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  • American Airlines: Monster Fuel Savings [View article]
    >>Remember these are very very good times for airlines (low oil price, strong economy).<<

    Maybe you are overthinking this, abdullah. Generally we want to get into companies that are doing well. You are working under the assumption (which may or not be true) that things will soon be bad for the airlines. The problem I have is that the price and estimates don't reflect either the low oil prices or the strong economy. If oil stays in the mid 60s, I think AAL will make over $10 a share next year. The NOLs will be there for at least a year or two. That is quite a windfall, and they can do a lot for their balance sheet. It is possible that oil will run back up to $100 and the economy will slow way down, but it is also very possible that the economy will continue in its current lumbering growth phase, and oil will stay here or go down a little. The airlines should do very well. That is contrarian thinking, I admit.
    Dec 4, 2014. 08:45 PM | Likes Like |Link to Comment
  • American Airlines: Monster Fuel Savings [View article]
    abdullah, If we put your 8X valuation on the S&P 500 right now the index would be in the 800s! That is just a little above the 2009 lows. Not realistic. 8X just doesn't work over the long haul. I had this argument with people who felt Apple should be valued at 8 times earnings when it was in the low 400s. It is a tech company, and, like airlines, many people feel they deserve an extra discount. Here is the problem: if mgmt is paying attention, they can buy so much of the company back that it can't stay there for long. On the NOLs--going from memory, but I think they have a little under 10Bn available. That is significant. On the EPS estimate, it was close to $7 back when oil was at $95/brl. Oil is obviously the big variable, but if we stay below $70, they will likely make a good bit more than $8.50/sh. On the valuation, the DJ Trannys are carrying right at a 20 PE today, like the S&P 500. There just aren't many huge bargains like AAL out there. All of those companies have risks, too. I agree that airlines should carry a discount, but a 60% discount is overboard imo. I think 35%, or a PE of ~13 is more reasonable, although airlines have a lot of structural differences when comparing to their past. But, assuming AAL makes $9 next year, and we disregard the NOLs completely we are still looking at ~$75-$80 with the discounted 13 PE. I believe the airline landscape has changed, and the sheer size and gate limitations will make the cut-throat competition of the past less likely in the future. Airlines have adjusted their business model and they are making a lot of money with lower fares.
    Dec 4, 2014. 07:17 PM | 1 Like Like |Link to Comment
  • American Airlines: Monster Fuel Savings [View article]
    I don't always agree with the Stone Fox, but I couldn't have said it better here! I figure that they use about 350 million gallons a month (very roughly). Assuming prices plunged $1 per gallon, they would save about $4.2Bn a year on gas alone. Think of it like this: falling gas prices are a printing press for dollars for the airlines-->10 million every stinking day in the ex. above, just as rising prices suck the life out of them. The numbers don't really reflect lower prices, though, as Stone Fox pointed out so well. I think $8.50 is too conservative, but it is always easier to raise them later. The airlines were making great money at $100 oil. That is different, if you are new to this game. (As always, airlines do have unique and varied risks, too)....GLTA.
    Dec 4, 2014. 01:25 PM | Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    It helps to adjust those numbers for inflation, too. We are looking back pretty far in some of the examples. In the light of increased N. American production and increased automotive efficiency, the price seems pretty reasonable to me. Maybe a range of 60-80 dollars? Something is different this time, and that is increased N. American supply. Don't miss that. Remember, demand can cause fluctuations down hard, and so can supply. A lot of people are talking as if they were the same cause of plunging prices. It may well be different this time, and all while the economy thrives on lower prices. We don't want to go too low on the prices, as that could cause serious economic damage, although it would be muted by lower oil. There is a happy middle ground, and I suspect we are close to being there now.
