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Asean Century

 
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  • Will Activists Finally Get What They Want From Rentech?
    Today, 6:32 AM RTK, RNF 4 Comments

    Summary

    • Activist investors are looking for changes at Rentech and Rentech Nitrogen Partners.
    • It's been an ongoing campaign since October 2012, but with shares underperforming since that time, management and the board might just listen.
    • Its wood fiber business is growing, and the Illinois plant looks to be the jewel of its nitrogen business, with EBITDA of $100 million this year.
  • Update: Lifeway Foods Earnings
    Mon, Aug. 18 LWAY 2 Comments

    Summary

    • Lifeway Foods beat earnings and revenue estimates in Q2.
    • I remain bullish on the company as the futures market is signaling that milk prices will come down later this year.
    • The demand for Lifeway’s Kefir has exceeded my expectations. The milk price impact on EPS was no surprise. I was hoping gross margins would remain around 28% to 29%.
  • Update: TreeHouse Foods Earnings
    Mon, Aug. 18 THS Comment!

    Summary

    • TreeHouse Foods beat earnings and revenues estimates for Q2.
    • The company guided higher on full-year EPS, and keeps my bullish thesis intact.
    • The cost savings I talked about are boosting margins and driving bottom-line growth, while acquisitions continue to drive the top-line.
  • Update: Prestige Brands Holdings' Earnings
    Mon, Aug. 18 PBH Comment!

    Summary

    • Prestige Brands Holdings beat earnings and revenue estimates in FQ1.
    • I’m moving to the sidelines until the acquisition of Insight Pharmaceuticals is complete. Shares are up 30% since I first recommended them.
    • Based on guidance, Prestige Brands will likely not post EPS and FCF as strong as I had anticipated.
  • Update: Papa John's International Earnings
    Sun, Aug. 17 PZZA 1 Comment

    Summary

    • Papa John’s International missed both EPS and revenue estimates in Q2.
    • Shares are down about 23% since my March article and I see the weakness as temporary.
    • The increase in cheese prices and the cost to roll out its new point-of-sale system impacted EPS more than I had expected.
  • Update: XO Group Earnings
    Fri, Aug. 15 XOXO 2 Comments

    Summary

    • XO Group delivered an earnings beat and a revenue beat in Q2.
    • I’m still bullish on shares and think the 20% gain since my March article is the start of a bigger move higher.
    • The new CEO and CFO are delivering the results I anticipated in my prior article.
  • Update: Famous Dave's Of America Earnings
    Fri, Aug. 15 DAVE Comment!

    Summary

    • Famous Dave’s delivered an earnings beat and a revenue beat in Q2.
    • Shares are up 10% since my February article and investors are best off exiting until we see same-store sales growth.
    • The former President of McDonald’s, USA is making the moves I anticipated, but there still remains some core weaknesses in Famous Dave’s business.
  • Update: National CineMedia Earnings
    Thu, Aug. 14 NCMI Comment!

    Summary

    • National CineMedia beat on revenues and reported EPS in-line with expectations for Q2, but results were much lower than last year.
    • Since the company is not expecting much improvement next quarter, investors are best off looking elsewhere until revenues and earnings start growing again.
    • I did not anticipate the big y/y revenue drop due to declining ad rates.
  • Update: Interval Leisure Group Earnings
    Tue, Aug. 12 IILG Comment!

    Summary

    • Interval Leisure Group delivered an earnings beat and a beat on revenues in Q2.
    • It was a solid earnings report and gives me confidence in the company even though shares are down 16% since my March article.
    • The company continues to make progress in diversifying its business model that I discussed in my prior article.
  • Update: The Scotts Miracle-Gro Company Earnings
    Tue, Aug. 12 SMG Comment!

    Summary

    • Scotts Miracle-Gro delivered an earnings beat, declared a special dividend, increased the regular dividend and will repurchase $500 million in shares.
    • The earnings beat and shareholder friendly initiatives will boost shares in the interim, but shares are basically flat since my March article.
    • I expected earnings to come in strong in my previous article, but the revenue weakness is a concern.
  • Update: Frisch's Restaurants Earnings
    Mon, Aug. 11 FRS Comment!

    Summary

    • Frisch’s Restaurants delivered a big earnings beat and grew revenues 9.8% year-over-year in Q4, but that was due to 13 weeks in the quarter.
    • Shares are down about 8% since my December article and the earnings report didn’t give me enough of a reason to get long.
    • Frisch’s latest report is slightly better than I anticipated due to better tax planning, but the company still lacks a catalyst to take shares higher.
  • Update: Chuy's Holdings Earnings
    Mon, Aug. 11 CHUY Comment!

