Q2 2013 Performance Update

After having done pretty well for a while now, I was expecting to lose some ground to the major indices this quarter, and that's exactly what happened. This quarter wasn't a disaster by any means, but my philosophy of "strategic torpor" wasn't as helpful this quarter.

Healthcare and biotech continue to be very good for me, as stocks like Alnylam (ALNY), Accuray (ARAY), Neurocrine (NBIX), Wright Medical (WMGI) were among my best performers. My Portfolio B continues to be hamstrung by a heavy weighting toward telcos and foreign stocks, and the contribution of "dog of the quarter" Statoil (STO) clearly didn't help either.

I have some ideas in the hopper, and they run the gamut of industry/sector, but more weighted towards the smaller market caps.

Q2'13 Performance
Portfolio A - +0.7%
Portfolio B - (4.3%)
Combined Portfolios - (0.9%)

S&P 500 - +2.4%
Nasdaq - +4.2%
Russell 3000 - +2.2%

YTD Performance
Portfolio A - +16.0%
Portfolio B - +4.7%
Combined Portfolios - +12.0%

S&P 500 - +12.6%
Nasdaq - +12.7%
Russell 3000 - +12.9% 




Please note that the market performance figures do not include dividends.

Seeking Alpha: Forget Arena Vs. Vivus - Zafgen May Be The Ultimate Winner

As an investor and writer with no financial stake in any of the companies involved, watching the message board battles between Arena (ARNA) and Vivus (VVUS) shareholders is good theater. Both companies have FDA-approved drugs on the market that are effective in helping obese people lose weight, but neither Arena's Belviq nor Vivus's Qsymia look like "the one obesity drug to rule them all". Belviq is hampered by modest efficacy, while Qsymia can produce scary side effects and has a more limited marketing effort behind it.

Quite frankly, though, the Arena-versus-Vivus battle may ultimately be just the undercard for the real battle. A private biotech company by the name of Zafgen has drug in clinical testing that has shown very impressive efficacy and solid safety, and happens to work by a completely different mechanism than biotech and pharma companies have pursued so far. While Arena and Vivus likely have at least three years before Zafgen's drug becomes a clear and present danger, investors in those companies may want to consider the risk that their parties could be brought to a premature end if Zafgen can continue to produce such strong data.

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Forget Arena Vs. Vivus - Zafgen May Be The Ultimate Winner

Investopedia: Nike Stretches Its Lead

Chasing Nike (NYSE:NKE) in the footwear business has to be a frustrating exercise for the likes of Adidas (Nasdaq:ADDYY), Skechers (NYSE:SKX), and Puma. In good times and bad, Nike's unmatched commitment to marketing and product development translates into strong share, revenue, and profits. Should Nike ever make a similar commitment to leading the apparel market, who knows how much larger the company could get? In any case, Nike doesn't look cheap today, but then it so seldom does.

A Solid End To The Year
Nike brought the fiscal year to a good end with fourth quarter results. Revenue rose more than 7% as reported, or about 9% on a constant currency basis. Growth was led by the tiny equipment business (up over 10%), while footwear sales rose almost 7% and apparel was up 6%. While the North American market has remained a hot one for Nike (up 12%), China has turned positive again.

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http://www.investopedia.com/stock-analysis/062813/nike-stretches-its-lead-nke-addyy-ua-lulu.aspx

Investopedia: Weak Consulting Stings Accenture, But The Valuation Is Interesting

With weak IT spending in hardware and software, it shouldn't come as a huge surprise that conditions have softened in the service area as well. That's bad news for Accenture (NYSE:ACN), as well as rivals like IBM (NYSE:IBM) and Cognizant (Nasdaq:CTSH), and Accenture is seeing both sluggish bookings in consulting as well as a slower process of converting those bookings into revenue. While current conditions aren't the best, Accenture is a company built to win over the long term, and today's valuation is interesting for investors willing to be patient during this downturn.


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Investopedia: BlackBerry Still Doesn't Get It

There's maybe no better example of the disconnect between the real world and the stock market than the near-tripling of BlackBerry's (Nasdaq:BBRY) stock price from the September lows of 2012 to the February highs of this year. This is a company that still doesn't appear to know how to handle investor relations, nor actually listen to what customers want and design their devices accordingly. The company's sizable cash balance gives management many additional bites at the cherry, but it's hard for me to see a reason to believe they'll execute on the turnaround opportunities in front of them.

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Investopedia: Adobe Patches A Hole With A $600 Million Purchase

Make no mistake about what Adobe (Nasdaq:ADBE) management is thinking – the company's legacy digital media business (Creative Suite/Creative Cloud, which includes well-known offerings like Photoshop) is primarily a source of cash flow, while digital marketing/marketing cloud is where the company's future growth will be generated. To that end, Adobe is spending another $600 million to enhance its capabilities and compete more effectively with the likes of Oracle (Nasdaq:ORCL), IBM (NYSE:IBM), and Salesforce.com (NYSE:CRM).

Spending Money To Make Money
Adobe announced Thursday evening that it had reached an agreement to acquire privately-held Neolane for $600 million in cash. While certainly not a household name to most investors, Neolane is an emerging player in marketing management software, with a strong position in areas like lead management and cross-channel campaign management.

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Seeking Alpha: Without Emerging Market Growth, FLSmidth Stuck In Cement

China's break-neck infrastructure development over the past decade seriously distorted multiple commodity and resource markets, and now companies are scrambling to figure out what the "new normal" actually is. Companies like Caterpillar (CAT) and Joy Global (JOY) have been fairly circumspect with guidance, and major miners like Rio Tinto (RIO) and BHP Billiton (BHP) have been pulling back on their capex plans.

That brings us to FLSmidth (FLIDY.PK) - a global engineering company that provides an array of equipment and services for the cement and mining industries. Barring a significant re-acceleration in demand for cement, coal, and base/industrial minerals, it's hard to see why this company deserves a higher multiple.

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Without Emerging Market Growth, FLSmidth Stuck In Cement

Seeking Alpha: A Window Of Opportunity At S & W Seed

When I wrote on S&W Seed Company (SANW) back in March, I was quite bullish on the prospects for the company, but relatively cautious on the stock due to very aggressive sell-side expectations and a big run in the stock. Since then, the stock has taken a few knocks as the company's fiscal third quarter earnings weren't great, the stevia business saw a big setback, and investor enthusiasm for all things ag has waned. While there's still ample execution risk here, and the scant sell-side coverage is arguably too aggressive with its targets, I think the valuation is pretty interesting for more aggressive investors.

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A Window Of Opportunity At S & W Seed

Investopedia: Paychex Still Muddling Through

It has been about a year since I last wrote on Paychex (Nasdaq:PAYX). Back in 2012, I suggested that the Fed's actions to stimulate the economy weren't going to have a tremendous impact on employment, nor lead to a big turnaround in Paychex's fortunes. A year later that prediction seems to have worked out, as the company continues to muddle through a weak payroll growth environment in its core small/medium-sized business (SMB) market. While efforts to build up the HR services side of the business should pay off, and payroll will recover at some point, it still would seem that the Street is much too willing to price a strong recovery into these shares.