    Dec 2, 2014. 04:23 PM | Likes Like |Link to Comment
  • Apple -3.6% in volatile trading [View news story]
    Just reporting here, so don't get mad at me. Digitimes ran a couple of very negative stories today. They have been very accurate with their supply chain calls through the run-up, so I suspect it is due to their articles. Basically, one said iP6 chip orders were going down for next qtr and could be at their peak. Apple is finally pulling back on 6/6+ production going into the slower Q2 if they are correct. They made it sound like Apple had caught up with demand pretty much. The second was mixed, but it said Apple is ordering for drastically lower iPad sales next year--maybe 15MM less iPads than this year, or so. That is with a new iPad pro in the mix! The positive part was that Macs are gaining ground. Mentioning the possibility of leveling iPhone sales and cratering iPad sales likely did their trick. Again, they have a spotty record, but lately they have been right on, as their sources are the suppliers of Apple in Asia. GLTA.
    Dec 1, 2014. 10:26 AM | 10 Likes Like |Link to Comment
  • American Realty Capital Properties' Dividend: What We Know, What We Might Know, And What We Can't Know [View article]
    It moved up rather mysteriously on no news ahead of the dividend announcement. This one appears leaky to me, so I suspect the big move today could be some good news on the way. Not actionable, but worth watching.
    Nov 26, 2014. 02:21 PM | Likes Like |Link to Comment
  • Long Rubicon Technology Inc.: The Time Is Right [View article]
    Blake, nice job and here is an interesting development: several sapphire producers in Taiwan are rallying on speculation of a new deal with Apple. If it ends up as a phone cover, you can put the rally cap on for RBCN. The sapphire demand will outstrip supply significantly, as it is likely to spread to all high end phones. It could be manipulation, but it is very interesting. RBCN is so cheap, it could double very, very quickly on a short squeeze from good news. Not a reason to buy, but worth mentioning. GLTA.
    Nov 26, 2014. 01:49 PM | 1 Like Like |Link to Comment
  • American Realty Capital Properties' Dividend: What We Know, What We Might Know, And What We Can't Know [View article]
    I would beware of people who won't disclose their position! If a guy doesn't have the guts to say he is short, then why listen to him? I respect and listen to people who are on the other side of the trade, but anonymous FUDsters/pumpers are unreliable at best. SA requires it for authors, and anonymity is the reason why you can disclose your position. On the guidance, the latest numbers for this year were given in the PR after the sale of Cole was announced in early Oct. After dumping Cole Cap, $1.06-1.08 for this year and $1.11-1.14 next year. Needless to say, they will be changing. If Cole produces cash flow, the numbers could go up. That is a curve ball. The lawsuits will be the big expense, as well as decreased deals. We know a dividend cut isn't happening until next year at the soonest, so the question is how far below 1.11-1.14 they will go. I would beware of second or third hand analyst chatter, especially.
    Nov 25, 2014. 04:12 PM | 1 Like Like |Link to Comment
  • Apple's market cap tops $700B [View news story]
    port, it is most likely profit taking. Buyers are stepping in on anything close to a dip. We may be seeing some window dressing soon, and large entities have been underinvested on Apple relative to their index weight, so big bucks have been waiting for shares on any dip. I think the smart money wants in prior to the next CC, not out. Read: new Watch, MB Airs, iPads, Apple TV. These should come after they have not out brought a new product in years between Thanksgiving and summer. Analysts are starting to signal a major blowout this quarter, so when is the next bit of bad news? Maybe a catastrophe is on the way, but I doubt it. Apple's forward PE is still discounted deeply compared to the Russell 2000 and Nasdaq 100, so selling the index to raise cash to buy Apple is the "alpha" play that has been winning big. GLTA.
    Nov 25, 2014. 02:57 PM | Likes Like |Link to Comment
  • Apple's market cap tops $700B [View news story]
    13X is on numbers that will rise dramatically when iPhone sales growth is corrected higher and the watch is factored into the mix. I think we are still in the 10-12X range ex-cash when considering buybacks and growth. The Nasdaq 100 is selling at just under 20X forward estimates today. The S&P 500 is over 17, and the Russell 2000 is over 19. Apple would be selling for about $150 if it was given the same value as the NSDQ 100 or Russell 2000 index. That gives zero credit for Apple's cash pile and quality. Mr. Market is saying the average Nsdq 100/Russell 2000 company is a much safer company than AAPL. The smart trade has been to sell the index and buy Apple. It can turn around, but with such a huge valuation discrepancy, I don't see it being a big risk unless Apple has a catastrophe. Always possible. GLTA
    Nov 25, 2014. 10:38 AM | 7 Likes Like |Link to Comment
  • Ford's New F-150: Best-In-Class Fuel Economy Is All It Needs [View article]
    Point of emphasis: you have to look at the total package on the Ecoboost 6, and the F150 has better HP, torque, towing, and payload--all while achieving higher MPG. So, if it performed worse, while giving a couple of MPG better, it wouldn't be as noteworthy. Everything is better on this truck and that will make it a big winner. I am sure GM and Dodge are working on an answer.
