In this article we will discuss the following six stocks: Gilead Sciences Inc. (GILD), The Mosaic Company (MOS), Corning Inc. (GLW), Discover Financial Services (DFS), Altera Corp. (ALTR) and Cliffs Natural Resources Inc. (CLF).
Compelling Fundamental Statistics
The stocks discussed are S&P 500 Buy rated large-cap or better stocks with net profit margins of over 25% coupled with PEG ratios near or below one. Additionally, these stocks have great stories, positive catalysts for future growth and some pay dividends.
Moreover, most of these stocks are trading well below consensus analysts' estimates, have recent upgrades and positive analyst comments. Below are three tables with detailed statistics regarding each company's current summary, fundamental and financial information. Use this information as a starting point for your own due diligence.
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(Charts provided by Finviz.com)
Gilead Sciences Inc.
Gilead Potential Catalyst
Gilead recently announced a Phase 3 clinical trial (Study 114) of its pharmacoenhancing or "boosting" agent cobicistat, which increases blood levels of certain HIV medicines to allow for one pill once-daily dosing, and met its 48-week primary objective of non-inferiority to ritonavir.
The Study 114 primary endpoint analysis indicated that after 48 weeks of treatment, 85% of patients taking a regimen of cobicistat-boosted atazanavir (a protease inhibitor) plus Truvada (emtricitabine and tenofovir disoproxil fumarate) achieved HIV RNA (viral load) of less than 50 copies/mL, compared to 87% of patients taking ritonavir-boosted atazanavir plus Truvada (95% CI for the difference: -7.4% to 3.0%). The predefined criterion for non-inferiority was a lower bound of a two-sided 95% CI of -12%. Discontinuation rates due to adverse events were 7.3% and 7.2% in the cobicistat and ritonavir arms of the study, respectively. Gilead plans to submit these data for presentation to a scientific conference in 2012.
The Mosaic Company and Cliffs Natural Resources Inc.
Basic Materials Macro Catalyst
Basic materials equities are trading at dirt cheap valuations based on a vortex of volatility brought on by a slew of incessant negative macroeconomic headlines from the eurozone, Middle East, China, Japan and a lack of confidence from Main Street USA based on the ever-present deleterious unemployment picture.
Nevertheless, if things go well this week regarding a eurozone resolution, this could be your last chance to pick up these stocks at this level. If you have powder dry, this is an excellent opportunity to pick up some shares. The FOMC minutes for the two-day November meeting suggest that under current economic circumstances the Federal Reserve will have to engage in a third round of quantitative easing. The solution to the eurozone’s sovereign debt issues will inevitably lead to euro printing presses cranking up, allowing them to paper their way out of their solvency problems, which will only spur basic materials commodities prices even higher.
Mosaic Potential Catalyst
Mosaic recently announced it agreed to repurchase 21.3 million shares from the Margaret A. Cargill Trusts for approximately $1.2 billion. The purchase price will be $54.58 per share, the closing price of Mosaic's common stock on November 16, 2011.
This repurchase completes, well ahead of schedule, the disposition of 157 million shares designated to be sold during the 15-month period following the May 25, 2011 split-off transaction with Cargill.
Jim Prokopanko, President and Chief Executive Officer of Mosaic, said:
The purchase of Mosaic shares represents one of the best investment opportunities we've seen and a good use of our excess cash. We are pleased we were able to reach an agreement with the Trusts with respect to this transaction.
Cliffs Natural Resources Potential Catalyst
Looking ahead, Cliffs anticipates stagnant to only modest growth in the U.S. economy. However, the company indicated that the current level of U.S. economic growth should sustain a healthy U.S. business for Cliffs. In Asia, historically high year-over-year crude steel production and iron ore imports continue to support demand for Cliffs' products across the company's iron ore segments exposed to the seaborne market.
For 2011, the company is modestly decreasing its expected sales volume in U.S. iron ore to approximately 24 million tons from its previous expectation of 25 million tons, driven by vessel availability and adjustments in customer pellet requirements.
