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  • Strong Growth To Continue For Teekay Tankers
    Wed, Feb. 25 TNK 1 Comment

    Summary

    • Teekay Tankers reported stellar 4Q14 results on the back of high spot market exposure for its marine oil tankers.
    • Based on the spot booking trend for 1Q15, the company's current quarter results are likely to be better than 4Q14.
    • I expect Teekay Tankers to trend higher over the next 3-4 months as lower oil prices keep spot market rates high on the back of demand from China.
  • The Fed's Stance Is Positive For Equities
    Wed, Feb. 25 ATW, CVE, SPY 2 Comments

    Summary

    • Yellen's comments before the congressional committee indicate that no interest rate hike is likely in June 2015.
    • I expect interest rate hike only towards the end of 2015 or in early 2016. This will keep the momentum positive for equities.
    • Inflation, not employment, remain the key concern for the Fed and I believe that a stronger dollar will also keep interest rates at artificially low levels.
  • Reaffirm Buy Rating For Ensco From Credit Perspective
    Tue, Feb. 17 ESV 6 Comments

    Summary

    • Ensco has a strong order backlog for 2015 that ensures majority funding of 2015 capital expenditure of $2 billion through operating cash flows.
    • Ensco has a cash and undrawn credit facility buffer of $3.35 billion and this provides a strong buffer.
    • With minimal debt maturity in 2015, Ensco's cost of debt is likely to remain the same and I expect debt reduction to come in 2016.
  • Buy Indian Markets For Coming Rally
    Mon, Feb. 16 EROS, IBN, INDA 9 Comments

    Summary

    • A potential 50 basis points interest rate cut over the next 2 months is the first upside trigger for the Indian markets.
    • A likely transformational budget coming up on February 28, 2015 is the second upside trigger for the Indian markets.
    • India's broad index can potentially deliver 10% to 15% returns over the next 2 months.
    • India focused ETF's look attractive for near-term as well as long-term investing.
  • Avoid Hercules Offshore Through 2015
    Sat, Feb. 14 HERO 10 Comments

    Summary

    • Hercules Offshore is likely to underperform through 2015 given lower utilization and a lack of long-term contracts.
    • The company's EBITDA margin has compressed significantly in Q4 2014, and I expect lower EBITDA margin through 2015, impacting the company's cash flow generation.
    • A high leverage of 8.7 in depressed market conditions adds to the negatives for Hercules Offshore.
  • Buy Rating For Atwood Oceanics From A Credit Perspective
    Sat, Feb. 14 ATW 2 Comments

    Summary

    • Atwood Oceanics has a healthy credit metrics and I expect the stock to move higher on strong cash flows in 2015 and 2016.
    • The company's capital expenditure for 2015 and 2016 is likely to be funded by internal cash flow and the company also has an additional cash buffer of $581 million.
    • A contract for one new rig to be delivered in September 2015 can accelerate the company's current rally.
  • Maintaining My Bearish View On Patterson-UTI Energy
    Fri, Feb. 13 PTEN 1 Comment

    Summary

    • Patterson-UTI Energy is likely to trend lower in 2015 as the challenging market condition for onshore drilling is likely to sustain through 2015.
    • Sharp decline in term-contracts has continued in 2015 and this will impact the company's revenue and EBITDA margin (as rigs are stacked).
    • Patterson-UTI remains uncertain on the outlook for 2015 and I believe that the bearish in terms of contract cancellations will extend to Q2 2015 and Q3 2015.
    • A potential "U-shaped" oil price recovery will extend the pain for Patterson-UTI Energy.
  • Credit Analysis For Transocean And Conclusions
    Fri, Feb. 13 RIG 19 Comments

    Summary

    • Transocean's credit metrics are likely to worsen in FY15 and FY16.
    • The company's debt is likely to increase in FY15 and FY16 due to high capital expenditure.
    • A low contract coverage for FY15 in challenging market conditions will impact the EBITDA, EBITDA margin and operating cash flow.
    • While Transocean is unlikely to default on debt, the likelihood of weak credit metrics backs my view to avoid the stock.
  • Reasons To Remain Bullish On U.S. Equities
    Thu, Feb. 12 ITA, SPY, VCR 3 Comments

    Summary

    • US economic resilience sustains as the divergence between US and other developed market economic activity widens.
    • Low sovereign yields will attract investors to equities and US equities are the best among all developed market equities from a fundamental perspective.
    • Global liquidity glut will help markets move higher backed by strong consumption driven growth in the US economy as consumer sentiment touches a 11-year high.
  • Reasons To Remain Bullish On Gold
    Thu, Feb. 12 GLD, ABX, NEM 4 Comments

