Sunday, September 30, 2012

Performance For The Third Quarter Of 2012

All in all, a respectable quarter. I've gotten a decent boost from M&A and biotech so far this year, and I know better than to think that'll continue. I'd like to add some more tech, some emerging market, and maybe even more industrials (though I'm overweight there already).

Q3'12 Performance
Portfolio A - +8.1%
Portfolio B - +7.4%
Combined Portfolios - +7.8%

S&P 500 - +6.4%
Nasdaq -  +6.2%
Russell 3000 - +5.7%

YTD Performance
Portfolio A - +20.0%
Portfolio B - +23.6%
Combined Portfolios - +21.3%

S&P 500 - +16.4%
Nasdaq - +19.6%
Russell 3000 - +14.4%

Also, year to date, my Alpha is about 6.3% for the combined portfolios. So, not a bad year so far. 

Friday, September 28, 2012

Investopedia: Machinery Markets Catch Cold; Titan Gets The Flu

There are plenty of examples of small companies growing through tough times in their sectors, often by grabbing share with new and innovative approaches to old problems. Nevertheless, it is still generally the case that when the big boys catch a sniffle, the smaller companies suffer even more.

With major construction and agriculture equipment original equipment manufacturers (OEMs) such as Caterpillar (NYSE:CAT) and Deere (NYSE:DE) looking a little weaker (and their managements sounding more cautious), it's not so surprising that the shares of Titan International (NYSE:TWI), a maker of wheels and tires for off-road commercial vehicles, have weakened. Titan remains an ambitious and aggressive company, however, and these shares look quite interesting as a more aggressive play on long-term growth in sectors such as mining, construction and agriculture.

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Investopedia: Dana Looks Like A Name To Know In Parts

These are not easy times to be in the business of supplying parts and components for the passenger vehicle or commercial vehicle markets. Although U.S. auto sales have been quite good of late, business has slowed in Europe and many emerging markets, while numbers and management guidance from a host of truck, agriculture and mining OEMs has pointed to slowing trends as well.

Against that backdrop, I still think it is worthwhile for investors to take a closer look at Dana Holdings (NYSE:DAN). Numbers have come down a bit, and there are definitely risks in end-user demand for 2013, but this company's diversification across geographies, end markets, technologies and customers makes it a differentiated parts and components company. Coupled with a valuation that does not seem demanding, the stock is likewise interesting at these levels.

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Investopedia: Bull Vs. Bear - Facebook's New Revenue Strategies Carry Real Risks

Question: Will Facebook's new plan for ads help push up its stock price?  

Bear's Response
Apart from the debate over whether Apple's (Nasdaq:AAPL) new iPhone is a great leap forward or the first warning of stalling innovation, perhaps the most popular topic in finance writing right now is "What's wrong with Facebook (Nasdaq:FB)?" and "Can it fix the problem?" It seems pretty clear that the more starry-eyed investors have had to revise their expectations down, but Facebook's management has been more assertive lately now that they have oncoming revenue growth strategies that will make a significant impact.

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Thursday, September 27, 2012

Investopedia: If Modine Manufacturing Can Turn It Around, The Rewards Could Be Significant

There aren't too many auto or commercial vehicle component manufacturers doing very well in the market right now, as even popular names like BorgWarner (NYSE:BWA) and Cummins (NYSE:CMI) are getting sold on fears about waning global demand. That leaves Modine Manufacturing (NYSE:MOD) in a precarious position - the company serves both passenger and commercial vehicle manufacturers, it has a sizable exposure to Europe and it's trying to execute a restructuring of some of its operations.

Although there's definitely a risk that Modine's restructuring efforts will fail, as well as industry-wide risks regarding demand and sustainable free cash flow generation, the potential payoffs of success make this a name worth watching.

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Investopedia: For Jabil, The Price Is Right But The Timing Is Uncertain

I don't know whether Jabil (NYSE:JBL) is really going to succeed in differentiating itself over the long term from the broader electronics manufacturing service (EMS) industry. What I do know, though, is that this is a tough stretch for the global economy and for key end markets like handsets, medical equipment, and communications/networking hardware. Jabil's stock does look undervalued, though, and while I think it may be too soon to make a major commitment here, I can see how this stock could appeal to more aggressive value hounds.

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Investopedia: Overvaluation Could Split The Fortunes Of FactSet And Its Stock

It has been a few years now since I've had a regular Wall Street desk job, but I still miss having FactSet's (NYSE:FDS) databases and analytic tools close-at-hand. Not only does this financial information company offer a very sticky product, but the company also continues to add functionality and breadth to its platform. Unfortunately, the Street has long had a love affair with the stock as well, and I am worried that the process of transitioning from growth stock multiples to those of a more mature company could be a tough one for shareholders.

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Wednesday, September 26, 2012

Investopedia: Improved Traffic And Menu Revamp Optimism Boosting Darden

Sit-down restaurants have come back into favor over the past year or so, and Darden (NYSE:DRI) has gone along for the ride ... even though company growth really hasn't improved all that much. Darden remains a strong player in the industry, with two of the largest concepts (Olive Garden and Red Lobster) and sustained double-digit returns on capital. Although Darden shares don't look like much of a bargain today, the market may not be through with it yet, as menu revamps could spur better traffic and earnings.

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Tuesday, September 25, 2012

FinancialEdge: What's Your Best Chance Of Becoming A Millionaire?

Inflation may be inexorably eroding the value of a dollar, but achieving millionaire status is still an impressive and motivating goal. More importantly, it's an eminently attainable goal with hard work and careful planning. Here are some of the best ways that a younger person can think of earning a seven-figure net worth over time.

Three Key Questions
When thinking about how to accumulate a million dollars or more, there are three key issues that people must consider. First, a job must be accessible for it to offer a high likelihood of millionaire status. For instance, playing in a professional sports league dramatically increases the odds of earning enough to become a millionaire, but professional sports employ less than 5,000 athletes (among the big four North American leagues). Likewise, virtually every Fortune 500 CEO gets a million-dollar pay package (or better), but there are only 500 of those jobs available.

