Brian Schieble's  Instablog

Brian Schieble
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Retail investor of eight years, fundamentally oriented, long mostly. Probably characterize my own investing style as aggressive value investing, concentration in a small number of stocks is not an issue in my thinking.
  • More Picks For 2014 (Part 3) 0 comments
    Jan 5, 2014 10:42 PM | about stocks: AEIS, HNP

    Here are a few more picks for 2014

    Advanced Energy Industries (NASDAQ:AEIS) - This is potentially a high flyer that's still a bit under the radar of the investing community. The narrative is great with their acquisition into their new inverter product offerings and moving much of their manufacturing base to a cheaper location. Not often can a company claim to be able to make this much real synergy from an acquisition. High projected EPS growth, no debt, further cost savings and positioned in an industry primed for growth.

    Price Target - I think this issue could hit $27 within the calendar year and be valued around 1.2 billion after cash is subtracted from the valuation, so between $33-35 in the next 3-4 years. Certainly possible it could reach this target quicker, maybe $30 by the end of 2014. The story seems sufficiently strong enough to warrant some enthusiasm in the name that seemingly hasn't yet materialized.

    Huaneng Power International Inc. (NYSE:HNP) - With intense growth expected in energy consumption in China over the next 20 years, this large player should see a paralleling rise in valuation, benefiting greatly from the macro trend. The dividend and valuation is compelling, close to it's 2013 low for share price, right now around $36. With a projected EPS in 2018 north of $9 per share, given the healthy dividend, macro trends in their factor, relative safety of a utility and robust growth for a utility, this might be one of the most attractive looking stocks in the world.

    Price Target - $60+ by 2016, well worth the risk of short term depreciation along with the substantial dividend it already provides.

    When looking at this long term, if the company can produce over $10 EPS in the future it could be worth over $100 per share, not to mention the dividend should rise considerably alongside this steep appreciation in value. The only real systemic risk to this potential outcome is a serious shift away from coal in China due to pollution concerns, which is a real but somewhat unlikely possibility. If the Chinese weakness story plays itself out this year, with a corresponding abandonment of Chinese equities, this particular name could become quite cheap relative to it's future prospects. Any dip back into the 20's would make this name a screaming buy in my opinion.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: AEIS, HNP
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