    Nov 25, 2014. 07:12 AM | 8 Likes Like |Link to Comment
  • It Pays To 'Think Different' About Apple's Stock Price [View article]
    Good job, even though I disagree with your call. Current estimates call for 66.22Bn and 2.52. Both are rising each day. As big a number as that is, I think it is way too low! It is less than 9Bn more than last year's 1Q. Two respected analysts raised their targets and were in the news today: Kuo and Caso. Both are checking the order chain and both are calling for a huge increase in iPhone sales. The lower of the two is calling for almost a 30% increase at the top of his range. What a lot of people are missing, though, is last year's 5C and 5S sold for less than the 6 and 6+ and they still had an ASP of $637 (all iPhones). I think we will be over $700 this year. The lower number times $700 is 13Bn in increased revs. Apple has called this year's phone sales growth dramatic--not just up, but way up. So Mr. Kuo may be right. This quarter is going to be much higher than current estimates, probably over 70Bn and approaching $3. If Mr. Kuo is correct, we are likely looking at ~75Bn and well over $3. Maybe the stock could relax, but it is currently discounted on the low numbers, and, *most importantly*, they have a number of new products rolling in the new year. They haven't rolled out new products in the first calendar quarter in years. GLTA, and again, very well written article.
    Nov 24, 2014. 04:36 PM | 15 Likes Like |Link to Comment
  • Investors Wait To Invest New Money In Apple [View article]
    Patrick, I think Gary is saying look at the people who bought at $700 two years ago. They are up over 20% total, and that is the worst possible case, as long as you bought and held. Those who were buying at $390 are up over 100% in a little over a year. Sometimes trying to call the perfect trades causes you to miss the gain--a very real risk that many try to deny or ignore. Apple may keep going, as the most recent iPhone estimates are very high! A huge beat, along with a bunch of new products in the New Year are going to make it hard for Apple to go down. Because of the buyback and the exploding analyst estimates, I think we are still significantly discounted from the major averages, especially when cash is adjusted. There just aren't many bargains out there. Apple is on sale and it is more solid than most of the companies in the indexes that are more expensive.
    Nov 24, 2014. 04:10 PM | 12 Likes Like |Link to Comment
  • Apple breaks highs following new bullish notes [View news story]
    Well, the keys are ASP and units. It still hasn't soaked into many analysts that Apple is sandbagging and the numbers are way too low. Let's take Ming-Chi, one of the most respected and independent thinking analysts. Assuming a $700 ASP, his number is almost an $18Bn increase in revs for this quarter YOY!! That is an 18Bn increase in iPhone revenue only. (Very high margin revs, btw). Apple guided for just under 10Bn higher at the top of the range--for the whole company. BTW, he isn't the only source saying orders are huge--these guys talk to suppliers and it is coming from many different sources. Even tuning down to the other guys, they will blow out of the top end like a Saturn 5 launch. That assumes no growth from any other product at Apple! Been saying this since the phones rolled out: this quarter is going to be huge. Not only that, but I see another huge couple of quarters, as Apple will be rolling out a number of new products in the new year (for the first time in years). I think Apple is headed to Mr. Caso's target of $135--probably quicker than many think.
    Nov 24, 2014. 03:52 PM | 4 Likes Like |Link to Comment
  • Apple gains following target hikes [View news story]
    I'm surprised SA hasn't commented on the increased targets and the big note out of Ming-Chi Kuo, predicting a stunning 71MM+ iPhones this quarter! Needless to say, Apple will beat the top of their range by at least 5Bn is he is close to right!
    Nov 24, 2014. 01:03 PM | Likes Like |Link to Comment