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Check Point Software Technologies: Calling Activists As Cash Balances Continue To Increase
- Check Point's balance sheet is bloated with cash, with net cash & investments amounting to almost a third of the company's market capitalization.
- The company's operating margins and cash flow generation are higher than any of its competitors, including Microsoft.
- Combination of steady, but uninspiring revenue and EPS growth and continued growth in cash balances has created an attractive entry point for activist investors.
- Check Point has a long track record of share buybacks; since 2006 the company has bought back over 20% of its shares.
HealthEquity: A Niche Pure Play On Healthcare Reform
- HealthEquity offers investors a unique and focused opportunity to profit from the ongoing implementation of the Affordable Care Act.
- Solid market position and product offerings have led to double-digit revenue and profit growth.
- Scalable business model has resulted in expanding EBITDA margins, with further increases to occur in the next several years.
- Pullback from post-IPO highs offers an attractive entry point for long-term investors.
Ambarella: Finding Gains Beyond GoPro
- A focus on the company's relationship with GoPro has obscured the growth potential of Ambarella's other segments.
- The company is leveraged to multiple global trends that are driving the adoption of newer and more complex cameras, and the chips that power them.
- Continued improvements in operating leverage are flowing through to the bottom line, driving double-digit EPS growth.
- Volatility in shares of GoPro can be used to initiate positions if they lead to a decline in shares of Ambarella.
Bed Bath & Beyond: Gains To Come Beyond 2014
- Despite double-digit cash flow growth, shares of Bed Bath & Beyond trade well below its retail peers.
- Headline results have been pressured by internal investments, which are set to begin yielding dividends in 2015.
- As a percent of sales, Bed Bath & Beyond generates far more operating cash flow than any of its direct peers.
- The company has a long-term track record of returning capital to shareholders, with over a third of the company's shares bought back in the past decade.
Best Buy: A Solid Buy As The Recovery Continues
- Shares undervalued on both an absolute and relative basis as the retailer's turnaround continues.
- Despite negative headlines, balance sheet remains clean, with over $4 per share in net cash & investments.
- The Renew Blue restructuring plan is yielding double-digit growth in operating income and EPS.
Qantas: Investing In The Recovery Of Australia's Leading Airline
- Qantas' underlying fiscal 2014 performance is stronger than headlines suggest.
- Erroneous narratives that its issues have been profitable for Virgin Australia has dampened sentiment.
- Balance sheet is stronger than headlines suggest, with ample liquidity.
- Industry-leading loyalty program is undervalued by investors.
- Changes in Australian government policy have opened door to new foreign investors.
Arris Group: Finding Profits In Your Cable Box
- The acquisition of Motorola Home has been very successful, resulting in double-digit growth in operating income and EPS.
- Post-earnings selloff on unfounded concerns surrounding bookings has created an attractive entry point.
- Continued balance sheet deleveraging will lead to increased ability to return capital to shareholders.
- Despite year-to-date gains, shares continue to trade at modest multiples, both on an absolute and relative basis.
DTS Inc.: A Mundane Business, With Exciting Profits
- Margin-rich royalty revenues result create business with material operating leverage.
- Partnerships with majority of leading consumer electronics companies create tailwinds as network-connected electronics sales continue to grow.
- Clean balance sheet with over $2 per share in net cash.
Infinera: As Optical Networking Grows, So Too Does The Upside
- Infinera's leading position in optical transport networking is not being adequately reflected in its stock price.
- Historically erratic financial results and concerns of Infinera's position as a mid-size company have hampered its ability to command an appropriate valuation.
- Forward growth is far above that of its peers, when measured by revenue, EBITDA, and EPS, but shares do not trade at a commiserate premium.
- Clean balance sheet, with almost $2 per share in net cash and ample opportunities for capital deployment.
CUR Media: A New, And Potentially Worthy Challenger To Pandora & Spotify's Crown
- Although its streaming service has yet to launch, CUR Media offers an intriguing alternative to Pandora and Spotify.
- The company is being guided by blue-chip veterans from the entertainment industry, including the founder of MTV and the former CEO of RCA Records.
- As Spotify moves closer to an IPO, shares of CUR Media may begin to rise alongside it.
- While risky, shares of CUR Media have high potential as well; investors should consider if their portfolios can accommodate such an investment.
Flextronics: Solid Free Cash Flow Deployment And Cost Controls To Drive Further Upside
- At over 12%, Flextronics' free cash flow yield is the highest in its peer group.