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Seeking Alpha: SPX - A Complicated Power Play

It has been an interesting decade for SPX (SPW), as the company has gone through spasms of acquisition and divestiture but really hasn't set the world on fire with its margins, returns on capital, or free cash flow generation. With most of the business shuffling complete, and broadly improving utility demand, can SPX show that it deserves a spot on a list of quality industrial conglomerates?

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SPX: A Complicated Power Play

Investopedia: Will QE3 Give Paychex More Than it Takes Away?

When you're in the business of processing payrolls for small employers, a weak job market is a definite limitation on growth. Paychex (Nasdaq:PAYX) has been muddling through this period of weak job creation, and now there is a new Federal Reserve stimulus program specifically targeting job growth and employment. It's an open question as to whether this stimulus will succeed, but it's a near-certainty that low rates will continue to pressure Paychex's ability to wring profits from its float. That sets up Paychex for a high-quality but growth-poor play on improved employment, and an expensive one at that.

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Seeking Alpha: Is There Room For One More Advanced Melanoma Treatment?

Investors should know in about three to six months if Vical's (VICL) Allovectin has the clinical credentials to get FDA approval for treating advanced melanoma. As another cancer immunotherapy company, Dendreon (DNDN), has ably demonstrated though, approval from the FDA is no guarantee of attaining commercially viable market share or retaining investor enthusiasm. So with all of the attention that Roche (RHHBY.OB) and Bristol-Myers (BMY) have gotten for their melanoma drugs Zelboraf and Yervoy, is there enough opportunity left in advanced melanoma for Vical?

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Is There Room For One More Advanced Melanoma Treatment?

Investopedia: Red Hat Keeps Booking The Dealds, But Is It Growing Enough?

I'll give credit where it's due - Red Hat (NYSE:RHT) did a great job with its Linux business, and management has shown prudent aggression when it comes to building next acts in middleware, storage, virtualization and cloud. The question, though, is whether the company can deliver the sort of growth and margin leverage that the valuation assumes. So far, it's not looking like a sure thing.

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Investopedia: Lennar Rebuilding, But Valuation Overbuilt

Homebuilders have already had a heck of a run over the last year, with names like Toll Brothers (NYSE:TOL), DR Horton (NYSE:DHI) and Lennar (NYSE:LEN) all up more than 125% over the last year and up many times over from the lows in the late fall of 2008. What concerns me is whether these moves have already discounted a lot of the early gains from the nascent housing recovery - setting up the possibility that housing activity (and prices) could continue to improve without necessarily taking the homebuilder stocks with them.

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Investopedia: Citrix May Be A Relative Bargain, But There's A Lot Left To Prove

Valuations in the software sector, particularly among those companies having anything to do with "cloud," are pretty bonkers right now. That leaves stocks like VMware (NYSE:VMW) and Citrix Systems (Nasdaq:CTXS) as what passes for "value." Value doesn't come without a catch, however, and in the case of Citrix, that catch is the sharp and ongoing debate about whether desktop virtualization can really catch on beyond the early adopters who are already on board.

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Investopedia: The Long-Tail Value Of Supreme Brands

The way tech companies like Apple (Nasdaq:AAPL) and drug companies like Pfizer (NYSE:PFE) fight to defend their patents, you'd think that success in business is impossible unless you can lock up your best ideas behind walls of patents and copyrights. While these legal protections for innovation are indeed important, a host of companies have demonstrated that there are considerable rewards to be wrung from brands and reputations protected by little more than the consumer's ongoing preference for the real McCoy and the value of the trademark.

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Monday, September 24, 2012

Investopedia: Budget Worries Could Crimp Cubic In The Short Term

I think many investors spend too little time thinking about their investing horizons when contemplating new positions. Although "buy and hold until it works out" is probably the default strategy for many investors, it can lead to some tense moments in the short-term. That brings me to Cubic (NYSE:CUB), a company which I think has a very interesting long-term outlook, but may well underperform for the next year or two.

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Seeking Alpha: Can Sun's Superiority Send It Higher?

Although 2012 has been a tough year for industrial names, hydraulic component players like Eaton (ETN), Parker-Hannifin (PH), and Sauer-Danfoss (SHS) still post quite solid 12-month returns relative to the S&P 500; about 40% higher on average. That makes Sun Hydraulics (SNHY) a notable and surprising laggard, with the trailing year's return about 40% lower than the market. Sun stands out as a high-quality and differentiated industrial small cap, but producing an appealing fair value target takes some effort and above-average optimism.

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Can Sun's Superiority Send It Higher?

Investopedia: The Market Is Already Expecting Big Things At Dril-Quip

There's ample business to come in offshore energy development, what with the huge discoveries of oil and gas in the waters off Brazil, and both East and West African countries. The question, however, is how much of that is already reflected in the valuation of equipment companies such as National Oilwell Varco (NYSE:NOV), Aker Solutions (OTC:AKKVF) and Dril-Quip (NYSE:DRQ). In the case of the latter, it looks like quite a lot.

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Investopedia: For Oracle, Mixed Progress Is Still Progress

The stock of enterprise software giant Oracle (Nasdaq:ORCL) has certainly come alive this summer, but there's more than a little skepticism about the health and durability of the company's growth. While bulls think that engineered systems and Fusion applications will reignite (or at least maintain) growth, skeptics point to Oracle's soft organic growth and threats to its basic enterprise business model. The stock seems undervalued on a cash flow basis, though, and double-digit license growth should tip the balance to the bull camp in the short term.

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Investopedia: Will Stimulus Push Cintas Higher?

The United States employment situation really hasn't gotten much better over the last year, but that hasn't hurt the shares of uniform supplier Cintas (Nasdaq:CTAS) all that much. Up more than 45% over the past year, it's worth asking whether investors have already baked in an improving job market - even if those improvements have yet to show up in the government's statistical data. Cintas remains a high-quality, well-run business with some meaningful barriers to competition, but the valuation case is a little more unclear.

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Friday, September 21, 2012

Investopedia: Telefonica Still Has To Muddle Through The Mess In Spain

The ongoing slow-motion train wreck that is Spain has dragged down plenty of otherwise companies, and Telefonica (NYSE:TEF) definitely belongs on the list. Although Telefonica's health isn't tied to the solvency of Spain as much as other major banks such as Santander (NYSE:SAN) or BBVA (NYSE:BBVA), the state of the economy there still does make a big difference. With hefty debt and a global decline in the returns of wireless as an industry, Telefonica has its challenges. Although the company's debt load is a roadblock to significant value for the shares today, I wouldn't completely count out this company (or its shares).

