The Motley Fool: AstraZeneca PLC's Renovation Plan Fully Underway

Once a floundering big pharma with looming patent cliffs and a pitiful pipeline, CEO Pascal Soriot has remade AstraZeneca (NYSE: AZN  ) in a relatively short period of time. Patent cliffs are still likely to compress revenue for the next year, but AstraZeneca now boasts an appealing pipeline targeting a host of therapeutic classes, including an immuno-oncology pipeline that holds up pretty well to comparisons with Bristol-Myers (NYSE: BMY  ) , Merck (NYSE: MRK  ) , and Roche (NASDAQOTH: RHHBY  ) (Mr. Soriot's former employer).

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AstraZeneca PLC's Renovation Plan Fully Underway

The Motley Fool: Even With Growth Opportunities Ahead, Is Hospira Overvalued?

Leading specialty injectables and infusion pump manufacturer Hospira (NYSE: HSP  ) has suffered greatly from largely self-inflicted wounds over the past couple of years. A lackadaisical approach to proper plant management has led to numerous FDA warning letters at key plants and a shipment freeze on the company's pumps. Yet, Hospira remains the largest player in an industry that has attractive gross margins, significant barriers to entry, and frequent supply shortages.

Hospira seems to be on the road back, and seems to be taking seriously both the need to comply with the FDA regulations and the need to augment its long-term growth potential. The problem is that it looks like Wall Street is already many steps down that road in terms of rewarding the company with a robust valuation.

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Even With Growth Opportunities Ahead, Is Hospira Overvalued?

Seeking Alpha: Silence Therapeutics A Quieter Name In RNAi

By now most biotech investors know about RNAi companies like Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals (ISIS), and many probably know Tekmira (TKMR) and Arrowhead Research (ARWR) as well. Alnylam and Isis have excited investors with the potential multiple billion-dollar drugs in their pipeline, while Tekmira and Arrowhead have solid delivery technologies and emerging therapeutic pipelines.

If you'll pardon the obvious pun, it has been a lot quieter where London-based Silence Therapeutics (OTCPK:SLNCF) (SLN.L) is concerned. This small biotech is barely followed on the Street and isn't exceedingly liquid even on its home stock exchange (the LSE). Silence's corporate history is shakier than many others and the company does not have a particularly thick book of clinical data in humans, but what the company does have is a three-pronged delivery platform that could, like Arrowhead's delivery technology, open up a wider range of treatment targets for RNAi therapy.

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Silence Therapeutics A Quieter Name In RNAi

Seeking Alpha: The Realities Of The LNG Market Weigh On Chart Industries

When I last wrote about Chart Industries (GTLS), one of concerns about the company's high-flying valuation was that there was a real risk of disappointment if the rollout of LNG vehicle fuel infrastructure hit any bumps in China or the U.S.. That is exactly what's happening, and the consequences for Chart's stock price have not been pretty.

Chart's ability to manage large-scale Energy and Chemical (E&C) projects need to improve, but a lot of what will drive this company/stock is outside of management control - truck builders, fueling station builders, and LNG liquefaction facility builders seem stuck in a cycle of "no, you first". I do believe that LNG as a vehicle fuel makes too much sense not to happen and that Chart Industries shares hold some appeal now for long-term investors, but the stock really needs better reported order growth to get moving upwards again.

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The Realities Of The LNG Market Weigh On Chart Industries

Seeking Alpha: XPO Logistics' $7 Billion Revenue Ambition

It's almost surprising that XPO Logistics (XPO) hasn't made another major acquisition since I last wrote about the company in mid-January. I am of course being facetious, but not by much, as XPO management has shown an extreme willingness to identify, negotiate, and close deals that bring in new revenue and business opportunities to this fast-growing third-party logistics provider.

The investment thesis here still comes down to belief. If you believe that management will hit its goal of $7.5 billion in revenue and $425 million in EBITDA in 2017, these shares look quite cheap today, but ample risks remain regarding the company's ability to integrate acquisitions, manage the balance sheet, and drive those mid-single digit EBITDA margins. I don't have complete confidence that management will get there, but "close" is still good enough to make this a stock worth considering.

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XPO Logistics' $7 Billion Revenue Ambition

The Motley Fool: ABB Ltd. Ready to Ride a Capex Recovery

Switzerland's ABB (NYSE: ABB  ) is one of those large companies that most people never think about, but wouldn't want to live without the end results of what they facilitate. ABB's automation products allow factories, refineries, power plants, and steel mills to operate smoothly, safely, and efficiently, while its varied products and service in the power market are vital to power generation and transmission. If you believe that Europe's economy is set to turn around and that emerging markets like China will continue to invest in power generation and factory and plant modernization, ABB is a name to consider today.

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ABB Ltd. Ready to Ride a Capex Recovery

The Motley Fool: Does This Johnson & Johnson Product Have Blockbuster Potential?

