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Ray Merola  

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  • Alaska Air Continues To Hold Its Own [View article]
    Nice article, Stephen

    Well done. I'm a bit more sanguine on ALK prospects, based upon the company making $4.15 in 2015. Based upon prior airline up-cycles, the historic average 12.7x P/E could see a point or so expansion. Even using the straight 12.7x benchmark on next years' earnings indicates a $53 target price.

    In addition, the current 5.1x EV/EBITDAR is considerably below the industry 6x marker. Maybe some upside there as well.

    I'm also positive on the share repurchase plan, as noted in your article. The $650 million buyback represents about 10% of the shares outstanding at today's price.

    Long ALK.
    Aug 27, 2014. 01:11 PM | Likes Like |Link to Comment
  • Why Celgene Stock Is Still A Good Investment Opportunity [View article]
    Thank you, Arie, for another fine article. I appreciate your clean, easy-to-understand style.

    Celgene management projects the company will make $8.50 a share by 2017. The team has not missed any quarterly earning estimates in the last 3 1/2 years. While it is challenging to forecast "out year" EPS, management should be given credit for its good record meeting near-term expectations.

    A long-term, 20% growth rate is below current Street figures. If we accept this, a 20x P/E on operating earnings is reasonable. Indeed, the PEG ratio on the aforementioned premises is 1.0, not high.

    Therefore, a plausible argument for a 2-year target price could be $170 a share. The current price for CELG stock is $95.

    Long Celgene.

    Aug 26, 2014. 02:15 PM | 2 Likes Like |Link to Comment
  • Energy Transfer Rocks On... Reloads The Cannons [View article]
    Many thanks, jonk

    I'm a bit less sanguine on ETP. It holds most of the partnership assets, therefore has much higher capital requirements and hurdles. It's set up to be more of an income play. The current distribution yield is good, so for such income-oriented investors, I believe they are generally getting what they bargained for.

    At Energy Transfer, separating the LP from GP creates the disconnect. ETP is for income, ETE is for capital appreciation. Combined, these 2 have provided investors some good returns of late.

    AMZ stews everything in together for multiple MLPs. Without doing the math, I suspect that equal parts of ETE and ETP have beat the averages.
    Aug 25, 2014. 12:02 PM | 2 Likes Like |Link to Comment
  • GM Rated Rotten, $31 Price Target, As It Puts The 'Brakes' On Russia [View article]
    Orange Peel,

    It would have been helpful to point out to readers that through the first-half 2014, GM-Russia sales accounted for only 2% of the company's total vehicle sales worldwide?

    If the article focused upon a view that the Chinese economy will fail in 2015; taking down General Motors with it, such a view could be a bit more compelling.

    Russia just doesn't move the needle for GM.
    Aug 25, 2014. 11:50 AM | 10 Likes Like |Link to Comment
  • Halliburton: 10% Decline Is A Solid Entry Point [View article]
    Well stated, Bret

    I have my guns loaded at $65 with October cash-secured puts. I've been long for several years at much lower prices. Lightened a little at $65 and $70; looking to buy back on a drop.

    HAL still has plenty of gas in the tank.
    Aug 22, 2014. 05:08 PM | 3 Likes Like |Link to Comment
  • Alaska Air Group: Look, I'm Flying! [View article]
    Thanks ebprice for reading.

    I had not thought about Alaska Air being a major beneficiary of northern arctic expansion. That certainly does make sense. Effectively, the carrier has little if any real arctic competition. I wonder what scenario would provide enough business to move the needle? Very interesting comment.

    Regarding American, it's a very good airline. Most airlines have good runways ahead: DAL, Spirit, and LUV look strong, too. As noted, AAL has shown an enormous run.

    I rolled with ALK for several reasons: 1) better balance sheet and financial profile, 2) superior customer service and loyalty models, 3) clearer/cleaner line-of-sight with unions and stock option exercises with management, 3) less "buzz;" by this I mean Alaska Air doesn't get the press or analyst attention of some of the "hotter" airlines. Taking a longer view, I see this as a net positive.
    Aug 22, 2014. 05:01 PM | Likes Like |Link to Comment
  • Alaska Air Group: Look, I'm Flying! [View article]
    vizZir

    Thank you for the kind words.

    Your observation about Delta (and the resulting comments by Alaska Air Group CEO and senior staff in response) was a major consideration when selecting ALK as my airline stock pick.