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Investopedia: Has The Market Already Noticed ConAgra's Improvements?

Investors make money on turnaround stories by coming in ahead of the curve, taking on the risk of being wrong in exchange for the possibility of outsized gains. Once the notion that a company has made real progress and improved its operations is generally accepted, usually the stock has already run up. In the case of ConAgra (NYSE:CAG), the stock is up strongly on better first quarter earnings, but more gains could be on the way if the Street accepts that these improvements are here to stay.

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Seeking Alpha: Here We Go Again With AEterna Zentaris ... Again

Maybe H.P. Lovecraft was really a prophet of biotech when he wrote "That is not dead which can eternal lie," as it clearly seems like there are certain biotechs that come back again and again… and again. While the failure of AEterna Zentaris' (AEZS) drug perifosine in colorectal cancer led to a major drop in the share price and the end of a variety of silly rumors regarding the company's prospects of being taken over by a Big Pharma company, it looks like the company has once again attracted some hope and optimism.

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Here We Go Again With AEterna Zentaris ... Again

Investopedia: Adobe's Transition Is Necessary, But A Little Turbulent

Another of the many quirks of Wall Street is that pretty much everybody can know what's going on, and yet still show some surprise when it shows up in the financials. Adobe (Nasdaq:ADBE) is in the middle of a business model transition as it shifts customers from licenses to subscriptions, and that process is messing with the reported revenue numbers. While the pre-market indications do not suggest that investors are too worried about Adobe's performance, the valuation still suggests something less than a full buy-in to Adobe's ongoing growth prospects.

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Thursday, September 20, 2012

Investopedia: Opacity Doesn't Help The Cause At Bed Bath & Beyond

Investors always seem to want more information from companies, and there's certainly a point of diminishing returns for companies when it comes to their level of disclosure. Nevertheless, I think Bed Bath & Beyond (Nasdaq:BBBY) is doing its shareholders a disservice by not breaking out its costs and charges in more detail in its earnings press release. As it stands, I don't think Bed Bath & Beyond is an especially compelling retailer at today's prices.

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Investopedia: General Mills Seeing Good OUS Growth, But Yoplait Needs Help

It's always something with Wall Street analysts and investors. So although General Mills (NYSE:GIS) is doing all right in businesses such soup and baked goods, and management seems pretty confident that the drought won't hurt margins much, worries about the Yoplait yogurt business overshadow good growth in overseas markets. While General Mills may not be a bad option for long-term income-inclined investors, it's hard to work up a lot of excitement on the basis of today's valuation.

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Investopedia: Waiting To Back Up The Truck For Old Dominion

It's not usually a good idea to hang around and hope that a stock you sold too soon once before gives you a second chance. Nevertheless, I do find myself hoping that Old Dominion (Nasdaq:ODFL) gives me that second chance to buy shares in one of the best-run companies and best growth stories in the U.S. trucking industry (and perhaps the U.S. transport sector as a whole). Although this stock has done quite well already this year and valuation looks a little stretched, a pullback could change all of that overnight.

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Investopedia: NetSuite's Valuation Leaves No Room For Error

Robust valuations are nothing new in the cloud/SaaS space, but NetSuite (NYSE:N) looks premium-priced, even by those lofty standards. Although this company certainly is posting strong billings growth today and free cash flow is ramping up nicely, it's hard to see how the industry can support the growth expectations for all of its members and I don't know that NetSuite's rampant success is as certain as the valuation would suggest.

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Investopedia: Segmenting The Business Doesn't Solve Federal-Mogul's Biggest Challenges

Although the passenger vehicle market has stayed relatively healthy in the United States, slowdowns in Europe and emerging markets have left many auto parts companies drifting this year. In the case of Federal-Mogul (Nasdaq:FDML), it could be argued that macro pressures have hidden some of the cost improvements the company is trying to make, while the weak performance of the aftermarket business has likewise weighed on the numbers. Although Federal-Mogul likely can do better from here, investors should not lose sight of the risks that accompany the stock.

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Wednesday, September 19, 2012

Investopedia: NetSuite's Valuation Leaves No Room For Error

Robust valuations are nothing new in the cloud/SaaS space, but NetSuite (NYSE:N) looks premium-priced, even by those lofty standards. Although this company certainly is posting strong billings growth today and free cash flow is ramping up nicely, it's hard to see how the industry can support the growth expectations for all of its members and I don't know that NetSuite's rampant success is as certain as the valuation would suggest.

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Investopedia: FedEx May Be In Sight Of Bargain Pricing

I've been a FedEx (NYSE:FDX) skeptic for some time now, and despite a few spikes in February and March, the stock has mostly chopped around in 2012 as investors try to digest the impact of slowdowns in Europe and China on global transportation. Although I still believe that FedEx enjoys too much benefit of the doubt with the sell-side analyst crowd, I do acknowledge the value in this company's nearly impossible-to-replicate infrastructure and its leverage to an eventual economic recovery. Overall, maybe FedEx is getting within sight of being attractively valued.

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Investopedia: Should Investors Play On The Acme Packet See-Saw?

Tech investors and analysts can be fickle creatures - they'll happily project astonishing revenue growth and breathtaking forward multiples when times are good, but they'll turn quickly when growth lags and often over-correct to the downside. None of this is to say that Acme Packet (Nasdaq:APKT) is automatically undervalued, but it may be worth asking whether circumstances have changed so much in the past half-year that the stock should only be worth half of what analysts once said it was worth.

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Investopedia: Danaher Does Another Typiacl Danaher Deal

Danaher (NYSE:DHR) is built through acquisitions, but it's an odd company in that it doesn't necessarily (or even often) buy great companies. Instead, Danaher seems to focus on buying companies that can be made substantially better under its aegis. With that profile in mind, Danaher's acquisition of IRIS International (Nasdaq:IRIS) makes a great deal of sense.

