The most likely reaction to FOMC will be a rally in US indexes. Not so sure that will be the case today. What this market really needs (in order to move on to new highs) is a well-deserved rest. I hope we get one.
Funny coincidence, went to my massage guy yesterday and we got talking about stocks a bit, and he said that the 1 stock he really wished he had bought was AAPL. Not sure it means anything other than everyone know about AAPL, but you could take it as there's no-one left who doesn't know the AAPL story, so stock growth will have to come from business growth, not new investors.
Greek Markets In Turmoil – Things in Athens continue borderline chaotic. The Greek stock market is down the equivalent of 2500 Dow points since Friday. Here's a nice synopsis from my friend Peter Boockvar over at the Lindsey Group: Any thought of pragmatism from the newly elected Greek government is quickly being thrown out the window. But, when you elect Marxists, this I guess is what you get. Greek capital markets are under major stress again today as they are losing faith that the negotiated process from here on with debts and budgets will go smoothly. The Athens stock market is down by another 8% and lower by 14% in just 3 days. Greek banks are down by 17-20% today alone. The 3 yr note yield is higher by 295 bps to 16.98% vs 10.1% as of Friday’s close. Greek 5 yr CDS is wider by 40 bps and has risen by 400 bps over the past three days. Alexis Tsipras held his first cabinet meeting today and pledged four priorities: 1)a return to dignity for the Greek people, 2)help the economy, 3)renegotiate Greek debt, 4)Get rid of corruption in government. He also wants to bring back a higher minimum wage just when the Greek economy needs to get more competitive. He wants to hire more government workers just as they have too many and he wants to freeze plans for privatizations just as the private sector is most needed. With respect to what everyone is most focused on, debt renegotiations, Tsipras today said “we do not want an extreme catastrophic clash…we do not want to go to mutually assured destruction but we won’t continue being subservient.”
It's going to be interesting - was reading through the Greek newspaper - ekathimerini.com and lots of opinions.
In the grand scheme of things, Greece is so minor (11 million of 350 million people), but its the precedent people are worried about. Ireland made a good turnaround even with their high debt, but they have a productive, open economy - that's what Greece really needs.
TXT/BC/FCAU - All luxury brand manufacturers. COH - What about this one? FCAU I can't imagine ever selling this one, except for going to wherever the luxury names go.
I like COH. Issue is its going through a transition period but valuation is pretty low. My wife said she doesn't think Coach products are out of favor at all. Last time she said this was when TLYS was at $8 and when DECK was at $30.
You and TOF use gurufocus a lot and I seem to like the information there myself, do either of you supscibe to the premium service and find it worthwhile?
T3 - I actually do subscribe to the premium service for Gurufocus. I like being able to see the bottom set of ratios on the 10 year financials that they have grayed out for the free users. It helps give me a point of reference for historical valuation ranges a company has gone through. I figure it saves me enough time to make it worth my while.
Also I think you can get screeners that you otherwise can't get as a free member, like the Joel Greenblatt screens which I have found a few things from like TUP.
Also I think you can get screeners that you otherwise can't get as a free member, like the Joel Greenblatt screens which I have found a few things from like TUP.
Got my average down to $10.83. Let's see how this pans out. I'm hoping for an intraday reversal today...maybe close around $11.20...then move to highs from a few days ago for a 20% to 25% move.
Not sure...it has more to do with the dollar in my opinion. I saw this move in the dollar coming from a mile away but didn't think through the implications of it properly. I figured the best way to play it was UUP which was ok but DWTI was a career making move.
What follows are the three rules that make up the Seasonality Timing System. I retrieved them from the May 2001 issue of Mutual Funds Magazine, the last time I saw the magazine provide a full-scale review of this timing model. The first two rules outline the two types of seasonality that the system hopes to exploit, while the third deals with exceptions:
1) To exploit positive seasonality around the turns of each month: Buy at the close of the third-to-last trading of each month, and sell at the close of the fifth trading session of the following month
2) To exploit positive pre-holiday seasonality: Buy at the close of the third-to-last trading day prior to exchange holidays, and sell at the close of the last trading day before a holiday.
3) Exceptions: If the holiday falls on a Thursday, sell at Friday's close rather than Wednesday's. Also, if the last day before a holiday is the first trading day of the week, don't sell until the day after the holiday. Finally, never sell on the first trading day after options expire; instead wait an extra day.
"Investors are dumping Greek equities today and bond prices are weakening as newly-formed leftist leadership stokes fear that the Hellenes could leave the Eurozone or default on debt. The spread between the Greek 10-year bond and its German equivalent widened to more than 10 points in recent trading. The yield on two-year debt rose by nearly 3 percentage points to more than 16.5%, The Wall Street Journal reports. The Global X FTSE Greece 20 ETF ( GREK) was down 11%, while the Vanguard FTSE Emerging Market ETF ( VWO) was off by 0.4%. In U.S. trading, shares of Greek banks are plummeting: Eurobank Ergasias ( EGFEY) catapulted 24% lower to 0.06 cents in U.S. trading. Alpha Bank ( ALBKY) is down 19%, Piraeus Bank ( BPIRY) is down 35% and National Bank of Greece ( NBG) is down 23%."
Lets think this through:
The new government hates austerity and are forcing the ECB's hand. They're done imposing harsh conditions on themselves. They're against nationalizing stuff, reversing several nationalization plans for ports etc in the past 3 days. This is EXTREMELY positive for their equity markets in my opinion. They're basically saying we are pro business. If the ECB doesn't want us then we will move back to our own currency and devalue it to wipe away debt. In both scenarios (ECB gives in or they move to their own currency) its a huge positive for their stocks.
They are actually cancelling the selling / privatization of port, etc. Other things they are talking is raising minimum wage, rehiring laid off civil servants, restoring pensions. Not business friendly moves. They are taking about trying to clean up the corruption in Greece, which be a huge pro-business thing to do, but they've talked about this for years and it seems too ingrained.
I'm not commenting on whether or not GREK is a good buy here, but the biggest concern I have about Greece in general is I truly don't think they have a competitive economy other than in a few areas like tourism and shipping. I think that a lot of economic growth they got since year 2000 when they joined the ECB was debt fueled and wasted, and without that debt support, the economy would be much smaller than now. IN 2000, GDP was around $125 million and, even though it has come down a lot, it is still double what it was back then. If they do leave the Euro, I think things gets much worse (as people won't want Drachma'sand they have a tough time buying imports for even necessities like fuel and food.
"Indeed, Greece has spent approximately half of the 182 years since it achieved independence from the Ottoman Empire in a state of default and therefore denied access to international capital markets"
In my previous readings, a lot of average Greek people were hoping the ECB could force the Greek government to reform properly as they did not seem to be able to do so internally. Seems like vested interests are going to be too strong even for that.
Its seems to me that moving away from austerity and layoffs toward the other end of the spectrum is pro business but I could be wrong. At the very least forcing the ECB to reduce debt or else moving back to the Drachma would have a positive impact on their equity markets. Getting timing right is key though if I'm looking to trade it. Longer term (ie longer than my time horizon) I think it makes sense to begin buying what most likely will amount to short term panic by sellers not looking at the longer term picture and considering an eventual return to prosperity.
Seems like a timing issue. It would be interesting if those countries who agreed to remain in the EZ have public debt forgiven, wow. Germany had their e11B WWII loan forgiven when they entered the EZ.
Maybe Europe can resolve who has morning bathroom rights within the next 5 or so years? Meanwhile I guess GREK hits some kind of bottom as Greece receives another loan for remaining in the EZ, then GREK retraces some portion of the chart?
