Saturday, January 31, 2015
- CEOs are far more pessimistic about corporate earnings than any time since the financial crisis, according to research from Bespoke.
- The percentage of companies lowering earnings forecasts during this reporting cycle has led those with upward revisions by 8.6 percentage points, the widest margin since Q4 2008, according to data compiled by the firm.
- The consumer staples group has seen the highest percentage of companies lowering guidance at 37.5%, while 17%-20% of health care and consumer discretionary companies have lowered; surprisingly, energy is among the sectors that are cutting guidance the least.
- Analysts now expect per-share earnings from S&P 500 companies to fall 2.1% in Q1 and slip another 1.1% in Q2, Bloomberg calculates; if correct, it would be the first back-to-back profit contractions since 2009.
- ETFs: SPY, IVE, SH, SSO, SDS, VOO, IVV, SPXU, UPRO, SPXL, RSP, RWL, EPS, SPYG, IVW, RPG, RPV, SPYV, VOOG, VOOV, SPLX
Friday, January 30, 2015
- Though it had previously struck a deal to use TubeMogul's (NASDAQ:TUBE) video ad-buying platform, snack food giant Mondelez partly opted to use Google's (NASDAQ:GOOG) rival DoubleClick Bid Manager platform to run YouTube campaigns following "contentious behind-the-scenes negotiations," TheStreetSweeper reports. Google is believed to have used YouTube's TrueView ad system as leverage.
- An analyst talking with TheStreetSweeper: "It’s clear Tube’s technology is nothing special, since Google did this. And besides Google, there’s a lot of other companies that could do the same."
- TubeMogul CEO Brett Wilson has argued the Google/Mondelez deal is a positive for the online video ad industry at-large, and stated TubeMogul still thinks it "will continue to be used as Mondelez's software for brand advertising and will be the pipes, if you will, to facilitate any of their publisher buys Google or otherwise."
- In addition to the Mondelez deal, TheStreetSweeper cites strong insider selling from CTO Adam Rose (through an automatic trading plan) and steep multiples relative to peers Rocket Fuel and YuMe as reasons to be bearish on TubeMogul. Worth noting: TubeMogul's Y/Y sales growth (112% in Q3) is much stronger than that of either of the cited peers.
- Shares fell 4.5% in regular trading. Q4 results arrive on Feb. 26.
Thursday, January 29, 2015
- This would be a much slower recovery than previous downturns, when oil prices recovered in an average of 17 months, UBS says.
- Oil faces a different reality than in the crashes of 2008 and of 1997/1998, which were driven largely by weaker demand; the current selloff is being driven by oversupply.
- UBS estimates oil supply is overshooting demand by 1.3M b/d in the 93M b/d global market, and notes the industry “finds itself without the OPEC safety net to manage downside risk for oil prices for the first time since the 1980s."
- Previously: Oil prices could rise sooner than expected (Jan. 28)
- Previously: OPEC official warns of spike to $200 (Jan. 26)
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, OLEM
Wednesday, January 28, 2015
- Even though the energy sector has been under selling pressure for months, up until recently the list of the 35 stocks in the S&P 1500 with more than 25% of their free-floating shares sold short only contained a few stocks from the group.
- This has changed dramatically, Bespoke reports, as 10 of the 35 stocks are now from the energy sector; leading the way lower are Swift Energy (NYSE:SFY), Rex Energy (NASDAQ:REXX) and Comstock Resources (NYSE:CRK).
- Also on the list: PGN, CRR, RIG, PVA, AREX, DO, NOG.
- Another bearish indicator: The average short interest as a percentage of float for energy stocks is now 9.5%, the highest since at least 2008 and 55% above the average reading over that time period.
- Merrill Lynch makes the case in a new report that many fundamentals still favor keeping a position in the utilities sector even after a period of gains, and 24/7 Wall Street screened for the firm's top five Buy-rated utilities with the highest yields.
- The list is headed by Edison International (NYSE:EIX), which makes Merrill's US 1 list; EIX raised the quarterly dividend paid to shareholders by 17.6% back in December, signaling a strong commitment to investors.
- Dominion Resources (NYSE:D) is expected to grow its dividend by 7% this year, in line with the past four; the report says many Wall Street analysts believe new EPA regulations actually could provide a boost for the company.
