PRO articles cover stocks that fly under most investors' radar screens.
Chemtura: 2015 Update
- AgroSolutions deal has been finalized and the company recently completed a $300MM tender offer for its stock. We believe that these share repurchases will continue.
- Missteps in IEP during the back half of the year look to be turning, as a competitor recently took price increase in bromine.
- Our 2-3 year price target is $40, representing ~70% upside.
Pier 1 Imports: 2015 Update
- Pier 1 has been executing in-line with expectations, so we have decided to provide our updated analysis on the company for interested readers.
- On the latest earnings call, the company stated that in Q4, the company will be a net closer of stores, confirming our store rationalization plan thesis.
- We have provided pro-forma projections and sensitivity analysis to let readers make informed decisions.
- Our 2-3 year price target is $27, representing ~80% upside.
La-Z-Boy: Update After Quarterly Earnings
- LZB is facing industry-wide weak traffic, but the conversion rate is good.
- The company is launching a new e-commerce site, has a successful launch of its Urban Attitude line, and is accelerating the pace of its real estate strategy.
- The short-term could be weak, but the company is making all the right moves to win in the long-run.
American Eagle Outfitters: An Update After Quarterly Earnings
- AEO recently reported quarterly earnings, which sent shares higher.
- Sales were weak, and guidance was muted, but strong gross margins and better guidance for gross margins helped the stock.
- The company gave great detail around its store economics and real estate strategy.
- The Aerie business looks to have bottomed.
- The company will continue to invest for growth, especially internationally.
The Fresh Market: An Update After Quarterly Earnings
- TFM reported earnings on Thursday night, sending shares higher in the aftermarket.
- Commentary was weak, and the move seems more to due with high short interest.
- The business model seems to now be in shift, especially from a real estate perspective.
Quantum Fuel Systems: Review After Major Announcements And Quarterly Earnings
- QTWW chose to walk away from its work with Agility Fuel Systems in order to have flexibility with new customers.
- Growth prospects sounds good, but commentary on capacity has been weak for three consecutive quarters.
- One potential area of upside is the company's work with GM on the Impala and light-truck CNG programs.
Ideal Power: Review After Quarterly Earnings And Recent Announcements
- IPWR signed a multi-year purchase agreement with Sharp Electronics.
- The company's hybrid converter has been launched.
- There are several multi-billion dollar industries in which PPSA can be disruptive.
UQM Technologies: Update After Quarterly Earnings And Management Meeting
- After recent earnings and management meeting, we have come away more bullish on the opportunity in China.
- The passenger car business is not progressing, which we believe to be the reason for the recent decline in the stock, so the company has shifted its focus towards fleets.
- The company has becoming increasingly more bullish on the China bus market, which is the most important business for UQM.
Lands' End: An Overvalued Retailer With More Downside Ahead
- The bull case on the Lands' End spin-off seems overblown.
- Lands' End is essentially still a subsidiary of Sears, which will hurt growth and increases risk on an investment.
- 2013 earnings are unrealistic for 2014 as the company now deals with added costs to its business.
Callaway Golf: The First Move In A Larger, Downward Trend
- Recent commentary by Dick's Sporting Goods was a worst-case scenario for Callaway Golf.
- Current consensus estimates for 2014 and 2015 will now need to be cut by at least 40%, as well as the possibility for multiple contraction.
- Secular trends in the golf industry make long term-growth forecasts unrealistic.
Pier 1 Imports: E-Commerce Push + Increased Share Buybacks = Outsized Returns
- We believe that Pier 1 Imports provides a unique combination of value, growth, and enhanced shareholder returns at a discounted valuation.
- 2014 estimates seem reasonable, if not conservative.
- New term loan provides the opportunity for sizable share repurchases over the next several years.
- We believe that the company will eventually get over 30% of its revenue from omni-channel initiatives, creating the opportunity for store rationalization and margin expansion.
2014 Ira Sohn Contest Finalist: Long Chemtura Corp
- This investment idea was recently one of four finalists for the 2014 Ira Sohn Investment Idea Contest, which was held on May 5.
- Over the past several years, the management team at Chemtura has divested assets to become a pure-play on industrial specialty chemicals.
- The recent announcement of the sale of its AgroSolutions business will allow the company to improve its over-leveraged balance sheet and return large amounts of cash to shareholders.
- After the tender offer is completed, we expect to company to continue to pursue the sale of the remaining businesses.
- Even without a sale of the business or its remaining pieces, we still believe there is attractive upside in the stock.
Ignite Restaurant Group: Hidden Value In The Company's Attractive Assets
- IRG's valuation has been weighed down by the Macaroni Grill acquisition, but the company's other assets are worth much more that the current enterprise value.
- Recent management shake-up at Macaroni Grill and management commentary leads me to believe that this segment is stabilizing.