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Investopedia: Growing Niches Should Propel Ultratech Higher

Niche markets are often spoken of poorly, as they don't typically offer the sort of huge addressable revenue opportunities that tech investors value. In the case of Ultratech (Nasdaq:UTEK), however, I wouldn't be so quick to dismiss the company as just a niche player. With opportunities to expand the utilization of market-leading tools for advanced packaging, laser annealing and LED production, Ultratech could be looking at several years of above-market growth or a takeout offer.

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Investopedia: Advanced Energy Industries Looking For Recoveries In Semis And Solar

You wouldn't really know it by looking at the stock's performance over the past year, but Advanced Energy Industries' (Nasdaq:AEIS) core markets are not doing especially well. While this company is well placed as a provider of power conversion systems for the semiconductor equipment industry and solar inverters, neither the semi CAPEX nor solar markets have been doing well this year. Better days are almost certainly ahead, but a market-beating stock may have already captured some of the gains to come from this recovery.

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Investopedia: Exelon's Discount May Offer An Opportunity

It feels like investors and analysts have spent the better part of two decades arguing that power prices in regions like the Midwest and Mid-Atlantic should be higher than they are. Along the way, several independent power producers ((including Dynegy (OTC:DYNIQ)) have faltered badly as consumer-friendly regulators and stubbornly lower power prices have made this a perennial "wait 'til next year" market. With power prices recently testing historical lows, Exelon (NYSE:EXC) shares have been quite weak. Is this an undervalued high-quality utility story, or just another utility doomed to struggle with lower-than-expected power prices in its core regions?

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Seeking Alpha: Achillion Back On The Hep C Roller Coaster Of Love

With an upgrade and an initiation at "Buy" on Wednesday morning, Achillion (ACHN) is back in the good graces of at least some biotech investors. I've been favorably inclined towards Achillion for a while now, thinking that its NS3 protease inhibitor sovaprevir (aka ACH-1625) and NS5a inhibitor (ACH-3102) gave it a better-than-average chance of being a player in the hepatitis C (HCV) market or, more likely, a target for a company that fears being left on the outside of this eventual multi-billion dollar market.

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Achillion Back On The Hep C Roller Coaster Of Love

Investopedia: Assurant Seems To Be Baking In Much Tougher Times

There can be a lot of money in targeting specialized insurance markets, as there's often less competition and substantial rewards for building up expertise in underwriting. It's a strategy that has served companies like Berkshire Hathaway (NYSE:BRK-A, BRK-B) and W.R. Berkley (NYSE:WRB) pretty well. In the case of Assurant (NYSE:AIZ), though, analysts are taking a generally dim view of this company's ability to continue growing premiums and maintaining a profitable combined ratio. While the stock is not especially interesting if the bearish predictions are in fact accurate, financial outperformance could power a strong recovery in these shares.

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Tuesday, September 18, 2012

Seeking Alpha: Neurocrine Still Looks Significantly Underrated

I've written positively on Neurocrine Biosciences (NBIX) twice already this year, and I finally took the plunge and bought it for my own account. Although there's ample risk with this company's clinical programs, the pipeline addresses some major unmet clinical needs and could support a price target roughly double today's price.

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Neurocrine Still Looks Significantly Underrated

Investopedia: Does American Axle Have The Horsepower To Outrun Its Balance Sheet?

There's no one right way to value a company, and that seems particularly relevant in the case of American Axle (NYSE:AXL). Investors who rely on discounted cash flow models are not likely to find much value here, as the company's huge debt load overshadows even optimistic projections for revenue and cash flow growth. On the other hand, the company is leveraged to potential demand growth in pickup trucks and looks potentially interesting on simpler valuation measures like P/E and EV/EBITDA.

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Investopedia: Home Depot Chooses Profits Over Empire Building

Although not everything that home improvement superstore operator Home Depot (NYSE:HD) has tried worked, management deserves credit for being ready with a quick hook when it seems clear that an idea just isn't going to live up to expectations. That seems to be the case with the company's plans for China, as management has announced that it will be closing its remaining big box stores in China and shifting to a strategy of specialty stores and e-commerce.

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Monday, September 17, 2012

Investopedia: What Does Q3 Mean For The Market?

Long in coming and widely anticipated, the Fed announced September 13 that it would launch another effort to stimulate the economy through further monetary policy actions. The implications extend not to the tens of billions of dollars that will be spent on mortgage-backed securities, but also into the interest rate, equity and commodity markets, as well as the global economy.

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Seeking Alpha: Targacept Looking Like A Dead End

Development-stage biotech Targacept (TRGT) may have once had a bright future and a nearly $30 share price, but those days are long past. With yet another clinical disappointment, it seems fair to ask whether Targacept's entire research direction is fundamentally flawed and whether the company can use the capital it has left to find a new path … or if shareholders would be better served by the company simply closing up shop and returning the cash.

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Targacept Looking Like A Dead End

Investopedia: Does BMC Software Offer Durable Value?

I've said it plenty of times, but some ideas are worth repeating - value-priced tech stocks seldom outperform in the absence of growing investor confidence regarding growth or significant returns of capital to shareholders. While BMC Software (Nasdaq:BMC) looks undervalued by many different standards, the company's growth is unimpressive and there are growing questions about the competitiveness of its product offerings. As a high-value buyout doesn't seem especially likely, BMC is going to have to figure out a new path to growth if this stock is going to work well.

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Investopedia: Can Hanesbrands Leverage Successful Brands Into Better Financials?

There's not much debate about the quality of the brands that Hanesbrands (NYSE:HBI) owns. Names like Hanes, Champion and Playtex resonate with consumers, and when it comes to innerwear, a large percentage of shoppers stick with a single brand for decades at a time. This company has not always managed to convert that brand value into shareholder value, though the stock has rebounded sharply from the lows of 2009. Now the question is whether management can not only maintain the value of these brands, but also wring more expenses out of the operations and deleverage the business.

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Friday, September 14, 2012

Investopedia: Does The Stock Of Chart Industries Already Discount A Rosy Future?

Natural gas has a bright future, both here and abroad, as an energy source in a variety of applications. Not only do countries like the U.S. and China have substantial shale gas reserves, but a host of companies like Westport (Nasdaq:WPRT) and Clean Energy (Nasdaq:CLNE) are developing technologies to exploit them in applications like vehicle fuel.