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http://www.investopedia.com/stock-analysis/062713/paychex-still-muddling-through-payx-intu-orcl-sap.aspx

Investopedia: Progress Software Showing Signs Of Life In A Tough Market

More than a year into large-scale efforts to reshape the organization, Progress Software (Nasdaq:PRGS) is hinting that its transition toward faster-growing markets could pay off. The company still has much to prove, and I would not ignore the risk of competition from large, entrenched rivals like IBM (NYSE:IBM), Oracle (Nasdaq:ORCL), and Microsoft (Nasdaq:MSFT), nor smaller rivals like TIBCO (Nasdaq: TIBX) and Software AG (Nasdaq:STWRY). At the same time, the company's significant cash balance, cash generating capabilities, and large maintenance revenue base all provide more than the normal margin of breathing room to execute this transformation.

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Investopedia: McCormick Looks Premium-Priced Even With Premium Performance

I appreciate why McCormick (NYSE:MKC) has almost always carried a premium valuation in the packaged food sector. The company holds effectively two-thirds of the U.S. market for spices, and has multiple opportunities to generate above-average growth in areas like dry dinners and frozen foods, and not just in North America. Even so, there is a fair price for every asset and McCormick's valuation seems well more than “fair” these days.

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Investopedia: ConAgra Does Appear To Be On A Better Path

It's been easy to criticize ConAgra (NYSE:CAG) management over the years, as relatively ham-fisted management of junior varsity brands has led to pretty pathetic growth and margin performance relative to its peers. What's true about the past is not automatically true about the future, though, and I think ConAgra is in perhaps the best shape it has been in the time I've watched the company. There's still a lot of work to be done in improving margins and cash generation, but in an overvalued sector ConAgra looks like an interesting relative value.

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Investopedia: General Mills Getting Back To Normal

Maybe the markets are getting a bit more rational when it comes to packaged food companies. With many of these stocks up 20% or more over the past year, the last couple of months has seen the momentum fade a bit. Arguably that's a good thing for stocks like General Mills (NYSE:GIS) where the company's self-improvement efforts are likely to be more of the slow-and-steady variety. Although General Mills is back below fair value and arguably a decent long-term hold, it's not likely to deliver another “Market-plus-10%” sort of performance over the next twelve months.

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Investopedia: Unexpected Challenges For Self-Employed Finance Professionals

Self-employment is very nearly a universal goal across most industries. While not practical in fields like commercial aviation or nuclear engineering, self-employment is certainly an option for financial professionals. Many brokers and investment managers understand quite clearly how much of their revenue they must "share" with their employers, and dream of the the freedom and income-generating possibilities that go with independence. Before taking the leap, though, would-be self-employed financial professionals should consider some of the challenges that go with the do-it-yourself approach.

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http://www.investopedia.com/articles/professionals/062613/unexpected-challenges-selfemployed-finance-professionals.asp

Investopedia: The Wait For $5 Gas Could Be A Long One At Ultra Petroleum

Reputations, good and bad, can be surprisingly sticky. Ultra Petroleum (NYSE:UPL) has long been lauded for its high-quality operations, its cost leadership, and the quality of its properties/reserves. While the first part is absolutely still true, I have bigger questions about the quality of Ultra's properties and how the company will generate value over the long-term. While I will certainly acknowledge that higher gas prices will be the rising tide that lifts all boats in the natural gas space, I'm increasingly concerned that Ultra Petroleum is a high-quality operator with medium-quality assets and, as such, maybe not the horse to ride for the long term.

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Investopedia: Monsanto Has Eased Off, But Still Not Cheap

Monsanto (NYSE:MON) generates a huge volume of press and public interest, but the reality is that the public bickering about GM crops has very little quarter-quarter impact on the decisions that farmers make in the U.S. and Latin America. The bigger issue for Monsanto, frankly, is that crop plantings seem to be coming in lower overall than expected and more of the earnings story revolves around the volatile and unreliable herbicide business. Though I continue to see Monsanto as a core holding, expectations for this company are not what I'd call conservative and investors may want to see how this apparent reallocation away from ag stocks plays out before stepping in to buy.

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Investopedia: Should Investors Dividend Shop At Weingarten Realty Investors?

Real estate investment trusts (more commonly known as REITs) have long been a favored destination for income-seeking investors, as the entire legal framework under which REITs are organized is designed to funnel cash out of the business in the form of distributions. There is a huge array of choices in the REIT world, though, and Weingarten Realty (NYSE:WRI) stands out for its focus on neighborhood and community shopping centers – often anchored by supermarkets and located in attractive locations like the Mid-Atlantic, Southeast, Texas, and West Coast.

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Seeking Alpha: The Only Tears From TearLab Are Tears Of Joy For Now

Some day I'll learn to buy the shares of the med-tech stocks I really like before I write them up for Seeking Alpha. Emerging eye care diagnostic company TearLab (TEAR) was already on its way up when I wrote on the company in March of this year, but the stock has gone on for a further gain of about 66% since then, and it's hard to beat that sort of performance.

In the meantime, nothing has changed to dull my enthusiasm for the stock other than to say that the sharp move up has blunted some of the long-term potential from here. TearLab continues to book orders literally faster than they can fulfill them, and the margin leverage is coming along nicely. Now with the possible entry of generic competitors to Allergan's (AGN) Restasis - the one prescription pharmaceutical for the condition TearLab diagnoses - the value of an accurate diagnostic to eye care professionals could be all the greater.

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The Only Tears From TearLab Are Tears Of Joy For Now

Seeking Alpha: Hurco Virtually Unknown And Meaningfully Undervalued

Typically when a writer talks about a company being "under-followed" it means that there are no analysts from big name firms following the stock, or that what coverage there is from small retail-oriented shops. In the case of Hurco (HURC), though, there is no coverage.

None.

While this is indeed a small company with a very small float, it doesn't deserve to be completely ignored. Hurco is a small player in the global machine tool industry, but its high-spec tools address a legitimate market opportunity. What's more, the company's margins and returns on capital stack up quite well against some of the giants of the sector. While there is a frustrating cyclicality to this industry, Hurco shares look 30% to 50% undervalued on the basis of a long-term free cash flow model.

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Hurco Virtually Unknown And Meaningfully Undervalued

Seeking Alpha: Wet Weather Soaks American Vanguard, But Analysts Look All Wet

Using discounted free cash flow as a primary valuation tool comes with certain drawbacks. Looking at the reaction to American Vanguard's (AVD) warning on second quarter earnings brings one of the biggest back to mind - namely, that sell-side analysts and buy-side investors don't look at stocks this way and it can create significant disruptions for more long-term-oriented investors. While American Vanguard shares are going to sit in the sin bin for a while now, and a lot of the positive 2013 momentum may be sapped from this stock, relatively little about the long-term has changed.

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Wet Weather Soaks American Vanguard, But Analysts Look All Wet

Seeking Alpha: Achillion May Be The Most Underrated Biotech Left

There are broadly two types of biotech investors - the Wile E. Coyote types who see bargains everywhere and charge bravely after them and the Roadrunner types that know better than to charge off a cliff and into thin air. Watch an episode or two and you'll see how the two types fare over time.

That bring me to Achillion Pharmaceuticals (ACHN) and an opportunity that looks so good, I keep wondering if it's just a false image painted on the mountainside. There have been some definite ups and downs across the sector in the race to develop new drugs for hepatitis C (HCV), but Achillion looks like the real deal. Success with Study 007 could point to a revenue opportunity of over $1 billion, while the recent addition of a nuc to the pipeline makes it a veritable one-stop shop for the next generation of HCV therapies.

