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Carl Cachia
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I work in the medical and healthcare field so my focus is mainly on Biotech stocks. I try to find the next Celgene, the next Pharamcylics if possible. Been a trader and investor for 13 years. Love the game, and I hope you enjoy my articles on here. Good luck with your investments and I look... More
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  • Keurig Green Mountain: A Bullish Setup Worth Noting

    Please note that this article was denied by seeking alpha. Hence, why I am posting as an instablog.

    A product that I use daily at my workplace is Keurig Green Mountain's (NASDAQ:GMCR) coffee machine. I believe their products are one of a kind, easy to use, easy to make and produce a wonderful coffee. I have studied this company for the past few years and have traded it in the past. Further analysis as explained in this article shows that the stock price is ready for a move higher. This article will explain the story, recent earnings, the future, together with technical analysis and risks investing in this company.

    The company

    GMCR is a leader in how it changed the coffee industry. It used to take me 6 minutes to prepare a cup of coffee at work, but with the Keurig machine, I can prepare a cup in a minute! The company has changed the way consumers prepare and enjoy their beverages at home. GMCR estimates that they have over 16 million Keurig Brewing Systems active in U.S. households to date, and surprisingly, this is only 13% of the total households in the U.S.

    2013 was a very strong year for GMCR. Here are some key highlights:

    1. Significant progress in strengthening long-term partnerships with leading companies including Starbucks (NASDAQ:SBUX) and a renewal agreement with Dunkin Donuts.

    2. New partnerships like the coffee Bean and tea leaf brand, cinnabon, lipton, and Snapple to Keurig Brewing System while strengthening already great relationships with beverage partners such as the J.M. Smucker company and its Folger's Gourmet Selections and millstone brands, luigi lavazza SpA, newman's ownorganics, and celestial Seasonings as well as with appliance partners such as Jarden consumer Solutions and Mr.. coffeebrand, conair corporation and its cuisinart brand.

    3. Working closely with the Campbell Soup company (NYSE:CPB), which allows the company to expand beyond beverages.

    The picture below shows the current uses within the Keurig's system.

    (click to enlarge)

    (Adapted from files.shareholder.com/downloads/GMCR/325...)

    The future

    I believe the future looks very bright for this company and I believe this is only the start.

    GMCR will continue to expand and grow their Keurig hot Brewing system as I believe there is significant opportunity to raise awareness of the system in geographies where the company is under penetrated.

    The potential for introduction of new systems is also another opportunity for growth. a Keurig cold system and a water system are 2 products we will see in the next year or so. The water system market is worth around $10 billion!

    Latest earnings

    The last earnings report that can be read here was very strong. There were a number of key highlights worth mentioning.

    • Delivery of double-digit revenue growth which was driven by 12% revenue growth from the Keurig system.
    • Non-GAAP earnings per share increased by 16% year-over-year.
    • Free cash flow increased 30% year-over-year to $263 million.
    • $800 million to shareholders this quarter and also ending the quarter with over $1.1b in cash.
    • New share repurchase authorization of up to $1 billion over the next two years.

    These are all strong statements and show you the position the company is in.

    Now let's look deeper into the numbers. As you can see in the chart below, numbers in the quarter and in 2014 and 2015 are increasing.

    (Adapted from finance.yahoo.com)

    The earnings history is also very strong. When I continue to see earnings numbers beating consensus, I find this is a very strong bullish sign.

    (Adapted from finance.yahoo.com)

    Technical analysis

    When I started trading years ago, my mentor always taught me "But the best fundamentals when the technicals start to match". The chart in GMCR is a thing of beauty. The base continues to tighten. There is resistance around $123.60 so keep an eye on volume as this clears. The daily chart explains this. Volume has been increasing lately too.

    (click to enlarge)

    (Adapted from stockcharts.com)

    The weekly chart also remains bullish as prices remain over the 20 and 50 day moving average, both trending up.

    (click to enlarge)

    Risks associated with this trade

    There are a number of risks worth mentioning here. Firstly, competition. Although GMC plans to enter the cold drink industry soon, one must remember that SodaStream International (NASDAQ:SODA) has been developing their system for years. So although the Keurig cold system can be a big boost to GMCR's bottom line, one must be careful of other products already in the market.

    Secondly, 10% of the float is short. Is there something the shorts know that we don't? The bulls might see this as a bullish sign, as a short squeeze can push the stock to multi year highs too. Things that we have to consider.

    Conclusion

    I initiated a position in GMCR recently and I believe the stock is ready for new highs. The company is currently valued at around $19b, has over $1.1b in cash, and around $273 million in debt. The large cash position mitigates the risk of a secondary offering of shares.

    I believe the future is bright for this company. Furthermore, on the 13th of May 2014, news came out that the Coca-Cola company (NYSE:KO) has purchased 16.7 million shares of GMCR, bringing the total to 26 million shares. This is massive, and a potential buyout is something to keep an eye out for.

    Buy the best fundamentals when the technicals are right"

    Disclosure: The author is long GMCR. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

    Tags: CPB, KO, SBUX, SODA, GMCR, long-ideas
    Jun 16 3:42 PM | Link | Comment!
  • U.S Silica Holdings: One Of Our Recent Favorite Buys

    Over the last week, we have initiated a position in U.S Silica Holdings (NYSE:SLCA). The future is bright for this young company and we have initiated a position as we believe the price can reach new highs over the next few weeks. This article will explain why we like SLCA, both technically and fundamentally.