For natural gas usage to meet its potential, though, the world needs a lot more infrastructure and that's where Chart Industries (Nasdaq:GTLS) comes into the picture. By offering good technology that addresses multiple points in the ecosystem (liquification, storage, distribution, etc.), this company should have many years of impressive revenue growth ahead. The question, though, is just how much of this the stock price already reflects.

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Investopedia: Weighing The Improvements At LSI Against Industry Challenges

While it often helps to have strong end markets when trying to turnaround or improve operations, it isn't always a prerequisite. LSI Corporation (NYSE:LSI) management has done a pretty good job of reorienting this business towards better growth and margin, but key end markets like PCs and mobile carriers haven't been doing all that well of late. Consequently, LSI may yet be cheap enough for investors to see worthwhile gains from here if and when these markets improve

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Investopedia: A Pick Up In North American Industry Will Benefit WESCO

WESCO (NYSE:WCC) has been doing its best to continue growing in recent years, despite the fact that key markets making up nearly half of sales have yet to really recover in a big way. Given the value that WESCO adds as a distributor, the fragmented nature of its electrical distribution industry and the opportunity for future growth coupled with better margins, WESCO is a name that I wouldn't want to be short for the long term.

Filling a Key Role in a Big Market 
WESCO is a significant distributor of electrical, industrial and communications products in North America, selling nearly 1 million different products from 18,000 suppliers to more than 65,000 customers. Although it's one of the largest players in this approximately $100 billion market, WESCO has just 6% share or so - highlighting just how fragmented the industry us.
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Thursday, September 13, 2012

Seeking Alpha: NuVasive Could Do Better, But Will It?

The last twelve to eighteen months have not been easy on NuVasive (NUVA). Once a darling of growth-oriented investors in the med-tech space, NuVasive got knocked off stride by a combination of sluggish growth in its core spine market, increasing competition, an IP litigation loss to Medtronic (MDT), a questionable acquisition, and just a generalized ennui on the part of investors frustrated with the pace of progress at this small-cap orthopedics company.

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NuVasive Could Do Better, But Will It?

Investopedia: Does Blount Offer Investors A Small-Cap Recovery Play On Housing?

Blount (NYSE:BLT) is the sort of small industrial company that can go unknown and unfollowed for years unless and until it gets a little attention from the financial media. Although the severe decline in residential construction has meant challenging times for this leading producer of cutting chains and other products for the forestry and lawn/garden markets, the potential offered by end-market recoveries and increased operating leverage makes this a name worth watching.

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Investopedia: United Natural Foods Has To Spend Money To Make Money

While there have certainly been some pullbacks along the way, including a nearly 10% decline after fourth quarter earnings, United Natural Foods (Nasdaq:UNFI) has, by and large, basked in the love of growth stock investors. And not without some good reasons - United Natural has delivered excellent growth and market share gains, and has recently shown some solid margin improvements. I still think a key fundamental question remains, however, and that is whether investors are properly discounting what the company needs to spend on capex to maintain its growth rate into the near future.

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Investopedia: Can Casey's Ring Up Better Cash Flow?

Plenty of stocks work even though their models fly in the face of academic notions of how financial markets are supposed to work. Take the case of Casey's General Stores (Nasdaq:CASY). While this company has a business plan that makes ample sense (building stores in small Midwestern communities) and has delivered good growth and reasonable returns on capital, the free cash flow generation has not been so great. So although Casey's doesn't work so well from a discounted cash flow perspective, I don't think that's going to hurt the stock all that much.

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Investopedia: Another Quarter, Another Warning From Steel Dynamics

Tuesday evening marked a continuation of a pretty unfortunate trend for Steel Dynamics (Nasdaq:STLD), as the company once again revised its quarterly guidance lower. Although Steel Dynamics' situation may not be identical to other domestic steelmakers, it would seem that investors would continue to do well in approaching these stocks with caution for the time being.

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Wednesday, September 12, 2012

Investopedia: Can E.ON Power Higher?

It's been an interesting couple of years for German utility giant E.ON (OTC:EONGY), and "interesting" is almost never a good thing for a utility. Not only has the company had to deal with the German government's decision to phase out nuclear power, but the economic and regulatory environment in Europe has been slipping around as though trying to walk on ball bearings. Nevertheless, the company's commitment to expand its unregulated and emerging market businesses offers the hope of more growth, though investors may question the likely returns on that growth.

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Financial Edge: Hey Self-Employed, Are You Making The Most Of Your Retirement Options?

Saving enough for retirement is a big deal, and retirement is just as real and important for self-employed workers as it is for more conventional employees. Unfortunately, the retirement savings options for the self-employed aren't quite as obvious or automatic as they are for regular employees - whenever someone starts a new job, HR often tells them about any company-sponsored plans that are available, but there's no similar mechanism for the entrepreneur.

Luckily, there is a wide range of options available to those who run their own business. While some approaches are compelling in their simplicity, others allow an owner or operator to squirrel away truly considerable amounts of money for retirement. Although readers should be aware that the details and requirements of these plans can change with the tax laws, here are some of the best options available to the self-employed.

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Financial Edge: How Checklists Can Help Investors

It is easy to drown in the flood of information available in the financial markets. There's always one more report to read, one more press release to peruse or one more chart to interpret. In such an environment, it's easy to get pulled off course; information intended to help you, can actually make it difficult to maintain a consistent investment process.

Unfortunately, the market rewards disciplined investing and often quickly punishes emotional, distracted or disorganized approaches. What's more, it's easy to forget discipline when things are going especially well or especially bad. And then there's just human nature – humans are fallible creatures and even the best find it difficult to remember or replicate what worked three or four years ago.

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Financial Edge: Plastic Surgery Worldwide - Which Countries Nip And Tuck The Most?

Healthcare is a critical factor in the health, happiness and well-being of people around the world, but most of the attention paid to healthcare focuses on what can best be called "medically necessary" procedures. However, what about people who choose to indulge in elective cosmetic procedures? Plastic surgery is a major global enterprise and some of the biggest indulgers in cosmetic surgery may surprise you.