- Tight cost controls are set to underpin expanding operating profit and margins.
- Flextronics has demonstrated a commitment to returning capital, having bought back almost 10% of the company in fiscal 2014 alone.
- The company's upcoming May 21 analyst and investor day will likely feature further updates on capital allocation and cost controls, which may drive further upside.
- Diversity of customer base may limit ability for short-term momentum rallies, but offers long-term stability.
American Airlines Group: As The Integration Continues, Solid Upside Ahead
- Despite leading the domestic airline industry in forward EPS growth, American sports the industry's lowest P/E multiple.
- Hundreds of millions of dollars in interest savings are set to flow through to the company's bottom line.
- American now has a lower cost structure cost than either Delta or United, yet receives little credit for it.
- Through Chapter 11, leverage has been reduced to industry-average levels.
- Conservative synergy targets create room for possible increases to the company's forecasts.
Symantec: With Activists And PE Firms Calling, The Time To Buy Is At Hand
- Recent turmoil at Symantec has created an attractive entry point.
- Hiring of JPMorgan as an advisor implies management believes activist investors and private equity firms are a threat.
- Symantec has no tools with which to defend itself against activist shareholders or private equity firms.
- Sum-of-the-parts valuation suggests sizable undervaluation.
- Analyst Day in late May and selection of permanent CEO may act as catalysts for the stock.
Lifetime Brands: A Mundane Company, With Exciting Profit Potential
- Lifetime's mundane business belies its profit potential.
- The company expanded gross margins during the key holiday quarter, alongside rising revenues and EPS.
- With insiders owning 22% of outstanding shares, capital is being deployed in an accretive fashion.
- Continued moves to enlarge brand portfolio and international presence will increase Lifetime's addressable market.
G-III Apparel Group: Unjustified Discount Belies Solid Execution And Opportunities Ahead
- G-III managed to not only grow revenues, EPS, and EBITDA in the holiday quarter, but posted rising gross margins across all segments.
- Despite solid performance in fiscal 2014, shares trade at meaningful discounts to peers.
- With management owning over 16% of outstanding shares, clear incentive to deploy capital in an accretive fashion.
Yahoo: As Alibaba Goes Public, Value Of Underlying Business Will Begin To Shine
- Net of its stakes in Alibaba, Yahoo Japan, and its cash, Yahoo's core business is being valued at less than 2x operating cash flow.
- CEO Marissa Mayer and CFO Ken Goldman have made material investments to turn Yahoo around, and they are beginning to pay off.
- Once Alibaba becomes public, investor focus will likely shift to Yahoo's core business, which is set to improve further in 2014.
UniCredit: With Dirty Laundry Now Aired, Underlying Recovery Can Come Into Focus
- Beneath the surface of a record net loss, underlying performance at UniCredit is beginning to improve.
- Continued steps to strengthen the balance sheet will further boost investor confidence.
- Sizable rally after disclosure of record net loss shows investors are pleased with management's decision to air UniCredit's "dirty laundry".
Nexstar Broadcasting Group: In 2014, Its Star Will Continue To Shine
- Sizable pullback has created an attractive entry point in NXST.
- Balance sheet is stronger than a cursory glance suggests.
- Dividend increase in early 2014 suggests confidence in future cash flows.
- Kate Spade & Company: The Crown Jewel Begins To Shine, For Investors And Bidders
- Sonus Networks: Connecting Shareholders To Double-Digit Returns In 2014
- Air Canada: Finding Value With Our Friends To The North
- SoftBank: For Exposure To Alibaba, Look To Tokyo, Not Sunnyvale
- RF Micro Devices: A Return To Growth Set To Reward Shareholders
- Juniper Networks: Solid Upside Ahead From Internal And External Activists
- ING Group: A Recovery In The Making To Drive Double Digit Upside
- First Citizens Banc: Sleepy Banking, Meaningful Profits
- Crédit Agricole: Farming Double-Digit Returns At France's Largest Bank
- TIM Participações: As The Chess Pieces Move In Europe, Double-Digit Upside In Brazil
- In Defense Of Prada: Parsing Q3 Results To Address Slowdown Concerns
- Regions Financial: Double-Digit Upside As Southern Recovery Continues
- Meaningful Upside Ahead As More And More Consumers Join The Devil In Wearing Prada
- Volaris: The Spirit Airlines Of Mexico Is Poised To Soar