- If we were to assign a valuation of zero to Macaroni Grill, instead of its current negative valuation, we could see IRG's stock move into the $20-25 range.
- Even if the business does not stabilize, the segment's attractive real estate portfolio allows for conversions to Brick House Taverns at a lower cost than new builds, or possible monetization.
Abraxas Petroleum: A 'Sweet-Spot' For Your Portfolio
- AXAS has recently undergone a transformation as the company has disposed of non-core assets and has cleaned up its balance sheet over the last several years.
- Recent management presentation leads us to believe that AXAS has potentially found a “sweet-spot” in the Eagle Ford Shale.
- Guidance for 2014 production leads us to believe that the company will enter 2015 producing at least 6,000 barrels per day, with potential upside from Eagle Ford expansion.
- Management’s implied guidance for production and debt levels leads us to believe that 2015 EBITDA will come in at about $90MM, with potential upside in the future.
- A normalized valuation plus non-core assets would give the company a price target of $6, but potential upside leads us to believe that’s the company could be valued at $8.
Monster Worldwide: Past The Bottom, With Inflection Point In Sight
- After the company's latest earnings call, I came away more bullish on my MWW position.
- The are clear signs that the US Careers business (the largest piece of MWW) is past the bottom and poised for growth.
- Upcoming May strategy meeting provides the catalyst necessary to push shares higher.
Bally Technologies: Macro Headwinds Create Attractive, Best-In-Class Buying Opportunity
- BYI's recent weakness is attributable to a weak environment for US slot sales.
- Part of the weakness is due to announcements by its major competitor, which has overly impacted BYI's stock price.
- BYI is the best-in-class company and has already diversified itself away from US slots, yet it trades at a historically low multiple.
- Several major tailwinds will begin to kick in over the next 12 months, which should send shares 50% higher.
American Eagle Outfitters: Risk/Reward Now Becomes Too Compelling To Ignore
- The current bear thesis on AEO is contradicted by the company's brand relevance rankings.
- Brand relevance should provide support for the company to weather the current teen retailing storm, setting the company up for future market share gains.
- The current risk/reward dynamics of the stock are compelling.
Mattress Firm: Roadmap For 2014
- Strong execution continues at MFRM.
- 2014 is all about the company's ability to take back some pricing they gave up over the last few quarters.
- After a 15% run, I am closing my buy recommendation.
Ideal Power: Part Two: Update After Quarterly Earnings And Management Meeting
- After recent quarterly earnings and a management meeting, I am now more bullish on IPWR's long-term future.
- Major announcements should be coming in the next several months, which could end up being the announcement of major commercial production.
- I now consider IPWR a long-term core holding.
UQM Technologies: Many Clues That An Inflection Point Is Upon Us
- Investors may currently be focusing on the car opportunity with Audi and Saab, but overlooking the real upside in the short term, which is a major bus deal in China.
- The company's recent secondary offering and announcement of ISO/TS 16949 Certification lead me to believe that a bus deal in China is imminent.
- Even if this bus deal does not come to fruition in the short run, the company has several other opportunities that could expand over the coming year.
Quantum Fuel Systems: An Update After Quarterly Earnings And Realization Of Price Target
- QTWW recently reported quarterly earnings and hit our previous price target.
- After review, consensus estimates are still too low.
- I am increasing my price target to at least $15.
Lumber Liquidators: Roadmap For 2014
- Lumber Liquidator's stock responded favorably to recent earnings, mostly due to strong gross margin guidance.
- 2014 is all about the company's ability to drive average ticket through sales of higher priced product and add-on accessories.
- This performance will be seen on the gross margin line, which is the most important metric to look at in 2014.
La-Z-Boy: Recent Selloff Creates Attractive Buying Opportunity
- The recent selloff is unjustified considering that recent results have been very strong.
- Analyst estimates for revenue growth seem unreasonably low, setting up the company for a possible re-valuation in the next 6-12 months.
- Even if this re-valuation does not occur, the company will begin to accelerate its returns of capital to shareholders.
Ideal Power: Reviewing This Recent IPO With Massive Potential
- IPWR's PPSA technology has the potential to be a disruptive technology in the energy storage and EV charging space.
- The company recently completed an IPO and built out its management team as it turns its focus to commercialization.
- The announcement of positive contract news could send shares (current market cap $60mm) much higher.
- Abercrombie & Fitch: Multiple Ways To Realize Higher Returns
- Chico's FAS: I'm Buying This Dip
- Bravo Brio Restaurant Group: Roadmap For 2014
- U.S Global Investor: What You Need To Know Before Considering An Investment
- Select Comfort: 70% Upside Ahead
- 1-800-Flowers.com: What You Need To Know For 2014
- Fiesta Restaurant Group: Balance Sheet Recapitalization Creates Upside To Estimates
- Multimedia Games: Possible Near-Term Downside Headed Into Quarterly Earnings