Possibly one of the greatest speculators of all time, George Soros is a man people have learned to take seriously. For a person who is a strong believer in disequilibrium, these five buy ideas are more akin to solid investments with great expectations:
ClickSoftware Technologies (CKSW): ClickSoftware has been in an upward trend for more than a year and is currently flirting with the ten dollar level. The company has just paid out its first dividend of .08 per share with a yield of 3.67%. Headquartered in the U.S. and in Israel, with offices across Europe and Asia, ClickSoftware supplies service industries: utilities, communications companies, and home services with computer and office equipment and optimization services.
The August 17 release of the company's workforce management and optimization solutions version 8.1.5 (ServiceOptimmization Suite) is a lot more user friendly than previous versions. This latest software version partnered with Apple's (AAPL) iPad, iPhone (Smartphone) and a new App store, bringing ground-breaking technology to the forefront of the service industry.
Although ClickSoftware only has a market cap of $267 million, it is still head and shoulders above its nearest competitor, Astea International (ATEA) with a market cap of $12.21 million. The company's PEG ratio of 1.21 is a little high, but room for growth and lack of serious competition far outweigh this fundamental deficiency. Though some may think this a speculative stock, the likelihood that CKWS can prevail, and we think, pay out a dividend with excess cash flows, somewhat offsets the higher risk.
Time Warner Cable (TWC): Time Warner Cable has just announced its intention to acquire Insight Communications Company from the Carlyle Group for around $3 billion. This is 25% less than the $4 billion Carlyle Group was asking just a few months ago. It also comes on the heels of a deal to purchase 70,000 video, 42,000 HSD, and 26,000 phone subscribers in Kentucky from NewWave Communications. Time Warner Cable also recently completed its purchase of NaviSite (NAVI), a cloud services company.
Time Warner Cable's debt to equity ratio currently stands at three, where it has hovered since 2009 levels of .5 to 1.00. The company has again reaffirmed its earnings guidance of $4.25 to $4.50 per share which is in line with analysts' expectations. The company also declared a quarterly dividend of $0.48 per share, payable September 15, to stock holders of record on August 31, 2011.
Time Warner Cable is second in size only to Comcast (CMCSA). Comcast has PEG ratio of 1.86, while Time Warner Cable is currently at 0.46. Time Warner Cable seems to be buying its growth, which may be a good strategy as long as it doesn't pay too much for it and can integrate successfully. The stock has dropped from $80 to the low $60's in the past two months, which is more than adequately reflecting these concerns. Shares are cheap at these levels.
Seagate Technology PLC (STX): Seagate Technology may have gotten the upper hand by filing its clearance to purchase one day earlier than Western Digital (WDC). See this article for more details. Seagate Technology plans on buying Samsung Electronics' (GM:SSNLF) computer hard drive operations, while Western Digital plans further consolidation by acquiring Hitachi LTD (HIT)'s storage unit. The European Union's regulators will consider Seagate Technology's transaction first, and the European Commission has listed potential antitrust issues with Western Digital's acquisition.
According to researcher iSupply, if both deals go through, it will reduce the number of hard drive manufacturers to three. Western Digital would have 50% of the market, and Seagate Technology would have 40%, with Toshiba (OTCPK:TOSBF) left with a mere 10%.
Western Digital's PEG ratio stands at .77 and Seagate Technology has a PEG of .59. Since May of this year, Seagate Technology stock has declined from around the $18 mark to bounce off the $10 mark on low volume. If this short term trend continues on increase in volume, a turnaround may be confirmed; however, it all hinges on a positive European Union outcome.
Western Digital Corporation (WDC): Western Digital Corporation's plan to buy Hitachi LTD's storage unit may be thwarted. See this article for more details. The company has received an antitrust complaint from the European commission. They have also asked the European Union's general court to overturn the European Union regulators' decision to consider Seagate Technology (STX) transaction as "cleared first." Seagate Technology applied for clearance the day before Western Digital Corporation attempted to consume its target.
Seagate Technology plans on buying Samsung Electronics' computer hard drive operations. If both deals go through, it will reduce the manufacturers of hard drives to three.
Meanwhile, ITT Corporation (ITT) is trading just off its 52 week low, knocked down by uncertainty in the economy and government spending. The company is still maintaining its guidance for earnings per share at a midpoint of $4.76, and has actually raised its full-year revenue forecast in the face of this uncertainty.
Throughout the year, ITT Corporation has been in the process of splitting into three separate publicly traded companies: defense and information services, fluid technologies and motion and flow control. The following are second quarter results ( year over year) for the company broken down into these separate segments: In the Defense and Information Services sector (which will be called ITT Exelis) revenues were flat, but orders were up 47% driven by additional orders from NASA and the FAA. Operating income was down 26%.
In the Fluid Technologies sector (which will be called Xylem) revenues were up 26% driven by strong demand in industrial, agriculture and global markets. Operating income was up 26% due to productivity gains and acquisitions. In the Motion and Flow Control sector, revenues were up 14% with strong demand in the aerospace and automotive market. Orders were up 6% driven by automotive market strength, as well as double digit growth in the aerospace and general industrial markets. Operating income was also up 36%.
When ITT Corporation announced the spinoff in January, the stock shot up to its 52 week high of $64. There is a high probability the same will thing will happen when the actual split takes place, and at very least, (if you own the stock) you will be on the ground floor of three well-run, established companies.