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Antonio Carradinha
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I'm graduated in Economics and Finance and work as a business consultant, specialized in company valuation. I have been an investor and trader for a couple of decades and Portfolio Manager on several situations, investing mainly in Commodities, Forex and US Stocks.
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Meu Caro Dinheiro (My Dear Money)
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  • USEC: A Top Mover

    After huge weakness following a 1-for-25 reverse stock split, USEC's (USU) prices have risen literally to the sky.

    The charts below lead us to believe that there is genuine buyer interest. Nevertheless, with a float of just 4.72M, around 15M shares have been traded in the last five days. It seems too much!

    The company has a partnership with the Department of Energy (DOE). Since 2002, USEC has been developing an efficient uranium enrichment gas centrifuge technology called the American Centrifuge. USEC is working to deploy this technology in its American Centrifuge Plant (ACP).

    One must remember that USEC had been created as a government corporation in order to restructure the government's uranium enrichment operation. The company had an IPO on July 28, 1998.

    It seems that shareholders think USEC's problems can be really overtaken.

    Let's see what happens to the stock prices this week.

    Chart since the IPO

    (click to enlarge)

    Charts courtesy of StockCharts.com

    Last three month chart

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure:

    No position in stocks mentioned.

    The author of this article gives only his personal view and opinion, never making any investment advice to buy or sell specific securities. The information presented is from sources believed to be reliable, but its accuracy cannot be guaranteed. Before investing in financial assets, investors should do their own research and consult a professional investment adviser.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: USU
    Jul 29 10:04 AM | Link | Comment!
  • Cisco: Leaving The Past Behind

    Cisco and Mandelbrot

    This article was conceived and written due to my immense admiration for a genius named Benoit Mandelbrot and one of his best books, "The Misbehavior of Markets - A Fractal View of Risk, Ruin and Reward", published in 2004. This book has been analyzed by another author on Seeking Alpha.

    For me, it is particularly challenging to conduct a review of a significant company such as Cisco Systems (CSCO) while taking into account Mandelbrot concepts.

    Cisco is the worldwide leader in networking and other products related to the communication and information technology. Ups and downs of Cisco shares are naturally linked to the succession of its sales and profits over the years. This has to be compared with the expectations of investors and analysts. This interaction in conjunction with other market forces results in the formation of prices.

    By Mandelbrot theory, what happened to the stock price of Cisco in 2000 was the bursting of a bubble. The variability of turbulent markets has two key features: a memory or long-term dependence and the risk of collapse. It is the pattern of exceeding the limit that caused the inevitable collapse. For a long time, Cisco investors have unreasonably increased the price of its shares sustaining overoptimistic expectations. When the quarterly results stabilized in 2000 investors lost their illusions and the bubble began to burst catastrophically. When the company recorded its first quarter loss in 2001, the bubble concluded its job and nothing could change it (a share's fall of 87% in 18 months). Not even decent results in the following years could make any difference.

    Chart courtesy of StockCharts.com

    (click to enlarge)

    Cisco earnings and stock prices

    From the tables below we can see the most relevant data from Cisco reports since 2007 to date.

     

    FY 2007

    FY 2006

    Vs. FY 2006

    Net Sales

    $34.9 billion

    $28.5 billion

    +22.6%

    Net Income

    $7.3 billion

    $5.6 billion

    +31.4%

    Earnings per Share

    $1.17

    $0.89

    +31.5%

     

    FY 2008

    FY 2007

    Vs. FY 2007

    Net Sales

    $39.5 billion

    $34.9 billion

    +13.2%

    Net Income

    $8.1 billion

    $7.3 billion

    + 9.8%

    Earnings per Share

    $1.31

    $1.17

    +12.0%

     

    FY 2009

    FY 2008

    Vs. FY 2008

    Net Sales

    $36.1 billion

    $39.5 billion

    -8.7%

    Net Income

    $6.1 billion

    $8.1 billion

    -23.8%

    Earnings per Share

    $1.05

    $1.31

    -19.8%

     