All told, Achillion looks like it could easily be worth $16 today, with upside well into the $20s with good data and an ever-present possibility of a takeout. Investors need to ask themselves why this is seemingly the one biotech with good data to not participate in the sometimes-crazy biotech bull market of the last three years, but on balance this looks like a very promising biotech with value-driving events coming later this year.

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Achillion May Be The Most Underrated Biotech Left

Investopedia: MTN Group Has The Growth, But Ample Uncertainties

One of the predominant issues in telco service stocks right now is the weak growth environment – penetration rates in most developed markets are quite high, and competition makes it difficult to sustain any sort of real edge. That's not nearly as much of a problem for Africa's MTN Group (Nasdaq:MTNOY), given the low penetration rates and per-capita incomes in much of its territory, but the company has its own set of challenges ranging from regulatory, political, and economic uncertainties to the potential deployment of capital towards M&A.

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http://www.investopedia.com/stock-analysis/062513/mtn-group-has-growth-ample-uncertainties-mtnoy-vod-fte-chl.aspx

Investopedia: Down In The Vale

As I've mentioned in other recent pieces on Investopedia, these are tough times for commodity producers as the incremental Chinese demand that pushed prices so far for so long has faded. With that, demand for steel inputs in particular (met coal and iron ore) has come into much better balance with supply and prices have weakened considerably.

Although high-cost iron ore suppliers are looking at some tough times in the coming years, Vale's (Nasdaq:VALE) low-cost assets should serve the company well. Investors don't really want anything to do with this giant iron miner today, but patient investors who can take the risk of conditions getting even worse in the short run may like the long-term potential offered by this company.

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Investopedia: Teck Profitable, Liquid, And Maybe Too Cheap

These are ugly days in the natural resources sector as the bottomless pit that was China's appetite for mined commodities apparently had a bottom after all. Most of the well-known miners have racked up double-digit losses over the past year, and companies with outsized exposure to iron ore (like Vale (Nasdaq:VALE) metallurgical coal like Teck Resources (NYSE:TCK) have suffered even worse.

It may not be the worst time to think about Tech Resources, though. The combination of mines that are still profitable at spot prices, extensive production expansion potential, good liquidity, and global prices that are having miners contemplating production curtailment could make this an appealing time to consider this beaten-down miner, but investors need to prepared for conditions to get uglier before they turn around.

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Investopedia: Turkcell Is Undervalued, But Also A Complete Mess

It's typically a given that undervalued stocks come with a “but”. In other words, there's usually a reason that a stock is trading below fair value and it's up to investors to decide if the prevailing sentiment is overlooking the longer-term opportunity. In the case of Turkcell (NYSE:TKC), that's a very difficult question to answer. On one hand, the company's improving post-paid subscriber base and generally more rational competition bode well for profits. On the other hand, Turkey is going through a very dangerous time and the the squabbling between Turkcell's major shareholders have prevented the company from paying a dividend for multiple years now.

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Investopedia: Symantec Fixing What Was Never Too Badly Broken

If you're going to repair and turn around a business, it certainly helps to start with one that wasn't too badly broken to start off. While Symantec (Nasdaq: SYMC) had certainly seen revenue growth and operating leverage stagnate, the company was still generating strong cash flows and maintained solid (if not leading) market share in multiple markets. With the company's new plan targeting commonsense expense reductions and a greater focus on customer value, these shares could be meaningfully undervalued today.

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Seeking Alpha: SLC Agricola - Come For The Crops, Stay For The Land

It isn't easy running a farm nor, by extension, a farming business. Couple that with extensive year-to-year volatility, and that may well be why there are no publicly-traded U.S. farming companies - forcing investors to make do with input companies like Mosaic (MOS), DuPont (DD), and Deere (DE) or crop/commodity-specific ETFs. That's really too bad, though, because for all of the year-to-year risk and volatility in farming, the long-term potential of land value appreciation can be considerable.

That makes Brazil an interesting opportunity. Unlike the U.S., there are multiple publicly-traded farm operators in Brazil, including Adecoagro (AGRO), Brasilagro (LND), Cresud (CRESY) (which is technically an Argentine company, but gets 70% of its EBITDA from Brazil). Last and by no means least is today's subject SLC Agricola (SLCJY.PK) - one of the largest, most productive, and most interesting agricultural companies in South America. While investing in agriculture and land development is by no means for the weak-hearted, and this is a very illiquid stock at present, the potential in these shares may be worth the risk to some investors.

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SLC Agricola - Come For The Crops, Stay For The Land

Investopedia: China Mobile Trades Growth For Stability

Investors may be frustrated with some of the decisions that China Mobile (NYSE:CHL) management has made in recent years, but at least they can say that the company is what it is – a leading wireless service provider focused exclusively on China and built around generating solid and predictable returns on capital and free cash flow. With that in mind, China Mobile looks like a solid investment pick, particularly for those investors looking for above-average dividend potential.

Will 4G Justify The Investment?
China Mobile has been ramping up its 4G network plans, and spending on this rollout is likely to be a key story over the next couple of years. Management has targeted having 200,000 base stations in 100 cities by the end of the year, with an official launch of service either late this year or early next. Assuming the company keeps to that schedule, it should provide an effective one- or two-year headstart.

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Investopedia: France Telecom Under Pressure From Both Sides

It certainly fits a lot of American stereotypes about France to see the incumbent telecom operator (and leading wireless provider) France Telecom (NYSE: FTE) struggling with operating efficiencies and high employee costs. What may not be stereotypical, but is nevertheless true, is that brutal free capitalist-style competition is likewise putting a lot of pressure on the company's revenue generation in its home territory. Although arguably too cheap by several metrics, France Telecom has a worrisome capital and expense structure and relatively uninspiring growth potential.

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http://www.investopedia.com/stock-analysis/062413/france-telecom-under-pressure-both-sides-fte-tef-vod-t.aspx

Investopedia: Above Average Opportunities Largely In The NXP Semiconductors Price

There are still bargains to be found here and there in the chip space, but many of these stocks have already rallied over the past year on expectations of improving fundamentals in the second half of this year. With the stock NXP Semidconductors (Nasdaq:NXPI) up about 50% over the past year, these shares appear to be among that group. The company's high performance mixed signal business is attractive, as is the company's leading share across multiple product categories and above-average potential margin leverage, but a lot those positives appear to be factored into today's share price.

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Investopedia: Could Alcatel-Lucent's Restructuring Boost Ericsson Further?

At the risk of sounding like I'm looking to bash Alcatel-Lucent (NYSE:ALU), I have been thinking more about the company's recently-announced restructuring efforts and wondering if they will help the company as much as they may help the company's rivals. The “law of unintended consequences” is real, and though there are sound motives for the company's moves, it nevertheless could backfire. To that end, I have to wonder if Ericsson (Nasdaq:ERIC) and Huawei are poised to reap the most benefit from Alcatel's self-improvement plans.