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Financial Edge: The Reality Of Investing In Space Exploration

Space exploration has long been one of those endeavors that many try to argue has to be the domain of national governments. Not only does space exploration carry a huge price tag and uncertain economic returns that are anathema to companies, but many pundits and observers have worried that their involvement will somehow sully the virtues of pure science and/or lead to unrestrained land-grabs that will be hard to adjudicate in on-the-ground courtrooms.

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Financial Edge: Beware Of Bad Companies That Won't Die

Anybody with a working memory of the 1980s remembers the phenomenon of the horror movie villain who just would not die. It didn't matter how absurd the situations became, or that the sequels were just shameless grabs for money, the villains lived on as long as there were people willing to buy tickets or rent VHS tapes, which brings us to today's topic - bad publicly traded companies that just cannot die.

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Financial Edge: The Risky Business Of Courting LGBT Customers

Whether it's due to the rise of social media and the phenomenon of the immediate sharing of views and opinions or just an intensification of the "culture wars" that seem to occur everywhere throughout history, where we eat and shop now has more political and social overtones than ever before. In particular, companies are finding that they must be very careful in how they attempt to position themselves towards Lesbian, Gay, Bisexual and Transgendered (LGBT) customers.

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Seeking Alpha: Med-Tech Due For More M&A

Buyouts have long been a staple feature of the med-tech landscape. While giants like Johnson & Johnson (JNJ), Medtronic (MDT), and Abbott Labs (ABT) are often knocked (and often unfairly) for their inability to innovate, they do excel at marketing. That creates a pretty steady conveyor belt where smaller, innovative companies create new devices that move the state of the art forward and large companies gobble them up to goose their own growth and leverage their existing production and sales infrastructures.

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Med-Tech Due For More M&A

Investopedia: A Familiar Refrain For Range Resources

In many respects, investors are going to find a lot similarities between companies like Ultra Petroleum (NYSE:UPL), Cabot Oil & Gas (NYSE:COG) and Range Resources (NYSE:RRC). Namely, that these are high-quality natural gas-oriented energy companies with attractive acreage and drilling prospects, as well as low operating costs. However, what is also similar between them all is the relatively low price of natural gas and the extent to which share price appreciation is going to be tied to improving natural gas realizations.

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Investopedia: Lenovo's Margins Are Slim, But The Stock Looks Cheap

Investors who like to cast their lot with the darlings of the market will probably never like to own Lenovo (OTCBB:LNVGY). Although this Chinese PC, smartphone and IT hardware company has ample growth potential in both emerging and developed economies, the company's low margins and volatile results keep many people at bay. Although Lenovo is not going to be a good stock for those who worry a lot about volatility, there seems to be quite a lot of value in these shares.

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Tuesday, September 11, 2012

Investopedia: For Palo Alto Networks, Valuation Is Secondary Today

With its combination of disruptive technology and a large (and growing) addressable market, valuation just isn't going to be what moves or worries investors in Palo Alto Networks (NYSE:PANW) for the next few years. Instead, it will be all about the growth rate and the company's ability to grow market share against large entrenched players such as Cisco (Nasdaq:CSCO), Check Point (Nasdaq:CHKP) and Juniper (NYSE:JNPR). Consequently, while this stock does not look cheap today, that won't preclude further gains so long as the growth satisfies the momentum crowd.

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Investopedia: Bull vs. Bear - The iPhone 5 Is Not Enough For Apple To Reach $1,000

Question: Will the iPhone 5 bring Apple stock to $1,000?
Bear's Response 
Apple (Nasdaq:AAPL) is a marvel by any meaningful sense of the word, but gravity pulls on the marvelous and not-so-marvelous alike. Given the huge revenue base at Apple and the shrinking quality gap between Apple phones and those of rivals such as Samsung, Google (Nasdaq:GOOG), Nokia (NYSE:NOK) and HTC, a simple repeat of an old formula may no longer be enough to keep Apple as the big dog.

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Seeking Alpha: Ametek Deserves Its Premium

Ametek (AME) is an odd, not-so-little industrial company. Although it produces over $3 billion a year in revenue, it's not widely followed by large investment banks (though it does have plenty of institutional ownership). It's also an unusual company in that management is content to focus on product innovation in niche businesses and stay concentrated on a component-oriented business model. While the shares are not especially cheap today, this looks like a classic example of a stock to put on a watch list in hopes of taking advantage of a future pullback.

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Ametek Deserves Its Premium

Monday, September 10, 2012

Investopedia: Rail Traffic Perks Up A Bit

The August edition of Rail Time Indicators from the American Association of Railroads once again offers investors an interesting read on several trends in the North American economy. Although the ongoing declines in coal traffic are still a revenue risk for Class 1 operators like Union Pacific (NYSE:UNP) and Norfolk Southern (NYSE:NSC), the underlying improvements in industrial traffic are encouraging for the economy as a whole.

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Investopedia: Kroger Has The Quality, But Value Is Less Certain

Nobody seems to have much love for supermarkets these days. With the assumption being that superstores like Walmart (NYSE:WMT) and Target (NYSE:TGT), as well as more specialized stores like Aldi, will pressure the mass-market end while players like Whole Foods (Nasdaq:WFM) and The Fresh Market (Nasdaq:TFM) take the high end, mainline supermarkets like Kroger (NYSE:KR) have largely been left behind by the market. Although this company is an exceptionally well-run player in its industry, management needs to figure out how to generate more cash from its assets for the stock to be more attractive.

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Investopedia: Sluggish Today, ON Semiconductor Could Still Surprise

There's a wide, fuzzy line between "early" and "wrong" when it comes to investing. It's all well and good to buy quality undervalued names before the Street catches on, but it can take a lot of patience to see these stories through to their happy ending. Those are all points to consider for investors looking at analog chip company ON Semiconductor (Nasdaq:ONNN). ONNN is a quality broad-based company with diversified end-market exposure and strong leverage potential. But current business trends are not helpful, and while there does appear to be real value here, it may take some time for that value to make it into the stock price.

