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David Guarino

 
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  • Beazer Homes Is All In [View article]
    There seems to be quite a bit of talk about quality of Beazer homes. Due to the fact that I have never built or inspected a home professionally, I am not going to challenge the real estate expertise of "TAS", "Rothbuilt", of "Joe Kelly". They are entitled to their opinion and may very well be correct regarding the quality of Beazer's product.

    As an investor however, I like to focus on how the company is operating and what financial benefits it can create for shareholders. Two metrics I recommend investors evaluate. First, is the backlog for Beazer moving in the right direction? If yes then consumers are obviously seeing value in the product. Second, how are warranty expenses looking? If the homes are in fact built with poor quality standards we would likely see more claims from homeowners and thus higher warranty expense (all new Beazer homes come with a warranty). Look at page 63 of last years 10-K filings and you can see that warranty "payments made" and "warranty liabilities" have all drastically declined over the past few years.

    I struggle to believe the "cheap" quality argument if more consumers are buying Beazer homes and less warranty claims are being made.

    -David Guarino
    Aug 12 08:46 AM | 3 Likes Like |Link to Comment
  • How Is Your Homebuilding Stock Handling Rising Rates? A Correlation Study [View article]
    Mlaffal33,

    Thanks for the comments. You bring up some interesting points however the data from many publicly traded builders shows demand is not weakening. There are so many factors (population growth, job growth, high rent prices, low levels of home ownership, low levels of home inventory, etc.) that point towards a continued recovery in housing. I don't think Fed tapering will completely fizzle out this rally. Although higher rates will knock some buyers out of the market, the Fed's position thus far has been keeping rates low for the foreseeable future. The difference between a 4.5% mortgage and a 5.5% mortgage will not drastically impact demand for new homes (in my opinion).

    Attempting to time stock purchases based upon what the Fed is going to do will always be a difficult task. Since we do not yet know the size or scale of the tapering, it may be wise to slowly build a position rather than buy the full position ahead of a major announcement.

    -David Guarino
    Sep 17 11:31 AM | 1 Like Like |Link to Comment
  • Private Equity Investment In AV Homes Could Power Company Higher [View article]
    ConservativeOutperformer,

    Thanks for your comments, however the AV Homes of today is quite different (given the TPG investment and management change) then the AV Homes (Avatar Homes) of the past. Rather than spend time informing readers on where the company has been, I prefer to focus on where they are headed.

    Good luck to you.

    -David Guarino
    Jul 25 12:04 PM | 1 Like Like |Link to Comment
  • Even With Negative FCF, Apple Still Undervalued [View article]
    I agree with you that market sentiment is a very powerful force in the pricing of stocks. However over the long term I believe stock prices will ultimately follow earnings. Sooner or later the market will realize the value in AAPL.

    Thanks for your comments.

    -David Guarino
    Jul 9 11:40 AM | 1 Like Like |Link to Comment
  • Even With Negative FCF, Apple Still Undervalued [View article]
    No problem, thanks for the comments.

    -David Guarino
    Jul 9 11:16 AM | 1 Like Like |Link to Comment
  • When Inventory Becomes Sales, Toll Brothers Poised For Growth [View article]
    You make a good observation regarding the 10 year treasury however I believe this move in interest rates is just "noise". There are may investors who believe in a sustainable housing recovery (myself being one) and many who do not believe. Since we are in the early innings, any positive news or negative news is going to cause home builder stocks to become quite volatile. The level of interest rates is a perfect example of this. If mortgage rates went up by a few hundred basis points we may see home buyers put off making a purchase, thus hurting Toll Brothers. However what we witnessed a few weeks back was interest rates rise 50 basis points (I follow the 30 year treasury bond which is a better fit for mortgage rates). I don't believe that home buyers are going to pass on making a purchase because rates ticked up 50bps. Especially considering all the pent up demand for housing.

    Regarding the company's earnings, I would struggle to compare 2007 valuation levels with today's valuation levels. We are in a very different housing environment. From a technical standpoint you may have a case, but to me that is just "noise" as well. The fundamental growth story is intact for this company and I am a firm believer that stock prices will follow earnings, not chart patterns, over the long term.

    Thanks for your post.
    David Guarino
    Jun 11 02:03 PM | 1 Like Like |Link to Comment
  • Dick's Sporting Goods: A Healthy Future Ahead [View article]
    Derek,
    Thanks for taking the time to reply. You make excellent points regarding the Field and Stream brand. I think the F&S opportunity has the potential to be tremendous, however it will take years before this becomes meaningful to the bottom line. Since the majority of this company's sales come from Dick's Sporting Goods brand, I tend to focus more on these stores.

    As of the Q1 earnings release the company is planning on opening 45 stores throughout 2013; 40 Dicks, 1 Golf Galaxy, 2 True Runner, and 2 Field and Stream. Until CapEx spending makes a meaningful shift towards any of the later three brands, I think the Dick's brand should be the main focus.