    FY 2010

    FY 2009

    Vs. FY 2009

    Net Sales

    $40.0 billion

    $36.1 billion

    +10.9 %

    Net Income

    $7.8 billion

    $6.1 billion

    +26.6 %

    Earnings per Share

    $1.33

    $1.05

    +26.7 %

     

    FY 2011

    FY 2010

    Vs. FY 2010

    Net Sales

    $43.2 billion

    $40.0 billion

    +7.9 %

    Net Income

    $6.5 billion

    $7.8 billion

    -16.4 %

    Earnings per Share

    $1.17

    $1.33

    -12.0 %

     

    FY 2012

    FY 2011

    Vs. FY 2011

    Net Sales

    $46.1 billion

    $43.2 billion

    +6.6 %

    Net Income

    $8.0 billion

    $6.5 billion

    +23.9 %

    Earnings per Share

    $1.49

    $1.17

    +27.4 %

     

    Q1 2013

    Q1 2012

    Vs. Q1 2012

    Net Sales

    $11.9 billion

    $11.3 billion

    +5.5 %

    Net Income

    $2.1 billion

    $1.8 billion

    +17.7 %

    Earnings per Share

    $0.39

    $0.33

    +18.2 %

     

    Q2 2013

    Q2 2012

    Vs. Q2 2012

    Net Sales

    $12.1 billion

    $11.5 billion

    +5.0 %

    Net Income

    $3.1 billion

    $2.2 billion

    +44.0 %

    Earnings per Share

    $0.59

    $0.40

    +47.5 %

    Net income has continued to grow steadily, except in 2009 with the consequences of the global financial crisis and in 2011 with restructuring and other charges.

    CSCO Net Income Quarterly YoY Growth Chart

    CSCO Net Income Quarterly YoY Growth data by YCharts

    It is remarkable that net income has increased 44% in Q2 2013, thus making believe that Cisco will have a great year until the end of July.

    How do these data have been influencing stock prices? As we can see in the chart above, there is a general correlation between net income and prices. Nevertheless, we can notice that advances in prices needed strong income growth while declines were easier to achieve as growth showed weakness.

    John Chambers, Cisco chairman and chief executive officer said, "Cisco delivered record earnings per share this quarter and record revenue for the 8th quarter in a row in a challenging economic environment". "In terms of the future, we are making solid progress towards our goal of becoming the #1 IT company in the world" he added.

    CSCO PE Ratio TTM Chart

    CSCO PE Ratio TTM data by YCharts

    The market still "remembers" the exceptional burst of the 2000 Cisco bubble as it affected the stock performance over the years. In my opinion, the share's price is undervalued with a PER of 12.55 and a price book of 2.09. Not only in absolute terms but also in relation to other global technological companies, Cisco prices do not reflect company performance.

    CSCO Price / Book Value Chart

    CSCO Price / Book Value data by YCharts

    The memory will not disappear

    Cisco share prices are still behaving as Mandelbrot stated in his theory of long memory. They show aversion in exceeding certain limits, down or up, preferring a safer way. Indeed, the long-term trading range from 2004 to 2013 has been maintained at a relatively wide scale but without showing any kind of persistent situation. In fact, it shows an anti-persistence standard. Even in recent weeks prices remained close to the average of the mentioned range without truly reflecting the last quarter excellent results and sound growth.

    It is likely that Cisco shareholders have not forgotten the excesses committed in 2000. For that reason, it is quite clear why the stock price has never surpassed moderate levels. On one hand, this is good because prices can be considered solid. On the other hand, the company continues to gain ground in a dynamic and highly competitive market, which makes admissible an increase in prices in the medium term.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: CSCO, long-ideas
    Mar 11 2:44 PM | Link | Comment!
  • Gold Remains Weak

    Take a look at the chart of Gold in euros to see that prices are below EMA50 and both of them are also below EMA200 which is now bearish for Gold. Never mind that its price is dealt in USD because the problem is another sign of weakness. It must be emphasized that though all the fundamentals naturally remain we have to observe carefully the position of EMA50 and 200 in USD, as they are also very close of each other.

    Chart courtesy of http://stockcharts.com
    click chart to enlarge

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: GLD
    Jan 15 5:05 AM | Link | Comment!
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