It's not often that a single clinical trial wipes out an entire therapeutic opportunity, but that is what most sell-side analysts seem to believe about Medtronic's  (NYSE: MDT  )  U.S. pivotal trial failure with its Symplicity renal denervation device. In the wake of Medtronic's surprising setback, both St. Jude Medical  (NYSE: STJ  )  and Boston Scientific  (NYSE: BSX  )  have hit "pause" on their renal denervation programs, while Covidien  (NYSE: COV  )  has chosen to tap out, ending development of its OneShot system altogether.

There may be life in the approach yet, though. Johnson & Johnson  (NYSE: JNJ  )  recently announced that it received European approval (the CE Mark) for RENLANE system, a multi-electrode RF ablation device that many people didn't even know was in development. That begs the question of whether this means there is opportunity yet in what was once touted as a multibillion-dollar area.

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Does This Johnson & Johnson Product Have Blockbuster Potential?

Seeking Alpha: Magnit Has Some Attractive Qualities

Emerging market investing isn't for everybody, but the rewards can be pretty appealing. Even in a relatively unexciting area like food retailing, CBD (CBD) and FEMSA (FMX) have done considerably better than the S&P 500 over the past five years, returning 242% and 277%, respectively, against about 139% for the U.S. index. Granted, FEMSA is not purely a retailer and not all retailers have done so well - Wal-Mart de Mexico (OTCQX:WMMVY) is up about 104% over that same stretch, while Turkey's BIM is up only 14% and South Africa's Shoprite is down around 23%.

That brings me to Russia and Magnit (OTC:MGJCL), Russia's largest food retailer by store count and sales volume. Right off the bat, I'll warn readers that this is a stock that will require a little extra effort - there is no trading U.S. ADR that I aware of, though there is a highly liquid GDR in London (MGNT) that should be accessible if your broker allows you to trade foreign stocks (many, if not most, brokers now have systems in place to handle online foreign stock trades).

It stands to reason that a stock that requires extra effort to own had better offer something worthwhile. I believe Magnit does. Magnit is growing at an exceptionally fast pace, but still has a large market share growth opportunity, not to mention free cash flow leverage from above-average margins. Many readers won't even consider investing in Russian stocks, but I believe Magnit is worth a closer look from more aggressive and risk-tolerant investors.

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Magnit Has Some Attractive Qualities

Seeking Alpha: Expectations For Merit Medical Still Seem A Little Low

"Buy the stocks of good companies" sounds like good advice, but the reality can get really tricky when it comes down to issues like valuation. Merit Medical (MMSI) is a good case in point. This company makes most of its money in markets that aren't really seen as growth opportunities and hasn't generated double-digit operating margins in quite some time. Yet, even a very modest 2x multiple to 2014 revenue suggests at least 10% upside, and the company may well see meaningful growth from products designed for radial access.

I'm inclined to be positive on Merit Medical, but the low margins, lack of free cash flow generation, and weak returns on invested capital are all reasons for pause. If cost/margin improvement efforts really take hold, though, the shares ought to do well.

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Expectations For Merit Medical Still Seem A Little Low

Seeking Alpha: Wright Medical Has The Right Stuff, But Isn't Cheap

Extremities remain a popular growth market within orthopedics and med-tech, and that has kept Wright Medical Group (WMGI) a pretty popular stock. With mostly solid fourth quarter results and guidance, and growing expectations for more M&A in the space, I don't think Wall Street is in a hurry to jump off this name just yet. The valuation doesn't really look a huge bargain, though, so investors buying into Wright Medical should realize that any interruptions in growth could bring swift and severe punishment for the market.

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Wright Medical Has The Right Stuff, But Isn't Cheap

The Motley Fool: Modest Expectations Still Working in Broadcom Corporation's Favor

Owning a stock market darling is a blast, but sometimes you have to turn to the ugly ducklings to find value. Such is the case with Broadcom (NASDAQ: BRCM  ) , where the market seems certain that the company can't win much baseband, can't keep its connectivity business, and doesn't deserve to be owned on the basis of its strength in networking or broadband. It is up to Broadcom management to prove that the market is too skeptical, but investors who own Broadcom today should be in position to benefit from stronger results later this year.

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Modest Expectations Still Working in Broadcom Corporation's Favor

The Motley Fool: Lenovo Group Ltd: Taking Short-Term Pain For Long-Term Gain

Chinese PC, smartphone, and tablet manufacturer Lenovo (NASDAQOTH: LNVGY  ) has a knack for surprising analysts and investors that goes back a while. Lenovo defied skeptics who thought its acquisition of the IBM (NYSE: IBM  ) PC business was a losing move, leveraging that deal to build the world's largest PC business and continuing to grow its PC business at a time when the market is shrinking.

Now Lenovo is doubling down in a big way. The company's acquisition of IBM's server business was well-telegraphed and well-liked, but then the company shocked the market with the nearly $3 billion acquisition of Motorola Mobility from Google (NASDAQ: GOOG  ) . The latter has proven quite controversial, with some sell-side analysts speculating that Lenovo will never turn Motorola around and the shares down around a quarter since the announcement.

I believe that the near-term skepticism ignores the substantial long-term opportunities at Lenovo and some significant undervaluation in these shares.

