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Crew Energy Has More Upside Potential
- In the last 14 months (since my coverage), Crew Energy has moved higher by 76%.
- The company's upside potential is not over as it plans the next big stage of growth through non-core asset disposition.
- Big capital expenditure program with high operational success rate are the critical success factors for Crew Energy.
- Financial flexibility is strong for the planned expansion activity.
AGCO Has A Great Future
- AGCO, with its production innovation, is well positioned to grow steadily in the agriculture sector.
- Low crop yield in emerging countries along with high level of harvest related losses are opportunities for AGCO.
- Food demand is expected to grow by 60% by 2030 as compared to 2012 and this will keep demand for the company's products stable.
Adecoagro Has Strong Upside Potential
- Adecoagro is undervalued based on the market valuation of its farmland.
- An increase in crushing capacity by March 2015 will boost the company’s growth and will take the stock higher.
- Continued sale of farmland assets at premium over appraised value will keep financial flexibility high and help fund core operations.
Seadrill: Remain On Sidelines For Events To Unfold
- Seadrill has slumped in the recent past and I expect more correction in the stock.
- Negative impact from sanctions on Russia is a looming negative trigger.
- Seadrill needs to cut dividends as its payout exceeds the OCF in relatively challenging market conditions.
- In the long term, Seadrill remains a good bet, provided industry conditions improve.
RigNet Remains A Value Creator
- RigNet has moved higher by 86% since I covered the stock in June 2013 and the rally is likely to continue.
- The company continues to increase its market share in the remote communication industry through superior services.
- Strong growth in the offshore oil & gas industry is the company’s key revenue driver and will remain the growth driver over the next few years.
- RigNet still looks attractive considering a likely earnings growth of 54.4% in 2015.
Indicators Of Overvalued U.S. Equities
- The forward PE indicates overvaluation in US markets as compared to historical averages.
- US equities are overvalued even in terms of cyclically adjusted PE ratio and Tobin's Q ratio with a likely downside of 10%-15%.
- High level of margin debt indicates high speculative activity and this is another sign of near-term peak in markets.
Eros International Will Deliver Strong Growth And Returns
- Eros International is the global leader in Indian filmed entertainment and well positioned to grow in an under-penetrated market.
- Theatrical content is likely to be the biggest growth driver for the company followed by television content and digital content.
- Eros International has an edge over peers with a comprehensive library of movie rights and with high financial flexibility.
Positive Sentiments And Stock Upside To Continue For GasLog
- GasLog has moved higher by 87% since my coverage and more upside is likely.
- Delivery of new vessels in 2015 and 2016 will spur revenue and EBITDA growth.
- High revenue visibility make cash inflow certain and strong industry fundamentals will help revenue visibility remain strong.
Investment Amidst Unusual Movement In Asset Classes
- There has been an unusual synchronized move in global asset classes in 2014.
- Treasuries can rally more in the short-term while equities can correct by 10%-15% before further rally.
- Dollar index surge in the recent past is a sign of relative contraction in global liquidity.
Transocean Partners: 5.1% Distribution Yield And Strong Growth Potential
- Transocean Partners has a 5.1% distribution yield, which is likely to grow over the next two years.
- The company is undervalued on a relative valuation basis, and the stock still has upside potential even after a 30% upside since IPO.
- The omnibus agreement with Transocean allows for revenue and EBITDA growth under long-term rig contracts.
Air Lease: Credit Perspective For Equity Investors
- Air Lease has a debt of $6.3 billion, but the company can comfortably service debt and leverage is not a worry.
- The company's loan-to-value is less than 100% providing scope for further leveraging.
- Most of the new aircraft delivery over the next 2-3 years is leased and will result in easy debt financing.
A Good Time To Buy Wal-Mart
- Wal-Mart is likely to do well in the seasonally strong quarters coming up.
- Consumer confidence is at its highest since the crisis and festive season consumption should increase.
- E-commerce for Wal-Mart is just starting to get bigger and holds immense long-term potential.
MakeMyTrip Will Continue To Create Value
- MakeMyTrip has moved higher by 126% since my recommendation and the stock will continue to trend higher.
