Boeing: Great Company, Little Upside [View article]
One thing to remember though is that BA is trading at less than 1x revenue. If they come in on the low end of the Rev forecast you mention, they will post roughly $81.5B in sales. At currently $95.60 they are trading at roughly $72.5B market cap. I believe the aerospace companies, LMT included, have had a lid on them because people thought defense spending cuts would absolutely cripple the revenue streams moving forward and destroy these price to revenue metrics. So far, that has not been the case.
Can these names safely trade up to being in line with their revenues? Why not? BA at $80B market cap would be $105.50. I wonder where the analysts got their price targets.
A Common Myth About Shale Oil And GDP [View article]
I have to agree with Hendershott-- the importance might lie in our ability to still chug along in positive GDP ranges whereas the rest of the major economies are faltering and remaining in true recessions. That displacement of oil imports has put a lid on international oil prices because we are displacing oil destinations.
True, the price of Brent is still high and subsequently so is the price at the pump, but the added benefit comes when we export product to other countries. We have effectively displaced 2+ million barrels per day of crude and then put out a further few hundred thousand per day of product to offset demand elsewhere.
The overall benefit comes to balance of trade, money supply, domestic jobs and the slow progression on increase money circulation in our internal economy that is not coming from unemployment checks. I think the benefits are seen when looking at longer-term factors and overall comparative economics between the US/ North America and Europe/ Asia. That is where the benefit currently exists.
You need to know that the debt is from GE Capital. They take down low interest rate debt and relend at higher rates. Their customers are paying off the debt and they keep the fees and the difference between interest rates. Same as finance arms at atuo manufacturers and equipment companies like Deere and Caterpillar. They take down debt to lend to their customers for payment. Customer pas them back at higher interest rate plus fees at the start. Pure profit if they dont default but that is what default reserves and delinquecy reserves are for.
Since it is actual debt they are carrying it is recorded on the balance sheet. But they are not paying for it all- their customers are paying it down. Thats how banks and credit card companies work too. Ever wonder why company like JP Morgan has a few Trillion in debt and liabilities?
Railroads on east coast have put 3000 locomotives into storage due to low demand for coal. No word on how many locomotives are those shuttling cars aound in the freight and hump yards vs actual heavy haul. Rest of country looks strong which explains employment move from pennsylvania to texas loco works (right to work state texas is a huge plus too).
Still moving few hundred new units but with the shuttered east coast fleet I would plan for contacted service and after market sales. However I am curious to see whether fuel and crew money will be put behind rail service tech and monitoring systems GE offers. They could still sell product but he mix would change- not sure how that would hit rev or margins though.
I think they need to double down their push behind Jennbachers for mitigating oil and gas field flaring and pushing agricultural sectors for adoption in connection with anaerobic digestors to use manure biogas for heat and electricity production. Will drop methane emission related issues for the sector too. While large scale thermal and wind might get hit this sector could quickly ramp up the size of their installed base for aftermarket and service contracts. Help shore up cash flow from these sectors and turn to more secure income versus purely cyclical major project sales. Much larger potential for these smaller units across global agro/rural and oil/gas fields for local demand and excess-to-grid systems.
Why The Rate Of Growth In U.S. Oil Production Is Going To Slow Significantly [View article]
Bakken alone has well over 10 years of drilling left-- roughly 20-30,000 more wells depending on which company you listen to. Unless they break into new technologies, they will not be finished drilling there in a 5-10 year period.
Why The Rate Of Growth In U.S. Oil Production Is Going To Slow Significantly [View article]
Excellent post TreyT-- drilling time decreases have already been stated by several companies as explanation for the stagnation/decline in total number of rigs in certain fields. Also, the crews are getting better due to their racked up experience which goes a long way as well in preventing/minimizing down time and job duration.
Also, there are several new drilling/spacing techniques being employed by EOG and others that have dramatically increased initial production rates to 1000+b/d for several months with little so far in decline. They are learning the geology very quickly now and deploying several new technologies that can maximize production per well.
I would also not rule out one major facet that was not included in the article-- how many rigs were needed by these producers to hit stated production and development numbers needed to retain ownership of their acreage claims? Many of these developers had to drill to keep ownership-- same goes for nat gas. Now they hold the acreage and can slow down and concentrate on quality.
It's like in agriculture-- moving from extensive to intensive cultivation.
General Electric Knows How To Woo Boeing [View article]
Does the $25 billion figure count for just the straight engine sales or does that include figures for expected engine replacements, service contracts and spare parts, etc?
4 Stocks That Could Be Berkshire's Next Heinz [View article]
SJM is decent enough, but I would prefer the others you list on their internal fundamentals-- the return on equity at SJM is toward the bottom of the pack. They are not growing intrinsic and book value as well or as quickly as the others which is their largest draw back.
