Seeking Alpha

Darspal S Mann

 
View as an RSS Feed
PRO Articles
PRO articles cover stocks that fly under most investors' radar screens.
  • MiX Telematics: This Looks Like A Bottom
     • Today, 12:15 PM MIXT Comment!

    Summary

    • Weak revenue growth, but fundamentally sound and subscriptions growing fast.
    • Operational changes, new products and geographic expansion should bring back revenue visibility and growth.
    • Trading near replacement value, stock may benefit from earnings and multiple improvement as the revenue stabilizes and margins expand.
  • Healthstream: Watch Out For A Tough Transition Ahead
     • Fri, Sep. 12 HSTM Comment!

    Summary

    • Revenue growth may decelerate as sales from ICD-10 related products decline with hardly any product ready to offset.
    • List of concerns, including poor leverage, cloudy revenue visibility, increased spending, possible fund raising and recent product discounts, is only getting bigger.
    • Stock may suffer as estimates as well as valuation multiples adjust for uncertainty ahead.
  • Paycom: High Expectations Seem Misplaced
     • Fri, Sep. 5 PAYC 3 Comments

    Summary

    • Rich valuation and high expectations for delivering consistently high growth rates, margin expansion and a possible acquisition candidate.
    • But the company with a weak competitive position, limited financial resources, relatively small scale and poor earnings leverage, is poorly positioned.
    • Stock may decline 30-40% as valuation multiple gets readjusted discounting the risks.
  • Willbros Seems Ready For A Better Multiple
     • Thu, Sep. 4 WG 1 Comment

    Summary

    • Fundamentals have started to improve but investors are still indifferent, which has created a valuation gap.
    • Finally, profitability for Oil & Gas division, growth in Utility T &D, consistency in Canadian operations and improving balance sheet is here.
    • Stock may benefit from improving estimates and valuation multiples, following the positive momentum of credit markets.
  • Dealertrack Is On A Good Track
     • Wed, Aug. 27 TRAK 1 Comment

    Summary

    • A good business model overshadowed by concerns over potential weakness in auto sales due to rising interest rates.
    • Integrating recent acquisitions and new products may push growth, margin and cash flows higher.
    • Stock can gain more than 30-40% from improving earnings, cash flows and valuation re-rating.
  • AEP Industries Is Ready To Benefit From Any Softness In Resin Prices
     • Wed, Aug. 20 AEPI 6 Comments

    Summary

    • The sharp rise in raw material costs has negatively affected the gross margins, but prices are catching up to close the negative spread.
    • Slow but consistent price increases, synergies from recent acquisitions and capacity additions position the company well for volume growth.
    • The stock can rise 30%-40%, as earnings can turn the corner quickly due to low share count and high operating leverage in the model.
  • ExamWorks: Deeper Financial Examination Poses Pertinent Questions
       • Sat, Aug. 16 EXAM 1 Comment

    Summary

    • Stock is flying high as an IME industry consolidation play.
    • Shareholders are hardly benefiting from the acquisitions, and future growth or operating leverage is questionable.
    • Stock risks losing 30-40% due to estimates adjusting to low growth environment and correction in valuation multiples.
  • ShoreTel Deserves A Re-Rating As The Cloud Takes Charge
       • Wed, Aug. 13 SHOR Comment!

    Summary

    • Almost half of the revenue now coming from growing and recurring revenue streams.
    • Leading indicators point to sustained top line growth, while decent operating leverage and low spending should benefit earnings and cash flows.
    • Stock can gain 30-40% from earnings improvement as well as the business re-rating, due to growing and predictable cash flows.
  • Xerium: Significant Opportunities Underneath The Weak Revenue Growth
       • Sat, Aug. 9 XRM Comment!

    Summary

    • Concerns over top line growth due to weaker pulp & paper industry are exaggerated.
    • Revenue diversification efforts and cost reduction programs are starting to deliver.
    • Earnings and EBITDA improvements can help the stock gain 30-40%.
  • Healthways Is Getting Back In Shape
       • Sat, Aug. 2 HWAY Comment!