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http://www.investopedia.com/stock-analysis/062113/could-alcatellucents-restructuring-boost-ericsson-further-alu-eric-jnpr-cien.aspx

Investopedia: The SoftBank-Sprint-Clearwire-Dish Network Game Of Musical Chairs Seems Over

In a process that has taken eight months now, it looks like SoftBank is going to succeed in its attempt to acquire Sprint (NYSE:S), and that Sprint is going to succeed in its attempt to acquire the remainder of Clearwire (Nasdaq: CLWR). The fly in both ointments, Dish Networks (Nasdaq:DISH) has apparently abandoned its efforts to acquire Sprint, and likewise appears to be unwilling to try to once again top Sprint's bid for Clearwire.

This all probably brings this particular chapter to a close, but those who think the story in U.S. wireless, broadband, and telecom M&A is over don't know the nature of the parties involved.

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Investopedia: TIBCO Stabilizes, But Needs Growth

Looking at the results this week from Red Hat (NYSE:RHT), Oracle (Nasdaq:ORCL), and TIBCO (Nasdaq:TIBX), it's pretty clear that there hasn't been a big re-acceleration in the market and conditions are still pretty difficult. That's not too surprising, really, but it does create uncertainty for these stocks in what is already a nervous market. I continue to like TIBCO, but the company definitely needs to start improving its sales and marketing strategy and execution. While the the shares do seem undervalued today, the valuation already incorporates a re-acceleration of growth and the company had best start delivering in the next year, or the stock will definitely suffer.

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Investopedia: Is It Oracle, Or Is It The Market?

To take an old cliché of the stock market and twist it around a bit, when a small tech company misses the quarter the question is “what is wrong with the company?”). But when a company like IBM (NYSE: IBM (or, in this case, Oracle (Nasdaq:ORCL)) misses, the question can quickly turn to “what is wrong with the market?”

Taken in total with the results recently reported by Red Hat (NYSE:RHT) and TIBCO (Nasdaq:TIBX), I think it's fair to say that the enterprise and government IT markets are still pretty challenging, but that Oracle in particular also continues to see increasingly aggressive competition not from established rivals like IBM and SAP (NYSE:SAP), but also from newcomers (relatively speaking) like Workday (Nasdaq:WDAY) and Salesforce.com (NYSE:CRM). Even so, I think even relatively modest forecasts for Oracle continue to point to a meaningfully undervalued stock.

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http://www.investopedia.com/stock-analysis/062113/it-oracle-or-it-market-orcl-sap-wday-crm.aspx

MassDevice: MicroPort And Wright Medical Group Flip The Script

Apparently MicroPort and Wright Medical (NSDQ:WMGI) didn't get the memo – American med-tech companies are supposed to buy Chinese med-tech companies and not the other way around. But in a surprising announcement Wednesday night, the two companies revealed that MicroPort has reached an agreement to acquire Wright Medical's OrthoRecon business for $290 million in cash.

This is a bold move for both parties. It not only brings MicroPort into the global hip and knee market, but also establishes a meaningful presence for the company in the U.S. For Wright Medical, it removes a significant amount of execution risk, and makes the company a pure-play on the much faster-growing markets for orthopedic extremities and biologics.

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http://www.massdevice.com/blogs/massdevice/microport-and-wright-medical-group-flip-script

Investopedia: Relief At Red Hat, But The Long-Term Growth Debate Will Rage On

I realize that Rule 36 of the internet says that you cannot challenge or question a stock in any fashion without being “secretly short”, but I think it's worth asking some questions about Red Hat (NYSE:RHT). On one hand, I do like the cash flow that this business produces, and I do believe that there are real opportunities for the company in middleware, data center, and cloud. On the other hand, the trend in billings and margins makes me wonder if this company is already transitioning out of its growth phase. Accordingly, while I wouldn't bet against this stock with my own money, it's hard for me to scoot this name up my watch list to a point where I'd seriously consider buying it with my own money.

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Investopedia: Finisar Perking Up On Datacom, With Telecom (Hopefully) On The Way

With Cisco (Nasdaq: CSCO), Juniper (Nasdaq:JNPR), and Ciena (Nasdaq:CIEN) all having decent enough recent quarterly reports, things were set up for Finisar (Nasdaq:FNSR) to do pretty well this quarter. Luckily, the company delivered, as strong datacom sales offset ongoing weakness in telecom. There is plenty of controversy around this name – ranging from customers self-sourcing components to the threat of silicon photonics – but the current stock price doesn't appear to capture all of the potential over the next two or three years.

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http://www.investopedia.com/stock-analysis/062013/finisar-perking-datacom-telecom-hopefully-way-fnsr-jdsu-csco-cien.aspx

Investopedia: The Craziness Is Well Underway Again At Micron

As someone who has almost always had a semiconductor stock in his portfolio, I can tell you that you have to a have a loose screw or two to like this sector. But the memory chip space is a completely different wing of the semiconductor asylum, one where the peak-to-trough cyclicality is truly impressive and where long-term economic returns are difficult to earn.

That has led to a pretty “challenged” existence for Micron (NYSE:MU), and a stock that has been all over the map. With the industry consolidating down to just four major suppliers, though, the thought now is that the players will operate on a more rational basis and allow each other to actually book some respectable earnings and cash flow. While I think Micron's shares have room left to run on investor enthusiasm, it's tough to outline a fundamental case where the stock is significantly undervalued for the long term.

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Investopedia: With So Many Sluggish Markets, There's Little Jabil Can Do Now

Unfortunately for Jabil (NYSE:JBL), there's really nothing that this manufacturing specialist can do about the uninspiring demand conditions in so many of its end-markets today. Key markets like consumer electronics, IT hardware, and healthcare are all pretty stagnant right now, and that is working its way back to this otherwise well-run company. Although Jabil still looks undervalued on a long-term basis, the same problems remain – weak free cash flow margins, inconsistent (and often quite mediocre) returns on capital, and ample volatility in demand, which places a premium on timing the stock buys and sells carefully.

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Seeking Alpha: Manitex Still Delivering Growth Investors Can Look Up To

About six months ago, I profiled an up-and-coming small-cap heavy equipment company that I thought had above-average potential. Since that report, Manitex (MNTX) has moved up about 30% and significantly outperformed rivals like Terex (TEX), Manitowoc (MTW) and Manitou, not to mention the S&P 500. Although I do have some concerns about the slowdown in the energy sector and the company's ability to generate consistent long-term operating and cash flow leverage, I believe this stock remains sufficiently undervalued to be a good buy today.

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Manitex Still Delivering Growth Investors Can Look Up To

Seeking Alpha: Pacific Biosciences Will Go Checkers Or Wreckers

I live in NASCAR country and it's not that rare to hear the expression "going checkers or wreckers" - meaning throwing caution to the wind and going all-out, with the idea that you either win or end up in a smoking heap.

That notion would seem to apply to Pacific Biosciences (PACB) today, as this once-promising innovator in single-molecule sequencing has been battered by concerns about the accuracy and value of its systems. With intriguing accuracy-improvement technology and techniques now available, though, PacBio may have its last best chance to achieve the success that many once thought was near-certain. If PacBio can recover its reputation and drive system and consumables sales, this stock could be undervalued by 50% or more. On the other hand, failure to markedly accelerate customer adoption over the next three years could have this company in bankruptcy and the share price in tatters.

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Pacific Biosciences Will Go Checkers Or Wreckers

Seeking Alpha: Celldex Turning Into A Compelling Immunotherapy Biotech

"Shoulda, coulda, woulda" will probably be my investing epitaph. While there is no shortage of investment advice telling you that long-term investment success is predicated on developing a consistent method of evaluating stocks and sticking to your valuation guns, the consequences can be painful.

