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Emerson Radio: Update, Going Neutral
- Emerson Radio was a buy because of the likelihood of growth and profits in a company trading below cash.
- However, the latest earnings report compromised both growth and profits.
- As such, I have turned temporarily neutral on Emerson Radio.
Philip Morris: The Dividend Will Eventually Be At Risk
- Philip Morris provided reduced guidance.
- While the reduced guidance is attributed to temporary factors, I believe there is a structural problem at work.
- The structural problem are e-cigarettes, they are disrupting the traditional cigarette industry.
- There are further reasons to believe dividends and buybacks at Philip Morris have peaked already.
Quick Consequences From Obama's Freeing Of Crude Exports
- Allowing crude exports has consequences for several assets.
- Most of the consequences flow from a tighter Brent/WTIC spread.
- I identify some winners and losers from this situation.
A Tale Of Unbridled Optimism
- There seems to be excessive optimism regarding what Apple's upcoming iWatch can do.
- This is borne by the reaction to my former article. Expectations for the iWatch have gone irrational.
- Excessive optimism is dangerous for the share price.
Inflation Is Rearing Its Ugly Head
- There are some signs inflation is showing up, after years of money printing.
- This is happening both in the U.S. and globally.
- With money printing being the main factor driving markets upward, inflation is probably the main roadblock towards the rally continuing.
An iWatch Cannot Move The Needle Much
- There's tremendous expectation regarding the iWatch.
- However, I show that the iWatch cannot move the needle for Apple.
- This is so even if we use rather optimistic assumptions, including making Apple the worldwide leader in the watch space, which is rather unlikely to happen.
How Price-Sensitive Are Amazon.com's Customers? A Tale Of Two Tablets
- We have doubts regarding Amazon.com's customers' price sensitivity.
- Clearly, Apple customers are not that price sensitive. When Apple launches a new product, it becomes its hottest seller, even though it is more expensive.
- As for Amazon.com, we have reason to believe things can worsen in reverse. The article presents proof of why I say this.
- All in all, this price sensitivity does not bode well when Amazon.com is trying to sell a mid-tier phone at high-end prices.
Lakes Entertainment: There's Hidden Value And Optionality
- Lakes Entertainment has several undervalued assets in its balance sheet.
- Valuing these properly, even using conservative assumptions, gives us a notion of the possible upside.
- Furthermore, there are even assets that have been written down to zero and present positive optionality.
- On the downside, there are no immediate, obvious, catalysts. This might mean the stock, while undervalued, can behave as "dead money."
Electromed: Possible Catalyst For A Positive Re-Rating
- Electromed sells a competitive medical device meant for airway clearance.
- This medical device is analogous to what Baxter delivers in the peritoneal dialysis market, only for airway clearance.
- Electromed has launched a new model and is seeing accelerated revenue growth. Electromed is also near attaining profitability.
- It seems to me that Electromed shares will re-rate higher as the market sees the growth and likely profitability for a seller of an high-margin medical device.
The Hail Mary Phone
- Amazon.com's Fire Phone offers mid-tier specifications for a high-end price.
- It thus requires ignorance of the smartphone market, to be bought.
- The phone would be very profitable if it sold in high numbers.
- However, the most likely outcome is for the phone to be a dud given how absurdly mispriced it is.
Saratoga Investment Corp: Potential Catalyst For A Revaluation
- Saratoga Investment is a BDC making loans and managing a CLO in the U.S.
- Right now, Saratoga Investment trades at a significant discount to its peer group.
- I believe this discount stems from the fact that Saratoga Investment does not pay a quarterly dividend, something which seems likely to change soon.
- Once Saratoga Investment starts paying a quarterly dividend, the stock is likely to eliminate its present discount, implying roughly 41% upside for the shares.
Why Doesn't Bohai Pharmaceutical Go Up?
- Bohai is a traditional Chinese pharma company.
- Its stock is supposedly trading at close to 1 times earnings, and its revenues show decent growth.
- Yet, as long as an issue I identify in the article isn't cured, the stock remains highly speculative.
Tesla's Q2 Goes Down To The Wire As Well
- Delivery numbers for May have arrived for Tesla's main markets.
- These numbers continue to tell a story of stagnation.
- Still, with the opening of the U.K. and China markets, Tesla is likely to still be able to meet Q2 deliveries guidance.
- A different story seems to be forming for Q3, Q4, with yearly guidance requiring re-kindled growth in Tesla's main -- and stagnated -- markets.
Is Intel Impossibly Leaky?
- Intel unexpectedly raised revenue and gross margin guidance.
- This brought with it a feeling of "dejá vu".
- A cursory look at the past shows that in many similar instances, Intel seemed to have anticipated the surprise.
- This pattern has historically compromised any excess returns from buying after the positive surprise.
This Is Amazon.com's D-Day And The Alibaba Troops Are Disembarking
- Alibaba is about to open a store in the U.S.
- Selling through Alibaba will be massively cheaper than selling through Amazon.com, so the suppliers will have much higher profits or much lower prices when doing so.
- 3P selling through Amazon.com is Amazon.com's most profitable segment, having a threat to that segment is a major threat to all of Amazon.com.
Here's What Amazon.com's Smartphone Will Do
- Amazon.com's smartphone doesn't hold much mystery.
- In the best case scenario Amazon.com's smartphone will get about as much market share as BlackBerry.
- Yet, Amazon.com went up two BlackBerries with all the speculation.
- In the end, Amazon.com's smartphone is likely to be a negative for Amazon.com's profitability.
Emerson Radio Corp. Update
- A catalyst did not materialize.
- However, things are still evolving favorably for Emerson Radio Corp.
- Two risks were eliminated, and the company is close to start showing revenue growth again.
