So for those of you who have followed my post in the past you know that I have been in S (Sprint,) CLWR (Clearwire,) BAC (Bank of America,) and now I am riding along in ALU (Alcatel-Lucent.)
I will tell you ALU has been a nice ride thus far. I originally purchased at a basis of $1.15 but am now leveraged in at $1.34 and 2014 was not nice to my 2013 gains. However, I am still up, alive and holding strong. I firmly believe ALU leadership finally has unlocked the up, up, down, down, left, right , b, a, cheat code. I see 2015 being a monster year. If ALU can do the following:
1. ALU needs to post a 4Q2014 massive beat
2. Successfully IPO the submarine unit
3. Confirm a merger/partnership with NOK with the wireless division
4. Link together successive profit generating quarters
On the topic of posting a massive beat in 4Q2014, most are fully aware Monsieur Combs has declared 2014 as the all clear profitable year but if 4Q2014 can give it a head start and even squeak 2014 by as a break even year the stock will push the $5/share the next day.
Also even though I have mentioned it only because ALU is thinking it I am not a fan of IPOing the submarine unit. YEs when the season is slow and things aren't in production it can be a cost center, but when things are good submarine is a profit generating machine. I think the should keep it under the roof and not IPO. However a successful IPO will infuse much needed cash into ALU and further improve the balance sheet giving them much needed breathing room.
The next thing to mention is NOK. We have been flirting with NOK for a couple years now, however this year no one is denying we saw them kiss. Once the merger/partnership/tie up rumor is confirmed look for things to get hot and heavy for ALU. This stock price will go up quick fast and in a hurry. And not because of NOK, but because rivals may also start jumping in to court ALU. and once there is blood in the water there will be a feeding frenzy.
Lastly I want to talk about profit and cash flow. What keeps many investors away from ALU is its long history of the post Lucent and Alcatel merger quarterly losses. I don't think there is a single analyst that will let you forget it. ALU needs to finally quiet the naysayer's and show them it has its ducks in a row and they mean business, what's the saying " Money talks." and that kind of talk will engage serious investors who have the capital to really catapult this stock to very higher highs.
Next topic up for discussion is Hugoton Royalty Trust. It is a fairly new position of mine and fairly speculative. I know nothing about natural gas or the energy industry at all. However these guys caught my attention when they were trading around $5/share. There was legal risk and money tie ups and they were fighting with the hand that feeds them. Long story short they won that fight and investors were rewarded. Now the stock is battling commodity pricing. and natural gas just like crude is seeing it's price drop. But what really drew me to this beast of a stock is the dividend currently right in the neighborhood of 10% annually which it pays on monthly. For me this provides some safety in a way to maximize on the dividend and at the same time wiggle room to exit the position without fear of loss. As I understand the stock and industry more I will post more on it, but as of now that's pretty much my basis for jumping in.
Until next time, I hope some of this information will help you make an informed investment decision, but by no means am I endorsing anyone to follow my lead. Theses stocks are highly speculative and expose your portfolio to higher than normal risk. You must assess your risk tolerance and decide if these are for you.
Disclosure: The author is long ALU, HGT.