“Men are so quick to blame the gods: they say that we devise their misery. But they themselves- in their depravity- design grief greater than the griefs that fate assigns.” -Homer, The Odyssey There is a battle brewing upon the Continent of Europe and, as in ancient days of lore, it will be won by the Greeks. Make no mistake, Greece will be the victor! It would be a wonderful story and a grand conspiracy theory to think that there was some architect of all of this. To imagine some oligarch, someone chosen by the ancient gods, that was behind it all but I do not believe that is the case. It may be that Zeus and the rest fashioned all of this and whispered hints to various politicians. Who am I to say? Who am I to know the will of the gods? The new government in Athens is to the left but that is rather incidental in my estimation. The platform of Mr. Tsipras and his friends, that won the election, had little to do with being left or right or centered. It had everything to do with being Greek. The platform was nationalistic; Greece run by the Greeks with policies decided and implemented by the Greeks and the rest of Europe could find its way to Hades on their own. The coalition, necessitated by the lack of an out and out majority, demonstrates my point. It is the left and the right and the common cause is the ending of economic and social decisions directed by foreigners. Europe has already floated the “extend and pretend” olive branch but that is not a stick that the new government is going to accept. The power mongers in Berlin, Brussels and in Washington D.C. at the IMF made their beds long ago and now they are going to have to lie in them. The luxurious linens have become brambles over time and the incredibly poor decisions that were made have come home and the price will get paid. The prize was a European Union that included everyone possible. The goal of some was a third try for domination with Berlin at the center. The forces used were not weapons but money and so the Greek demands should come as no surprise to anyone. What was gained by wealth must be sustained by wealth or someone will cut the cord. Greece is demanding a larger share of wealth than already given by the forgiveness of debt and it will either be that I am afraid or the curtailing of German ambitions. “All things are in the hand of heaven, and Folly, eldest of Jove's daughters, shuts men's eyes to their destruction. She walks delicately, not on the solid earth, but hovers over the heads of men to make them stumble or to ensnare them.” -Homer, The Iliad If there is one thing that can be said, in my opinion, with some certainty about the Greek elections is that it was based upon nationalism. There is quite real anger in Athens and elsewhere in Greece that foreign dignitaries are trying to impose their far different standards, ethics and demands upon the Greek people. It is fitting, I suppose, that the break in European unity begins in the birthplace of Democracy as a growing amount of citizens in Europe just are not happy with foreign imposition. This tide is swelling in Spain, Britain, Portugal and Italy. The biggest threat to the continuation of the European Union now resides in the “will of the people” and it is in upcoming elections and then the consequences of them where the Fates will flourish and the fate of Europe will be decided. “Generations of men are like the leaves. In winter, winds blow them down to earth, but then, when spring season comes again, the budding wood grows more. And so with men: one generation grows, another dies away.” -Homer, The Iliad
I am romantic enough, in my own fashion, to imagine that the gods of olde are behind all of this. The Troika has given Greece so much money, so much wealth to entice them in, to keep them in, to hold them in, that Greece is really in a no-lose position. It will be debt forgiveness in the end or back to the Drachma, no debt at all, as they default, a huge hit taken by the ECB and other central banks and a do-over for Greece. Their main business is tourism after all and they would be the cheapest destination on the Continent and no debt to be re-paid to anyone. Those that claim the economy would be devastated I believe are incorrect and as the Greek banks would default along with the nation there would be no debt left to pay in the financial institutions either. “Come, weave us a scheme so I can pay them back! Stand beside me, Athena, fire me with daring, fierce as the day we ripped Troy's glittering crown of towers down.” -Homer, The Odyssey You may expect shouts and screams and all manner of hand wringing and finger pointing. Prepare yourselves for curses and threats and all types of acts that provide the defamation of characters. There will be vengeance and every possible gesture made but in the end, the very end, Germany and her allies
will probably fade and grudgingly use the coins of the realm one more time to keep Greece in the fold. The Greeks have rolled out the Trojan Horse once again and one more time it was pulled into the city. “I know not what the future holds, but I know who holds the future.” -Homer As do I and it is the people of Greece. Long live Odysseus!
Re Gurufocus, I don't have the premium membership. Morningstar also has a very good free site and I find between the 2 of them, I get most of what I want.
BB - Just to clarify about the Greek situation that I think is unfolding: if you read about this Tsipras guy you will know he's actually pretty pro business. I think what he's saying is let's halt everything and go after a reduction of debt first. If we can get that then we need to attempt to get better prices for our ports and other projects that were previously attempted to be nationalized at absurdly low prices. So on the surface moving away from privatization looks bad but I have a feeling based on his comments and his background that he ultimately is looking for fair selling prices.
Man these low commodities prices must be creating an economic windfall for Canada and South America,these guys are sprouting superweed green shoots from their ears.
Since the beginning of October, Orange Capital, LLC has been loading up on shares of Bellatrix Exploration (NYSE:BXE). Orange, who is now well over a 10% owner of the company, continues to add shares with it most recently adding some on January 15th. Bellatrix now represents over 8% of Orange's portfolio and continues to grow. Some of the management has also picked up shares in the past few months according to CanadianInsider.com. In fact, on Jan 23rd, the VP of operations just picked up another 2,500 shares. Below is a chart of the purchase transactions, Orange making up most of them buying on nearly a weekly basis.
CP - Full disclosure on COH, I own some so I'm biased. I think they're going through a rough patch right now but if they stabilize and turn things back around then the business is cheap. It trades at 10X the average FCF for the past 5 years. Before now it previously traded between 12 and 21 times FCF over the past 7 years so lots of upside if they can right the ship.
Right. Good yield, low p/FCF, solid balance sheet. Hopefully they can stabilize things but if they don't I think it's a fairly low risk stock. Similar in some ways to TUP.
Closing HDGE @ 11.87 (+1.62%). In a range-bound market which seemingly exhibits no memory day to day (and anything can/will happen), I'll take gains when I have them.
(a) Crude oil futures <45. (b) OIH (Oil Services) -5%, XLE (Energy) -4%. (c) TLT (the long bond) +2%, as the yield on the 30-yr Treasury falls below 2.3% for the first time in history. (d) EEM (Emerging Markets) -1.2%, EWZ (Brazil) -2.6%, PBR (Petrobras) -11.4% (as investors punish the company for failing to reveal the amount of the write-down linked to the corruption scandal). (e) DJIA -1%, SPX -1.26%. (f) GREK (Greece) off another -11%.
Reopening positions in RYWVX (Rydex 2x Emerging Markets), RYEIX (Rydex Energy), RYVIX (Rydex Oil Services) and RYPMX (Rydex Precious Metals) at the close. Why? Basically, because buying panic is what I do.
Re Greece, extend and pretend is what worked in South America when they had their problems. Basically , keep the debt whole, but minimize interest and let the country grow out its problems.
I read Tsipras letter and it sounds not unreasonable, except that he is saying the same things the governments before him said.
"Dear readers, I understand that, behind your 'demand' that our government fulfills all of its 'contractual obligations' hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for 'reforms', as long as these 'reforms' do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners."
The above is really the big problem in Greece, and people have been trying to fix it for years without success. Maybe he can do it, but I honestly have my doubts.
I also wonder if the German's and EU don't justwant the Greeks out of the EU. Greece lied to get in about meeting the requirements, have not seemed to live up to their bargains and aren't really economically up to EU standards. Everyone has had a few years to prepare for this now. Why not just negotiate hard and let Greece take themselves out?
Below is from Reuters and why I see him as more socialist:
The government, installed within 48 hours of Sunday's win, is expected to pursue social welfare policies such as handing out free electricity and food stamps to the poor and cutting heating oil prices, alongside a crackdown on tax evasion.
On the labor front, Tsipras is expected to reverse a cut to the minimum wage and restore collective bargaining agreements abolished under the bailout out deal, as well as instituting a 5-billion-euro plan of incentives for firms to hire workers.
As well as reviewing privatization plans, Syriza officials have also promised to take on business tycoons, though in the run-up to the vote they said little about whether they will implement earlier pledges to slap new taxes on big Greek shipowners.
Tsipras has also promised that he will scrap unpopular crisis-era taxes, prompting critics to question how he will be able to afford his lavish social spending while battling depleting cash coffers and exasperated foreign lenders.
I guess the presidential cycle reflects upon the sentiment towards DC, trying to recall the election 8 years ago didn't seem the candidates were in sync with the economy or current events, lots of clueless jaws hanging open.