A perfect case in point is Celldex Therapeutics (CLDX). I've always liked this development-stage biotech (and have written about it here and here...), but the price never seemed quite right to me. That "price discipline" has kept me on the sidelines as the stock has risen over 250% over the past year and 400% over the past two years, and the company has emerged as one of the most legitimate and interesting small/mid-cap immunotherapy biotechs.

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Celldex Turning Into A Compelling Immunotherapy Biotech

Investopedia: Actuant Still Working Through A Lull

That big second-half rebound in industrial demand is starting to look weaker and weaker. Although companies like Grainger (NYSE:GWW) and Fastenal (Nasdaq:FAST) have been reporting decent demand for industrial supplies and equipment among manufacturing customers, Actuant's (NYSE:ATU) guidance suggests that most industrial, energy, and vehicle markets are still crawling along. While I do believe growth should pick up again, the value proposition here doesn't look very compelling.

Sluggish Results Due To Sluggish Demand
Actuant's results aren't showing much underlying strength in key end-markets like industrial, energy, or vehicles. Overall revenue was flat on a reported basis and down 2% on a “core” or organic comparison. Industrial revenue rose 1% as reported, and energy rose 3%, but sales in the engineered products business were down about 2%.

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Investopedia: FedEx Not Particularly Expensive, But Analysts Still Too Positive

Although I have tremendous respect for the business that FedEx (NYSE:FDX) has built, the same cannot be said of my opinion of most analysts' models and valuations for this company. FedEx has long struggled to deliver good free cash flow (FCF) generation, and although I think the company's new efficiency plans will produce better results, there's a gulf between “better” and “good”.

That said, FedEx shares have underperformed the market for about three years running and now don't seem particularly expensive. While I would have some concern that sell-side analysts are still setting too high a bar for the company (sowing the seeds for future disappointment), there's at least a buy case to be made today.

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Investopedia: Will A New Alcatel-Lucent Plan Lead To Better Results?

Stop me if you've heard this before – Alcatel-Lucent (NYSE: ALU) has a bold plan to cut costs, refocus the business, and return the company to profits and prosperity. To be fair, the new CEO does deserve a chance to show if his plan can/will work, and the broad strokes outlined today make sense. Even so, this is Alcatel-Lucent and the telecom equipment industry we're talking about, and success is far from guaranteed.

Cut Costs, Cut Businesses
 The centerpieces to the new plan are deep cost cuts and a sharp focus on businesses where Alcatel-Lucent can compete effectively in the coming years.

While the company had been targeting about EUR 500 million in cost cuts by 2015, that target has been doubled. Management intends to achieve this by increasing its direct channel focus with sales and marketing and reducing the scope of its R&D. That's an interesting move, particularly given how many Alcatel-Lucent bulls try to point to the company's patent estate as a store of future value. While it makes ample sense to reduce the scope of R&D (translating those patents into real products and real revenue streams has not gone well), I wonder how it will go over with shareholders.

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Investopedia: Wall Street Has Converted To Adobe's New Model; Will Customers?

Wall Street analysts and investors can be an exceptionally stubborn bunch, and it sometimes takes several whacks with a 2x4 to make them see reason. That seems to have happened with Adobe (Nasdaq:ADBE), though, as the Street now seems quite enthusiastic about the company's philosophical shift in digital media and its opportunities in digital marketing. With the stock up more than 35% over the past year, this is the first time in quite a long time where I can say that Adobe's stock no longer looks like much of a value.

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http://www.investopedia.com/stock-analysis/061913/wall-street-has-converted-adobes-new-model-will-customers-adbe-aapl-orcl-crm-ibm.aspx

Investopedia: Why Is Monsanto Evil, But DuPont Isn't?

As I explored almost a year ago in the case of Wal-Mart (NYSE:WMT) and Amazon (Nasdaq:AMZN), public perception is a curious thing. Two companies can do many of the same things, and yet one will take a much larger amount of flack and criticism for it. Or, as the Seattle Organic Restaurants website says, “the difference between a rainforest and a jungle is that a rainforest has a PR agent”.

To that end, I find it very interesting that Monsanto (NYSE:MON) is one of the most-hated companies on the planet, with the internet and social media full of stories and passed-around memes that declare it to be one of the worst companies in the world. And yet, DuPont (NYSE:DD) is just as big in genetically-modified seeds and agricultural chemicals, and pursues largely the same policies as Monsanto with respect to pricing, IP enforcement, and so on.

So it merits the question – Why is Monsanto evil, but DuPont isn't?

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http://www.investopedia.com/articles/investing/061913/why-monsanto-evil-dupont-isnt.asp

Seeking Alpha: Tough Conditions Burying The Quality Edge At C & J Energy Services

There's a school of thought out there that the best companies really show their stuff when their sectors come under serious pressure. While that is true in many cases, it is also true that sometimes conditions reach a point where the distinctions in company-to-company quality become effectively moot.

I believe that is what has happened to C & J Energy Services (CJES), as severe overcapacity in U.S. pressure pumping and expiring contracts have effectively overwhelmed the quality of the company's equipment and services. History suggests better days will come again, but the Street appears to already be baking that in and investors may find better bargains in other parts of the oil patch.

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Tough Conditions Burying The Quality Edge At C & J Energy Services

Investopedia: Amdocs A Good Value As Is, But With Growth Upside

Value-priced software and technology service companies often struggle to attract and maintain investor attention. To its credit, Amdocs (NYSE:DOX) is doing what it can to reward patient investors, as management has been allocating significant percentages of free cash flow (FCF) to buybacks and dividends. It has been a while since the company has logged double-digit revenue growth, but if the company can successfully repeat its business model in emerging, there could once again be a growth kicker to what already looks like a solid value.

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http://www.investopedia.com/stock-analysis/061813/amdocs-good-value-growth-upside-dox-acn-ibm-orcl.aspx

Investopedia: Valuation Is Finally Reasonable At FactSet, But Growth Is Now A Concern

For much of its history as a public company, FactSet (NYSE:FDS) shares have frustrated the value and GARP crowds. Now the shares look more reasonably valued, but the cause is yet another reason for concern. With sluggish employment trends in the financial sector and worries about competition from the likes of Bloomberg, McGraw Hill Financial's (NYSE:MHFI) S&P Capital IQ, now growth appears to be an issue for the company. While the company is likely to do better over the long term, investors considering these shares today need to be prepared for a little more volatility than with the average equity.

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http://www.investopedia.com/stock-analysis/061813/valuation-finally-reasonable-factset-growth-now-concern-fds-tri-mhfi-bac.aspx

Investopedia: W.R. Grace - Maybe The Most Valuable Bankrupt Company Going

While individual/personal bankruptcy is pretty straightforward, the same cannot be said for corporate bankruptcy. Airlines go through bankruptcy seemingly about as often as most people buy and sell cars, while in other cases bankruptcy is the end of the story – whatever assets are worth something are sold off and the company ceases to be.