    Summary

    • While demand for investments remained weak in FY14 as compared to FY13, Central Banks have accelerated the pace of buying gold as reserves.
    • I remain bullish on a bounce back in gold prices in an environment of expansionary monetary policies and competitive currency devaluation.
    • Physical gold remains the best investment option followed by gold ETFs and certain gold mining stocks.
  • Cenovus Energy: Revised Investment Plan Signals Bottom For The Stock
    Thu, Feb. 5 CVE 18 Comments

    Summary

    • Cenovus Energy has revised its capital budget plan for FY 2015, and the current guidance is at $50 per barrel oil assumption for cash flows.
    • Even with the lowering of the capital budget, Cenovus Energy's production guidance for FY 2015 remains largely the same.
    • A potential stake sale in the coming months can trigger upside for Cenovus Energy.
    • After the release of revised investment guidance, Cenovus Energy has moved higher by 14.6% and I believe that the stock has bottomed out.
  • I Remain Bullish On DHT Holdings After Strong Results
    Thu, Feb. 5 DHT 1 Comment

    Summary

    • DHT Holdings reported robust 4Q14 results and I expect the stock to trend higher in the coming months.
    • High exposure to the spot markets will ensure strong revenue and EBITDA growth in FY15.
    • DHT Holdings debt coverage remains comfortable even after surge in debt in FY14.
    • I expect the company's dividend to increase in the coming quarters as well after an increase from $0.02 per share to $0.05 per share in 4Q14.
  • Maintaining My Bearish View On Helmerich & Payne After Results
    Wed, Feb. 4 HP 6 Comments

    Summary

    • Continued declines in term contracts and active rigs is negative for Helmerich & Payne's earnings in the coming quarters.
    • If oil prices remain low for 1H15, I expect further cuts in oil and gas company investments. This will trigger further idle rigs and margin compression for the company.
    • Even if Helmerich & Payne has limited downside from current levels, any upside over the next six months is unlikely.
  • MakeMyTrip: Strong Results To Take Stock Higher
    Tue, Feb. 3 MMYT Comment!

    Summary

    • While MakeMyTrip reported losses for 3Q15, the overall results were strong and the stock is an attractive buy at current levels.
    • Higher advertising cost and one time cost related to acquisition depressed the bottom-line. However, advertising has positively impacted the transactions growth.
    • Company has provided a strong guidance of 30% to 31% growth for revenue less service cost for FY15 and this should take the stock higher.
  • Why U.S. GDP Growth Will Remain Robust
    Mon, Feb. 2 CMG, SPY, VCR 6 Comments

    Summary

    • US GDP growth was relatively lower in 4Q14 at 2.6% compared to 3Q14 growth of 5.0%. However, GDP growth is likely to remain robust in 2015.
    • Personal consumption expenditure will continue to drive GDP growth with expectations of higher wages growth further triggering spending upside.
    • US disposable income has been increasing while the savings rate is on a decline. This is a positive trend from a consumption growth perspective.
    • Consumption based themes will continue to do well in 2015 and I remain bullish on US stocks.
  • GasLog Partners' Distribution Yield Increases To 7.4% On Strong Earnings
    Fri, Jan. 30 GLOP 7 Comments

    Summary

    • GasLog Partners reported its 4Q14 results and announced a 16% increase in quarterly cash distribution.
    • The LP's remaining contract coverage of 4.2 years with BG Group provides stable cash inflow and cash distribution visibility.
    • I expect more drop-downs from GasLog in 2015 and this will further boost the company's cash distribution.
    • GasLog Partners targets a cash distribution growth CAGR of 10% to 15% and this implies a potential forward (2016) distribution yield of 8.4%.
    • The debt agreement with Citibank ensures an extended debt maturity profile and a prudent quarterly interest and debt payment.
  • Dollar Will Keep The Fed Very Patient
    Thu, Jan. 29 ITA, SPY, VCR 1 Comment

    Summary

    • The FOMC meeting press release still have no certain view on the timing of policy firming.
    • The Fed has however indicated that it is flexible on either side in terms of the time for policy tightening.
    • I believe that a strong dollar is the single biggest factor that will push policy firming towards 3Q15 or in 2016.
    • US equities are likely to remain positive as the policy firming is delayed. Further, strong economic data and liquidity from euro zone QE backs upside view for US stocks.
  • Caterpillar: Maintaining My Bearish Outlook After Results
    Thu, Jan. 29 CAT 3 Comments