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Lenovo Group Ltd: Taking Short-Term Pain For Long-Term Gain

Seeking Alpha: Dorel Industries Trying To Ride Out A Flat Tire

Segment-leading brands don't always guarantee top-flight performance, as Canada's Dorel Industries (OTCPK:DIIBF) demonstrates. The stock hasn't been terrible, but it doesn't really stack up so well against the S&P 500 over the last one, two, and five-year periods, even though Dorel boasts significant market share in the infant/child products, bike, and ready-to-assemble furniture markets.

I wish I could see a brighter future for this company, but I have some doubts. I don't think the issues that are currently hitting the bike business are going to last forever, but this isn't a company that has done all that much from an organic growth, operating margin, or return on invested capital perspective over the past decade. The stock does seem a little undervalued today, but I can't get comfortable with the idea that it's really an outstanding performer.

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Dorel Industries Trying To Ride Out A Flat Tire

Seeking Alpha: Techtronic Still Worth A Look As A Housing Recovery Play

My Top Idea call on August 20, 2013 to buy Techtronic (OTCPK:TTNDY) worked okay for a while, as the stock rose almost 20% through to year-end. Shortly thereafter, worries about the soundness of the housing play as an investing them started to creep into the market, stimulated by weaker housing starts and existing sales and worries about the economy as a whole. That took a lot of the steam out of Techtronic, as well as rival Stanley Black & Decker (SWK) and major retailing partner Home Depot (HD).

I believe the Techtronic story remains an appealing one. Techtronic has been a share-gainer in the U.S. with its Ryobi and Milwaukee tool lines, and still has yet to really address the European or major emerging markets in a big way. Likewise, I continue to believe that the company can do better with its floor care business, with a resulting uplift to margins. With margins and returns on capital heading in the right direction and a housing market only in the early phases of recovery, I still believe Techtronic has a lot to offer at these levels.

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Techtronic Still Worth A Look As A Housing Recovery Play

Seeking Alpha: Foschini Group Offers Short-Term Pain, But Maybe Some Long-Term Gain

South Africa definitely has issues right now. Unemployment runs close 24%, official inflation is over 5%, and economic issues have led to strikes, unrest, and violence in many parts of the country, not to mention weaker consumer and business confidence. Against that backdrop, it's not so surprising that The Foschini Group (OTCPK:FHNIY), one of the larger retailers in South Africa, is having a tougher time of it, with the ADRs down 40% over the past year and the South African shares down about half as much (down 21%).

There are definitely things that Foschini needs to work on, including comparatively unimpressive inventory turns and a high reliance on credit sales, but there are also some worthwhile positives in the company's favor. Foschini is positioned towards the higher end of South Africa's "mass-middle market" and has nearly 20% share in a market where the informal sector still has about 40% overall share. What's more, the company has already begun to expand outside of Africa and has been targeting logical growth opportunities. The Foschini Group does not look hugely undervalued to me today, but it does look like a good option for playing a relatively bullish thesis on the South African consumer, if your interests are in that direction.

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Foschini Group Offers Short-Term Pain, But Maybe Some Long-Term Gain

Seeking Alpha: Petra Diamonds Looking To Capital Investments And Global Demand To Move Higher

Diamonds are not necessarily an investor's best friends, but Petra Diamonds (OTC:PDMDF) shares have treated investors pretty well in just the past three months, shooting up more than 50% on increased optimism about the company's expansion plans and cost structure. The shares have probably overshot the mark in the short term, but Petra's collection of mines (and its plans to improve their productivity and value) certain bear watching.

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Petra Diamonds Looking To Capital Investments And Global Demand To Move Higher

The Motley Fool: 3M Co. Has The Quality, But Are Growth And Value Lacking?

Having owned 3M (NYSE: MMM  ) for more than eight years, I have to say that I'm perfectly happy with how the company has developed and how the stock has outperformed against the S&P 500. 3M often only gets grudging credit from some analysts as a good stock to own during downturns, but few companies match, let alone surpass, the company's long-term returns on capital and net assets.

I am not all that eager to dislodge a cornerstone position (albeit a small cornerstone...), but I cannot aggressively advocate readers to join me in owning 3M right now. The company's market exposures (both by end market and geography) don't look ideal for the coming year and the valuation seems to already assume that everything will go well. Instead, I would suggest that investors consider names like Honeywell (NYSE: HON  ) , Eaton (NYSE: ETN  ) , and Dover (NYSE: DOV  ) in what is an admittedly bargain-poor industrial conglomerate sector these days.

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3M Co. Has The Quality, But Are Growth And Value Lacking?

The Motley Fool: A Whole New Opportunity For Hologic Inc?

Women's health specialist Hologic (NASDAQ: HOLX  ) has had a rough go of it. At a time when most companies in the medical equipment or diagnostics markets can look back on a great two-year run in their share prices, Hologic's shares have chopped around and gone nowhere fast (up just 2%). This isn't a mistake on the part of the market, as Hologic has underperformed due to slow adoption of 3D tomosynthesis, changing recommendations for cervical cytology testing, and fiercer competition in diagnostics.

