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  • Echo Global Logistics Inc. (ECHO): The Technology That Optimizes The Transport.

    This 2009 IPO, is dedicated to providing technology and services for transport chain management through a Web-based platform capable of analyzing data and thus give solution to the needs of customers. The company was founded in 2005 and currently has a market capitalization of about $ 500 M.

    Echo is not only a young and small business, it is also a high-growth company not excessively valued as other high-growth companies, since in 2011 had revenues of $ 600 million, a figure only slightly higher than its current capitalization. In addition, revenue per employee were more than $ 700,000.

    Their last quarterly increments of EPS are: +200%, +100%, +100%, +67%, +44%, +25%, +33% and +40%, while sales increases have been +82%, +62%, +42%, +45%, 38%, +40%, +43% and +30%. Great numbers in both cases although failing to keep upward progression in both cases. EPS growth expectations for 2012 is 36%, and 39% for 2013. Moreover, ECHO has no debt, operating cash flow has grown a lot these past 3 years, and its ROE is at 11%.

    A last pair of facts that I liked a lot, include that the number of funds invested in the company has gone from 93 to 138, and that management owns 32% of the company. For the 'value' peers, you would like to know that P/E was 32, that would be the bottom of the range seen in the last five years between 21 and 96.

    At technical level, its behavior had been somewhat erratic, perhaps due to the low volume or low expectations for future growth, it was not until 2012 that Echo found its own upward trend. In July made its highs, a level that is still fighting today, in what could be a prelude to the start of an uptrend. We'll see if the market really sees potential in stocks and the price continues to increase, the first step would be take hold above $ 20, showing that already passed the first phase of the IPO in 2009.

    (click to enlarge)

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

    Nov 29 11:52 AM | Link | Comment!
  • There Are Reasonable Reasons For Pessimism? (Fundamentals)

    In this post I will attempt a comprehensive look at various economic indicators around the world that have caught my attention recently because of the negative implications that these may have in the recent future.

    CHINA

    It is certainly the Asian giant that has cough most eyes in this last months. In the last PMI published, has been able to overcome the 50 level , providing some relief to

    this country bulls. However we must not forget that recently it has started its political transition, and in these cases, national institutions usually tend to publish results somewhat softened.

    (click to enlarge)But other indicators that come from the Asian giant are not as reassuring.

    GDP growth in clear decline. (And that these are the 'official' figures)

    (click to enlarge)

    Luckily we can see some evidence of this slowdown by other market data, e.g. cement prices.

    (click to enlarge)

    Or in the price of steel.
    (click to enlarge)

    JAPAN

    The other Asian giant, has given us more bad news recently, and its growth is as anemic as it has been for a long time. The worst is that it seems to show more signs of deterioration.

    (click to enlarge)

    EURO ZONE

    Regarding the Euro zone, I think with a single chart would be enough. Simply that we are already in recession.

    (click to enlarge)

    GERMANY

    Reviewing the data from either European leader I was very confident for the future, and it seems that the crisis in southern countries is beginning to seriously affect exporting countries such as Germany.

    Its GDP growth was the worst levels since 2008.

    (click to enlarge)

    Thanks to Morgan Stanley chart, we see consumer confidence is in free fall.

    (click to enlarge)

    UNITED STATES

    Regarding the US, at first glance and even with the prick of their market a couple of weeks, is relatively close to maximum. There are some reasons to believe that the U.S. stock market might be overvalued compared to some economic indicators? Let's see.

    Demand for durable goods is usually a good leading indicator of future growth of an economy; in this case, we have begun to point to dangerously towards a turnaround.

    (click to enlarge)

    Another interesting indicator is the level of emission of debt used to repurchase shares, we see this indicator peak in 2000, and with the peak in 2007, the case was much more visible. Although the global deleveraging process we are experiencing, it has reached a much higher level than you would expect.

    (click to enlarge)

    Another contrarian indicator I like to review, that and historically return good results is the number of new IPOs. In the graph we see that in 2000 and 2007 the maximum number of new listed peaked the same year as the stock market. We'll see if history repeats 2012 or in 2013 the number even higher.

    (click to enlarge)

    Just for closing the American market review, just take a look at St.Louis Fed financial stress indicator. For those who are not familiar with it, this is an indicator that tries to give information on the level of financial stress in the U.S economy. This is made from 20 different series of statistics such as different spreads between corporate and government bonds, interest rates for different levels of junk bonds, volatility ....
    As it can be seen from the chart, the lower the number the better. In depth, it can be seen that in the early stages of recoveries, index decreases rapidly, and historically gives good signals anticipatory of future crises when there is a discrepancy with the general market, this is, when the stock hits new highs, but in St.Louis index change can not lose more (as we saw in 2000, 2007 and we are seeing from almost 2010).

    (click to enlarge)

    And with that I will end this review of the economic status of different countries. Just mention that in this review I have not added any graphic on employment in U.S. despite being discussed very often, because it is an indicator that undergoes major revisions, and therefore I do not consider it a great help.
    Now we must continue working to see how they evolve in the coming months. In any case we must be attentive, because data show that could have serious problems soon if the economy continues to deteriorate. What do you think will happen in the future?

    After this post focused on fundamentals in the coming days publish another post related, more focused on the technical level. See you then.

    Nov 26 10:22 AM | Link | Comment!
  • Procera Networks (PKT)

    Procera Networks is a company dedicated to providing solutions to broadband services providers. In fact it is a global provider of infrastructure equipment service management, control and identification of network traffic, creator of the devices 'PacketLogic', the most accurate identification application of the market, by employing the identification connection engine DRDL (Datastream Recognition Definition Language).

    Procera is a young company, founded in 2002 and listed since 2003, but it's also relatively small, with $470 M capitalization. Its results didn't became interesting until 2010 when its growth began to be exceptional. Let's see it's latest quarterly changes, old to new.

    EPS: -58%, +108%, +225%, +667%, +200%, +1000%

    Sales: -20%, +110%, +102%, 157%, 108%, 78%.

    In addition, its debt is small, its ROE is 15%, and has doubled the number of funds invested in it in the last year (from 58 to 113). Moreover, the management team owns 5% of the company, which is not bad, although since being such a young company i would have expected a higher number. Finally its operating cash flow was in clear upward trend.

    At technical level, we can see that its first step in the market was like a 'hot IPO', and that also had a second golden age in 2007. More recently it's stocks had a nice upward movement in 2011 and 2012, and since April, started building a base, that failed with a kind of a double top in July. Since then it has moved sideways, and even new S&P 500 new highs for new QE announcement was not enough for Procera making new price increase. In November, its movement has turned even more dangerous with the general market declining. For my taste, I would prefer the stock to gain a little bit of relative performance strengh before trying to invest in it. However, it would be also positive to see bull signs in the S&P also.

    To sum up, and although it seems to be an stock for the future, it would be wise to wait for positive signs in the stock performance while waiting for continuing with its EPS growth.
    (click to enlarge)

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

    Nov 24 6:38 AM | Link | Comment!
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