Another thing, why is it they always exit with gray hair?
From Ryan Detrick, the 6 month period starting Nov, Dec, and Jan has been up 16 of 16 times with average return around 15%.
Might not happen this time, but Obama seems to be in campaign mode and I'm sure the republicans are too. Time for goodies for the economy, not tightening and tough decisions.
DB - Here we go, bottom trend line again. Pretty damn weak stock in a severe downtrend, this one is. BSBR has twice as many employees and half the market cap, pays a dividend to boot.
X had a good day today up 10%. I think these pseudo-commodity stocks where they are not mining, but producing things like Steel and Aluminum do well as the economy grows and the cost of inputs has fallen.
I still own Steel fabricator CAM.TO and it's my 8th largest position
This guy has been taking notes from the earnings reports: http://skrisiloff.tumblr.com/post/108924356895/this-is-what-ceos-are-saying-about-the-economy
I've looked at a number of the regional banks as a lot of the value guys seem to like them. But everyone I've looked at seems to be expensive. I think people must be expecting higher profitability then current because the last cycle was so much better, but I wonder if there aren't too many banks now given the level of business. So far, I am staying away. interestingly though, the big banks like the BAC and C, are very cheap. But I see too much risk in them.
I agree with this. I was looking closely at IBKC and a few others and it seems to me that IBKC has been overpriced for a long time. Granted banks will look overpriced with interest rates at 0 because earnings are significantly below what they would be with higher rates...if they ever come.
Not sure if you are trading these days, but my kitchen is done, just having the fireplace installed today then a bit of drywall and paint and the greatroom will be finished.
But one nice thing I found - got some lumber this week and they finally got rid of those dumb staples to hold on the UPC code and replace it with a sticker. Such a simple idea, but so much nicer, can't believe it took them so long to figure out!
The valuation of FCAU is no longer as compelling as I once thought if the market is only willing to pay 8x earnings for F & GM and both of those pay a 3%+ dividend. Just not as compelling of a stock. Here's my quick math on it:
Ferrari - $260 Million Net After Tax Profit assume a 30% rise in production results in 30% rise in profits Results in approx $340 Million Net Profits Assume a 45x multiple which is aggressive so $15.3 Billion Remaining Piece of FCAU estimated to generate about $1 Billion Net Profit. Apply a 9x multiple you get $9 Billion. That may be aggressive if F & GM are trading at same multiple but offer a sizable dividend.
Combine the two and you get a $24 Billion market cap. Market cap right now is $22 Billion or so fully diluted.
I think you are being overly generous re Ferrari, but even at 20 p/e, gives $6.8 billion
But the other side is improving profitability in the main company. F generated $6.2 billion profit on $145 billion sales. FCAU has $1.2 billion profit on $105 billion sales. Assuming they can improve margins up to F's level, would be $5 billion in profit, so put a 9 p/e on that and you have $45 billion + $6 billion for Ferrari, so over $50 billion market cap, so more than a double.
The are guiding for the $1 billionish for 2015, but I think they have better opportunities to improve margins over the next few years than F does, so should get a higher multiple now, then more in line as things actually do improve.
Definitely not as good value now as when we were buying in the $10's, but they are executing well and I could see a 20% year this year and grow into a double over a few years.
The key is assuming an ability to grow margins over time. You would have thought with a dynamite year for Jeep and Maserati that margins would have expanded but they actually contracted. And they guided for more of the same in 2015. Additionally they suggested that the Ferrari IPO wouldn't be until later in the year. I wouldn't be surprised to see it stall here for a good while and perhaps run up into the Ferrari IPO...maybe a month or so out.
Hopped back into YRCW at $16.1. Only a 7% position but I figure they have got to be a major beneficiary of low oil. I don't quite understand why it would be down so much other than they are losing gobs of money and have a horrible balance sheet (ha!) but I think the odds of a decent bounce heading into earnings after a 30% drop this year alone are good.
BXE - Pretty sure I posted the $1.90 target some days ago, it's just a target though so could go even lower. MTDR - This one I found a few days ago, their properties look interesting.
Similar companies but I believe the ownership structures are different. Plus TA caters to the truck driver crowd which makes it a bit unique. Its a truck stop operator not a retail gasoline chain. They do much higher throughout per station and their ancillary services in many ways are much more important to their customer than the ancillary services are to the average car driver at a gas station/with convenience store. Truckers have many less options for fueling, parking, showering, etc. Not sure if you saw the WSJ article last week talking about the problem of insufficient overnight parking for truck operators. This is increasingly inuring to the benefit of the truck stops with the most parking (and TA states that they as a chain have the largest parking capacity of any of their chain competitors).
But having done 3 cross country trips over the past decade, I'm familiar with the TA brand. They're huge plazas typically where they are the only ones on the entire highway stop. They operate over 500 quick service and full time restaurants on their travel centers which is the #1 beneficiary of lower oil. That's predominantly what is working in this market. That and stocks trading at 10 to 13 times earnings with solid balance sheets.
I started sniffing around the sectors that TUP and COH operate in and one that looks interest is UFPT. I looked into their financials a bit and didn't see anything regarding low fuel costs other than just the cost of shipping. I doubt they would be positively impacted by low oil; however, it's a pretty cheap stock
LYB/WLK - These guys produce ethylene, the market is saturated. Whoever depends on ethylene as a feedstock now has a huge tailwind. BERY/BLL I guess, and other companies who manufacture products made of plastic.
BERY is a big winner. Probably reflected in the stock price though. I'm convinced the shippers like CNW, SAIA, ARCB, YRCW etc are great entry points if only for a few weeks long trade.
I think I completely agree. Seems to me its a function of a panicky market and not fundamentally driven. Lower oil is undoubtedly good for those companies. I don't think they will pass on the majority of savings so margins should expand.
YRCW was actually cash flow and EPS positive last quarter. It's still incredibly risky but the others aren't all that expensive especially if you consider an uptick to earnings due to lower oil. A few of them are taking it on the chin the past 2 days: KNX and SWFT amongst others.
There appears to have been a major 'shakedown' in all sectors this morning, with OIH/XLE/GDX/EEM all retesting recent lows. There are no guarantees in this game, but it certainly 'feels' like the market wants to move higher (having left weak hands behind).
(a) DJIA now +165 (reversing an early decline of -55). SPX/NDQ both +0.64%. (b) EEM (Emerging Markets) mildly in the red, but +0.7% off earlier lows. GREK (Greece) +6%, rewarding yesterday's intrepid buyers. (c) OIH (Oil Services) printed a new 52-wk low this morning, and has now recovered to within -1% of yesterday's close. Selling was less dramatic in in XLE (Energy), reversing well above its 52-wk low and now flat. (d) GDX (miners) -1.7%, but this was expected given the strong dollar. The precious metals may in fact have marked the initial leg of a new bull market.
My 'take' at this point is still bearish- I believe a serious correction is needed to launch markets to new highs. Just trying to play the bounces along the way.
REXX has been kicking ass, I think their gas is going to smash Canadian producers as the pipeline is open now I think, or close to it.
Looks like Canada is screwed, and they knew it was coming so tried to make a fake rally and published a lot of misleading data and bullish scenarios to suck in those whomever took the bait.
I believe Marketwatch has it correct: http://www.marketwatch.com/investing/stock/FCA?CountryCode=IT
Also, look at their website, I think they don't have the fully diluted shares (assuming 100M share secondary and convertible which I'm not exactly sure how to calc that but I think it's just $2.5 B divided by the convertible price or $2.5B divided by conservatively I used $13 conversion price). So from their site: 1,284,919,505 + 100,000,000 + 192,307,692 = 1,577,227,197. That equates to a $21 Billion market cap at $13.4.
YRCW - Looks like earnings Feb 5, AMC, Thursday, could run into the event getting some volume here. UUP - Hmm, maybe a top? WNC - Is it true Blackrock owns $57M of this one?