In hiring former Stryker CEO Stephen MacMillan, though, the board may have put this company back on the right track. MacMillan's experience in improving sales efforts and integrating acquisitions both speak to areas where Hologic needs to improve, and there is certainly room for improvement here.

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A Whole New Opportunity For Hologic Inc?

The Motley Fool: A Big Pharma Titan Prepares For the Next Generation

Bristol-Myers Squibb (NYSE: BMY  ) and Merck (NYSE: MRK  ) have made one thing pretty clear – they want to be more like Roche (NASDAQOTH: RHHBY  ) . Roche is the #1 company in oncology and has developed three of the top 10 best-selling drugs in the world. Now the company is looking to a deep pipeline of antibodies, antibody drug conjugates, and small molecules to maintain that leadership into the next decade. Valuation is not undemanding here, though, and that puts a premium on clinical success and operational execution.

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A Big Pharma Titan Prepares For the Next Generation

Seeking Alpha: Tornier Working Through An Awkward Transition

Extremities are the highest-growth area in orthopedics today, but Tornier (TRNX) has been on the outside looking in for the last few quarters. Large companies like Johnson & Johnson (JNJ), Biomet, and Stryker (SYK) are paying more attention to these markets as a way of augmenting slower growing hip, knee, and spine markets, but Tornier's problems are largely self-inflicted by way of its sales restructuring.

Tornier doesn't believe it is going to return to torrid growth in 2014, but the market seems to be willing to look past these issues and forward to a strong multiyear extremities market growth story. It also certainly does not hurt that large med-tech companies have started opening their wallets again and Tornier would be an attractive target for multiple companies. Tornier's intrinsic DCF-based valuation isn't so impressive at these levels, but by the EV/revenue method that is often favored in med-tech there still would seem to be worthwhile potential.

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Tornier Working Through An Awkward Transition

Seeking Alpha: MTS Systems Waiting For A Better Cycle

Industrial test system and sensor manufacturer MTS Systems (MTSC) is the sort of small company (if over a half-billion dollars in sales is truly small) that just does what it does, year in and year out. As the company's customers operate in cyclical markets, MTS Systems' business inherits some of that cyclicality, but the company reliably delivers very good returns on capital as a byproduct of its strong market share and long customer relationships. With the shares not quite recovered from a post-earnings swoon, there is some value here though it is not a severely undervalued stock at this point.

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MTS Systems Waiting For A Better Cycle

Seeking Alpha: Mattson Looking For Advanced Chips To Drive The Cycle

Small-cap semiconductor equipment company Mattson Technology (MTSN), like most of its peers, has had its ups and downs recently as investors try to digest and interpret the guidance from major chip and foundry companies on their spending plans. Mattson still has the potential to leverage migration to 3D NAND and FinFET to significant revenue, profit, and cash flow growth, but it remains a risky call as it is a small player relative to Applied Materials (AMAT) and Lam Research (LRCX) and may find it difficult to maintain or grow its share during this next spending cycle.

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Mattson Looking For Advanced Chips To Drive The Cycle

Seeking Alpha: Aruba Gaining Share And Broadening Its Base

Mobile enterprise specialist Aruba Networks (ARUN) hasn't completely filled the crater created in early 2013 when the company lost sales to weaker industry spending and competitive gains from Cisco (CSCO), but this quarter will bring it a lot closer. More importantly, the company appears to be gaining share from its largest rival and newer offerings like ClearPass and Instant seem to be hitting their stride.

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Aruba Gaining Share And Broadening Its Base

The Motley Fool: A New Strategy At Allscripts Healthcare Solutions Is Making All The Difference

The health care IT space is still very competitive, with Epic and Cerner (NASDAQ: CERN  ) holding large shares in large hospitals, but new management has made a big difference for Allscripts (NASDAQ: MDRX  ) . Strong bookings put the company on good footing for 2014, while growing interest in population health and a sizable replacement opportunity in electronic health records (EHR) offer more enduring potential.


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A New Strategy At Allscripts Healthcare Solutions Is Making All The Difference

Seeking Alpha: Basic Energy Blowing Up

I liked Basic Energy Services (BAS) back in October, but even I didn't think the shares were going to snap back this strongly. Competition remains fierce in basins like the Permian and activity levels weren't great in the fourth quarter, but Basic Energy has done a good job of controlling costs while adding assets in its fluid services business.

It looks as though energy companies are getting an early start to their 2014 capex plans, and pricing is improving as a result. Valuation for small service companies is frustratingly imprecise, but I wouldn't rule out the possibility of EBITDA estimates moving up throughout the year. For now, though, I think some of the excitement in the shares can be explained a reaction to some very loudly bearish analysts and a large short position, and I'd probably wait for the dust to settle a bit before buying.

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Basic Energy Blowing Up

Seeking Alpha: Rofin-Sinar Needs To Get Moving

When I last visited Rofin-Sinar Technologies (RSTI), I thought that the valuation held some appeal for long-term investors, but that there were some meaningful operating/execution risks in the meantime and that I preferred fiber laser specialist IPG Photonics (IPGP). That call has worked out pretty well, as IPGP is up more than 15% from that article, while Rofin-Sinar has fallen about 6%.