- All in all, I put the stock's value at $3.70, a 111% upside from its recent quote.
Cannabis Capital Corp: You Can't Make This Up
- The marijuana bubble produced its share of crazy booms and busts.
- It also led many companies to include "cannabis" in their names.
- Most of these companies' shares have already imploded, but one stock I have identified hasn't.
- This stock will drop 90-95% with 99% certainty, one only needs to look at its balance sheet to know why.
Delticom Update: The Amazon.com Of Tires Is On Track, Though Seemingly Not
- Delticom reported Q1 2014 earnings.
- These are clouded by the Tirendo acquisition, a pro-forma inclusion of Tirendo in Q1 2013 already shows significant improvement.
- Taking into account the European replacement tire market's size, we can estimate a TAM for Delticom.
- With further assumptions, we can derive significant potential for Delticom's share price.
E-Cigs Are A Different Industry From Traditional Tobacco
- The e-cig market is intrinsically different from traditional cigarettes.
- Thus, while Big Tobacco might dominate entry-level e-cigs, it has no hope of dominating the e-cig market.
- The e-cig market will be fragmented and consist of highly-customizable devices and e-liquids.
- Furthermore, there are now signs that the e-cig market is entering the mainstream. The impact on Big Tobacco is likely to accelerate quickly.
Sears Earnings Offer Us Our First Glimpse Of Lands' End First Quarter
- We can try to estimate Lands' End's Q1 from the earnings just reported by Sears.
- This exercise shows that Lands' End is for the most part stagnated.
- However, conducting the exercise shows other factors which mean Lands' End will likely be an interesting investment.
Sears: The Good, The Bad, The Ugly
- Sears actually had something good to say. Same-store sales improved dramatically.
- But these came at the cost of lower margins.
- And Sears is burning cash dramatically as well. Sears is still on track for an ugly outcome.
Callaway Golf: Concentrated In The Worst Possible Space And With Financial Risk
- Dick's Sporting Goods painted a horrid picture for the golf market.
- Callaway Golf is a pure-play on golf, so stands to be penalized by this development.
- Things are even worse, because Callaway Golf carries significant debt and is not generating much in the way of EBITDA, so a deteriorating golf market might impact its solvency.
Alloy Steel International: Founder's Death Will Have Significant Implications
- Alloy Steel International was tremendously cheap at 0.7 times EV/EBITDA.
- Yet, it had a major problem: nepotism.
- That's what makes yesterday's death of its founder so relevant. The death of the founder increases the likelihood of the company being sold or being managed neutrally towards minority interests.
- Either way, it's likely that the death of the founder is going to make the share price trade several times higher in the next few months.
India Is Probably A Sell Right Now
- India is incredibly loved right now after the Modi rally.
- Yet, as I show in this article, there might be reasons to doubt the Indian market at this point.
- The reasons include sentiment, valuation and fundamentals.
The One Amazing Thing About Sears
- Sears keeps spinning off assets.
- This is unusual. Usually creditors would impede these moves.
- As Sears spins off more valuable assets, the likelihood of bankruptcy increases, and the recovery for creditors in the event of bankruptcy decreases.
Tesla's April Sales Begin Flowing In
- Data regarding Tesla's April deliveries are flowing in.
- When we compare this data to the previous quarter, it is below the average monthly sales registered then, even though the delivery pipeline was supposed to be full.
- However, at the same time, the April deliveries exceed January's, so in that regard, the data are inconclusive.
Enphase: Strong Story, Strong Growth And Decent Valuation Make For Substantial Upside
- Enphase is a beneficiary both of the general trend towards solar energy, and the trend within solar energy towards microinverters.
- Furthermore, while Enphase has done well in Q4 2013 and Q1 2014, Q1 2014 was actually penalized by bad weather.
- Enphase is also exhibiting strong operational leverage, which makes profitability likely in the short term and strong earnings growth likely right afterwards.
- All of this is available at a sensible valuation, with earnings estimates having 100% upside for 2015, and the stock probably following on the same magnitude.
Apple Is Acquiring A Fad - Not Quality - And That Is Troubling
- Apple is acquiring Beats for $3.2 billion.
- A check of Beat's history shows it likely that it's mostly just slapping a celebrity name into an OEM product.
- So Apple is buying a fad, not audio quality. Apple could have easily bought audio quality instead, so buying a fad is troubling.
- The acquisition itself is not really material for Apple's prospects, but the decision behind it is troubling and seems to show Apple is on the wrong track.
Tesla's Customer Deposits, North American Demand And The Will To Believe
- The thesis that U.S. deliveries for the Model S peaked remains in force.
- This is so in spite of Tesla talking about 10% sequential growth in North American net orders.
- This is also in spite of growth in customer deposits.
- This fact means that Tesla's 2014 35,000 deliveries estimate is in danger. Unless China/UK/Japan spring a large surprise, such an estimate would probably require growth in the U.S.
Soros And The Second Coming Of The Dark Fiber
- As with the dotcom bubble, today we're seeing an investment boom in technology, part of which can be explained by Soros' theory of reflexivity.
- This means that as the bubble goes away, which seems to already be happening, a good part of that technology demand will also go away.
- In the present case, the "dark fiber" of today seems to be cloud services, so Rackspace and Amazon.com are particularly vulnerable to this dynamic.
Independence Holding: Prime Beneficiary Of The Self-Insurance Trend
- Obamacare leads to an incentive for smaller firms to use self-insurance more extensively.
- Using more self-insurance leads to more demand for medical stop-loss insurance.
- Independence Holding is a large provider of medical stop-loss insurance and thus a prime beneficiary of this trend.
- Furthermore, Independence Holding is taking other measures which should lead to higher profitability, and there's a sign that the strategy is working, leading to strong growth in profitable business.