Then there's the case of W.R. Grace (NYSE:GRA). Technically in bankruptcy, Grace did not go into bankruptcy because of any flaws in its core business, but rather the rapidly-accelerating and virtually uncontrollable costs of settling asbestos litigation. With a valuable catalyst business, a stable coatings business, and a construction products business leveraged to a recovery, Grace is most definitely a going concern. On the other hand, a better-than-60% jump in the stock over the past year and a nearly 20-fold increase from the 2009 lows seems to already recognize the ongoing value in this business.

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Investopedia: Enthusiasm Over SK Telecom Has Gone Far Enough

Investors don't love telecom service providers like they used to, largely due to extreme competition that has made it difficult to grow revenue or improve margins, all the while spending billions on equipment to keep the network current. It's arguably worse in the case of SK Telecom (NYSE:SKM), as management here has made it clear that they believe they're able to do more than just run a telecom business and have deployed billions of dollars in questionable non-telecom investments. While the sharp run-up over the past year was largely reasonable, as it brought SK Telecom back into parity with many of its global peers, it's hard to argue that these shares deserve to go much higher.

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Seeking Alpha: Johnson & Johnson And Aragon May Have Medivation Feeling Sick

The already-successful new prostate cancer drug Zytiga is not solely responsible for turning around the fortunes of Johnson & Johnson's (JNJ) once-lackluster drug business, but it has certainly played an important role. Johnson & Johnson is now doubling-down on that success, acquiring privately-held Aragon Pharmaceuticals in a $1 billion deal that could represent a major headache for prime prostate cancer drug rival Medivation (MDVN). Although Medivation is likely to have several more years before it has to worry about Aragon's drug, this is very clearly a shot across the bow from a well-armed rival with deep pockets.

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Johnson & Johnson And Aragon May Have Medivation Feeling Sick

Seeking Alpha: American Vanguard Should Reap A Better Multiple

American Vanguard (AVD) has long been a volatile small-cap stock. Some of that can be chalked up to the vagaries of the agricultural chemicals market, a business where the likes of FMC Corp. (FMC) have also had ample ups and downs. Some of it, too, can be attributed to the fact that investors in agricultural stocks often seem to look and think no further than the next harvest, so planting, weather, and harvest data can make these stocks move in the opposite direction of fundamentals.

To that end, I think it's worth checking out American Vanguard today. Although I do have some long-term concerns about the company's position vis a vis new GM crops that target lucrative parts of the company's business, I believe there's a very good chance that the stock will deliver stronger results in the short term as capacity upgrades and strong marketing support from partner Monsanto (MON) lead to much better herbicide and pesticide sales.

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American Vanguard Should Reap A Better Multiple

MassDevice: CareFusion May Be Weighing Two Very Different Deals

At the risk of sounding a bit mean, CareFusion (NYSE:CFN) doesn't get all that much attention in the market. The company has a solid business between its operations in pharmaceutical dispensing, infusion, respiratory care, and procedural disposables, but it never really seems to get much attention unless/until there's another round of news about infusion pumps – a business where rivals like Baxter (NYSE:BAX) and Hospira (NYSE:HSP) have seen recalls that benefited CareFusion.

That has changed very recently, though, as CareFusion seems to be a key potential acquirer for at least two medical device businesses known to be on the block – ICU Medical (NSDQ:ICUI) and Smiths Group's (LON:SMIN) Smith Medical. CareFusion has long been an active acquirer and recently not only reaffirmed its commitment to future deals, but a willingness to do larger deals than before. While both ICU Medical and Smiths Medical make solid sense for CareFusion, both deals have certain drawbacks as well.

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MassDevice: Smarter Strategic Moves Bode Well For Wright Medical

There's a saying in the markets that there's always a bull market somewhere. Along similar lines, it's almost always possible to find areas of growth in otherwise stagnant med-tech markets. While the overall performance of the orthopedic market has been pretty uninspiring of late, the extremities sub-sectors (upper and lower extremities) have been notable exceptions.

Growing share in lower extremities is not the only positive factor at work in pushing Wright Medical (NSDQ:WMGI) to new highs. After years of pursuing what I believe to have been an unrealistic business model and a scandal tied to the industry-wide practice of improper payments to surgeons to use their implants, CEO Bob Palmisano has the company on the right track again. Two years into his tenure as CEO, there's still ground to cover in terms of margins, but the company's sales strategy for recon, its growth in extremities, and the assets acquired from BioMimetic Therapeutics make this a name to watch in the sleepy ortho sector.

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Investopedia: Elan Shareholders Bring Management To Heel

Financial writers often lament that shareholders are too passive with respect to exercising their rights to oppose management decisions that they disagree with and holding management to account. Well, that can't be said about Elan's (NYSE:ELN) shareholders. Shareholders handed a significant and embarrassing collection of rejections to management, a move that I would argue expresses a very wise lack of confidence in management. With this rejection of management's strategy, I would hope that Elan management sees reason and seeks out the best deal available to sell the company.

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Investopedia: Does AT&T Have Global Ambitions?

Monday is often the day for deals and rumors, and a doozy in the telecom market quickly made the rounds. Depending upon which reports you believe, AT&T (NYSE:T) either made a bid for Telefonica (NYSE:TEF) and was rebuffed by the Spanish government, or no such approach was ever made. In either case, it is not altogether surprising that AT&T would be entertaining global ambitions, and Telefonica is certainly a business that could be worth quite a bit more if cleaned up and improved. By the same token, this is not the only potential asset that could appeal to AT&T.

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Investopedia: Rockwood Gets Its Deal For CeramTec

Rockwood Holdings (NYSE:ROC) hasn't been shy in talking about its intentions to simplify its operations around its high-quality lithium business and is surface treatments business. With Monday's announcement of the sale of CeramTec to a private equity buyer, Rockwood has taken a major step toward that vision. While I would have preferred to see Rockwood keep CeramTec, the company got a good price and should be relatively close to a sale of the titanium dioxide and performance additives businesses, which will free the company to repay debt and pursue M&A to beef up the surface treatments operations.

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Investopedia: Weyerhaeuser Has A Busy Father's Day

Weyerhaeuser (NYSE:WY) didn't have the luxury of taking it easy on Father's Day, as the company announced a slew of transactions that could significantly reshape this large timberland and wood products REIT. On balance, the transactions should increase (or at least unlock) value within the company, and the naming of a high-quality CEO should have the company in good shape to take advantage of the slowly building housing recovery. Although Weyerhaeuser is not shockingly cheap, it still looks like a quality name to consider.

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MassDevice: The Bulls May Have Run A Little Too Far With St. Jude Medical

Combine a bull market with increasing optimism that major med-tech markets are stabilizing, and it's not so hard to see why stocks like St. Jude Medical (NYSE:STJ) have seen solid runs and enjoy pretty favorable valuations today. In the case of St. Jude, while I have generally been on the side arguing that the Street was not giving the company enough credit for its long-term prospects, the move into the mid-$40s for the stock argues that the Street has in fact come up to speed.

With that in mind, St. Jude is going to need to start outperforming to drive a significantly higher multiple and share price.

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http://www.massdevice.com/blogs/massdevice/bulls-may-have-run-little-too-far-with-st-jude-medical

MassDevice: Can C.R. Bard Use A Windfall To Reignite Growth?