Rofin-Sinar is definitely seeing some pressures in its business today, as semiconductor, electronics, PV, and medical markets have fallen off. It is also not obvious to me that the company is making as much progress as it needs to in closing the gap with IPG Photonics. All of that said, the valuation is getting less demanding and if management can rebuild margins back to past levels the shares could do well from here.

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Rofin-Sinar Needs To Get Moving

Seeking Alpha: Orbital Sciences Executing Better, But Business Remains Volatile

I liked Orbital Sciences (ORB) back in September, but even I'm surprised at the better than 50% jump in the shares. Successfully completing the first operational Cygnus cargo mission to the International Space Station definitely helped, but so too did solid guidance on revenue and free cash flow for 2013. As the Cygnus program matures, recognized margins should move up and Orbital should unlock significant free cash flow. Risks remain, though, in the company's ability to keep the satellite business moving forward and resolving potential supply issues for the Antares rocket.

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Orbital Sciences Executing Better, But Business Remains Volatile

Seeking Alpha: Portfolio Recovery Associates Finally Getting Aktiv Outside The U.S.

Holding Portfolio Recovery Associates (PRAA) hasn't been particularly rewarding over the past few months, even though PRA remains the best-run receivables collection company out there. The stock enjoyed a good run as the company managed to exceed expectations, but performance has petered out as those expectations get dialed in more closely and the receivables market gets more competitive.

Now it looks like PRA is leaping ahead into its next phase of life. The company has been very slow to exploit its acquisition of UK-based MacKenzie Hall and drive real growth outside the U.S., but the $1.3 billion acquisition of Norway's Aktiv Capital shows a very real commitment to becoming a global collection champion. There isn't quite enough information available right now to fully value the contribution that Aktiv can make, but the valuation seems reasonable and PRA management has more than earned the benefit of the doubt. Even with no contribution from Aktiv in the numbers, PRA remains meaningfully undervalued today.

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Portfolio Recovery Associates Finally Getting Aktiv Outside The U.S.

Seeking Alpha: Penn Virginia Offers Near-Term Risk, But Long-Term Reward

When a stock goes from about $4.50 to almost $13 in the space of a year, and analyst price targets have more than doubled in the trailing six months, something pretty dramatic is going on. That seems like a fair summary of Penn Virginia (PVA) as this once gas-heavy small-cap E&P has transitioned to an oil-oriented company with exceptional real estate in the Eagle Ford.

It's not all Beverly Hillbillies yet, though. As the last couple of quarters have shown, hitting production and earnings targets is still a challenge. The company also has a significant amount of debt on the balance sheet and ambitious spending goals for 2014 and beyond. I do believe that further drilling in the Eagle Ford can unlock significant value from here, but investors have to be able to withstand the quarter-to-quarter turbulence that will accompany this name.

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Penn Virginia Offers Near-Term Risk, But Long-Term Reward

The Motley Fool: Multiple Setbacks May Spell Opportunity at Medtronic, Inc.

In a pretty richly valued med-tech space, it takes some setbacks to uncover value and opportunity. Medtronic (NYSE: MDT  ) has certainly seen setbacks, as the company has abandoned renal denervation, has lost some momentum in CRM, and may not be as competitive as hoped in drug-coated balloons. On a more positive note, transcatheter heart valves look like a viable growth driver and Medtronic has several opportunities in areas like neuromodulation, diabetes, and atrial fibrillation.

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Multiple Setbacks May Spell Opportunity at Medtronic, Inc.

Seeking Alpha: Lightstream Resources: A Different Sort Of Oil Play

I've spent a fair bit of time over the past couple of months highlighting oil and gas companies, mostly operators in the Niobrara and Bakken areas, that I feel have been overly punished by the market. Then there is the Lightstream Resources (OTCPK:LSTMF) (LTS.TO) situation. Not unlike Forest Oil (FST), I think years of mismanagement pushed the company into an undesirable situation, though issues outside of the company's control like Western Canadian Select (or WCS) differentials haven't helped.

Relative to long-lived value estimates like NAV and short-term metrics like EV/EBTIDA, Lightstream does not leap out as a huge value. Moreover, the company has work to do in cleaning up its balance sheet. With that heavy debt load, I cannot say that the recently-lowered dividend is entirely safe, though the yield definitely sweetens the potential expected return. If Lightstream can do a good job of selling assets in what is a buyer's market and delivers good drilling results in Swan Hills, there could be some upside here yet.

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Lightstream Resources: A Different Sort Of Oil Play

Seeking Alpha: Okay Results From Terex Don't Fit Wall Street's Story

Wall Street seems to really want to believe that 2014 will be a very good year for companies exposed to non-residential construction, even though comments from company managements don't seem quite as optimistic. That is coming home to roost for Terex (TEX) on Wednesday, as the shares are getting hit relatively hard on what didn't really look like a bad quarter or guide.

