Seeking Alpha
View as an RSS Feed

Rodolfo Avalos  

View Rodolfo Avalos' Comments BY TICKER:
Latest  |  Highest rated
  • Update: International Game Technology Acquisition [View article]
    I'm puzzled by this.. It has been announced that the closing of this transaction will occur on Apr 7, 2014 at an effective price of $18.02 per IGT share ($14.3396 in cash plus 0.1819 shares of the NewCo * $20.2379 (this is the calculated "Gold Share Trading Price" - basically the final GTECH price translated from Euros to US$), so the total gives you $18.0209.. why does IGT currently trade at $17.68 - $17.70?????
    Apr 6, 2015. 02:37 PM | Likes Like |Link to Comment
  • First Solar: Heading In The Right Direction [View article]
    I'm with you on the TetraSun situation, I did notice an analyst asked about it during the CC and management didn't provide an answer, which can only tell you that they are behind on their plans. As for the capacity increase, it's not that they are maxed out but they are planning on that because they are anticipating increased demand in 2015 as a result of the ITC expiration and they want to be able to capture as much as possible. This is not a guarantee (as they don't have this increased capacity yet committed), they just want to be prepared.
    Dec 8, 2014. 09:18 AM | Likes Like |Link to Comment
  • First Solar: Heading In The Right Direction [View article]
    I Currently hold a large position in FSLR, however I'm trying hard to find reasonable and convincing arguments to keep me holding this name. For instance, on the efficiency front, FSLR's panels are way behind the cSi counterparts, specially that of SunPower, and they have a long way to go to catch up. On the cost side, they are not the most cost-efficient compared to JinkoSolar. Utilization-wise, I'm worried they were not maxed out in the last quarter when several competitors are operating at full capacity. Yes they do have a best-in-class balance sheet, but it might not be sufficient if they can't become a leader in the short to mid term in at least one of the areas I just mentioned. Some of my hope lies in the TetraSun acquisition, so at least they can try to compete in the residential DG market fairly soon. Also, although the book-to-bill ratio remains at or slightly above 1, many of those new opportunities (still far from being realized) are at MUCH lower gross margins. Management expressed some concern in the CC about some competitors being overly aggressive with their pricing, hence forcing FSLR to play a cautious role competing for those projects (meaning staying on the sidelines as to not engage in opportunities with disadvantageous numbers, even money losing ones). I'm not overly concerned with the whole yield co situation, as they don't really need that at this point, but although the future of solar is bright, we can't know for sure if some excess capacity is being brought back online by inefficient competitors (most of the solar companies disappointed investors in their latest quarter). All in all, heat is closing in on FSLR and they better move faster and deliver in execution or else.. My doubt is whether to keep being invested while all this happens or get out, wait and see they can execute. The only strong argument in favor of the stock is the book value per share being currently higher than the stock price, thus providing some support. But if competition intensifies and solar demand experiences a bit of a slowdown, things can get uglier for FSLR before they get better. Hard to decide..
    Dec 8, 2014. 12:25 AM | 3 Likes Like |Link to Comment
  • Update: International Game Technology Acquisition [View article]
    Some of the calculations included in the table don't seem right to me. I noticed them since the previous article but forgot to mention it. The calculation should be GTech price * 0.1819 (stock part) + 13.69 (cash part). So if you take some of those GTech prices the end result for IGT is not correct.
    Dec 4, 2014. 12:53 AM | Likes Like |Link to Comment
  • Skechers Q3 Earnings Will Beat Estimates [View article]
    Guidance is what did it for Skechers's price drop after earnings announcement. Yes they delivered a superb quarter but guidance did not please investors (because this stock is currently valued as a growth stock and matching guidance with consensus is not a good thing for growth stocks) and many investors probably took the opportunity to take some profits off the table. After all, this stock has appreciated considerably very fast. There's nothing wrong with people taking profits, and this is when opportunities arrive for new investors to come in or to continue building an existing position. I wouldn't be surprised if SKX tests the 200 DMA ($44.16 as of today) on a market's pullback/scare. Selling some put options at the $45 strike price for Jan 15 seems like an excellent play, or buy the stock at $50 or below.
    Oct 24, 2014. 12:58 PM | 1 Like Like |Link to Comment
  • Whole Foods Is Taking A Beating, But Here's Why You Should Expect Future Growth [View article]
    Where's Gary J's comments in this article? I miss him..
    Jul 31, 2014. 01:49 PM | Likes Like |Link to Comment
  • Update: International Game Technology Buyout [View article]
    Horrible earnings for IGT on the latest quarter. The only "bright" spots are the social gaming revenue increase and the costs containment, but sales are plummeting hard. Be satisfied with the $18.25/share bid from GTech. I'm playing this stock thru options betting that the deal will go thru and the final price will be $18.25. Let's see..
    Jul 29, 2014. 04:44 PM | Likes Like |Link to Comment
  • The Demise Of Whole Foods Is A Fallacy [View article]