C.R. Bard (NYSE:BCR) has a problem; specifically, a growth problem. While the company has #1 or #2 market share in markets that make up over 80% of its revenue, a hugely consumables-oriented business, and a solid legacy when it comes to margins and returns on capital, Wall Street is a “what will you do for me tomorrow?” sort of place, and Bard's poor organic growth has kept a lid on the stock when so many other med-techs have enjoyed big runs.

Perhaps that can change, though. For starters, Bard has the opportunity to leverage past R&D and M&A with new products like a drug-coated balloon and an atrial fibrillation ablation system. Bard is also looking forward to a large cash settlement from Gore, a settlement that management has already earmarked in part for further growth-oriented M&A. This gives investments an interesting dilemma with these shares – the shares are only slightly undervalued on an “as is” basis, but factoring the settlement and potential leverage from that settlement (M&A that generates even more revenue, profits, and cash flow) makes the shares quite a bit more interesting.

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MassDevice: Is Valeant About To Make A Bold Bid For Bausch & Lomb?

Never let it be said that Valeant (NYSE: VRX) management is shy about doing deals. With a roster of past deals including Biovail, Cephalon, OraPharma, and Medicis, Valeant claims that better than 80% of its deals have attained the 20% internal return target it uses to evaluate potential transactions. If rumors out Friday prove true, Valeant is about to bag its biggest target yet in what would be a particularly bold move.

Multiple sources have reported (or repeated) rumors that Bausch + Lomb's private equity owners Warburg Pincus are near a deal to sell the eye care giant to Valeant in a deal worth close to $9 billion. That Bausch & Lomb is on the block is well known – Warburg Pincus hired Goldman Sachs back in December of 2012 to assist them, and reportedly approached companies including Sanofi (NYSE:SNY), GlaxoSmithKline (NYSE:GSK), and Abbott (NYSE:ABT) without getting any takers on the then-reported price tag of $10 billion. At that point, Warburg Pincus reportedly began considering an IPO of Bausch & Lomb to cash out of a company it originally acquired for $4.5 billion.

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http://www.massdevice.com/blogs/massdevice/valeant-about-make-bold-bid-bausch-lomb

MassDevices: Boston Scientific May Finally Be On The Right Path Again

It feels like Boston Scientific (NYSE:BSX) has spent the majority of the past decade in a perpetual limbo of ineffectual turnaround. The shares are down ⅔ over that period, while rivals and peers like Medtronic (NYSE:MDT), St. Jude Medical (NYSE:STJ), and Stryker (NYSE:SYK) have been flat, up 50%, and up 100%, respectively, over the same period. Worse still, Boston Scientific transformed from a market leader to a market laggard and squandered an immeasurable amount of credibility and investor goodwill.

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MassDevice: Not A Lot Of Bargains Among Med-Tech Stocks

Medical technology stocks of all stripes have been enjoying a pretty exceptional run in the market, as healthcare has actually been 1 of the leading sectors in the recent rally. Unfortunately for investors, however, revenue, profits, and free cash flow have not been improving at the same rate, and the number of real bargains in the market has shrunk noticeably. While there are still a few opportunities that look undervalued, investors are increasingly finding themselves faced with a limited menu of attractive options.

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http://www.massdevice.com/blogs/massdevice/not-lot-bargains-among-medtech-stocks

MassDevice: The Strange Case Of The Diabetes Market

It wasn't so long ago when diabetes was one of the hot sectors of med-tech where many companies felt they had to have a presence, no matter what the cost. And while it is true that the incidence of diabetes continues to increase at worrisome rates in many countries, the diabetes market is no longer a “build it (or buy it), and the growth will come” type of proposition. It may not be quite true that diabetes as become a “winner takes all” sort of market, it is definitely a market where data, pricing, and marketing muscle make a big difference.

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MassDevice: Can Johnson & Johnson Fire On All Cylinders Again?

In what has become a red-hot stock market for med-tech stocks, it's the rare quality company that hasn't taken part in the rally. As a huge player in drugs, devices, and OTC consumer healthcare products, Johnson & Johnson (NYSE: JNJ) has certainly been carried along by this healthcare lovefest – the shares are up nearly 40% over the past year, and only a small handful of other large companies (Stryker (NYSE: SYK) and Roche (Nasdaq: RHHBY), for instance) can come close to matching or exceeding Johnson & Johnson.

The curious thing about this performance is that it hasn't accompanied strong, even financial performance. JNJ's drug business has roared back to life, but the device business continues to struggle with a difficult environment and past mistakes, while the consumer business tries to recover from the reputation and market share damage incurred by the spate of recalls and contamination problems a few years ago.

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http://www.massdevice.com/blogs/massdevice/can-johnson-johnson-fire-all-cylinders-again

MassDevice: Edwards Lifesciences Comes Back Down To Earth ... Hard

Although I had been writing for some time that I thought Edwards Lifesciences (NYSE: EW) was significantly overvalued by the market, I don't take any particular pleasure in seeing the stock down almost one-quarter over the past year and year-to-date in 2013. Even so, it's a valuable reminder as to the risks of getting a little too bullish about first movers in fast-growing markets and the danger of the idea that “valuation doesn't matter”.

While the valuation has indeed come down significantly for Edwards, so too have the growth expectations. I do believe the market for transcatheter heart valves will exceed $4 billion in 2020 and that Edwards will remain the market leader. With free cash flow likely to grow at a low-teens rate and the stock slightly below fair value, these shares look interesting for more risk-tolerant investors.

Please read the full article here:
http://www.massdevice.com/blogs/massdevice/edwards-lifesciences-comes-back-down-earth-hard

Seeking Alpha: Natural Grocers Boldly Going Where Others Have Gone Before

If imitation is the sincerest form of flattery, Natural Grocers (NGVC) (also known by its full name of Natural Grocers by Vitamin Cottage) is paying some big compliments to Whole Foods (WFM), The Fresh Market (TFM), Trader Joe's and Sprouts. The company is pursuing a growth strategy in the organic/natural food retailing sector that seems to be taking some of the best ideas of these larger chains and coupling them with an even tighter focus on the hard-core healthy eating community. While these shares have had a big run in 2013 and sport pretty robust valuation multiples, it may be hasty to assume that the stock is overpriced today on a long-term basis.

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Natural Grocers Boldly Going Where Others Have Gone Before

Investopedia: Even Near A 52-Week High, MetLife Seems Undervalued

MetLife (NYSE:MET) has been one of my favorite financial companies that I don't actually own, and nothing has happened to dim my enthusiasm for the company. Not only has the company been fairly proactive in adapting to the new regulatory realities of the U.S. financial system, but it has also looked to improve its international growth prospects while reducing risk in its business. Even though the shares are up 50% over the past year, I'd still consider adding these shares to a portfolio (and would do so in my own portfolio if I didn't already have sizable exposure to the financials).

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http://www.investopedia.com/stock-analysis/061413/even-near-52week-high-metlife-seems-undervalued-met-hig-pru-amp.aspx

Investopedia: Can National Oilwell Varco Win Back The Love?

It doesn't feel like it was all that long ago when National Oilwell Varco (NYSE:NOV) was a darling in the energy equipment space. Sure, there was always strong cyclicality to the business and the stock (as the multiples tend to expand and contract with the book-to-bill ratio), but this was one of the companies that consistently got above-average multiples and the benefit of the doubt.