I like Terex's focus on improving margins and full-cycle, and I also like the company's leverage to an improving European economy. Valuation is a more complicated matter. While I think Terex can ride a recovery in non-residential construction to high single-digit FCF margins over the next five years, I don't see the shares as cheap on a long-term intrinsic value basis. On the other hand, cyclical stocks tend to overshoot during recoveries and investors can look at metrics like EV/EBTIDA as validation for further upside in these shares.

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Okay Results From Terex Don't Fit Wall Street's Story

Seeking Alpha: A Focus On Margins And Clinical Opportunities Could Transform Bruker

Due in no small part to the willingness of large life sciences companies to grow by acquisition, there are not all that many small-to-mid cap companies with solid technologies, products, or market shares. Bruker (BRKR) is definitely one of the outliers, as the company has established a significant presence in areas like nuclear magnetic resonance, molecular spectroscopy, and advanced X-ray technologies.

Bruker has historically been more focused on product development and revenue growth than profitability, but that has started to change. The company has also started to alter its end-market focus, with clinical microbiology emerging as a very worthwhile opportunity. Bruker certainly has to prove that it can execute, and competing with companies like Agilent (A), Danaher (DHR), and Thermo Fisher (TMO) is no picnic, but Bruker seems to offer some appealing growth potential. The valuation isn't a slam-dunk at today's price, but there are definitely some bull-case drivers that could emerge to propel even better sales and margin performance down the line.

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A Focus On Margins And Clinical Opportunities Could Transform Bruker

Seeking Alpha: Forest Oil Trying To Make A Go Of It With Second-Rate Assets

Getting smaller can be a good way of cleaning up a balance sheet and improving a company's growth prospects. In the case of Forest Oil (FST), though, I have some real concerns about whether management hocked the family silver and kept the stainless steel instead. I do believe that Forest shares trade below their current NAV and that more experience could lead to better results (which in turn would lead to a meaningfully better NAV), but that upside has to be set against the reality that Forest Oil may be on the outside looking in when it comes to the Eagle Ford and may not have the capital or technical expertise to maximize the Permian assets anytime soon.

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Forest Oil Trying To Make A Go Of It With Second-Rate Assets

The Motley Fool: Becton, Dickinson & Co Poised To Be A Large-Cap Growth Leader

When the worst thing you can say about a company is that its stock doesn't look very cheap, that's not a bad situation. It is challenging for me to see substantial undervaluation in Becton Dickison (NYSE: BDX  ) these days, even given the company's excellent share in safety devices, pre-filled syringes, and autoinjectors, and above-average growth in emerging markets. Although I'd be in no rush to sell, I would suggest investors keep an eye on the changes under way throughout the diagnostics industry.

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Becton, Dickinson & Co Poised To Be A Large-Cap Growth Leader

Seeking Alpha: Can Newfield Exploration Get Some Newfound Respect?

Oil prices appear to have put in a bottom in the low $90s, but investors have yet to come back to names like Newfield Exploration (NFX). Issues like the oil/gas mix, production and drilling costs, and debt-adjusted growth seem to be weighing on sentiment, even though Newfield has an enviable geographic diversity to its operations. While this is not my favorite name in the E&P space, I do believe it is trading below fair value and should do well when institution investors rediscover the independent E&P space.

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Can Newfield Exploration Get Some Newfound Respect?

Seeking Alpha: Strong Orders And Large Markets Keep Hollysys Moving Forward

The combination industrial automation and train signaling/control story that is Hollysys (HOLI) continues to improve. Building on solid share in its existing businesses, Hollysys is adding products and targeting end markets that should billions to its long-term addressable opportunity. Although the stock has doubled the return of the S&P 500 over the past year, the company is still largely unknown and the prospects of many years of strong revenue and FCF growth still argue for owning these shares.

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Strong Orders And Large Markets Keep Hollysys Moving Forward

Seeking Alpha: Thompson Creek Really Has To Execute Now

A year ago, I discussed Thompson Creek (TC) as a high-risk/high-reward mining stock opportunity that was increasingly dependent on bringing its Mt. Milligan copper-gold project into production on time and on budget. As stock calls go, this one delivered more of the "high-risk" than the "high-reward", though the 15% decline in the shares since that report isn't terrible compared to the performance of other small miners like Taseko (TGB) or General Moly (GMO) over the same period.

Since that last report, Thompson Creek has started production at Mt. Milligan and molybdenum market conditions have continued to be adverse to the company's interests. As is often the case for mining companies, Thompson Creek's future depends greatly on future metal prices (which they cannot control) and future mining costs (which they can control at least to a point). I believe current copper futures prices are good enough for this stock to work, so it is now about whether the ore grades and operating efficiencies come in as expected. With a cost-focused CEO at the helm, I'm optimistic on that score and I believe there's worthwhile upside at these levels.

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Thompson Creek Really Has To Execute Now

Seeking Alpha: Oasis Petroleum Offers A Familiar Story In The Bakken

ith concerns about oil prices, wider differentials, and rising costs pushing down many oil and gas developers in high-growth areas like the Bakken and Niobrara, Oasis Petroleum (OAS) isn't exactly a unique situation. Relative to companies like Whiting (WLL) or Continental (CLR) I suppose you could call Oasis a "fast follower", but whatever you call it, the company has more than half a million acres in the Bakken. Oasis's acreage is company-operated to a very significant degree and a significant amount of that property is in the attractive McKenzie County in North Dakota.