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Investopedia: UTi Worldwide Sees A Relief Rally

Investors in freight forwarder UTi Worldwide (Nasdaq:UTIW) certainly had little reason to be optimistic going into second quarter earnings. With ocean freight rates pressuring margins and air cargo demand falling, earnings expectations had been drifting lower for weeks. Then when FedEx (NYSE:FDX) warned of a disappointing quarter it was not hard to think that investors were bracing themselves for this report.

Consequently, when UTi Worldwide reported a quarter that wasn't all that terrible on Thursday, the stock enjoyed a good pop. Although the stock remains undervalued on a long-term basis, it's going to take real improvement in the underlying markets (and not just relief rallies) for this stock to work.

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Seeking Alpha: Keep A Close Eye On Cooper's Improvements

Cooper Companies (COO) (or, more formerly "The Cooper Companies") has done a fine job over the past few years of making up for lost time. While the company had to play catch up in the silicone hydrogel contact lens market, it is once again growing its market share and expanding its margins. Although the valuation today on these shares does not look all that compelling, investors shouldn't ignore the potential for further multiple expansion tied to ongoing share growth and margin expansion - two things that med-tech investors prize greatly.

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Keep A Close Eye On Cooper's Improvements

Investopedia: Apple Throws Everything Into Question For Audience

It's increasingly looking like getting business from Apple (Nasdaq:AAPL) is a mixed blessing for small-cap tech companies. While investors had been looking for Audience (Nasdaq:ADNC) to use its solid relationship with Apple (and Samsung) as a platform from which to build on its voice isolation/noise suppression technology, it now looks as though Apple has elected not to use the company's technology in the next iPhone. Not only does that news hammer the expected profit stream for 2013, it also calls into question the broader bullish thesis for the company's technology.

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Investopedia: Verint Watches You, Should You Watch It?

Civil libertarians don't like it, but there is big business in monitoring employees and customers and analyzing that data for actionable information regarding marketing, customer relations, employee training and so on. Likewise, national governments are well aware of the intelligence to be gained through video surveillance and communications interception. Accordingly, it would seem that Verint (Nasdaq:VRNT) ought to have a fairly appealing addressable market for years to come, while the spin-off/merger transaction with Comverse Technology (Nasdaq:CMVT) will ultimately simplify this company's ownership structure.

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Investopedia: Bonkers Expectations May Still Be lululemon athletica's Biggest Challenge

It looks like the momentum trade is back "on" for lululemon athletica (Nasdaq:LULU) as investors cheered a solid second quarter and encouraging third quarter guidance. With lululemon's comps remaining in the double-digits and demand continuing to outstrip supply, the biggest challenge for this company may simply be living up to expectations. Although this remains one of the strongest-growing and most productive stories in retailing, valuation and expectations look more than a little breathless.

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Sunday, September 9, 2012

New email subscription option

Over on the left column of the front page, you'll see a new "feature" - the option to subscribe to get updates by email. So if you're interested in seeing what I'm writing, but don't want to check the site every day, this should be a good option. Not entirely sure how well it works yet, but it may be something you want to check out.

Friday, September 7, 2012

Investopedia: Bull Vs. Bear - Facebook May Not Have The Long-Term Value

Question: Did Facebook and its investors have realistic expectations for the company's growth potential?

Bear's Response
"What's wrong with Facebook (Nasdaq:FB)?" is probably one of the most popular themes in financial/investment writing these days. The poor performance of this stock post-IPO has plenty of people speculating that there was a social media bubble (and that the bubble is now deflating), and now there are rumblings that Facebook is already on the wrong side of its growth curve. While I do think a lot of the pessimism and criticism of Facebook is overheated click-bait, I do believe that the company is growing more slowly than investors expected, and investors may want to take a closer look at some reasons to avoid Facebook.

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Seeking Alpha: Hurco Navigating A Tough Market Reasonably Well

As a tiny industrial company focused around capital equipment and generating more than half of its revenue from Europe, it shouldn't surprise anyone that Hurco (HURC) is seeing some challenging operating conditions. That said, the company is managing this tough market reasonably well and while the next couple of quarters are likely to be touch-and-go, the long-term potential of this company ought to make it a solid candidate for small-cap investors.

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Hurco Navigating A Tough Market Reasonably Well

Seeking Alpha: Accuray's Quarter Not A Disaster, But Share Growth Is Still An Issue

Small-cap med-tech stories rarely have smooth, parabolic trajectories toward success, and radiotherapy company Accuray (ARAY) is certainly no exception in that regard. While management does deserve praise for the extent to which it has driven better service margins, fiscal Q4's sales shortfall and the company's falling share of new North American placements loom as real concerns. Imminent product introductions give investors a reason to hang on, but sales execution must follow if this stock is going to work.

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Accuray's Quarter Not A Disaster, But Share Growth Is Still An Issue

Investopedia: The Market Seems To Have Shifted From Blind Love To Blind Fear With VeriFone

The stock market is a funny place sometimes; one where you may just find yourself defending a stock you used to criticize pointedly. And yet, that's where I feel I am with VeriFone (NYSE:PAY). I didn't like this stock much back in the "what, me worry?" go-go momentum days and I'm glad I didn't actually short it, as the stock just kept climbing from 2009 to 2011. Now it's a different story. Investors have raised questions about how the company reports organic growth and everybody seems to be getting on board the mobile payments bandwagon. Although VeriFone still carries pretty robust fundamental valuation ratios every value investor looks at, this is a company that looks well-placed for ongoing growth. The question for investors now, though, is whether the company can please a momentum crowd that no longer seems willing to give the company much benefit of the doubt.

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Investopedia: Valeant Works Its Mojo With Medicis

It seems pretty obvious that once a company figures out a winning formula, it ought to stick with it. Acquisitions have definitely done a lot to build and boost specialty pharmaceutical company Valeant (NYSE:VRX). Now the company is going to the well again to acquire Medicis (NYSE:MRX). While there's always a risk that Valeant will eventually bite off more than it can chew, this deal looks like a winner from the get-go.

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Investopedia: Is Fresh Pork Eclipsing The Value Of Smithfield's Packaged Foods?

On more than one occasion I've written of my preference for companies that serve the processed/packaged food space in favor of those that sell commoditized fresh/frozen products. That's certainly true in the protein sector, where I much prefer the prospects of a company like Hormel (NYSE:HRL) to those of Tyson (NYSE:TSN). However, Smithfield (NYSE:SFD) is a curious case. Although it is one of the many ways traders can invest in everyday products, this company has both a sizable fresh and packaged meats business.