Very true that foreign money could be buying up houses to rent out-- treating US housing as an asset class for a cash stream. Look to articles that came out the other day about German solar projects seeing a boost in investment interest as foreign wealth looks to invest in hard assets that can produce an income stream. If you can't get good returns on investment grade bonds and don't want too much risk, diversify into hard assets. Pipelines, electric grids, water treatment plants, wind farms and solar installations, housing and apartment buildings, etc. etc. Even the trade publications for retirement plans and pension investments are touting the benefits of investing in long-lived hard assets that generate income but don't lose their intrinsic value very quickly. Heck, why not buy up a fleet of tank rail cars and lease them out for a few years instead of buying bonds. At least there's more diversity and flexibility in that investment vs. a 3-5 year bond.
4 Stocks That Could Be Berkshire's Next Heinz [View article]
I can't agree more with the notion that HNZ and the like were passed over by most because they saw them as "boring", and yet these companies returned solid and relatively dependable gains.
HNZ was fully valued on a past performance basis, but not on a forward looking basis with their growth throughout South America just beginning to fully ramp up. With employment numbers in North America showing any sign of strength, that would lead to more people being able to switch back to name brand products and that would put a floor under sales. Heck, even just the general tendency of people needing eat at home more and save extra money would lead to solid sales moving forward.
Huge potential for further acquisitions of regional brands in South America that would growth the distribution network and lower input costs due to being able to purchase raw goods in greater quantities. Their emerging market presence would not have caused monopoly bells to ring either. There are plenty of other low-key producers of Heinz products. The same goes for MKC-- smaller regional and organic offerings. Knorr of Unilever commands significant shelf-space with their spice packets to at least split the market in half for some offerings.
With Buffett and more people searching for safety and income, this sector has come back under the view of investors who are now getting the momentum guys following suit. I don't see it lasting but I don't see a crash of the sector either. I think expectations could get reigned in with earnings kicking off for MKC on Tuesday and the rest of the sector might see a small 5% pullback on the whole with some names taking immediate 5-10% hits after earnings. MKC is definitely in this boat given its performance after last earnings. Since then, they still have to announce the full impact of currency impacts as the dollar has continued to strengthen and many of these guys are not raising prices this year because of the hit they took after doing so for the past two years. Need to make sure they can keep their customers and market share-- otherwise they will only be selling increased volumes through the industrial side for private label goods with lower margins.
Pick Your Poison: 2 Best-of-Breed Alcohol Stocks To Consider [View article]
The comments from some of the last conference calls from the "Brunch-time" presidents call for Africa are fairly optimistic.
There are a number of regional brands that have been developed by the majors to make use of locally sourced products-- sorghum and the like. Perks galore from the African governments if they use local agriculture for the products to boost cash investment in the areas. It's slow and steady, but it will definitely take time for a base to build and for them to hit a point of "critical mass" but I think that might be sooner than most believe. People will be looking for the next "frontier markets" now that China has gone to continual hit or miss. Africa, Eastern Europe, Middle East and South East Asia will be the next major emerging markets areas-- resources, domestic demand, huge need for infrastructure spending, and they are moving toward relative stability (with the exception of Middle East).
What are your thoughts on DEO strategy of getting their foot in the door with local brands and using that "beachhead" to expand their channels?
Pick Your Poison: 2 Best-of-Breed Alcohol Stocks To Consider [View article]
Don't forget that DEO has a robust growth opportunity due to recent acquisitions and current attempts to expand it's equity stake in several companies. There is a lot of room to grow.
In regards to beer, what are your thoughts on the prospects of the beer companies to make considerable growth in Africa? DEO is working out quite strong growth channels, SABMiller and others are also growing out pretty fast there too.
Resource Nationalism Behind OECD Energy Renaissance [View article]
Anyone have any opinion on the monetary fallout in global trade that could occur due to resurgence of non-OPEC oil production? That's a lot of money that will not leave our shores (or others' if they are producing more oil/gas) for OPEC nations. That's a lot less debt and trade imbalance. Further, as the Middle East continues to see the benefits of it's previous and continuing oil wealth leading to an increase in domestic demand for energy, consumer products and luxury goods, there will be a great deal of money flowing back to Western companies and countries. The likes of Coca-Cola, GE, defense contractors, engineering and construction firms and the like have been and will continue to see increased contracts and demand.
What is the net benefit of this flow of capital back into the countries that originally supplied it to OPEC nations for oil? What is the impact on currencies and financial markets? What is the impact on the OPEC nations as "emerging markets"? These issues could carry some significant and long-term benefits and consequences to a number of countries and geo-political/economic groups and interests.
Boeing: Great Company, Little Upside [View article]
Can these names safely trade up to being in line with their revenues? Why not? BA at $80B market cap would be $105.50. I wonder where the analysts got their price targets.
Thoughts?
A Common Myth About Shale Oil And GDP [View article]
True, the price of Brent is still high and subsequently so is the price at the pump, but the added benefit comes when we export product to other countries. We have effectively displaced 2+ million barrels per day of crude and then put out a further few hundred thousand per day of product to offset demand elsewhere.
The overall benefit comes to balance of trade, money supply, domestic jobs and the slow progression on increase money circulation in our internal economy that is not coming from unemployment checks. I think the benefits are seen when looking at longer-term factors and overall comparative economics between the US/ North America and Europe/ Asia. That is where the benefit currently exists.
Why I Would Sell GE [View article]
plus fees at the start. Pure profit if they dont default but that is what default reserves and delinquecy reserves are for.