U.S. iron ore revenue per ton is expected to be approximately $135 - $140, up from the previous expectation of $130 - $135, based on the following assumptions:
- A Platts 62% iron ore spot price of $140 per ton (C.F.R. China) is maintained for the remainder of 2011;
- 2011 U.S. blast furnace utilization of approximately 70%;
- 2011 average hot rolled steel pricing of $700 - $750 per ton; and
- An approximately $5 per ton increase related to fully consolidating Empire Mine.
In addition, the revenue-per-ton expectation also considers various contract provisions, lag-year adjustments and pricing caps and floors contained in certain supply agreements. Actual realized revenue per ton for the full year will depend on iron ore price changes, customer mix, production input costs and/or steel prices (all factors contained in certain of Cliffs' supply agreements).
Cliffs is increasing its U.S. iron ore 2011 production volume to approximately 24 million tons. The company is also increasing its cash cost per ton expectation to approximately $60 - $65, up from its previous expectation of $55 - $60. Both increases are related to fully consolidating the Empire Mine. For 2011, depreciation, depletion and amortization is expected to be approximately $4 per ton.
In 2012, Cliffs expects to produce and sell approximately 23 million tons from its U.S. iron ore business. This sales volume expectation assumes a 70% - 75% blast furnace utilization rate in 2012.
Corning Inc. and Altera Corp.
Technology Macro Catalyst
According to Jim Cramer of CNBC’s "Mad Money" program, we are in the midst of the bullish season for technology stocks.
Cramer's broad thesis is that tech stocks should be sold in January and bought in late October; due to the fact many corporations spend their apportioned budgets for technology in the fourth quarter. Regarding retail oriented plays, obviously the Christmas shopping season is the strongest for sales.
Corning Inc. Potential Catalyst
Corning Cable Systems Pty. Ltd., part of Corning Incorporated’s Telecommunications segment, recently announced that it has been selected as a primary supplier of optical fiber cable and hardware to NBN Co for the Australian government’s National Broadband Network (NBN) initiative to bring high-speed broadband services to residential single-family homes and apartment buildings or multi-dwelling units (MDUs).
NBN intends to pass 93% of Australian homes and businesses (roughly 12 million, of which more than 30% are MDUs) with an open-access optical fiber network providing download speeds of 100 megabits per second within the next 10 years. Corning Cable Systems Pty. Ltd. and NBN Co have signed a contract for the supply of optical cable and hardware valued at up to AUS $310 million over five years.
Altera Corp. Potential Catalyst
Altera recently announced it has started shipping its 28-nm Arria V FPGAs. The Arria V devices are the lowest power mid-range FPGAs available on the market today with 10.3125-Gbps transceiver technology. The family’s innovative features allow designers to tailor their low power, high bandwidth and low cost requirements for next-generation systems in wireless, broadcast and military markets. The Arria V devices are the second family to ship from the company’s 28-nm product portfolio following the shipment of its Stratix V family in early 2011, underscoring Altera’s commitment to deliver 28-nm devices optimized to meet the diverse design needs of customers.
Discover Financial Services
Discover Financial Services Potential Catalyst
Discover has been honored as one of America’s most innovative users of business technology, earning a spot on the 2011 Information Week 500 list for the sixth consecutive year. This award is presented annually by the magazine to recognize companies that drive business technology innovation in support of corporate strategies. The award recognizes Discover for exhibiting a pattern of technological innovation including the roll out of its Rapid Development Data Sourcing methodology.
Glenn Schneider, chief information officer at Discover, said:
Discover’s new process of data sourcing is just one of the ways we continue to provide industry-leading technology solutions to our customers and business partners. Our technology staff has demonstrated a strong record of delivering innovative systems by combining their understanding of business needs with market-driven changes in the technology industry.
Taking these factors into account, I posit these equities will soon soar from their current shares prices based on macroeconomic, sector and company specific catalysts. These stocks have great stories and positive facilitators for future growth. However, many are trading at significant discounts.
Nevertheless, I suggest layering into these names as there may be a significant buying opportunity at the end of this week produced by the bumbling EU bureaucrats as they haggle over the final solution of their sovereign debt debacle.