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Thursday, September 6, 2012

Seeking Alpha: Can Navistar Pull Itself Out Of The Ditch?

Arguably the only thing more remarkable than the share growth Navistar (NAV) saw in the first decade of this century has been how quickly it all went wrong when the company decided to break with the pack and pursue its own engine emissions technology. The company has seen since the error of its ways, and though the profitability of the "new" In-Cylinder Plus Technology and the agreement to use Cummins (CMI) engines are uncertain, the company can at least start thinking about getting back to the business of being a respectable truck builder.

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Can Navistar Pull Itself Out Of The Ditch?

Seeking Alpha: Roche Hosts An Encouraging Investor Day

Sometimes it's good to just rally the troops a bit. While I didn't see anything especially new in Roche's (RHHBY.OB) Investor Day presentations, it was a good reminder as to the depth, breadth, and quality of this Big Pharma's drug and diagnostics pipeline. History says that several of these currently-promising programs will fall by the wayside, and Roche's shares are not quite slam-dunk cheap, but this remains a quality to name to hold in the healthcare space.

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Roche Hosts An Encouraging Investor Day

Investopedia: Jive Could Be The Next Big Thing

With all of the hype that still surrounds the social media and cloud computing spaces, putting the two together sounds a little like a hype supernova. To be sure, there is a lot of hype and hope with Jive Software (Nasdaq:JIVE), a stock that IPO'ed not all that long ago and now sits close to new lows. Although the valuation on this stock still looks pretty rich, it's not hard to see that Jive could become a hot property if it can prove that enterprise customers really are willing to spend money to facilitate workplace collaboration.

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Investopedia: Still Waiting For A Better Plan From Campbell Soup

For a company with what should otherwise be a simple business, Campbell Soup (NYSE:CPB) offers up more than a few questions. Can the company stem its share losses in soup? Can the company effectively compete with the likes of Kellogg (NYSE:K) and Kraft (Nasdaq:KFT) in snacks? Does management really have a solid long-term growth strategy? How you see the answers to these questions goes a long way toward answering whether this is a good stock to own for the next few years.

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Wednesday, September 5, 2012

Investopedia: Washed Out Expectations May Help Maxwell From Here

The combination of overheated expectations and market weakness in Europe and Asia has done a real number on energy technology names ranging from wind power to solar to batteries. With declining revenue momentum in ultracapacitors, lower overall revenue guidance and worries about both emerging competition and sluggish end markets, Maxwell Technologies (Nasdaq:MXWL) has been no exception - dropping almost 50% over the last year.

I'm starting to wonder, though, if this isn't a good time to start reconsidering this name. I think investors have been forced towards much more rational market and revenue expectations, and if anything the market may now be undervaluing the company's long-term potential. While this remains a high-risk name with much to prove, sometimes emerging tech stories work better after a lot of the wide-eyed optimism has been washed out of the stock.

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Investopedia: OmniVision Looks Fueled Up For Another Run

CMOS sensor company Omnivistion Technologies (Nasdaq:OVTI) has a crazy stock. Pull up a long-term chart, and you're basically looking at a map of the Tetons or some such. That chart also says a lot about the business. While Omnivision has long been at the edge of technology in the space, the company has been unable to establish a steady revenue and profit growth trajectory. While I don't expect that basic pattern of volatility to change much, investors may want to consider this stock for the potential sales and profit growth that could be reported with the next major Apple (Nasdaq:AAPL) phone launch.

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Tuesday, September 4, 2012

Investopedia: Cabot Oil And Gas Looks Like A Reasonable "Buy And Wait" Story

Everybody knows the deal these days on natural gas. E&P companies like Cabot Oil & Gas (NYSE:COG) have been incredibly successful at finding and exploiting new sources of natural gas, but the U.S. energy infrastructure has not shifted as radically. Consequently, inventories are high and prices are low, which has kept a lid on many of the stocks. Although Cabot's near-term valuation wouldn't suggest that it's a compelling buy, I think a longer-term perspective suggests a different answer.

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Investopedia: Has Ultra Petroleum Seen The Worst?

Maybe the worst question an investor can ask about a stock or sector is "how much worse can it get?," as the answer is often something along the lines of "a lot." That seems like a relevant point when considering Ultra Petroleum (NYSE:UPL) - a natural gas-focused exploration and production (E&P) company that has long been a top-notch operator, but has suffered from rock-bottom gas prices. It's probably true that higher natural gas prices are inevitable as export-oriented liquefaction facilities come online and more energy consumption is shifted to gas, but that's a multi-year process that still leaves ample room for volatility in these shares.

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Seeking Alpha: The Wait Goes On At YM Biosciences

It's not uncommon for biotechs to go quiet for long stretches of time, particularly when they are basically one-product companies with little incremental data on the way. In the case of YM Biosciences (YMI), though, shareholders have reason to be a little edgy about the lack of news. Not only has the company been cagey in discussing its plans for pivotal trials of its lead drug CYT387, but partnership discussions have supposedly been ongoing for most of the year so far. While I'm cautiously optimistic that YM Biosciences does have a real winner in myelofibrosis, it may well be hard for this stock to outperform without the seal of approval represented by a Big Pharma partner.

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The Wait Goes On At YM Biosciences

Investopedia: Ciena Still Trying To Translate Tech Into Prosperity

I realize that many readers have little or no sympathy for sell-side analysts, but I don't envy them the task of figuring out the telco capex space these days. JDS Uniphase (Nasdaq:JDSU) and Oplink (Nasdaq:OPLK) recently offered solid beat-and-raise quarters that stoked hopes that the much-awaited carrier spending rally has finally come.

And then along comes Ciena (Nasdaq:CIEN); a company that has been introducing solid technology and gaining share, but sees less strength in the market right now. As befits its space, Ciena is a tough stock to figure out. While much more promising (and not nearly so beaten down) than Alcatel Lucent (NYSE:ALU), Ciena has to start delivering pretty substantial profit improvements for the stock to really work. The potential is certainly there, but then so are above-average risks as well.

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