- Also named: AES, PPL, UIL.
- Big oil companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and Royal Dutch Shell (RDS.A, RDS.B) are betting too much on a return to higher oil prices, Citigroup says.
- The industry now looks to be adopting a slightly adjusted Plan A, with some capex cuts and cost-control but still with a fundamental view that higher oil prices will come to the rescue, CIti says, convinced that best results will be achieved only if the industry commits to full self-help action - Plan B - where the underlying principle is that oil prices may not recover any time soon.
- Citi recommends buying the companies closest to moving to Plan B - Total (NYSE:TOT), BP and ConocoPhillips (NYSE:COP) - and avoid those still stuck on Plan A - Exxon, Chevron and Shell.
Tuesday, January 27, 2015
Monday, January 26, 2015
- It was a great day for energy stocks in at least one group of high-yield dividend dogs, as the five energy names making up the top six stocks in David Fish's Dec. 31 composite list of Champions, Contenders and Challengers list all enjoyed substantial gains: EVEP +10.7%, BBEP +21.5%, VNR +12%, CLMT +6.1% and WPZ +0.4%.
- So far in January, most results for the energy stocks in the group are still lower: EVEP -24%, BBEP -6.3%, VNR -0.7%, CLMT +16.2%, WPZ -2.5%.
- BofA/Merrill's Daniel Heyler has named Himax (NASDAQ:HIMX) his top 2015 pick among display IC vendors, and upped his target to $12.50. He cites growing demand for 4K TV sets (they require more powerful LCD driver ICs), spurred by falling panel prices.
- The call comes ahead of Himax's Feb. 12 Q4 report. Shares +24% since Microsoft showed off HoloLens last Wendesday.
- ConocoPhillips (NYSE:COP) headlines BofA Merrill's list of five favorite large-cap energy stocks, after recently raising the stock to a Buy rating as the company has somewhat dampened earnings and growth expectations for a time even though it is cash rich.
- Occidental Petroleum (NYSE:OXY) faces the oil price correction with the strongest balance sheet in the sector, the firm says, with net cash at year-end 2014 estimated at $1.7B and a whopping $11/share of cash available for buybacks.
- Chatter about takeover speculation has resumed around Hess (NYSE:HES); with a market cap falling to just north of $21B, Merrill says the company could fall prey to larger integrated as a quick bolt-on acquisition to boost growth.
- Also recommended: XOM, PXD
Saturday, January 24, 2015
- "I don’t see how the Fed can justify hiking rates when economic growth will disappoint, employment growth will fade, and inflation will overshoot on the downside," says Felix Zulauf at the Barron''s Roundtable. He wouldn't be shocked to see 2016 also pass by without tighter policy.
- The iShares 20+ Year Treasury Bond ETF (NYSEARCA:TLT) is the largest position in his portfolio (the 30-year yield was 2.53% when the Roundtable took place earlier this month; it's 2.37% today). "The U.S. bond market is mispriced," he says, noting long-term yields on these shores tower over those in Europe (they tower far more after the ECB's QE this week).
- Zulauf is also bullish on the dollar (NYSEARCA:UUP) - not exactly a contrarian view - but he says most don't understand the real reason for the greenback's strength: Basically the world is massively short greenbacks thanks to dollar weakness policies pursued by the Greenspan and Bernanke Feds. When the dollar corrects later this year on realization the Fed won't be lifting rates, it will be a good spot to get long.
- Expecting a correction in U.S. stocks, Zulauf would then put money to work in the Market Vectors Retail ETF (NYSEARCA:RTH) - a strong dollar allows retailers to benefit by buying their overseas supplies cheaper.
- Related ETFs: TBT, TLT, TMV, TBF, EDV, TMF, TTT, ZROZ, SBND, TLH, VGLT, DLBS, UBT, TLO, TENZ, LBND, TYBS, DLBL, UUP, UDN, UUPT, FORX, UDNT, USDU
- In a low-yield world, the newly launched iBillionaire High Dividend Index - which tracks the trading moves of 25 investing-savvy billionaire investors such as Stanley Druckenmiller, James Dinan and Nelson Peltz - actually lives up to its name with a dividend yield of 5.34%.