    The story

    SLCA is a leading silica sand supplier with a focus on performance materials that are essential to modern living. SLCA largest end market is the oil and gas industry which uses the silica as "frac sand". This sand is injected with water under high pressure in order to generate fractures in the rock. These fractures improve the well's oil and gas output. SLCA also works in wind-powered and solar energy helping in cost-effective manufacturing. Geothermal wells are also more efficient due to improved transfer. SLCA is a leading producer of industrial minerals including sand proppants, whole grain silica, ground silica, fine ground silica, calcined kaolin clay and aplite clay.

    Last earnings report

    Here are some key highlights:

    "The first quarter of the cutting was very strong for our company and we posted record revenue driven by strong performance in oil and gas and we again delivered EBITDA at the high end of our guidance range specifically on a year-on-year basis.

    Quarterly volume increased by 8% to 1.9 million tons while revenue climbed over 19% to $122.3 million. On a sequential basis volume was flat in ISP and up 17% in oil and gas.

    Adjusted EBITDA of $38.8 million increased 4.9% year-over-year and was flat sequential."

    "We expect profit demand growth to outpace rig count growth as the enhanced efficiency of those rigs drive growth in both wells drilled and stages per well".

    Onto the numbers:

    Revenue was up 19% year over year. Basis revenue for the oil and gas industry grew 37% to $73.6m. Estimates came in at 36c per share.

    Fundamental analysis

    - Market capital of $1.25b

    - Float of 45m shares after the recent secondary offering on June 3rd.

    - There is a massive amount of shorts. 12.9m shares are short, around 28% of the float.

    - Cash in hand of $42m plus the recent offering of shares that resulted in another $196m approximately.

    - 32% of the float is held by insiders.

    Technical analysis

    Both the daily, weekly and monthly charts show bullish action.

    Let's discuss the daily chart. The 50 day moving average is above the 200 day. Stochastics and Relative Strength Index are both on an uptrend. A base has been forming over the last little while and once this breaks $24 we expect new highs soon.

    (click to enlarge)

    The weekly chart shows more of the same bullish action. We believe the stock is in an early first stage or ipo primary base stage since it has only been trading for 2 years. The 10 day and 20 day moving average are rising and the price is above the respective values showing bullish action. We believe a cup and handle setup is forming with a right sided base to high 20s to occur soon.

    (click to enlargeConclusion

    We believe SLCA is very cheap at these levels. The fundamentals together with the technical analysis remain very strong. The high percentage of float being short makes us believe that a short squeeze can take this stock to new highs within the next few weeks, especially if earnings are strong like the last quarter. Furthermore, a company in the same field, Carbo Ceramics (NYSE:CRR) showed some very impressive numbers recently beating estimates by 5c and we believe this bodes very well for SLCA's potential. The oil and gas industry continues to boom, and we believe SLCA is poised for continued growth.

    Disclosure: I am long SLCA. 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: CRR, SLCA, long-ideas
    Jul 28 6:00 PM | Link | 1 Comment
  • Is IRobot Corporation About To Take Off?

    A stock that is coming consistently on our watchlist is iRobot Corporation (NASDAQ:IRBT). Fundamentally, the picture is a bright one and the stock has been on a huge uptrend. A period of consolidation might occur but the stock is poised for new highs anytime.

    The story

    IRBT designs and builds robots that as the company says "that makes a difference". The company designs products that have a place both in the home, in defense and security and lately also in the medical field. I believe the latest product (RP-VITA) in the medical field is one that will take the company to new levels.

    RP-VITA

    The RP-VITA is the first remote presence solution for patient care. The robot features state-of-the-art mapping and obstacle detection and avoidance technology, a simple iPad user interface for control and interaction and the ability to interface with diagnostic devices and access electronic medical records.

    (click to enlarge)

    The future for this product

    The future for IRBT is very exciting. There are a number of new products that will follow the potential of the RP-VITA.

    Adapted from irobot.com

    (click to enlarge)

    These robots are being planned to be introduced in 2014. Potential applications include their use in security environments, material transportation, caregiver support, factory inspection and in mobile kiosks.

    Fundamental analysis

    The company is currently valued at $1.14b. The company has $137m in cash with 0 debt making the possibility of a secondary issuing of shares remote. The float is 27m, with a high 8.4% short.

    The latest earning report were stellar. Revenues came in at $106.2m, which was higher than what analysts were expecting. GAAP reported sales were also 8.6% higher than the prior-year quarter. Earnings per share came in at $0.30 which was $0.12 higher than what analysts were expecting.

    Technical analysis

    Weekly chart is a thing of beauty. A nice trend. Expect this to continue going forward.

    (click to enlarge)

    Conclusion

    There are a number of factors that makes IRBT a strong buy, even after this huge rise. There is improvement of gross margins, strategic alliances with big companies (Read here) and extensive and new product line make IRBT a stock to own for the future. I will continue to add on any dips in prices.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in IRBT over 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: IRBT, long-ideas
    Jul 08 1:50 PM | Link | Comment!
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