    Summary

    • Chuy’s Holdings reported earnings and revenues that missed estimates, but the stock rose after the earnings call.
    • My short position from January is up 25%, but it’s time to cover.
    • I still see shares as being overvalued at 29 times next year’s earnings, but the bounce after the earnings call signals optimism from investors.
  • Update: Carter's Earnings
    Mon, Aug. 11 CRI Comment!

    Summary

    • Carter’s delivered a big beat on earnings in Q2 and revenues grew 11% year-over-year.
    • Carter’s continues to beat earnings expectations and I’m still bullish on shares.
    • Carter’s looks set to deliver the record earnings that I had anticipated back in March for FY14.
  • Update: Roadrunner Transportation Systems Earnings
    Mon, Aug. 11 RRTS Comment!

    Summary

    • Roadrunner Transportation Systems missed EPS estimates by one penny, but beat on revenues by $20 million.
    • I’m not as bullish as I was back in March due to flat EPS growth. Shares are flat since my article came out.
    • I’m happy with the revenue beat, but I was expecting faster EPS growth.
  • Update: Clearwater Paper Corporation Earnings
    Fri, Aug. 8 CLW Comment!

    Summary

    • Clearwater Paper missed earnings and revenue expectations in Q2.
    • I still see shares of Clearwater Paper as being undervalued, but lack a catalyst to take shares higher.
    • I did not expect Clearwater Paper to miss earnings back-to-back after my article came out, but shares are still up about 4% since February.
  • Update: Flextronics International Earnings
    Fri, Aug. 8 FLEX Comment!

    Summary

    • Flextronics International beat Q1 estimates, but issued lighter guidance for Q2 than Mr. Market was looking for.
    • I remain long Flextronics and think shares will likely continue heading higher on the back of strong FCF and share buybacks.
    • Q1 revenues actually came in higher than I anticipated back in May.
  • Update: Tempur Sealy International Earnings
    Thu, Aug. 7 TPX Comment!

    Summary

    • Shares of Tempur Sealy sold off after the company’s earnings report came in weaker than expected.
    • I still see Tempur Sealy as the best bet for investors in the mattress space.
    • I said in my earlier article that an increase in marketing spending would crimp margins and earnings and that 2014 would be a transition year.
  • Update: Monarch Casino & Resort Earnings
    Wed, Aug. 6 MCRI Comment!

    Summary

    • Monarch's latest results were another disappointment, as the gaming operator missed EPS estimates by $0.11 and revenue dropped 3.7% y/y.
    • The latest results proved my short thesis, but it's time to cover, as shares look fairly valued.
    • I stated in my original article that competitive headwinds would pressure the company's business and that its shares were overvalued.
  • Update: Integrated Device Technology Earnings
    Wed, Aug. 6 IDTI 3 Comments

    Summary

    • Integrated Device Technology delivered a strong Q1 report that beat on earnings and revenues.
    • I’m no longer quite as bullish as I was back in February as shares have risen over 40% since my article.
    • The strong results come from the global 4G infrastructure buildout that I talked about back in February.
  • Update: Sally Beauty Holdings Earnings
    Tue, Aug. 5 SBH Comment!

    Summary

    • The latest earnings report from Sally Beauty Holdings was in-line with expectations and revenues managed to come in slightly higher.
    • It was a solid earnings report, but not spectacular. Shares look to be stuck in the same holding pattern that I talked about back in March.
    • FY14 earnings look to come in as I expected, but the company needs an earnings beat next quarter for the market to notice.
  • Update: Ruth's Hospitality Group Earnings
    Tue, Aug. 5 RUTH Comment!

    Summary

    • Ruth’s Hospitality Group delivered a lackluster quarter lead by continued weakness at its Mitchell’s Fish Market concept.
    • I still think the long-term picture for Ruth’s is intact, lead by its Ruth’s Chris Steak House restaurants and an eventual turnaround at Mitchell’s.
    • In my original article, I stated that the Mitchell’s Fish Market was the weak link. However, it looks like the turnaround will take longer than expected.
  • Casey's General Stores: Multiple Business Lines Create A Market Mispricing
    Tue, Aug. 5 CMG, CASY 2 Comments

    Summary

    • Mr. Market thinks of Casey's as a grocer that sells fuel, but Mr. Market is missing the value of Casey's real estate and its fast-growing prepared foods business.
    • Shares of Casey's are undervalued by about 20% currently.
    • Casey's move into the pizza delivery business and having all stores operating 24-hours will drive revenue, same-store sales, and EPS growth.
  • Update: Telecom Argentina Earnings, Argentina Defaults And CEO Resigns
    Mon, Aug. 4 TEO 3 Comments

    Summary

    • A strong earnings report from Telecom Argentina is being overshadowed by the country defaulting and the CEO leaving.
    • I still own shares and still see shares as being undervalued as I take a long-term view.
    • In spite of Argentina’s default and the CEO leaving, shares are still higher by 21% since my article came out as I correctly predicted its business would continue to grow.
  • Update: Addus HomeCare Earnings
    Mon, Aug. 4 ADUS Comment!