    Summary

    • Still having significantly under performing and underappreciated assets, but the company successfully transitioned into a preventative healthcare business.
    • Encouraging signs like improving top line and margins suggest new Board, helped by activist investors, is starting to deliver.
    • Stock may gain 30-40% as earnings improve and balance sheet de-leverages. Any strategic deal can add significant value on top of that.
  • Alliance Fiber Optic: One Customer Driven Growth Seem Over For Now
       • Wed, Jul. 30 AFOP 10 Comments

    Summary

    • Slowing revenue from the top customer is a major red flag.
    • Growth, which heavily relied on one customer, is petering out now and margins may follow suit, especially with no other pocket of growth visible to offset this decline.
    • Stock can lose 30-40% as weak top line added with negative leverage may force estimates to correct significantly.
  • For Applied Optoelectronics, Technology Waves Are Getting Stronger
       • Fri, Jul. 25 AAOI 1 Comment

    Summary

    • Well positioned to monetize laser equipment demand for data center and FTTH market expansion.
    • Aggressively expanding capacity, while enjoying technical leadership in the market with a decent operating leverage.
    • Stock may gain 30-40% as healthy top line and leverage helps the company achieve target operating model.
  • ValueVision Media: Not Retail, But A Good Restructuring Play
       • Wed, Jul. 23 VVTV 2 Comments

    Summary

    • Bad retail environment and ASP pressures have taken a toll on the stock.
    • Activist investors driven management change and improving operational metrics should help the company deliver in the coming months and close the large valuation gap between its peers.
    • Low expectations and improving fundamentals provide 30-40% upside for the stock.
  • Genesee & Wyoming: The Weather Is Good Again
       • Thu, Jul. 17 GWR 3 Comments

    Summary

    • Slowdown caused by severe weather conditions is a temporary issue.
    • A high quality short line railroad with improving fundamentals and potential margin expansion opportunities from integration of recent acquisitions.
    • Low beta stock that can deliver 25-35% as growth momentum comes back.
  • Mistras Should Benefit From Expanding Energy Infrastructure
       • Fri, Jun. 27 MG 1 Comment

    Summary

    • Well-positioned beneficiary of outsourcing plant inspection and related services.
    • Margins, temporarily compressed due to startup and other costs, should improve as offsetting revenues from new contracts start over the next few months.
    • A quality business with 30-40% upside potential as earnings improve.
  • Freescale: A Good Execution Story
       • Wed, Jun. 25 FSL Comment!

    Summary

    • Executing well in the absence of any major cyclical upturn.
    • Revenues, margins and cash flows are improving, while leading indicators suggest that the current trend can continue.
    • Stock offers 30-40% upside as earnings and execution help close the valuation gap with peers.
  • TravelCenters Of America Is Turning Towards Growth And Profits
       • Fri, Jun. 20 TA 3 Comments

    Summary

    • Time to look beyond leasing issues and small weakness in fuel demand due to improving fuel efficiencies.
    • Revenues can grow via organic and inorganic initiatives, just as acquired businesses get fully integrated and retail fuel margins stay high.
    • Stock may gain 30-40% as improving earnings ease investor’s concerns.
  • Improving Truck Market Can Help Accuride Make A Comeback
       • Sat, Jun. 14 ACW Comment!

    Summary

    • Well past the operational shortcomings and difficult macro environment.
    • Good truck sales and new product launches should drive growth, while low break-even and rising utilization rates should drive margins higher.
    • Stock, as a leveraged small cap play on CV sales, offers 30-40% upside as estimates and multiples get re-evaluated.
  • Luxoft: A Tale Of Two Elections Leading To One Opportunity
       • Sat, Jun. 7 LXFT Comment!

    Summary

    • Ignoring fundamentals, Luxoft stock has been negatively affected by the political events in Ukraine.
    • The fundamental business is going strong, both in absolute terms and relative to the Indian IT services companies, and deserves a premium.
    • There seems 30-40% upside as performance helps the stock to shed off near-term blues.
  • Steady Growth Set To Gain Pace At MaxLinear
       • Wed, Jun. 4 MXL Comment!

    Summary

    • Revenues from Satellite business to further accelerate existing steady growth from Cable and Terrestrial business.
    • Good execution by an aggressive and technically strong team, building and dominating one product at a time, while ensuring financial discipline.
    • Consistently improving earnings and multiple expansions may take the stock 40-50% higher.
  • Fading Concerns And High Growth Should Take EZchip Higher
       • Fri, May. 30 EZCH 5 Comments

    Summary

    • Product rollouts offer predictable and high revenue growth for the next few years.
    • Good play on “White Box” or SDN solutions with increasing market share, decent margins, high operating leverage and solid balance sheet.
    • Stock offers 40-50% upside on improving earnings and visibility.
  • Proofpoint: Fundamentals Suggest Still More Downside
       • Thu, May. 29 PFPT 3 Comments