Valuation is always an inexact science, and even moreso in the case of oil and gas companies. If you assume that double-digit differentials are temporary and that WTI oil prices won't drop back below $80/barrel, Oasis looks attractive on a NAV basis. Likewise, an EV/EBITDA approach would support the notion that a price in the mid-to-high $50's is reasonable today.

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Oasis Petroleum Offers A Familiar Story In The Bakken

The Motley Fool: Actavis PLC Buys Pricey Lumber with Forest Labs

Investors were greeted with an intriguing rumor early Tuesday morning, as the Wall Street Journal and other financial news sources were reporting that Actavis (NYSE: ACT  ) and Forest Labs (NYSE: FRX  ) were closing in on a deal. It didn't take long for this to play out, as Actavis announced the deal before the market opened.

This is a bold move for Actavis, as Forest Labs substantially expands its therapeutic end-markets, its addressable health care markets, and its balance sheet. There are definitely rich opportunities for operational and financial synergy here, but successful execution on this premium deal is an absolute must.

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Actavis PLC Buys Pricey Lumber with Forest Labs

The Motley Fool: High Expectations for Growth: Is CR Bard Overvalued?

C.R. Bard (NYSE: BCR  ) finds itself in an interesting and unfamiliar situation – for the first time in quite a while, the Street actually has relatively demanding growth expectations. Bard has long based its business upon strong share in lower-average selling price consumables-driven businesses that don't offer spectacular underlying growth. Now management is looking to deliver more growth, as it prepares to leverage its new Lutonix drug-coated balloon and acquisitions driven by the incoming cash from Gore's patent infringement damages.

Bard has indeed returned to a level of growth that hasn't been seen in years. As is so often the case, though, my concern now is with the expectations that are getting baked into the valuation. With today's valuation not leaving much (if any) margin of safety, I'd prefer other names in the med-tech space.

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High Expectations for Growth: Is CR Bard Overvalued?

Seeking Alpha: Louisiana-Pacific Marking Time Ahead Of Closing Ainsworth

The U.S. housing market may not be back to business as usual, but business has gotten a lot better. A range of companies with exposure to residential building materials, including Headwaters (HW) and Universal Forest Products (UFPI), seen solid demand in recent quarters. Louisiana-Pacific (LPX) is having a little more difficult on the pricing and cost sides of things, but bringing Ainsworth (OTCPK:ANSBF) into the fold in 2014 should be a big help.

Louisiana-Pacific needs to execute better on costs and has to keep the momentum moving forward for products like SmartSide and engineered wood products. Provided that they execute on the opportunities that Ainsworth will bring, and that the U.S. housing recovery doesn't get knocked off stride, I continue to believe that Louisiana-Pacific is undervalued and should trade at $20 or higher.

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Louisiana-Pacific Marking Time Ahead Of Closing Ainsworth

Seeking Alpha: Does The OmniVision Roller Coaster Have Another Climb Left In It?

I've followed the ups and downs of OmniVision Technologies (OVTI) for about a decade now, and the company has never managed to break out of an intensely cyclical pattern driven by product launches and competitive pressures. I have no expectation that that will change, as Sony (SNE) has proved a fierce competitor on the high end while a bevy of Chinese rivals compete for the low-end of the CMOS image sensor market.

If investors can accept OmniVision for what it is, there may yet be trading opportunities to consider. As of this writing, the shares lie ever so slightly below tangible book value and this is a company that has generated positive net free cash flow and returns on assets over the past decade. Investors who can stomach the risk of a decline back to the $12 to $13 range may want to take a closer look, as even a discount to past price/book multiples suggests a fair value in the $18 to $20 range.

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Does The OmniVision Roller Coaster Have Another Climb Left In It?

Seeking Alpha: American Eagle Offers Some Value, But Large Execution Risks

Time will tell if the current ugliness in teen-oriented retail is tied to economic issues or a more fundamental shift towards value-oriented and fast-fashion retailers. As one of the established leaders of the teen retailer space, American Eagle Outfitters (AEO) has a lot to lose if its the latter, and the company's sales are suffering amidst a highly promotional environment.

With the surprising removal of its CEO about a month ago, American Eagle has to find a new leader at a challenging time in the sector. The company's brand identity, strong store footprint, and clean balance sheet work in its favor, but there is an undeniable risk that the company will not evolve with the times. My expectations for American Eagle's future growth are quite low, and the Street is expecting very little from this company, and I believe there is some appeal here for turnaround investors.

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American Eagle Offers Some Value, But Large Execution Risks

Seeking Alpha: Multi-Color Fades A Bit In The Third Quarter

Sometimes a couple of steps forward is followed by a step or two back. The operating leverage and margin improvement story at Multi-Color (LABL) isn't a one quarter or one year process, so I am not going to overreact to one disappointing quarterly result. That said, the ongoing weakness in pricing does highlight a significant challenge for the industry and sometime to watch when rival CCL Industries (OTC:CCDBF) reports later this week.