Was looking closer at the PTRY earnings release and am pretty floored by the numbers they did. They boosted fuel margins by 54% last quarter. They do about $1.2 Billion in fuel revenues and $0.45 Billion in merchandise revenue in their convenience stores (so about 75% fuel revenues).
TA does around 80% fuel revenues per quarter for a total revenue rate of around $2 Billion. Here is TA's margins per gallon for the past 7 quarters:
Here is PTRY's until last quarter: Q1 2013 0.117 Q2 2013 0.123 Q3 2013 0.107 Q4 2013 0.118 Q1 2014 0.107 Q2 2014 0.129 Q3 2014 0.133
Both had been trending up slightly with Q3 being solid. TA has maintained about a 48 to 53% higher fuel margin per gallon so if you assume this ratio for Q4 then you could see TA do $0.27 to $0.28 per gallon. That seems too high but if you assume those margins then TA could see a boost of $32 Million in operating profit for Q4 (about $0.90 or 0.59 after tax) just from fuel. Additionally, merchandise sales appear to have been helped by the lower oil and it would be logical to see TA experience the same. Last year in Q4 they basically broke even after backing out a one time litigation charge. If you assume a $0.59 boost to after tax income from higher fuel margins, then you arrive at a $0.59 EPS figure for Q4. Again, this seems too high to me but current EPS estimates are at $0.06 which seem really low to me. It seems like this is going to be a blowout quarter for TA.
TA is an interesting one because they have been spending like crazy to get all of these newly purchased properties fixed up and running well so ultimately this could pay off in the form of better revenues plus a lot of these expenses will be going away. On top of this they're getting a boost to fuel margins and higher consumer spending from oil savings. Q4 and Q1 are usually slower quarters for them but if they can post a big beat like that...even if it's like $0.20 or $0.30...then the total EPS figures for the entire year could be significantly higher than in 2011-13, which averaged around $1.00. I still think this stock gets to at least $20. Plus, the chart is breaking up into blue skies, much like NLS and LNG did a couple of years ago. This could be a good long term one.
TD has ATD.B in Toronto as a top pick. They are a large convenience store and gas station operator, mainly in the US, and are currently buying PTRY. TA and ATD.B still too expensive for my style, but I can see why people would pay up for them and the stocks could do well this year. For your info, TD also see fuel margins rising:
"Following up on a strong performance in H1/F15, our fuel margin calculator places the company’s net fuel margin at a record $0.26/gallon net of interchange fees ($0.30/gallon gross) for the first 14 weeks of CoucheTard’s 16-week Q3/F15. We were initially basing our Q3/F15 EPS estimate on $0.153/gallon net ($0.200/gallon gross) compared to $0.130/gallon a year ago. Given that significant decline in rack prices, our initial estimate seems far too conservative. With the intention of retaining a little conservatism – we find Couche-Tard rarely seems to match the industry data at the extremes – we are boosting our Q3/F15 net margin estimate to $0.23/gallon ($0.27/gallon gross). This would put our full-year net fuel margins assumption at $0.185/gal ($0.228/gal gross). Looking further ahead, as long as we do not see oil surge higher – steady increases are more manageable – we now believe that annual U.S. net fuel margins can average ~$0.155–$0.160/gallon (~$0.19–$0.20/gal gross) in F2016 and F2017.
They've knocked the market cap down more than the likely high end hit to earnings from this. Stock is even cheaper now, unless you believe this nuclear issue grows and hurts earnings even more (which is not unheard of for nuclear reactors).
I'm pretty sure I want to add into this weakness, but suspect we get more selling on Monday after the brokers reduce estimates to reflect this, so I'm watching and waiting for now.
Interview with Francis Chou - you can tell he's got a good system and just follows it:
ReplyDeletehttp://m.gurufocus.com/news_read.php?id=310877
Wow - AAPL rocking it this morning.
ReplyDeleteFunny coincidence, went to my massage guy yesterday and we got talking about stocks a bit, and he said that the 1 stock he really wished he had bought was AAPL. Not sure it means anything other than everyone know about AAPL, but you could take it as there's no-one left who doesn't know the AAPL story, so stock growth will have to come from business growth, not new investors.
GREK - Bad news from Europe?
ReplyDeleteper Cashin, UBS
DeleteGreek Markets In Turmoil – Things in Athens continue borderline chaotic. The Greek stock market is down the
equivalent of 2500 Dow points since Friday. Here's a nice synopsis from my friend Peter Boockvar over at the
Lindsey Group:
Any thought of pragmatism from the newly elected Greek government is quickly being thrown out the
window. But, when you elect Marxists, this I guess is what you get. Greek capital markets are under
major stress again today as they are losing faith that the negotiated process from here on with debts
and budgets will go smoothly. The Athens stock market is down by another 8% and lower by 14% in
just 3 days. Greek banks are down by 17-20% today alone. The 3 yr note yield is higher by 295 bps to
16.98% vs 10.1% as of Friday’s close. Greek 5 yr CDS is wider by 40 bps and has risen by 400 bps over
the past three days. Alexis Tsipras held his first cabinet meeting today and pledged four priorities: 1)a
return to dignity for the Greek people, 2)help the economy, 3)renegotiate Greek debt, 4)Get rid of
corruption in government. He also wants to bring back a higher minimum wage just when the Greek
economy needs to get more competitive. He wants to hire more government workers just as they have
too many and he wants to freeze plans for privatizations just as the private sector is most needed. With
respect to what everyone is most focused on, debt renegotiations, Tsipras today said “we do not want
an extreme catastrophic clash…we do not want to go to mutually assured destruction but we won’t
continue being subservient.”
It's going to be interesting - was reading through the Greek newspaper - ekathimerini.com and lots of opinions.
DeleteIn the grand scheme of things, Greece is so minor (11 million of 350 million people), but its the precedent people are worried about. Ireland made a good turnaround even with their high debt, but they have a productive, open economy - that's what Greece really needs.
Sold my TUP today at $66. Added some more Z at $99.3 and GREK at $10.7. All small positions.
ReplyDeleteNice one - getting back on track
DeleteSlowly but surely. Still a nasty market.
DeleteShiller agrees
Deletehttp://www.bloomberg.com/news/articles/2015-01-27/nobel-prize-winning-economist-says-it-s-time-to-buy-greek-stocks
TXT/BC/FCAU - All luxury brand manufacturers.
ReplyDeleteCOH - What about this one?
FCAU I can't imagine ever selling this one, except for going to wherever the luxury names go.
I like COH. Issue is its going through a transition period but valuation is pretty low. My wife said she doesn't think Coach products are out of favor at all. Last time she said this was when TLYS was at $8 and when DECK was at $30.
DeleteBXE - As is customary, another $0.20 haircut What a great pick!
ReplyDeleteI suppose my question is, with all due respect, where was your stop when you purchased and where is your stop now if any?
DeleteMy stop was $8, actually. I drank the wrong kool aid now I'm dying. :(
DeleteBB, thanks for the Chou article, working thru it.
ReplyDeleteYou and TOF use gurufocus a lot and I seem to like the information there myself, do either of you supscibe to the premium service and find it worthwhile?
T3 - I actually do subscribe to the premium service for Gurufocus. I like being able to see the bottom set of ratios on the 10 year financials that they have grayed out for the free users. It helps give me a point of reference for historical valuation ranges a company has gone through. I figure it saves me enough time to make it worth my while.
DeleteAlso I think you can get screeners that you otherwise can't get as a free member, like the Joel Greenblatt screens which I have found a few things from like TUP.
Deletethanks
DeleteAdded some more GREK at $10.69. Down 40% in 5 weeks is my kind of buyable move.
ReplyDeleteAdded a significant chunk over the past hour to GREK. Now about a 15% position. Just a hunch but feels like exhaustion on the downside to me.
DeleteAlso I think you can get screeners that you otherwise can't get as a free member, like the Joel Greenblatt screens which I have found a few things from like TUP.