    Summary

    • Caterpillar will continue to move lower or sideways on bearish revenue and EPS guidance for 2015.
    • If oil prices remain lower through 2015, Caterpillar is likely to revise its guidance on the downside and that can result in further stock decline.
    • Besides the oil price factor, China's weak growth will continue in 2015 and will imply that equipment sales trends remain depressed.
    • A strong dollar is also likely to impact Caterpillar's earnings in 2015.
  • I Prefer FedEx Over UPS For 2015
    Wed, Jan. 28 UPS, FDX 26 Comments

    Summary

    • UPS has reported that it anticipates lower than expected results for 4Q14 and the stock slumped on the news.
    • I expect 2015 to remain challenging for UPS and management has indicated continued margin compression for the year.
    • Operating margin for FedEx has been expanding and will continue to expand in 2015 on the back of a modern fleet.
  • Is $200 Oil Possible?
    Tue, Jan. 27 CPG, REXX, VDE 5 Comments

    Summary

    • OPEC’s secretary-general is of the opinion that oil can surge to $200 per barrel on lack of investment in the oil and gas sector.
    • I believe that even if oil prices trend back to $80 to $100 per barrel, the sector will witness renewed strong investments.
    • Oil can potentially go to $200 per barrel on geo-political tensions or currency devaluation. However, such an extreme scenario is unlikely in the foreseeable future.
    • Oil can surge back to $100 per barrel once economic activity picks up globally. Low per capita consumption of oil in China and India will drive consumption growth.
    • My opinion is to gradually accumulate quality oil and gas stocks for strong returns over a 3-5 year investment horizon.
  • Crescent Point Energy: A Sustainable 9.5% Dividend Yield For 2015
       • Tue, Jan. 27 CPG 3 Comments

    Summary

    • Crescent Energy provides a dividend yield of 9.5% for 2015, which is sustainable even in the current energy price environment.
    • The biggest producing assets for Crescent Energy have a low break-even and this makes the company profitable even without considering hedges.
    • A drilling inventory of 7,650 locations provides long-term growth visibility.
    • Internal cash flow can fund 2015 capital expenditures along with dividend payments.
    • The stock bottomed out on December 15, 2014 and has been trending higher. I expect the upside to sustain.
  • Rexx Energy: Worth Considering At Current Levels
       • Fri, Jan. 23 REXX 22 Comments

    Summary

    • Rexx Energy surged by 12.8% after the company provided an update on production, liquidity and hedging for 2015.
    • I expect Rexx Energy to trend higher on a fully funded 2015 investment plan, 33% production growth estimate and a well managed balance sheet.
    • Rexx Energy also has significant long-term potential based on the company's resource potential estimate and the fact that the company has one of the lowest F&D cost.
  • Antero Resources: Robust 2015 Guidance Will Take The Stock Higher
    Thu, Jan. 22 AR 3 Comments

    Summary

    • Antero Resources has provided a production growth guidance of 40% for 2015 amidst a challenging environment in the energy sector.
    • With 94% of estimated natural gas production hedged for 2015, Antero Resources expects an EBITDAX of $1.4 billion in 2015 as compared to an EBITDAX of $1.1 billion in 2014.
    • The company's low-cost assets make the stock an attractive buy even from a long-term perspective.
    • A 70% stake in Antero Midstream Partners is likely to be a long-term value creator. In 2015, Antero Resources is likely to have a cash flow of $100 million from AM.
  • Challenging Environment To Continue For McDonald's
    Thu, Jan. 22 MCD 9 Comments

    Summary

    • McDonald's will post its worst sales performance in 3 decades and the challenging environment is likely to continue for the company in 2015.
    • While McDonald's has embarked on a "seven step plan" to turnaround sales, the impact of the new initiatives remains to be seen.
    • McDonald's growth in other big markets like China remains a big challenge with local players making it big backed by PE funding.
    • Investors can wait for a sustained turnaround in sales growth before considering exposure to the stock.
  • 3 Promising India Focused ETFs
    Thu, Jan. 22 INCO, INXX, SCIF Comment!

