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  • Carnival: Reiterating Price Target After A Strong Start To 2015
     • Wed, Apr. 1 CCL 3 Comments

    Summary

    • Almost 40% drop in fuel expenses has led to a strong start in fiscal 2015 for Carnival.
    • Bookings remain healthy across Carnival's global markets, guidance remains strong.
    • Success of Wi-Fi at Sea program in driving customer satisfaction and onboard spend should not be overlooked.
    • 40% growth in the Chinese cruise market will benefit Carnival, given its leading position within the market.
    • Reiterate price target of $59.71, equivalent to 25% upside.
  • Kulicke & Soffa Industries: A Bloated Balance Sheet Masks True Value
     • Wed, Apr. 1 KLIC 5 Comments

    Summary

    • KLIC's balance sheet is pristine, but bloated with cash; even when accounting for repatriation-related taxes, over 33% of the company's market capitalization is in cash.
    • Management has gone on record in saying that Q2 2015 guidance is conservative.
    • Ongoing recovery in revenues and profits highlights modest multiples; KLIC trades at less than 6x fiscal 2015 EBITDA, and less than 8.5x EPS.
    • Situation is ripe for the involvement of activist investors; one has already called for share repurchases.
    • Lack of sell-side coverage and perceived hoarding of cash are among factors that have led to a depressed valuation.
  • HealthEquity: Raising Price Target After A Banner Year, More Upside To Come As Health Reform Continues
     • Sat, Mar. 28 HQY 1 Comment

    Summary

    • Raising price target to $28.17 after a strong finish to fiscal 2015.
    • Industry data suggests that HealthEquity is continuing to take market share within the HSA industry.
    • While King vs. Burwell may present a headline risk, the role of HSA's in the U.S. healthcare system is unlikely to be affected.
    • EBITDA margins continue to climb as the company continues to scale the business.
    • Fiscal 2016 guidance may prove to be conservative.
  • Sanmina: Sitting In The Sweet Spot Of Contract Manufacturing
     • Thu, Mar. 26 SANM 2 Comments

    Summary

    • Dramatic increase in opportunities to deploy capital are being overlooked by the market.
    • Dramatic declines in net debt have led to steep falls in interest expenses and increased financial flexibility.
    • Margin gap relative to peers continues to narrow, will all but disappear by fiscal 2016.
    • Price target of $29.06 may seem low, but it fails to account for optionality provided by share repurchases or further M&A.
    • Management focus is likely to shift in 2015 from deleveraging to deploying capital.
  • QLogic: Restructuring And Share Gains Continue, Further Upside In 2015
       • Thu, Mar. 19 QLGC Comment!

    Summary

    • 32% return since our initial October 2014 recommendation, well above the returns of the S&P 500.
    • No evidence yet that the acquisition of Emulex by Avago will be a negative for QLogic.
    • Continued market share gains in Q3.
    • Analyst day in May will likely act as a catalyst for shares.
    • Raising price target to $16.45 from $14.30.
  • Carnival: Declining Fuel Costs To Lift Profits In 2015 And Beyond
       • Thu, Jan. 29 CCL 18 Comments

    Summary

    • Far too little has been written about the benefits of lower oil prices to the global cruise industry, which is led by Carnival.
    • Carnival is the market leader within the cruise industry on both a global basis and in the industry's most important growth market: China.
    • Carnival has the industry's strongest balance sheet on a net-debt-to-EBITDA basis.
    • Growth in yields set to continue into 2015 alongside double-digit falls in fuel expenses.
    • Assuming current oil market conditions continue, pressure will likely increase on Carnival to restructure/abandon its fuel derivative portfolio, upside potential of this move not currently in forward estimates.
  • TiVo: A Forgotten Business, A Solid Opportunity
       • Fri, Jan. 16 TIVO 9 Comments

    Summary

    • Despite record levels of revenue, subscribers, EBITDA, and record margins, TiVo has largely been forgotten by the market.
    • With over 40% of the company's market cap in net cash, ample room for further capital deployment.
    • Shares trade at an almost 30% discount to peers on an EV/EBITDA basis, despite superior EBITDA growth.
    • Clear path to further service revenue growth and a return to positive net TiVo-owned subscriber additions.
  • RF Micro Devices: As The Transformation To Qorvo Nears Completion, Continued Exposure Is Warranted
       • Dec. 23, 2014 QRVO 10 Comments

    Summary

    • Despite a 200% return since our initial recommendation, continued exposure to RF Micro is warranted.
    • Sustained increases in gross margin and tight cost controls have led to triple digit operating income and EPS growth.
    • Nearly 100% increase in fiscal 2015 consensus EPS estimates over the past 10 months has dampened the rise in RF Micro's 2015 P/E multiple.
    • The global transition to 4G LTE technology remains in the early stages, with ample room for further growth.
    • As RF Micro transforms into Qorvo, continued exposure to the shares is warranted.
  • Air Canada: Despite Triple-Digit Returns, Undervaluation Remains
       • Dec. 10, 2014 ACDVF 2 Comments