DeleteGot my average down to $10.83. Let's see how this pans out. I'm hoping for an intraday reversal today...maybe close around $11.20...then move to highs from a few days ago for a 20% to 25% move.
Deletebought a little, too
DeleteCommodities tend to fall through their butt hole when the economy is growing, right?
ReplyDeleteNot sure...it has more to do with the dollar in my opinion. I saw this move in the dollar coming from a mile away but didn't think through the implications of it properly. I figured the best way to play it was UUP which was ok but DWTI was a career making move.
DeleteLine in sand: was today a near term bottom?
ReplyDeleteOriginal Seasonality Timing System 012615
ReplyDeleteWhat follows are the three rules that make up the Seasonality Timing System. I retrieved them from the May 2001 issue of Mutual Funds Magazine, the last time I saw the magazine provide a full-scale review of this timing model.
The first two rules outline the two types of seasonality that the system hopes to exploit, while the third deals with exceptions:
1) To exploit positive seasonality around the turns of each month: Buy at the close of the third-to-last trading of each month, and sell at the close of the fifth trading session of the following month
2) To exploit positive pre-holiday seasonality: Buy at the close of the third-to-last trading day prior to exchange holidays, and sell at the close of the last trading day before a holiday.
3) Exceptions: If the holiday falls on a Thursday, sell at Friday's close rather than Wednesday's. Also, if the last day before a holiday is the first trading day of the week, don't sell until the day after the holiday. Finally, never sell on the first trading day after options expire; instead wait an extra day.
"Investors are dumping Greek equities today and bond prices are weakening as newly-formed leftist leadership stokes fear that the Hellenes could leave the Eurozone or default on debt.
ReplyDeleteThe spread between the Greek 10-year bond and its German equivalent widened to more than 10 points in recent trading. The yield on two-year debt rose by nearly 3 percentage points to more than 16.5%, The Wall Street Journal reports.
The Global X FTSE Greece 20 ETF ( GREK) was down 11%, while the Vanguard FTSE Emerging Market ETF ( VWO) was off by 0.4%. In U.S. trading, shares of Greek banks are plummeting: Eurobank Ergasias ( EGFEY) catapulted 24% lower to 0.06 cents in U.S. trading. Alpha Bank ( ALBKY) is down 19%, Piraeus Bank ( BPIRY) is down 35% and National Bank of Greece ( NBG) is down 23%."
Lets think this through:
The new government hates austerity and are forcing the ECB's hand. They're done imposing harsh conditions on themselves. They're against nationalizing stuff, reversing several nationalization plans for ports etc in the past 3 days. This is EXTREMELY positive for their equity markets in my opinion. They're basically saying we are pro business. If the ECB doesn't want us then we will move back to our own currency and devalue it to wipe away debt. In both scenarios (ECB gives in or they move to their own currency) its a huge positive for their stocks.
They are actually cancelling the selling / privatization of port, etc. Other things they are talking is raising minimum wage, rehiring laid off civil servants, restoring pensions. Not business friendly moves. They are taking about trying to clean up the corruption in Greece, which be a huge pro-business thing to do, but they've talked about this for years and it seems too ingrained.
DeleteI'm not commenting on whether or not GREK is a good buy here, but the biggest concern I have about Greece in general is I truly don't think they have a competitive economy other than in a few areas like tourism and shipping. I think that a lot of economic growth they got since year 2000 when they joined the ECB was debt fueled and wasted, and without that debt support, the economy would be much smaller than now. IN 2000, GDP was around $125 million and, even though it has come down a lot, it is still double what it was back then. If they do leave the Euro, I think things gets much worse (as people won't want Drachma'sand they have a tough time buying imports for even necessities like fuel and food.
Delete"Indeed, Greece has spent approximately half of the 182 years since it achieved independence from the Ottoman Empire in a state of default and therefore denied access to international capital markets"
In my previous readings, a lot of average Greek people were hoping the ECB could force the Greek government to reform properly as they did not seem to be able to do so internally. Seems like vested interests are going to be too strong even for that.
Its seems to me that moving away from austerity and layoffs toward the other end of the spectrum is pro business but I could be wrong. At the very least forcing the ECB to reduce debt or else moving back to the Drachma would have a positive impact on their equity markets. Getting timing right is key though if I'm looking to trade it. Longer term (ie longer than my time horizon) I think it makes sense to begin buying what most likely will amount to short term panic by sellers not looking at the longer term picture and considering an eventual return to prosperity.
DeleteSeems like a timing issue. It would be interesting if those countries who agreed to remain in the EZ have public debt forgiven, wow. Germany had their e11B WWII loan forgiven when they entered the EZ.
DeleteMaybe Europe can resolve who has morning bathroom rights within the next 5 or so years? Meanwhile I guess GREK hits some kind of bottom as Greece receives another loan for remaining in the EZ, then GREK retraces some portion of the chart?
Deleteextend and pretend?
Deletehttp://syriza.net.gr/index.php/en/pressroom/253-open-letter-to-the-german-readers-that-which-you-were-never-told-about-greece
“Men are so quick to blame the gods: they say that
Deletewe devise their misery. But they themselves- in their
depravity- design grief greater than the griefs that
fate assigns.”
-Homer, The Odyssey
There is a battle brewing upon the Continent of
Europe and, as in ancient days of lore, it will be won
by the Greeks. Make no mistake, Greece will be the
victor!
It would be a wonderful story and a grand conspiracy
theory to think that there was some architect of all of
this. To imagine some oligarch, someone chosen by
the ancient gods, that was behind it all but I do not
believe that is the case. It may be that Zeus and the
rest fashioned all of this and whispered hints to
various politicians. Who am I to say? Who am I to
know the will of the gods?
The new government in Athens is to the left but that
is rather incidental in my estimation. The platform of
Mr. Tsipras and his friends, that won the election, had
little to do with being left or right or centered. It had
everything to do with being Greek. The platform was
nationalistic; Greece run by the Greeks with policies
decided and implemented by the Greeks and the rest
of Europe could find its way to Hades on their own.
The coalition, necessitated by the lack of an out and
out majority, demonstrates my point. It is the left and
the right and the common cause is the ending of
economic and social decisions directed by
foreigners. Europe has already floated the “extend
and pretend” olive branch but that is not a stick that
the new government is going to accept.
The power mongers in Berlin, Brussels and in
Washington D.C. at the IMF made their beds long ago
and now they are going to have to lie in them. The
luxurious linens have become brambles over time
and the incredibly poor decisions that were made
have come home and the price will get paid. The
prize was a European Union that included everyone
possible. The goal of some was a third try for
domination with Berlin at the center. The forces used
were not weapons but money and so the Greek
demands should come as no surprise to anyone.
What was gained by wealth must be sustained by
wealth or someone will cut the cord. Greece is
demanding a larger share of wealth than already
given by the forgiveness of debt and it will either be
that I am afraid or the curtailing of German ambitions.
“All things are in the hand of heaven, and Folly,
eldest of Jove's daughters, shuts men's eyes to their
destruction. She walks delicately, not on the solid
earth, but hovers over the heads of men to make
them stumble or to ensnare them.”
-Homer, The Iliad
If there is one thing that can be said, in my opinion,
with some certainty about the Greek elections is that
it was based upon nationalism. There is quite real
anger in Athens and elsewhere in Greece that foreign
dignitaries are trying to impose their far different
standards, ethics and demands upon the Greek
people. It is fitting, I suppose, that the break in
European unity begins in the birthplace of
Democracy as a growing amount of citizens in
Europe just are not happy with foreign imposition.
This tide is swelling in Spain, Britain, Portugal and
Italy. The biggest threat to the continuation of the
European Union now resides in the “will of the
people” and it is in upcoming elections and then the
consequences of them where the Fates will flourish
and the fate of Europe will be decided.
“Generations of men are like the leaves. In winter,
winds blow them down to earth, but then, when
spring season comes again, the budding wood grows
more. And so with men: one generation grows,
another dies away.”