    Summary

    • Addus HomeCare grew revenues 17% in Q2 and EPS beat expectations by $0.01.
    • After a strong Q1 and Q2, Addus is on track to post a record year.
    • In my last article, I said its business remained strong and the selloff over financial reporting issues was a non-issue.
  • Update: Bally Technologies Buyout
    Fri, Aug. 1 SGMS, BYI 6 Comments

    Summary

    • Scientific Games is acquiring Bally Technologies for $83.30 per share in cash with the financing already in place.
    • I still see shares as a buy since they're trading $5 below the offer price.
    • The buyout was not anticipated back in February, but appears to be happening due to consolidation in the space.
  • Addus HomeCare: Recent Pullback Presents A Buying Opportunity
       • Sat, May. 17 ADUS Comment!

    Summary

    • Shares of Addus HomeCare are undervalued and warrant trading around $30 based on fair value and the company's growth rate.
    • The company's home-based care appeals to many baby boomers wishing to stay in their homes longer and avoid nursing homes.
    • The recent pullback in shares looks to be an overreaction by Mr. Market and presents a great buying opportunity for long-term investors.
  • Strong FCF And Share Buybacks Make Flextronics International A Compelling Investment
       • Sat, May. 10 FLEX 5 Comments

    Summary

    • Flextronics International generated $701 million in FCF last year and repurchased 9% of its outstanding shares, yet has a market cap of only $5.72 billion.
    • Look for margin expansion as Flextronics transitions to higher margin businesses.
    • Its Integrated Network Solutions division has been a weak spot, but look for that segment to stabilize and possibly even grow again with telecoms boosting 4G LTE capex spending.
    • Shares remain undervalued; look for market-beating returns over the next several years on the back of strong FCF generation and share buybacks.
  • Watsco Remains A Top Investment In A Volatile Market
       • Sat, May. 3 UTX, WSO 5 Comments

    Summary

    • Watsco is the largest and only publicly-traded HVAC/R distributor in North America.
    • Watsco relies on the replacement market, which is less cyclical than the new construction market.
    • Plenty of growth ahead as the company expands into Latin America and more than 89 million units are nearing the end of their useful life cycle.
    • Watsco is a steady performer that has delivered to shareholders a 19% annualized return over the past 25 years.
  • Prestige Brands Holdings Just Got A Whole Lot More Interesting
       • Wed, Apr. 30 PBH 1 Comment

    Summary

    • Since my last article a month ago, Prestige Brands has made 2 game changing acquisitions that make the company much more valuable than before.
    • Both acquisitions are immediately accretive to EPS and FCF, and boosted fair value from $36.48 to $43.25.
    • Look for more sell-side analysts to jump on the bandwagon, as the company is on a quicker pace to $1 billion a year in sales.
    • Prestige is underfollowed, with only 3 sell-side analysts on the last call, even though the company has grown EPS 22.3% annually over the past four years.
  • Pool Corporation Is Looking All Wet
       • Thu, Apr. 24 HD, LOW, POOL Comment!

    Summary

    • Pool Corporation is highly cyclical and the next cycle is likely down, which will impact Pool's top- and bottom-lines, especially since 42% of its business comes from discretionary spending.
    • The company's move into building product sales diversifies revenues, but sets the company up to compete head-on with Home Depot and Lowe's, a losing proposition in my opinion.
    • I think analysts earnings expectations are overly optimistic, especially since Pool has missed earnings in three of the last four quarters. Margins are low and no margin expansion expected.
    • Shares of Pool are more expensive than Home Depot or Lowe's and based on fair value and its historical book value per share, shares should trade mid $30s.
  • A. Schulman: An Underrated Diversified Business With An Appetite For M&A
       • Tue, Apr. 15 SHLM Comment!

    Summary

    • A. Schulman has been growing earnings and revenues in the double-digits and that will likely continue via organic growth and acquisitions.
    • The company will benefit from the global automotive market, food packaging and new products from its four innovation centers.
    • A. Schulman is now a global enterprise with an experienced management team and its acquisition of Perrite Group strengthened its position in Europe and Asia.
    • Shares are a compelling value and trade below fair value and its historical P/E average.
  • Telecom Argentina: An Extremely Undervalued Situation
       • Thu, Apr. 10 REPYY, TEF, YPF 12 Comments

    Summary

    • The Argentina discount has made shares of Telecom Argentina extraordinarily cheap.
    • Even though Argentina has a high rate of inflation, the telecom provider is showing impressive results across all of its businesses.
    • Based on the company's pristine balance sheet and strong cash flows, fair value is $35.
    • Most investor concerns have been answered or are receding and have lead to the reward side being favored in the risk/reward balance.