    At the end of the day we are arriving at the same conclusion, bullish on Dick's Sporting Goods.

    -David Guarino
    Jun 10 08:49 AM | 1 Like Like |Link to Comment
  • Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
    While your data is important, I would also look at the National Association of Realtors home price affordability index which is hitting new highs. Something has to give and when both your metric and my metric are reaching new levels. I would argue that both of our data points suggest more individuals are going to be buying homes in the future.

    David Guarino
    Jan 29 04:15 PM | 1 Like Like |Link to Comment
  • Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
    You correct that $1.04 billion of land is categorized as inventory for future communities. However you are incorrect about them purchasing this prior to the housing crash. If you look back at earlier 10-k filings you can see that in 2008 land owned for future communities $819 million, in 2009 that decreased to $775 million. Additionally if you look at impairment charges during that period you will see that "land owned for future communities" was impaired by $404 million in 2007, $144 million in 2008, and $169 million in 2009.

    Using GAAP financial statements you cannot reverse impairment charges, so I would assume that land for future communities has been drastically written down (and then expensed properly). This also leads me to believe that the company sees opportunity and is now purchasing property which is why the inventory component of future communities has been increasing.

    David Guarino
    Jan 29 04:07 PM | 1 Like Like |Link to Comment
  • Don't Give Up On Coach Just Yet [View article]
    Stan,
    You make a very good point regarding historical price multiples. Given the current slowdown in North America the company may be deserving of this lower multiple.

    However my argument lies with the growth of China, other emerging economies and the Mens stores. If you begin to model out these segments and see the impact they may have on earnings in the years to come, one could argue that Coach is just taking a breather. Hence my reference to the "transition year", the company appears to be building itself for the future.

    Additionally, if competitors begin to fall out of style with consumers (as I feel they will), Coach stands to gain back that market share. The company has been around for decades and has proven its ability to be a lasting brand.

    Thanks for your comments.

    David
    Jan 29 10:20 AM | 1 Like Like |Link to Comment
  • What's In Store For Apple Investors In FY13 [View article]
    rich,

    First let me thank you for being the first to post a comment regarding my article and not your own thoughts on why Apple is great/sucks. You make a very good point about what 2014 and beyond may hold. I think the company can keep the earnings growing by large scale share repurchases. I know some may argue that this is not "organic" growth, but what else are you to do with such a large cash pile? The cash is becoming a drag on performance and given the extremely low valuation, it appears to be a rather favorable entry point.


    In the event the company needed cash to invest in other projects, the debt market would likely treat them very kindly given the pristine balance sheet and tremendous operating cash flow.

    Thanks for your comments,

    David
    Dec 20 01:03 PM | 1 Like Like |Link to Comment
  • Under Armour: An Investor's Guide [View article]
    Thomas,
    You make a good point regarding the low levels of operating cash flow. One point I would urge you to consider is the point on the business life cycle that Under Armour currently operates. They are still rapidly expanding and one characteristic of these companies can be lowered operating cash flows due inventory purchases and extending credit to new customers (a great way to promote your brand). Both of these situations apply directly to Under Armour over the past few years.
    Regarding your point about products manufactured overseas, I tend do invest based upon profitability, not product manufacturing location. I have never heard of a stock going down because they found a way to control costs.
    Nov 13 02:26 PM | 1 Like Like |Link to Comment
  • Beware Of eBay's Drop In EPS [View article]
    You make a great point about factoring in capital reserves. I certainly think that these should be taken into consideration when evaluating a company, but it should be noted that these are one time events and not a part of normal business operations. If I am buying a company today, I am concerned with their earnings power in the future. Skype will no longer add to the bottom line so I don't want to factor that into my projections. To analyze the growth trend of eBay's core businesses you need to strip out irregular income statement line items.
    Thanks for your comments and for pointing out the typo error, I will have that corrected.
    Nov 6 02:25 PM | 1 Like Like |Link to Comment
  • Green Mountain Coffee: Bet Against The Herd [View article]
    Coffee234,
    Thanks for the comments. As I mentioned above the line-up of coffee that Green Mountain distributes has a tremendous opportunity to reach various vendors (hotel/hospitality included). Starbucks will only be selling one brand, and that may turn some customers away.
    Sep 27 08:25 AM | 1 Like Like |Link to Comment
  • IBM: Portfolio Anchor Stock [View article]
    doc,
    Thanks for your comments. As I mentioned in the last paragraph in my article, if you want a higher growth stock, Apple would be the one for plus-sized returns. I think Apple is an great company to own and agree with you about the very low valuation.
    However it doesn't take an "otherwise educated so call analyst" to understand the benefits of diversification within your portfolio. If you are only investing in one stock, Apple, then don't be surprised to see your portfolio experience some serious volatility down the road. If you are looking to build a portfolio of high quality securities then maybe you should consider adding IBM to your mix.
    Sep 20 08:29 AM | 1 Like Like |Link to Comment
COMMENTS STATS
63 Comments
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