-Homer, The Iliad
I am romantic enough, in my own fashion, to imagine
Deletethat the gods of olde are behind all of this. The Troika
has given Greece so much money, so much wealth to
entice them in, to keep them in, to hold them in, that
Greece is really in a no-lose position. It will be debt
forgiveness in the end or back to the Drachma, no
debt at all, as they default, a huge hit taken by the
ECB and other central banks and a do-over for
Greece. Their main business is tourism after all and
they would be the cheapest destination on the
Continent and no debt to be re-paid to anyone. Those
that claim the economy would be devastated I believe
are incorrect and as the Greek banks would default
along with the nation there would be no debt left to
pay in the financial institutions either.
“Come, weave us a scheme so I can pay them back!
Stand beside me, Athena, fire me with daring, fierce
as the day we ripped Troy's glittering crown of
towers down.”
-Homer, The Odyssey
You may expect shouts and screams and all manner
of hand wringing and finger pointing. Prepare
yourselves for curses and threats and all types of
acts that provide the defamation of characters. There
will be vengeance and every possible gesture made
but in the end, the very end, Germany and her allies
will probably fade and grudgingly use the coins of
the realm one more time to keep Greece in the fold.
The Greeks have rolled out the Trojan Horse once
again and one more time it was pulled into the city.
“I know not what the future holds, but I know who
holds the future.”
-Homer
As do I and it is the people of Greece. Long live
Odysseus!
BABA - Today's issue is a large majority of the merchandise is supposedly counterfeit.
ReplyDeleteRe Gurufocus, I don't have the premium membership. Morningstar also has a very good free site and I find between the 2 of them, I get most of what I want.
ReplyDeleteTreasury rate flattened, must be the FED notes?
ReplyDeleteBB - Just to clarify about the Greek situation that I think is unfolding: if you read about this Tsipras guy you will know he's actually pretty pro business. I think what he's saying is let's halt everything and go after a reduction of debt first. If we can get that then we need to attempt to get better prices for our ports and other projects that were previously attempted to be nationalized at absurdly low prices. So on the surface moving away from privatization looks bad but I have a feeling based on his comments and his background that he ultimately is looking for fair selling prices.
ReplyDeleteMan these low commodities prices must be creating an economic windfall for Canada and South America,these guys are sprouting superweed green shoots from their ears.
ReplyDeleteBXE - Nice job, joke is on me.
ReplyDeleteDoes Canada have some kind of max down rule, the price seems to drop by the same amount daily.
DeleteFWIW
DeleteBellatrix Exploration
Since the beginning of October, Orange Capital, LLC has been loading up on shares of Bellatrix Exploration (NYSE:BXE). Orange, who is now well over a 10% owner of the company, continues to add shares with it most recently adding some on January 15th. Bellatrix now represents over 8% of Orange's portfolio and continues to grow. Some of the management has also picked up shares in the past few months according to CanadianInsider.com. In fact, on Jan 23rd, the VP of operations just picked up another 2,500 shares. Below is a chart of the purchase transactions, Orange making up most of them buying on nearly a weekly basis.
Yeah thanks. 2500 shares is about 1/100,000 of this guy's salary no doubt. I don't know why they bother mentioning that it's an insult, lol
DeleteWow, today's a very special day for BXE, down 40 cents....... Oh boy do I regret this idea.
DeleteCP - Full disclosure on COH, I own some so I'm biased. I think they're going through a rough patch right now but if they stabilize and turn things back around then the business is cheap. It trades at 10X the average FCF for the past 5 years. Before now it previously traded between 12 and 21 times FCF over the past 7 years so lots of upside if they can right the ship.
ReplyDeletedecent yield plus squeezing btw 50 and 200 dma
DeleteRight. Good yield, low p/FCF, solid balance sheet. Hopefully they can stabilize things but if they don't I think it's a fairly low risk stock. Similar in some ways to TUP.
DeleteThis comment has been removed by the author.
ReplyDeleteNobody posted this today might be they'd rather post about how they could care less about your money:
ReplyDeleteSaudi minister reiterated they have no plans to cut production.
Hey, TUP is up 12% today.......
ReplyDeleteClosing HDGE @ 11.87 (+1.62%). In a range-bound market which seemingly exhibits no memory day to day (and anything can/will happen), I'll take gains when I have them.
ReplyDelete(a) Crude oil futures <45.
ReplyDelete(b) OIH (Oil Services) -5%, XLE (Energy) -4%.
(c) TLT (the long bond) +2%, as the yield on the 30-yr Treasury falls below 2.3% for the first time in history.
(d) EEM (Emerging Markets) -1.2%, EWZ (Brazil) -2.6%, PBR (Petrobras) -11.4% (as investors punish the company for failing to reveal the amount of the write-down linked to the corruption scandal).
(e) DJIA -1%, SPX -1.26%.
(f) GREK (Greece) off another -11%.
FCAU - Three consecutive down days, not very inspiring.
ReplyDeleteReopening positions in RYWVX (Rydex 2x Emerging Markets), RYEIX (Rydex Energy), RYVIX (Rydex Oil Services) and RYPMX (Rydex Precious Metals) at the close. Why? Basically, because buying panic is what I do.
ReplyDeleteOh no way, US rates will never move lower, no way man..... Everyone would much rather hide out in Greek notes, lol.....
ReplyDeleteRe Greece, extend and pretend is what worked in South America when they had their problems. Basically , keep the debt whole, but minimize interest and let the country grow out its problems.
ReplyDeleteI read Tsipras letter and it sounds not unreasonable, except that he is saying the same things the governments before him said.
"Dear readers, I understand that, behind your 'demand' that our government fulfills all of its 'contractual obligations' hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for 'reforms', as long as these 'reforms' do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners."
The above is really the big problem in Greece, and people have been trying to fix it for years without success. Maybe he can do it, but I honestly have my doubts.
I also wonder if the German's and EU don't justwant the Greeks out of the EU. Greece lied to get in about meeting the requirements, have not seemed to live up to their bargains and aren't really economically up to EU standards. Everyone has had a few years to prepare for this now. Why not just negotiate hard and let Greece take themselves out?
Below is from Reuters and why I see him as more socialist:
The government, installed within 48 hours of Sunday's win, is expected to pursue social welfare policies such as handing out free electricity and food stamps to the poor and cutting heating oil prices, alongside a crackdown on tax evasion.
On the labor front, Tsipras is expected to reverse a cut to the minimum wage and restore collective bargaining agreements abolished under the bailout out deal, as well as instituting a 5-billion-euro plan of incentives for firms to hire workers.
As well as reviewing privatization plans, Syriza officials have also promised to take on business tycoons, though in the run-up to the vote they said little about whether they will implement earlier pledges to slap new taxes on big Greek shipowners.
Tsipras has also promised that he will scrap unpopular crisis-era taxes, prompting critics to question how he will be able to afford his lavish social spending while battling depleting cash coffers and exasperated foreign lenders.
"green initiatives" - Man I could just puke if I hear this terminology again like 10,000 times a day.
ReplyDeleteRegarding the broad markets, it sure seems like we've had a lot of bad days lately to only be 5% off all-time highs.
ReplyDeleteIf the Presidential Cycle is going to play out at all this year, we're going to have to see things turning around pretty soon.
I guess the presidential cycle reflects upon the sentiment towards DC, trying to recall the election 8 years ago didn't seem the candidates were in sync with the economy or current events, lots of clueless jaws hanging open.
DeleteAnother thing, why is it they always exit with gray hair?
From Ryan Detrick, the 6 month period starting Nov, Dec, and Jan has been up 16 of 16 times with average return around 15%.
DeleteMight not happen this time, but Obama seems to be in campaign mode and I'm sure the republicans are too. Time for goodies for the economy, not tightening and tough decisions.
http://stocktwits.com/RyanDetrick/message/26670358
DB - Here we go, bottom trend line again. Pretty damn weak stock in a severe downtrend, this one is. BSBR has twice as many employees and half the market cap, pays a dividend to boot.