    It is important to think this through. The main argument pro-Whole Foods is that its loyal base of customers will not ever switch to competitors because besides the organic food they sell, WFM also provides an experience. A WFM shopper supposedly will never trade it down for a Wal-Mart. While I don't disagree with that premise, it's a fact that many of WFM's customers do not necessarily care much about how expensive their food is. However, there's only a limited number of people that falls into this category; as they continue to grow and expand in the US, their target starts to spread out to other classes, specifically those that do care about differences in prices when competitors offer similar but less expensive products. This translates into a margin compression down the road, even if they continue growing, but their profitability might diminish as nothing is ever static, things change and the dynamics of customers' preferences can change in a blink. I personally used to shop at WFM religiously for the last 8 years, but at one point I started to notice some of the products I buy in different stores at lower prices and started making comparisons that ultimately resulted in me rarely going to Whole Foods nowadays. I never thought I could stop being that loyal to the store given how much love I professed to this grocer in the past. Valuation-wise, considering this likely trend (and especially given the fact that the inequality gap continues to widen, having less people falling in the category of those who don't really care much about the price - there's only a limited number of high-mid to upper class people that can shop at WFM in any given time) in the mid future, should result in a margin compression in WFM's share price. I'm not sure that the current negative trend is something that will continue, but it's most likely that this situation will play out to the downside as a result of their continued growth. Even in most european countries, people are more conscious of prices on their groceries. Health has no price, that's true, but in certain classes it does, and it's the first thing that people trade off. In addition, we are living in rich times, with a very flexible Federal Reserve. That is not going to last and nobody knows what will happen later on when things are not that loose. The risk/reward ratio is leaned towards the risk side, in my opinion. Good luck to WFM shareholders on this Quarter!
    Jul 29, 2014. 02:37 PM | Likes Like |Link to Comment
  • Yingli Green Energy: This 40%-Loser Is A Terrific Buying Opportunity [View article]
    The humongous debt of this company makes it a prime candidate to go bellyup at the first sign of industry's downturn, which we may or may not be close to it, but it's almost guaranteed given that they haven't reached profitability yet and they continue to incur expansive capex. Good luck to their shareholders..
    Jul 23, 2014. 09:13 AM | 1 Like Like |Link to Comment
  • Chipotle Mexican Grill: Blurred Quarterly Results And Risks On The Horizon Suggest Overvaluation [View article]
    CMG has always been overvalued.. that doesn't mean that you shouldn't invest in it. The problem with that overvaluation is that CMG is constantly pulling future returns to the present, and nobody has any idea when this will possibly stop and reflect a more down-to-earth valuation. Although the stock has appreciated MASSIVELY over the years, the risk/reward ratio always leans toward the risk side. The best way to play this stock is not to invest in it all at once, but gradually. As long as you like the business, you should "dip your toe in the water" at different periods of time, but never a FULL position. This way if the stock reverses and you still like the business (ie fundamentals) you give it a shot at a more decent valuation to keep building your position. Eventually you either end up with massive gains starting out from a smaller position, or your losses are not devastating and you can still average down your entry price (again, provided the fundamentals continue to be good, which is KEY).
    Jul 22, 2014. 03:12 PM | Likes Like |Link to Comment
  • It's Always Darkest Before The Dawn: Why Vivus Could Double In Three Months And Triple In Twelve [View article]
    To the author, can you take the other side and outline the risks associated to VVUS based on what you know? What you think CAN go wrong?... An objective analysis from the other side of things would validate many of your points here and help us understand the risks. Good investing is about risk management. Thx
    Mar 3, 2014. 09:18 PM | 1 Like Like |Link to Comment
  • Will Teva Pharmaceuticals Overcome Its Patent Cliff Worries? [View article]
    Where were those profits reflected in the balance sheet?
    Nov 13, 2013. 12:35 PM | Likes Like |Link to Comment
  • Teva Pharmaceuticals: Copaxone's Upcoming Expiration Continues To Depress Its Current Valuation [View article]
    This is the type of news that provide WONDERFUL opportunities to accumulate more stock.. You have to look at this longer than just a few months. Teva does have a substantial pipeline of products coming their way; there will be more demand for generics in the future; they do a GREAT job at filing first for many of the drugs that go off patent (hence getting the 180-days exclusivity), and all the fears about Copaxone are already priced in the stock. Any CEO will understand that the strategy for this company must remain the same: cut costs, continue to focus on R&D, make more strategic and smaller acquisitions and leverage the company's operational expertise. At this point, TEVA is slowly digesting the excessive number of pricey acquisitions and the Copaxone patent loss, but that poisoned food is almost out of the system.
    Oct 30, 2013. 03:26 PM | 2 Likes Like |Link to Comment
  • Teva's Several Billion Dollar NTE Opportunity Largely Overlooked [View article]
    I believe the shares have found a bottom. This was confirmed by the fact that shares didn't fall significantly after the news of the Copaxone's patent expiration broke out, and in fact they keep making higher lows since they bottomed at the end of 2012. However I also don't expect too much of an appreciation until further news from the generic Copaxone come to light or if the generics business materially improves.
    Aug 12, 2013. 01:41 PM | Likes Like |Link to Comment
  • Don't Fall For The Hype On SolarCity [View article]
    "As with the other Elon Musk business, SolarCity doesn't appear to have a real path to profits. The company spent more on operating expenses during the last quarter than it produced in revenue. A business building scale at the cost of short-term profits might actually be a wise move. The real question though is why investors are willing to pay up for such a business that hasn't proven out the business model. Typically such concepts don't end so well for those being sold such a business plan. Investors won't wait forever for profits that the company gets farther away from each report."