    Summary

    • India will overtake China's GDP growth rate in 201 according to IMF and I believe that Indian equities are positioned for a multi-year bull market.
    • Infrastructure is India's biggest challenge as well as the biggest opportunity and I believe that the sector will perform well amidst lower interest rates in the foreseeable future.
    • India's consumption story has just commenced and with very favorable demographics, India's consumption is likely to grow at a robust pace making the consumer related ETF attractive.
    • While the focus has been on large companies in the recent rally in Indian markets, the small companies hold immense long-term potential and the small-cap ETF looks attractive.
  • Preferring Infosys Over Wipro For The Long-Term
    Wed, Jan. 21 INFY, WIT 1 Comment

    Summary

    • Infosys is likely to outperform Wipro over the next 2-3 years on a consistent basis.
    • Inorganic growth and innovation will help Infosys gain an edge over Wipro and also best the industry growth rate.
    • I also expect Infosys to see margin expansion in the next 2-3 years as the company pitches for more innovation driven projects.
    • Investors can consider fresh exposure to Infosys at current levels with the company likely to grow at a robust pace of 15% to 20% in the coming years.
    • Investors alsocan consider switching from Wipro to Infosys as the latter will outperform in terms of stock upside.
  • US And India Remain Bright Spots In IMF Growth Outlook
    Tue, Jan. 20 IBN, INDA, INFY 1 Comment

    Summary

    • IMF has cut global GDP growth forecast by 0.3% since its last outlook. However, the growth forecast for US remains robust amidst gloom for other developed markets.
    • China's GDP growth is likely to trend lower in 2015 and 2016 while India's GDP growth will trend higher. India is likely to beat China's GDP growth by 2016.
    • I remain positive on the US and Indian equity markets for 2015 and I am of the view that India can potentially be the best performing equity market in 2015.
  • Why Large Scale Bond Purchase By ECB Is Inevitable
    Tue, Jan. 20 SPY, USDU, UUP Comment!

    Summary

    • A large scale bond purchase program seems inevitable due to the big debt refinancing wall for PIIGS in 2015.
    • The deflation and weak GDP growth factor also support the stimulus view. Chief Economist at Markit expects 4Q14 Euro-zone GDP growth at 0.1%.
    • The dollar will continue to rally along with strength in US Treasuries. Among risky asset classes US equities will move higher back by liquidity support.
  • More Pain In Store For China Equities
    Tue, Jan. 20 GXC, MCHI, SPY 8 Comments

    Summary

    • China's index has plunged after big trading firms were banned from margin-trading and I believe that this is a beginning of a renewed downside for China equities.
    • The unintended consequences of easy money has been an abnormal rise in Chinese equities amidst negative economic sentiments and policymakers are looking to arrest this rise.
    • Economic indicators point to continued gloom and equity markets are likely to correct based on the economic direction.
    • My view is to avoid ETFs that have large exposure to the financial sector, industrial sector and the real-estate sector.
  • Diamond Offshore Fleet Status Report Has Significant Concerns
    Tue, Jan. 20 DO 8 Comments

    Summary

    • Diamond Offshore's latest fleet status has some major concerns and I maintain my bearish view on the stock.
    • Diamond Offshore's contracts with Petroleos Mexicanos have a high probability of cancellation as the latter embarks on cost cutting due to big losses.
    • The company's North Sea rigs are also under threat of low utilization and potential contract cancellations as lower oil prices force significant cost cutting measures.
  • Implications Of Accelerating Decline In U.S. Rig Count
    Sun, Jan. 18 CHK, ECA, HP 5 Comments

    Summary

    • US rig count slumped by 74 rigs for the week ended January 16, 2015 and I expect the decline in rig count to continue.
    • While some US oil and gas companies will remain profitable at $50 per barrel oil, the incentive to increase production or investment is low from an EBITDA margin perspective.
    • Onshore drilling rig suppliers will continue to suffer in the coming quarters due to lower rig utilization and lower day rates.
    • US consumer sentiment has hit a 11-year high and robust economic resilience implies a strong dollar that is also negative for oil.
  • Barrick Gold: An Interesting Pick For The Second Half Of 2015
    Sat, Jan. 17 ABX 13 Comments

    Summary

    • Barrick Gold, with strong fundamentals, a prudent financial strategy and a low all-in sustaining cost, is an attractive stock to consider.
    • A liquidity position of $6.7 billion gives the company strong financial flexibility for investment-driven growth when gold prices resume an uptrend.
    • Barrick Gold is positioned to generate approximately $5 billion in annual operating cash flows if gold does move higher by 30% from current levels.
    • The stock is worth accumulating at current levels, and accumulation can be accelerated toward the second half of 2015.