Now, though, investors' enthusiasm has turned more toward those companies with bigger subsea and offshore surface exposure, companies like FMC Technologies (NYSE:FTI) and Cameron (NYSE:CAM) for instance. Although I don't want to suggest that investors should ignore the risks that National Oilwell Varco will struggle to improve margins, that the equipment cycle peak is in sight, and/or that the company will be challenged to expand into subsea and surface, today's discount to historical multiples and current rivals seems a bit overdone.

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Investopedia: Peabody Energy Carries Higher Expectations, But Solid Value

Having recently examined Arch Coal (NYSE:ACI) and Cloud Peak Energy (NYSE:CLD), it's time to examine the largest U.S. coal producer – Peabody Energy (NYSE:BTU). There is a lot to like about Peabody at first glance, as this company has attractive U.S. thermal coal exposure (with minimal Appalachian reserves) and heavily China-leveraged met coal exposure.

On the other hand, Peabody is arguably the most well-respected coal miner out there (and maybe one of the best-regarded natural resource companies overall) and investors and analysts consistently award the stock a higher multiple than its peers. Consequently, while Peabody may the highest-quality coal stock to own today, the upside in these shares to a thermal (and/or met) coal recovery doesn't seem as great as in its rivals.

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Investopedia: With Freeport McMoRan, It's Time To Get Over It And Move On

I don't think it's an exaggeration to say that some percentage of Freeport McMoRan (NYSE:FCX) shareholders, or former shareholders, hated the company's decision to acquire Plains Exploration and McMoRan Exploration. These shares are down about 22% from the time just before the announcement, though miners like BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO), and Southern Copper (NYSE:SCCO) haven't fared dramatically better in what has been a pretty unpleasant market for basic materials stocks.

With the deals done, it's time to get over the disappointment regarding the oil and gas transactions and just accept Freeport McMoRan for what it is today – an incrementally more diversified natural resources company with a hefty amount of debt and high leverage to global economic growth. Given that I do not believe that the oil & gas properties will be value-destructive (in total) from this point on and that the valuation already prices in further copper price erosion, Freeport McMoRan stock does hold some appeal at these prices.

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Investopedia: Cloud Peak Energy May Have A Steeper Road To Recovery

Multiple sell-side analysts keep talking about the thermal coal recovery, but Wall Street seems to be responding with “that's okay, after you...”. On a six-month, year-to-date, and three-month basis, the shares of most of the major U.S. coal producers are in the red, with the met-coal miners like Peabody (NYSE:BTU), Arch Coal (NYSE:ACI), and Alpha Natural (NYSE:ANR) under-performing the thermal-focused Cloud Peak Energy (NYSE:CLD).

It's true that natural gas prices have risen of late, making coal more cost-competitive. It's also true that coal inventories have been worked down at utilities and that miners have been relatively responsible in idling marginal mines.

It's still not abundantly clear that Cloud Peak Energy offers a great opportunity today. While this is a very well-run miner with solid assets, the counter-intuitive reality is that it's offer the lesser operators that see the biggest stock price improvements early in a recovery. It's also not certain that this “recovery” has legs or will show up in the numbers anytime soon, as there is ample capacity, prices are still weak, and margins are very thin. While I think Cloud Peak is on balance a good play on an eventual thermal coal recovery, investors are going to need patience for this stock to work.

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Investopedia: Challenging Conditions And Conservatism Keeping U.S. Bancorp In Bargain Territory

Larger banks, particularly well-run companies like U.S. Bancorp (NYSE:USB), haven't been at the top of most investors' buy lists recently. While U.S. Bancorp shares are up about 10% from when I last wrote about the company (after first quarter earnings), there seems to be a general sense of “why bother?” on the Street, given weak loan demand, aggressive pricing, and limited scope for earnings leverage. While U.S. Bancorp's conservative ways will likely limit aggressive capital deployment and the bank is pretty economically-sensitive, even near a 52-week high these shares appear to offer solid long-term potential.

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Investopedia: Absent A Quick Turnaround In Power, GE Has Gone Far Enough For Now

General Electric (NYSE:GE) has been one of my go-to industrial stocks since around mid-2009, and the stock hasn't disappointed in that time – rising more than 140% and besting the return of the S&P 500 by about 30% or so. Companies and stock picks are always fluid, though, and the recent developments in GE's industrial margins and free cash flow (FCF) generation haven't been all that positive (particularly in power). While some of this is cyclicality and some is likely growing pains, a somewhat longer ramp back to strong operating performance leads me to think that GE is close to fair value absent a big turnaround in industrial demand and/or margins at GE.

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Investopedia: Dover's Opportunities Matched Only By Wall Street's Enthusiasm For Them

Any significant worries about a failure of the second half industrial recovery thesis seem to have been set aside for Dover (NYSE:DOV). With the company deciding to spinoff its Knowles electronic components business and outlining significant opportunities in markets like energy and refrigeration, analysts and investors are on board with the solid potential of this industrial conglomerate. Although Dover is by no means overvalued and should offer better growth than most of its peers, newcomers to the story may just want to wait in the hopes of a better entry price.

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Investopedia: Afer A Strong Recovery, What Moves ADM From Here?

I've had a love/worry relationship with Archer Daniels Midland (NYSE:ADM) for a while now, as I do believe that the Street is often too negative about a business that is admittedly very low-margin and unpredictable. With the stock up more than one-third from its November 2012 lows, though, it is harder to argue that the stock is unfairly neglected by the Street. Longer-term opportunities in Asia will take time to materialize, which makes a strong U.S. crop and the speedy close and integration of GrainCorp all the more important.

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Investopedia: After A Good Run, Novartis Looks Fairly Valued

Like so many other pharmaceutical stocks, Novartis (NYSE:NVS) has done pretty well for its shareholders over the past year and solidly beat the S&P 500. With that move, the multi-year discount in most Big Pharma shares has evaporated and Novartis is no exception. Novartis has a deep and high-potential pipeline, but threats from generic competition, competition to its branded drugs, margin pressure, and strategic uncertainties do mitigate some of that pipeline value.

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Investopedia: Impala Platinum Trying To Survive Multiple Challenges

Being a South African platinum miner is a pretty miserable existence right now. The contract price of platinum has fallen more than 12% over the four months and seems stuck in a trading range of $1,400 to $1,700 an ounce. At the same time, once-great mines are starting to show their age and labor unrest is becoming a serious issue. Add in the risk of expropriation in Zimbabwe, and it's not exactly surprising that Impala Platinum (OTC:IMPUY) (aka “Implats”) shares are at their lowest point in roughly eight years.

The good news is that Impala still has some of the highest-quality assets and reserves in the market, as well as a balance sheet and cost structure that stands out in the field. Were the company to get a little more aggressive in M&A and/or see a recovery in platinum prices, the shares could recover from these lows.

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Investopedia: Pandora Ups The Stakes In A Brewing Battle Royal(ty)

Life is seemingly never boring for Pandora (NYSE:P). If investors (or, more likely, sell-side analysts) aren't openly fretting about mobile monetization and listening hours or the threat that is (or isn't) Apple (Nasdaq:AAPL), they're worried about Pandora's content acquisition costs. While there of course many uncertainties regarding what Pandora will look like in a few years' time, the company is not just sitting back and waiting for the future to arrive. As seen in the company's decision to buy a terrestrial radio station, Pandora is willing to take off the gloves and get its hands dirty to build a viable long-term business.

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