Since it is actual debt they are carrying it is recorded on the balance sheet. But they are not paying for it all- their customers are paying it down. Thats how banks and credit card companies work too. Ever wonder why company like JP Morgan has a few Trillion in debt and liabilities?
Why I Would Sell GE [View article]
Still moving few hundred new units but with the shuttered east coast fleet I would plan for contacted service and after market sales. However I am curious to see whether fuel and crew money will be put behind rail service tech and monitoring systems GE offers. They could still sell product but he mix would change- not sure how that would hit rev or margins though.
I think they need to double down their push behind Jennbachers for mitigating oil and gas field flaring and pushing agricultural sectors for adoption in connection with anaerobic digestors to use manure biogas for heat and electricity production. Will drop methane emission related issues for the sector too. While large scale thermal and wind might get hit this sector could quickly ramp up the size of their installed base for aftermarket and service contracts. Help shore up cash flow from these sectors and turn to more secure income versus purely cyclical major project sales. Much larger potential for these smaller units across global agro/rural and oil/gas fields for local demand and excess-to-grid systems.
General Electric Offers Investors Gross Returns Of Between 7 And 8% Over The Next 5 Years [View article]
Why The Rate Of Growth In U.S. Oil Production Is Going To Slow Significantly [View article]
Why The Rate Of Growth In U.S. Oil Production Is Going To Slow Significantly [View article]
Also, there are several new drilling/spacing techniques being employed by EOG and others that have dramatically increased initial production rates to 1000+b/d for several months with little so far in decline. They are learning the geology very quickly now and deploying several new technologies that can maximize production per well.
I would also not rule out one major facet that was not included in the article-- how many rigs were needed by these producers to hit stated production and development numbers needed to retain ownership of their acreage claims? Many of these developers had to drill to keep ownership-- same goes for nat gas. Now they hold the acreage and can slow down and concentrate on quality.
It's like in agriculture-- moving from extensive to intensive cultivation.
General Electric Knows How To Woo Boeing [View article]
4 Stocks That Could Be Berkshire's Next Heinz [View article]
The U.S. Housing Bubble Is Back [View article]
4 Stocks That Could Be Berkshire's Next Heinz [View article]
HNZ was fully valued on a past performance basis, but not on a forward looking basis with their growth throughout South America just beginning to fully ramp up. With employment numbers in North America showing any sign of strength, that would lead to more people being able to switch back to name brand products and that would put a floor under sales. Heck, even just the general tendency of people needing eat at home more and save extra money would lead to solid sales moving forward.
Huge potential for further acquisitions of regional brands in South America that would growth the distribution network and lower input costs due to being able to purchase raw goods in greater quantities. Their emerging market presence would not have caused monopoly bells to ring either. There are plenty of other low-key producers of Heinz products. The same goes for MKC-- smaller regional and organic offerings. Knorr of Unilever commands significant shelf-space with their spice packets to at least split the market in half for some offerings.
With Buffett and more people searching for safety and income, this sector has come back under the view of investors who are now getting the momentum guys following suit. I don't see it lasting but I don't see a crash of the sector either. I think expectations could get reigned in with earnings kicking off for MKC on Tuesday and the rest of the sector might see a small 5% pullback on the whole with some names taking immediate 5-10% hits after earnings. MKC is definitely in this boat given its performance after last earnings. Since then, they still have to announce the full impact of currency impacts as the dollar has continued to strengthen and many of these guys are not raising prices this year because of the hit they took after doing so for the past two years. Need to make sure they can keep their customers and market share-- otherwise they will only be selling increased volumes through the industrial side for private label goods with lower margins.
Pick Your Poison: 2 Best-of-Breed Alcohol Stocks To Consider [View article]
Pick Your Poison: 2 Best-of-Breed Alcohol Stocks To Consider [View article]
There are a number of regional brands that have been developed by the majors to make use of locally sourced products-- sorghum and the like. Perks galore from the African governments if they use local agriculture for the products to boost cash investment in the areas. It's slow and steady, but it will definitely take time for a base to build and for them to hit a point of "critical mass" but I think that might be sooner than most believe. People will be looking for the next "frontier markets" now that China has gone to continual hit or miss. Africa, Eastern Europe, Middle East and South East Asia will be the next major emerging markets areas-- resources, domestic demand, huge need for infrastructure spending, and they are moving toward relative stability (with the exception of Middle East).
What are your thoughts on DEO strategy of getting their foot in the door with local brands and using that "beachhead" to expand their channels?
Pick Your Poison: 2 Best-of-Breed Alcohol Stocks To Consider [View article]
In regards to beer, what are your thoughts on the prospects of the beer companies to make considerable growth in Africa? DEO is working out quite strong growth channels, SABMiller and others are also growing out pretty fast there too.
Resource Nationalism Behind OECD Energy Renaissance [View article]
What is the net benefit of this flow of capital back into the countries that originally supplied it to OPEC nations for oil? What is the impact on currencies and financial markets? What is the impact on the OPEC nations as "emerging markets"? These issues could carry some significant and long-term benefits and consequences to a number of countries and geo-political/economic groups and interests.
Any thoughts?