- The company serves a fast growing and under-penetrated market with market leadership being an added advantage.
- Higher sales mix of hotels & packages as compared to air ticketing is boosting margins as MakeMyTrip moves towards profitability.
The Failure Of Expansionary Monetary Policies
- Money Velocity is at a 50-year low, indicating sluggish real business activity.
- Expansionary monetary policies have done little beyond helping the financial system out of crisis.
- Policy change and favorable business environment for infrastructure, manufacturing and small businesses is the need of the hour.
Will Employment Factors Prevent An Interest Rate Hike?
- The headline unemployment paints a positive picture, but there are several other employment related concerns.
- SNAP Participants are increasing along with an improving economy, indicating that things are worse than what headline numbers suggest.
- Record number of people not in labor force and 30-year low employment population ratio are some other major concerns.
Talking Gloom Amidst The Boom
- Equity markets are near record highs, but there are warning signals that should not be ignored.
- Global debt levels are higher than that of 2007 and leverage can translate into another crisis.
- Geo-Political tensions have not significantly impacted equities, but have the potential to spook markets.
- China debt crisis still remains to unfold in my opinion.
Ensco Looks Attractive At Current Levels
- Ensco looks attractive at current levels on a standalone basis and relative to Seadrill.
- The company will continue to increase dividends at a robust pace as new rigs become operations.
- Low leverage and attractive valuations are the other positive factors for Ensco.
No Reason To Remain Bearish On Gold
- The correction in gold and bearish sentiments is a good buying opportunity.
- Expansionary monetary policies and geo-political tensions are gold price supportive.
- Additionally, gold mining stocks are trading at attractive valuations and are a value buy.
Strong Growth Drivers For Freeport-McMoRan
- Amidst a slowdown in China, Freeport-McMoRan has underperformed in the last two years.
- Freeport-McMoRan capital expenditure cycle is picking-up and it indicates stronger growth in the future.
- Significant investment in next 3 years in oil & gas assets will boost the EBITDA margin.
- Resumption of exports from Indonesia is another stock upside factor.
Correction, Not Crash, Is What I Expect
- Market valuations are stretched, but a crash in unlikely.
- Expansionary monetary policies will continue to support markets.
- A 15%-20% correction would not be a surprise after a five year bull market.
Fed Likely To Implement Negative Deposit Rates
- The Fed is likely to follow the ECB and introduce negative deposit rates.
- The excess reserves of depository institutions with the Fed has surged to $2.5 trillion, and the Fed pays an interest of 0.25% on excess reserves.
- A likely introduction of negative deposit rates can spur a further rally in stocks and bonds.
Tata Motors Still Has Upside Potential
- Tata Motors has surged by 48% in the last one year and the rally is likely to continue.
- Jaguar Land Rover will continue to be a major revenue and margin driver for the company with continued sales growth.
- Government change in India and a likely shift in monetary policy will support local growth for cars and commercial vehicles.
Caterpillar Is An Avoid At Current Levels
- Continued slump in the resources industry sales will keep Caterpillar's revenue and EPS growth muted.
- China's economy is expected to grow at a sluggish pace over the next two years according to IMF and this will impact Caterpillar.
- Based on the forward PE valuation and current EV/EBITDA valuation, Caterpillar is expensive and a correction is likely.
Markets Headed For Steep Correction
- US markets can potentially correct by 15%-20% in 2014.
- A record high margin debt indicates excessive levels of speculation in the market.
- The US IPO market is flooded with new paper and valuations signal that the end of party might be in sight.
- Seadrill Looks Attractive After Correction
- The Fed Needs To Continue Its Expansionary Monetary Policies
- Zooming Monetary Base Supporting Equity Markets
- Head NV Will Continue To Head North
- Adecoagro: An Excellent Long-Term Farmland Play
- Teekay Tankers: Bearish Outlook Affirmed With Significant Headwinds
- Medifast: Steep Growth Target Can Be Company's Undoing
- Brazil Hospitality: Gearing Up For 2014 And 2016