ReplyDeleteX had a good day today up 10%. I think these pseudo-commodity stocks where they are not mining, but producing things like Steel and Aluminum do well as the economy grows and the cost of inputs has fallen.
ReplyDeleteI still own Steel fabricator CAM.TO and it's my 8th largest position
I wasn't following X, I was watching AKS, it was choking.
DeleteStrange pair - must have been the earnngs vs. expaectationg were a lot better at X
DeleteVNM ?Chinese oligarchs are hanging out in Vietnam and Philippines in response to Macaw crackdowns against their bad habits.
ReplyDeleteChart looks like total shit.
7,000 homeless living in San Francisco
ReplyDeleteTons of capital is flowing into political campaign contributions, Koch brothers are ponying up $1B
ReplyDeleteOkay, I don't recall those stocks, CBS or something?
This guy has been taking notes from the earnings reports:
ReplyDeletehttp://skrisiloff.tumblr.com/post/108924356895/this-is-what-ceos-are-saying-about-the-economy
Good link, thanks.
Deleteanother interesting one:
http://avondaleam.com/after-three-years-of-double-digit-gains/
IBKC/BOKF/BOCH/FUNC/KRE - Regional banks not doing so well, has the consumer slammed his wallet shut?
ReplyDeleteOr, maybe AAPL was Christmas, Valentines, Birthday, Halloween, Hanuka?
I've looked at a number of the regional banks as a lot of the value guys seem to like them. But everyone I've looked at seems to be expensive. I think people must be expecting higher profitability then current because the last cycle was so much better, but I wonder if there aren't too many banks now given the level of business. So far, I am staying away. interestingly though, the big banks like the BAC and C, are very cheap. But I see too much risk in them.
ReplyDeleteI agree with this. I was looking closely at IBKC and a few others and it seems to me that IBKC has been overpriced for a long time. Granted banks will look overpriced with interest rates at 0 because earnings are significantly below what they would be with higher rates...if they ever come.
DeleteMark,
ReplyDeleteNot sure if you are trading these days, but my kitchen is done, just having the fireplace installed today then a bit of drywall and paint and the greatroom will be finished.
But one nice thing I found - got some lumber this week and they finally got rid of those dumb staples to hold on the UPC code and replace it with a sticker. Such a simple idea, but so much nicer, can't believe it took them so long to figure out!
DB - I shoulda gone all in y-day and flipped it today............... Ugh, but who knew?
ReplyDeletePLaying earnings is a crap shoot - can go either way
DeletePAL - Holding up pretty well, considering. Should also have taken another 70% haircut along with everything else..
ReplyDeleteGreece has a really good point of view though, austerity as dictated wasn't working?
ReplyDeleteHey BB- I'm here all the time. Just busy with other things. Luckily we don't get those freaking stupid tags on the lumber we use.
ReplyDeleteStill trying to get back into the swing of things.
BABA - Ouchie Chinese government was hiding their accusation.
ReplyDeleteMITK day. It's already run up a lot so it's gonna be tough.
ReplyDeleteTOF,
ReplyDeleteanother nice winner today with COH. TUP yesterday. NIce going
Thanks. Still a tough market for me because they were both only 7% positions. I'm bleeding with AFL, Z and a few others. I sold COH and GREK.
DeleteThe valuation of FCAU is no longer as compelling as I once thought if the market is only willing to pay 8x earnings for F & GM and both of those pay a 3%+ dividend. Just not as compelling of a stock. Here's my quick math on it:
ReplyDeleteFerrari - $260 Million Net After Tax Profit
assume a 30% rise in production results in 30% rise in profits
Results in approx $340 Million Net Profits
Assume a 45x multiple which is aggressive so $15.3 Billion
Remaining Piece of FCAU estimated to generate about $1 Billion Net Profit. Apply a 9x multiple you get $9 Billion. That may be aggressive if F & GM are trading at same multiple but offer a sizable dividend.
Combine the two and you get a $24 Billion market cap. Market cap right now is $22 Billion or so fully diluted.
I think you are being overly generous re Ferrari, but even at 20 p/e, gives $6.8 billion
DeleteBut the other side is improving profitability in the main company. F generated $6.2 billion profit on $145 billion sales. FCAU has $1.2 billion profit on $105 billion sales. Assuming they can improve margins up to F's level, would be $5 billion in profit, so put a 9 p/e on that and you have $45 billion + $6 billion for Ferrari, so over $50 billion market cap, so more than a double.
The are guiding for the $1 billionish for 2015, but I think they have better opportunities to improve margins over the next few years than F does, so should get a higher multiple now, then more in line as things actually do improve.
Definitely not as good value now as when we were buying in the $10's, but they are executing well and I could see a 20% year this year and grow into a double over a few years.
The key is assuming an ability to grow margins over time. You would have thought with a dynamite year for Jeep and Maserati that margins would have expanded but they actually contracted. And they guided for more of the same in 2015. Additionally they suggested that the Ferrari IPO wouldn't be until later in the year. I wouldn't be surprised to see it stall here for a good while and perhaps run up into the Ferrari IPO...maybe a month or so out.
DeleteAnyone else see the earnings out of PTRY today. These were absurdly good. That bodes well for TA which I own.
ReplyDeleteDamn I can't believe these #'s.
DeleteHopped back into YRCW at $16.1. Only a 7% position but I figure they have got to be a major beneficiary of low oil. I don't quite understand why it would be down so much other than they are losing gobs of money and have a horrible balance sheet (ha!) but I think the odds of a decent bounce heading into earnings after a 30% drop this year alone are good.
ReplyDeleteIf it falls below $15.4 I'm out.
BXE - Pretty sure I posted the $1.90 target some days ago, it's just a target though so could go even lower.
ReplyDeleteMTDR - This one I found a few days ago, their properties look interesting.
TBIO - Here's one for ya......... :)
ReplyDeleteLooks like TA caught an upgrade from C with a price target of $17 today. I think that's conservative but I'd take it in this market.
ReplyDeleteTA vs SUN - Aren't these pretty much the same thing? I dunno if SUN can shine but maybe?
ReplyDeleteSimilar companies but I believe the ownership structures are different. Plus TA caters to the truck driver crowd which makes it a bit unique. Its a truck stop operator not a retail gasoline chain. They do much higher throughout per station and their ancillary services in many ways are much more important to their customer than the ancillary services are to the average car driver at a gas station/with convenience store. Truckers have many less options for fueling, parking, showering, etc. Not sure if you saw the WSJ article last week talking about the problem of insufficient overnight parking for truck operators. This is increasingly inuring to the benefit of the truck stops with the most parking (and TA states that they as a chain have the largest parking capacity of any of their chain competitors).
DeleteBut having done 3 cross country trips over the past decade, I'm familiar with the TA brand. They're huge plazas typically where they are the only ones on the entire highway stop. They operate over 500 quick service and full time restaurants on their travel centers which is the #1 beneficiary of lower oil. That's predominantly what is working in this market. That and stocks trading at 10 to 13 times earnings with solid balance sheets.
DeleteI started sniffing around the sectors that TUP and COH operate in and one that looks interest is UFPT. I looked into their financials a bit and didn't see anything regarding low fuel costs other than just the cost of shipping. I doubt they would be positively impacted by low oil; however, it's a pretty cheap stock
ReplyDeleteBRY/BLL?
ReplyDeleteLYB/WLK - These guys produce ethylene, the market is saturated. Whoever depends on ethylene as a feedstock now has a huge tailwind. BERY/BLL I guess, and other companies who manufacture products made of plastic.
ReplyDeleteBERY is a big winner. Probably reflected in the stock price though. I'm convinced the shippers like CNW, SAIA, ARCB, YRCW etc are great entry points if only for a few weeks long trade.
DeleteUPS - Fuel costs have cratered, so I say BS on the selling, whatcha think?
ReplyDeleteI think I completely agree. Seems to me its a function of a panicky market and not fundamentally driven. Lower oil is undoubtedly good for those companies. I don't think they will pass on the majority of savings so margins should expand.