    Summary

    • Correction in the broader market may be over, but weak fundamentals may drive the next leg down for the stock.
    • Decent headline growth numbers, but momentum restricted to a few products with limited operating leverage and worsening balance sheet.
    • Stock may correct 40-50% as estimates start to reflect weak fundamentals and valuation multiples compress.
  • Diversification Is Complete, Post Ready To Go Higher
       • Wed, May. 21 POST 2 Comments

    Summary

    • Product portfolio, after the last month’s acquisition, looks well diversified and positioned for top line growth.
    • Acquisitions have been announced, but benefits from diversification and financial improvements should follow in the coming quarters.
    • Stock is 30-40% cheaper based on the EBITDA potential of the new combined entity.
  • Vocera Is Finally Connecting To Growth And Profits
       • Wed, May. 14 VCRA 1 Comment

    Summary

    • Leader in slow growing, but stable and defensible niche market.
    • Bookings, new products and ramped up sales force point to a good second half.
    • Stock should benefit from conservative street estimates and return of a profitable growth.
  • Time To Look Beyond The Macro Concerns At Rent-A-Center
       • Thu, May. 8 RCII 1 Comment

    Summary

    • Concerns like broader economy related revenue weakness and higher expenses related to the emerging businesses are well reflected in the stock.
    • Emerging businesses and fundamental improvements are not fully reflected in the stock.
    • Stock is under appreciated by 30-40% considering the franchise, strategic value or the cash flows.
  • Better To Step Aside As Financial Restructuring Pauses At Libbey
       • Thu, May. 1 LBY 1 Comment

    Summary

    • Great restructuring play for the last few years.
    • Slowdown in the U.S. retail and China, margin pressures, increased cash outflows and volatile credit markets are likely to put a break on the comeback.
    • With rising costs and weak revenues, the stock may correct 30-40% as high leverage bears negatively on earnings.
  • Sober Expectations For Control4 Is An Opportunity
       • Thu, Apr. 24 CTRL 1 Comment

    Summary

    • Lofty expectations, after the recent stock correction, have been checked.
    • Decent growth in 2014 from macro trends like Internet of Things and company specific catalysts like new partnerships and improving international markets.
    • Stock may gain 30-40% on improving estimates due to revenue growth and under-appreciated operating leverage.
  • Stability At AZZ Should Shine In Volatile Markets
       • Wed, Apr. 23 AZZ 3 Comments

    Summary

    • Revenue weakness, missing estimates and project delays, a lot went wrong for the company in last one year.
    • Early indicators like backlog, more maintenance outages at nuclear power facilities and pent up demand bodes well for a comeback this year.
    • Stock may rise 30-40% as earnings improve and visibility returns.
  • Fundamentals Are Also Changing For Parametric
       • Fri, Apr. 18 HEAR 42 Comments

    Summary

    • Time to look beyond the reverse merger and weakness related to the gaming consoles product transition issues.
    • Growth of PlayStation 4 and Xbox One should drive sales of gaming headsets, the market in which the company enjoys a leading position.
    • Stock may gain 30-40% as revenue growth returns and improving margins help the earnings.
  • De-Risking Efforts Should Create Value For Meritor Shareholders
       • Fri, Apr. 11 MTOR Comment!

    Summary

    • De-risking of balance sheet by reducing debt and pension liabilities should unlock significant value.
    • Improvements are driven by better operational and financial management, independent of any revenue or broader economic growth.
    • Stock has 30-40% upside as numbers, benefiting from high earnings leverage, reflect improving balance sheet and earnings estimates.
  • Eros Is Ready For Primetime
       • Wed, Apr. 9 EROS 1 Comment

    Summary

    • Eros should benefit from new releases and growth in media & entertainment consumption, after the Indian elections in the coming weeks.
    • Business is well positioned with new library monetization efforts and new movie releases, serving as significant growth catalysts.
    • Stock may appreciate 40-50% as estimates improve and content assets get revalued.
  • WageWorks: Rage For This Cloud Story About To Hit A Wall
       • Fri, Apr. 4 WAGE 2 Comments

    Summary

    • Excitement around WageWorks, as a well positioned beneficiary of Defined Benefits adoption trends, seems misplaced.
    • Poor organic revenue growth, free cash flows and leverage trends are raising concerns about this supposedly fast growing Cloud story.
    • Stock may correct 30-40% as efforts to create value for shareholders fail and streets expectations & estimates are revised accordingly.