- At 24%, the index has a high allocation of energy shares, including OXY, TRP, CNP, COP, BP, ATLS, CVI, WMB, APL, RIG and ARP.
- Also worth noting is that the index contains some high-yielding mortgage REITs, an area most investors hate right now but where billionaires seem to find value; examples are NRF, AGNC and CIM.
- No mutual fund or ETF tracks this index, but it offers a fishing pond of income investment ideas to research further.
- The top 20 holdings: TLM, CVC, GM, TIME, AEE, D, STAY, KMI, TROX, EXC, STNG, PPL, IRM, PFE, KKR, KAR, F, MIC, LO, ABBV.
Friday, January 23, 2015
- Though Tableau's (NYSE:DATA) 2015 revenue consensus is only at $554M, and its license revenue currently ~2/3 of total revenue, Cowen's Jesse Hulsing thinks the business intelligence/analytics upstart can deliver $1B/year in license revenue by 2019.
- Hulsing: "We think the business intelligence market is inflecting due to a confluence of cultural infatuation with data, more relevant data, cheaper infrastructure and better tools. We call this Measurement Mania." He sees Tableau as a major beneficiary (so do others), and believes the company can grow its BI license market share to ~30% in four years.
- Nonetheless, Hulsing only assigns the richly-valued software vendor a Market Perform rating, and notes competition is growing. "While we think Tableau still has a lead over its competitors in the market, we think recent competitive responses have closed the gap (e.g., Qlik Sense) and new entrants create some threat of incremental competition (Salesforce.com's analytics cloud)."
- Q4 results arrive on Feb. 4.
- "Similar to the 2012/13 bear raid on FB where the street was over-obsessed with 'declining engagement' only to see shares triple in a single quarter, we think the debate around Twitter’s (NYSE:TWTR) MAU adds should eventually move to the background in favor of new product initiatives the company is working on," says Deutsche's Ross Sandler, reiterating a Buy and steep $60 target for the microblogging platform ahead of its Feb. 5 Q4 report.
- Sandler: "Consumer internet stories that have: 1) improving core products, and 2) are heavily undermonetized, tend to work themselves toward much higher valuations, and the best time to add to positions is when they are most out of favor. Twitter could be one of the best mean-reversion ideas for 2015."
- He does admit the catalyst that propelled Facebook higher (soaring mobile ad sales driven by ad load and advertiser growth) isn't available for Twitter, given its platform is demand-constrained and has less than 5% of Facebook's advertiser density, but sees other possibilities. "The catalyst could be any of: 1) instant timeline (non-curated Twitter-light), 2) international subs, 3) video, 4) logged out experiences, 5) messaging, 6) a partnership with Google, or non-disclosed product innovations."
- Co-founder/ex-CEO Evan Williams recently made a case for why MAUs provide an incomplete view of Twitter's value.
- Copper puts are Goldman Sachs' favorite global macro hedge, as derivatives strategist John Marshall notes that options prices on copper remain at long-term average levels even as the 12-month copper price has declined 12% over the past month.
- Freeport McMoRan (NYSE:FCX) provides the opportunity for a single-stock trade, as its options are 94% correlated with options on the underlying commodity; Goldman suggests buying FCX March $20 straddles for $2.79 when the stock was at $19.70.
- The firm estimates three-month implied volatlity for FCX is 43%, below the 45% implied by oil, copper and gold options, and FCX volatility would surge to 65% if copper volatility surges as expected.
- Earlier: Goldman gives in on mined commodities
Thursday, January 22, 2015
- Arista Networks (NYSE:ANET): Price target $95 vs. current $64.28. Implied upside: 48%.
- Stratasys (NASDAQ:SSYS): PT of $110 vs. current $75.19. Implied upside: 46%.
- Ingram Micro (NYSE:IM): PT of $35 vs. current $25.49. Implied upside: 37%.
- Synaptics (NASDAQ:SYNA): PT of $87 v. current $63.78. Implied upside: 36%.
- FireEye (NASDAQ:FEYE): PT of $45 vs. current $34.22. Implied upside: 31.5%.
- Salesforce.com (NYSE:CRM): PT of $70 vs. current $57.71. Implied upside: 21%.
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