DeleteYRCW was actually cash flow and EPS positive last quarter. It's still incredibly risky but the others aren't all that expensive especially if you consider an uptick to earnings due to lower oil. A few of them are taking it on the chin the past 2 days: KNX and SWFT amongst others.
DeleteThere appears to have been a major 'shakedown' in all sectors this morning, with OIH/XLE/GDX/EEM all retesting recent lows. There are no guarantees in this game, but it certainly 'feels' like the market wants to move higher (having left weak hands behind).
ReplyDelete(a) DJIA now +165 (reversing an early decline of -55). SPX/NDQ both +0.64%.
(b) EEM (Emerging Markets) mildly in the red, but +0.7% off earlier lows. GREK (Greece) +6%, rewarding yesterday's intrepid buyers.
(c) OIH (Oil Services) printed a new 52-wk low this morning, and has now recovered to within -1% of yesterday's close. Selling was less dramatic in in XLE (Energy), reversing well above its 52-wk low and now flat.
(d) GDX (miners) -1.7%, but this was expected given the strong dollar. The precious metals may in fact have marked the initial leg of a new bull market.
My 'take' at this point is still bearish- I believe a serious correction is needed to launch markets to new highs. Just trying to play the bounces along the way.
REXX has been kicking ass, I think their gas is going to smash Canadian producers as the pipeline is open now I think, or close to it.
DeleteLooks like Canada is screwed, and they knew it was coming so tried to make a fake rally and published a lot of misleading data and bullish scenarios to suck in those whomever took the bait.
And, I suspect the selling we saw was fear of the FED tightening, which didn't happen.
DeletePharmacy armed robberies - This could be avoided if pharmacies were banned from selling opiate based pain medication.
ReplyDeleteGREK, sold all in morning, had to go and just got back.
ReplyDeleteTGIBF!
ReplyDeleteDB - Might be headed to $34 from here, check it out.
ReplyDeleteGOOG - Ouchie.....
ReplyDeleteNice turnaround on GOOGL. DECK got....decked?
ReplyDeleteMITK had solid #'s. That looks like a cheap stock, if you can sit through slimy Jimmy's sales presentations on every conference call.
YRCW- Damn! Surprised to see it back here. When are earnings?
ReplyDeleteMITK- .0 EPS?
TOF, how do you get FCAU market cap of $22 billion?
ReplyDeleteMost web sites, including the Fiat one, have it under $17 Billion US (15 billion euro).
I believe Marketwatch has it correct:
Deletehttp://www.marketwatch.com/investing/stock/FCA?CountryCode=IT
Also, look at their website, I think they don't have the fully diluted shares (assuming 100M share secondary and convertible which I'm not exactly sure how to calc that but I think it's just $2.5 B divided by the convertible price or $2.5B divided by conservatively I used $13 conversion price). So from their site: 1,284,919,505 + 100,000,000 + 192,307,692 = 1,577,227,197. That equates to a $21 Billion market cap at $13.4.
YRCW - Looks like earnings Feb 5, AMC, Thursday, could run into the event getting some volume here.
ReplyDeleteUUP - Hmm, maybe a top?
WNC - Is it true Blackrock owns $57M of this one?
Yeah I like YRCW into earnings but if it drops below $15.4 I'll bail.
DeleteEU - Proposal to collect and store for 5 years all air traffic travel/ticket info for each passenger.
ReplyDeleteWas looking closer at the PTRY earnings release and am pretty floored by the numbers they did. They boosted fuel margins by 54% last quarter. They do about $1.2 Billion in fuel revenues and $0.45 Billion in merchandise revenue in their convenience stores (so about 75% fuel revenues).
ReplyDeleteTA does around 80% fuel revenues per quarter for a total revenue rate of around $2 Billion. Here is TA's margins per gallon for the past 7 quarters:
Q4 2012 0.157
Q1 2013 0.158
Q2 2013 0.175
Q3 2013 0.179
Q4 2013 0.169
Q1 2014 0.188
Q2 2014 0.193
Q3 2014 0.193
Here is PTRY's until last quarter:
Q1 2013 0.117
Q2 2013 0.123
Q3 2013 0.107
Q4 2013 0.118
Q1 2014 0.107
Q2 2014 0.129
Q3 2014 0.133
Both had been trending up slightly with Q3 being solid. TA has maintained about a 48 to 53% higher fuel margin per gallon so if you assume this ratio for Q4 then you could see TA do $0.27 to $0.28 per gallon. That seems too high but if you assume those margins then TA could see a boost of $32 Million in operating profit for Q4 (about $0.90 or 0.59 after tax) just from fuel. Additionally, merchandise sales appear to have been helped by the lower oil and it would be logical to see TA experience the same. Last year in Q4 they basically broke even after backing out a one time litigation charge. If you assume a $0.59 boost to after tax income from higher fuel margins, then you arrive at a $0.59 EPS figure for Q4. Again, this seems too high to me but current EPS estimates are at $0.06 which seem really low to me. It seems like this is going to be a blowout quarter for TA.
TA is an interesting one because they have been spending like crazy to get all of these newly purchased properties fixed up and running well so ultimately this could pay off in the form of better revenues plus a lot of these expenses will be going away. On top of this they're getting a boost to fuel margins and higher consumer spending from oil savings. Q4 and Q1 are usually slower quarters for them but if they can post a big beat like that...even if it's like $0.20 or $0.30...then the total EPS figures for the entire year could be significantly higher than in 2011-13, which averaged around $1.00. I still think this stock gets to at least $20. Plus, the chart is breaking up into blue skies, much like NLS and LNG did a couple of years ago. This could be a good long term one.
TD has ATD.B in Toronto as a top pick. They are a large convenience store and gas station operator, mainly in the US, and are currently buying PTRY. TA and ATD.B still too expensive for my style, but I can see why people would pay up for them and the stocks could do well this year. For your info, TD also see fuel margins rising:
ReplyDelete"Following up on a strong performance in H1/F15, our fuel margin calculator places the company’s net fuel
margin at a record $0.26/gallon net of interchange fees ($0.30/gallon gross) for the first 14 weeks of CoucheTard’s
16-week Q3/F15. We were initially basing our Q3/F15 EPS estimate on $0.153/gallon net
($0.200/gallon gross) compared to $0.130/gallon a year ago. Given that significant decline in rack prices, our
initial estimate seems far too conservative. With the intention of retaining a little conservatism – we find
Couche-Tard rarely seems to match the industry data at the extremes – we are boosting our Q3/F15 net margin
estimate to $0.23/gallon ($0.27/gallon gross). This would put our full-year net fuel margins assumption at
$0.185/gal ($0.228/gal gross).
Looking further ahead, as long as we do not see oil surge higher – steady increases are more manageable – we
now believe that annual U.S. net fuel margins can average ~$0.155–$0.160/gallon (~$0.19–$0.20/gal gross) in
F2016 and F2017.
BXE - Most likely bankrupt or what?
ReplyDeleteA lot of people I know buy stuff through AMZN, this company is putting box stores out of business.
ReplyDeleteCBI down 10% on news of a nuclear plant delay - trying to figure out what this really means, but could be a good time to buy
ReplyDeleteAh, nuclear plants... That explains it. Those are on the left end of the smartphone popularity spectrum.
Delete$34 was my brokers target, just shy of the geometric target. Could go lower.
DeleteCBI - Hmm, not looking good.
ReplyDeleteThey've knocked the market cap down more than the likely high end hit to earnings from this. Stock is even cheaper now, unless you believe this nuclear issue grows and hurts earnings even more (which is not unheard of for nuclear reactors).
DeleteI'm pretty sure I want to add into this weakness, but suspect we get more selling on Monday after the brokers reduce estimates to reflect this, so I'm watching and waiting for now.
Maybe Buffett's been selling?
DeleteFAZ - I should've bought this over anything else, along with the SPXS
ReplyDeleteUS military has 13,000 aircraft, Russian military has 3,000 Russia is the clear leader in rolling vehicles by a wide margin.
ReplyDeletenew post
ReplyDelete