    Summary

    • Despite returning over 100% since our initial February 2014 write-up, shares of Air Canada continue to offer an asymmetric risk-reward proposition.
    • Continued progress on the company's restructuring is apparent in Air Canada's Q3 results, with rising revenues and expanding margins.
    • Landmark contract with pilots provides long-term cost certainty and peace between management and the company's most important labor constituency.
    • Dramatic increases in estimates have helped suppress multiple expansion at Air Canada since our February write-up.
  • DTS: Strong Audio Trends Continue, Lifting Price Target
       • Nov. 18, 2014 DTSI 1 Comment

    Summary

    • Although shares have returned almost 44% in under three months, further upside remains.
    • Strong Q3 results and raised 2014 guidance show that DTS is continuing to execute well.
    • Weakness in internal controls has been remedied.
    • A series of new licensing agreements and acquisitions have further expanded the DTS ecosystem.
  • Investment Technology Group: A Profitable Investment In The Global Capital Markets
       • Nov. 11, 2014 ITG Comment!

    Summary

    • Despite a 3-decade presence on Wall Street, few investors are likely to have heard of ITG.
    • ITG has a clean balance sheet, with over 16% of its market capitalization in net cash.
    • Increasingly diverse revenue base, from both a geographic and business perspective is helping drive double-digit growth in operating profits and EPS.
    • Management has a solid track record of returning capital to shareholders; since 2009, over 20% of shares have been repurchased.
  • Polycom: As The Recovery Continues, Share Gains To Come
       • Oct. 30, 2014 PLCM Comment!

    Summary

    • Ahead of a return to revenue growth in 2015, Polycom continues to restructure its operations, leading to expanding operating margins and double-digit EBIT growth.
    • Balance sheet remains solid, with over 20% of the company's market capitalization in net cash.
    • Latest market share figures show that Polycom is gaining share, further gains likely in Q3 2014.
    • Despite further restructuring potential, shares continue to trade at modest multiples.
  • Infinera: Raising Price Target As Performance And Potential Grow
       • Oct. 25, 2014 INFN 1 Comment

    Summary

    • Solid Q3 results and Q4 guidance demonstrate that Infinera is navigating uncertainty in the networking sector.
    • Continued cost discipline and long-term gross margin expansion is positioning the company for 2015 EPS growth approaching 100%.
    • Growing cash balances, with potential for capital deployment in 2015.
    • Raising price target to $15 as solid execution and guidance warrant upward revisions to multiple.
  • QLogic: A Logical Buy For 2015
       • Oct. 22, 2014 QLGC 8 Comments

    Summary

    • Despite clear signs of progress in its turnaround, shares of QLogic remain undervalued on both an absolute and relative basis.
    • Signs of stabilization in the Fibre Channel market and continued growth in Ethernet sales have allowed the company to expand its market share.
    • Despite gross margin pressures, tight cost controls have helped minimize the impact to operating margins.
    • Pristine, debt-free balance sheet, with almost 30% of market capitalization in cash.
  • Check Point Software Technologies: Calling Activists As Cash Balances Continue To Increase
       • Oct. 18, 2014 CHKP 5 Comments

    Summary

    • 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
       • Oct. 4, 2014 HQY 14 Comments

    Summary

    • 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
       • Sep. 29, 2014 AMBA 2 Comments

    Summary

    • 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
    Sep. 29, 2014 BBBY 10 Comments

    Summary

    • 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
       • Sep. 16, 2014 BBY 1 Comment

    Summary

    • 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
       • Sep. 6, 2014 QUBSF Comment!

    Summary

    • 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
       • Sep. 3, 2014 ARRS 11 Comments

    Summary

    • 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
       • Aug. 22, 2014 DTSI 7 Comments

    Summary

    • 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
       • Aug. 19, 2014 INFN 7 Comments

    Summary

    • 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
       • Jun. 3, 2014 CURM 1 Comment

    Summary

    • 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
       • May. 15, 2014 FLEX 5 Comments

    Summary

    • 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
       • Apr. 29, 2014 AAL 58 Comments

    Summary

    • 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
       • Apr. 23, 2014 SYMC 2 Comments

    Summary

    • 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
       • Apr. 16, 2014 LCUT 15 Comments

    Summary

    • 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
       • Apr. 8, 2014 GIII 4 Comments

    Summary

    • 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
    Editors' Pick • Mar. 31, 2014 YHOO 25 Comments

    Summary

    • 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
       • Mar. 27, 2014 UNCFF 1 Comment

    Summary

    • 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
       • Mar. 15, 2014 NXST 14 Comments

    Summary

    • 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.