    I like the industry in general, and there's certainly some other good ones out there. However, Alaska Air stock appears to have a better current price point; I concur largely because of fears about Delta Airlines kicking them around in Seattle.

    Short-term disruptive? Likely yes. Long-term negative draw-down? I am not convinced.
    Aug 21, 2014. 11:30 AM | Likes Like |Link to Comment
  • Alaska Air Group: Look, I'm Flying! [View article]
    Thanks John, for your comments

    While preparing this article, similar Alaska Air Group experiences were shared with me by others who frequent the carrier. It was a factor in my investment decision. So was a very informative discussion with Investor Relations. It was pointed out that Alaska Air isn't a low-cost carrier, though its fares are often low-cost. The company chooses to be recognized as providing superior safety, service, and "hassle-free" flying. I found these data points to be most helpful when finalizing my investment decision.

    Best-of-breed regional carrier? Yes.

    (Though Southwest Airlines may be right there, too).
    Aug 21, 2014. 07:49 AM | Likes Like |Link to Comment
  • Alaska Air Group: Look, I'm Flying! [View article]
    Thank you, markone, for the encouragement. I appreciate that.

    Indeed, airlines have not been my thing. Like so many other investments, there's a "season" for them; and just perhaps the airline stocks are having their season in the sun.

    My thesis is largely based upon simple fundamentals: many of these companies are making real cash. In the case of LUV and ALK, the balance sheets are actually pretty darn good. The runway ahead for this group is strong, contingent upon a continued gradual U.S. economic recovery.

    My recent flights have been 1) full, 2) less ticket discounting, 3) more "extras" for food, baggage, etc. Not the best for customers, but better for investors.

    In the case of ALK, the customer service is clearly superior.
    Aug 20, 2014. 07:12 PM | 1 Like Like |Link to Comment
  • Alaska Air Group: Look, I'm Flying! [View article]
    jimtssl

    I considered a number of airline stocks, whittling it down to Delta, Spirit, Southwest, and Alaska Air. All have good fundamentals, though I believe ALK was generally superior overall.

    The next step is to determine price versus fair value. Here Spirit and Southwest appeared a bit rich; though I was surprised insofar as the market has placed nearly double the 10-year normalized PE on LUV versus ALK, despite Alaska Air actually having a far better EPS growth rate.

    ALK shares, courtesy (or regrets) to Delta's decision to try to move in on Seattle, has worried some investors. This provided the potential opening to find a great company, in a hot industry, at a discount.

    In any event, many of the airlines look good. Certainly, Southwest is a best-of-breed carrier, too. However, when evaluating these stocks, I was far more interested in where I believe they are going versus where they have been.
    Aug 20, 2014. 03:45 PM | 1 Like Like |Link to Comment
  • 2014 Strategies And Stocks: Mid-Year Review, Part 2 [View article]
    Many thanks, DAG1996, for the kind words. Indeed, your S.A. articles provide insight that I otherwise I may have missed without reading. Keep up the good work.

    Glad I may be of some assistance.
    Aug 20, 2014. 11:49 AM | Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Mid-Year Review, Part 2 [View article]
    Many thanks, DAG1996, for the kind words. Indeed, your S.A. articles provide insight that I otherwise I may have missed without reading. Keep up the good work.

    Glad I may be of some assistance.
    Aug 20, 2014. 11:48 AM | Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Mid-Year Review, Part 2 [View article]
    Many thanks, DAG1996, for the kind words. Indeed, your S.A. articles provide insight that I otherwise I may have missed without reading. Keep up the good work.

    Glad I may be of some assistance.
    Aug 20, 2014. 11:48 AM | 1 Like Like |Link to Comment
  • Energy Transfer Rocks On... Reloads The Cannons [View article]
    jackmaster20

    Of course, I have no special insight; but my instincts tells me that Energy Transfer will not expand the S/S business west of the Rockies. The expertise to run that part of the organization comes from the old Sunoco hands, and that company didn't operate in the West.
    Aug 19, 2014. 11:04 AM | Likes Like |Link to Comment
  • Should Rising Interest Rates Doom Utilities As An Investment? [View article]
    Well done, Gary

    History can enlighten us for the future. I believe this was the primary purpose of your article, and it succeeded.
    Aug 19, 2014. 08:36 AM | Likes Like |Link to Comment
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