    I think you are missing entirely the business model here. SolarCity is making big investments upfront in exchange for a steady stream of payments for 20 or more years. This is very similar to how a house mortgage works, but they are financing 100% of the cost of the system so that costumers are even more appealed to it and they can accelerate growth (and for now you can consider the ITC as the "down payment"/"equity" a house buyer would have to put up to buy a house). As more consumers sign up, the cash inflows will increase and at one point (not very far I'm sure) will be enough to cover/finance new systems and spread the fixed part of the operating costs among a wider base. This is the typical path of any company trying to achieve economies of scale. There will be a default rate, like in any set of mortgages. There's a reason why Congress is trying to consider these solar leases/PPAs as REITs. They would be pretty stable and safe for many years to come.

    Now to address another concern of yours, the potential in the market is there to reach this point, and it will happen sooner rather than later. I agree with you that the stock price is at this point way ahead of itself, but eventually earnings/cash flow will catch up. As SolarCity's CEO said during the conference call, you can bet they have enough room to prove their business model:

    "Lyndon Rive

    So we have what I call 12 main states and two small other states, that’s 14. We are content with where we are right now. The market is so big, we could meet our growth targets for the next 10 years just focusing on one state. I mean it's such a big market. So as our cost come down, and cost of retail electricity increases, we'll continue evaluating new markets. We are looking at new markets and might open up one more new market this years, but it's still (inaudible)."
    May 14, 2013. 09:48 PM | 4 Likes Like |Link to Comment
COMMENTS STATS
114 Comments
60 Likes