I continue to like Multi-Color as a multi-year play on greater consolidation in the label industry, better gross margins and operating leverage, and industry shifts toward more advanced (and expensive) label options. Consolidation has to be tempered with balance sheet risk and operating leverage is not a straight line process, but Multi-Color's basic thesis has not changed all that much. I continue to believe that these shares are priced to provide a decent premium to market returns over the next few years.

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Multi-Color Fades A Bit In The Third Quarter

Seeking Alpha: Taminco Isn't Your Typical Chemical Company

Specialty chemicals is a sector label that really doesn't tell investors all that much, as it includes a wide range of companies with very different end-markets and operating characteristics. That said, specialty chemicals do usually stand out as having above-average full-cycle returns than more commodity-oriented chemical companies. With that backdrop, I think Taminco (TAM) is worth a closer look as a pretty special specialty chemical company.

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Taminco Isn't Your Typical Chemical Company

Seeking Alpha: Ur-Energy Is A Fine House, But The Neighborhood Is Scary

Ur-Energy (URG) has a lot of things to its credit - the company has a quality asset in its Lost Creek mine, expansion/growth potential with assets like Shirley Basin and Lost Soldier, and an attractive cost structure. It also doesn't hurt that Ur-Energy represents a meaningful chunk of the U.S.'s low-cost domestic supply of uranium for its nuclear power fleet.

On the other side of the ledger is a uranium market that is still in pretty rough shape. Weak prices have curtailed production and exploration across the world, but spot prices are still hovering around multiyear lows. Likewise, while there is legitimately bullish talk about the construction of new nuclear plants in China, India, and the Mideast, not as much attention is being paid to whether aging plants in Europe, North America, and Japan will be replaced. All in all Ur-Energy shares don't seem overpriced today, but the risk-reward isn't quite enough to get me pounding the table to buy.

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Ur-Energy Is A Fine House, But The Neighborhood Is Scary

Seeking Alpha: Commercial Vehicle Making Progress, But It's Not Pretty

The turnaround story at Commercial Vehicle Group (CVGI) is moving along at a painfully slow pace, but is moving along. New senior management (both the CEO and CFO have been at the company less than a year) has a lot on its plate, ranging from shifting the R&D process to a more customer/application-specific approach to enhancing productivity to positioning the company for growth in large markets like agriculture and Chinese heavy vehicles.

All of this takes time, and not all of the factors necessary for better results are within management's control. While I wouldn't overlook other quality stories leveraged to commercial vehicles, like Cummins (CMI) or Eaton (ETN), I'm still willing to wait and see if new management at CVGI can deliver better results as the truck and construction cycles turn around. I think reasonable fair value (considering the risks and cyclicality) is around $9.50 today, but simply de-risking the story to a point where Commercial Vehicle would be on par with companies like Allison (ALSN), Cummins, and Eaton would add over $2 per share to fair value.

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Commercial Vehicle Making Progress, But It's Not Pretty

Seeking Alpha: Brocade's SAN Business Showing Some Resilience

When I wrote up Brocade (BRCD) as a Top Pick in mid-August, a lot of my thesis was predicated on the Street underestimating the company's ability to cut costs and overestimating the threats to the company's SAN business. So far, that thesis is working as the shares are up more than 20% since that pick (versus approximately 15% and 8% moves for the S&P 500 and Nasdaq). I do believe that there are very relevant long-term concerns about Brocade's core SAN switch business, but even modest growth expectations support a fair value closer to $11 today.

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Brocade's SAN Business Showing Some Resilience

Seeking Alpha: Commercial Becoming More And More Important For DigitalGlobe

Back in September, I thought DigitalGlobe (DGI) was a good name for growth-oriented investors to check out, as I thought synergies from the GeoEye merger and growing commercial use of satellite imagery and data could fuel a long run of above-average growth. Shares have certainly cooperated since that mid-September report, with DigitalGlobe shares up about 18% and trouncing the S&P 500.

Whenever a stock more than doubles the return of the market over a 12-month period, it certainly makes valuation a valid question. I wouldn't say that DigitalGlobe is an inarguable bargain at today's price, but many large potential customers are stepping up their commitment to growing businesses that rely on satellite data. I do worry that sell-side analysts are playing the "the price has reached my target … so it's time to raise the target" momentum game, but a long-term free cash flow outlook still suggests meaningful opportunity.

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Commercial Becoming More And More Important For DigitalGlobe

The Motley Fool: High Expectations for Growth: Is CR Bard Overvalued?

C.R. Bard (NYSE: BCR  ) finds itself in an interesting and unfamiliar situation – for the first time in quite a while, the Street actually has relatively demanding growth expectations. Bard has long based its business upon strong share in lower-average selling price consumables-driven businesses that don't offer spectacular underlying growth. Now management is looking to deliver more growth, as it prepares to leverage its new Lutonix drug-coated balloon and acquisitions driven by the incoming cash from Gore's patent infringement damages.

Bard has indeed returned to a level of growth that hasn't been seen in years. As is so often the case, though, my concern now is with the expectations that are getting baked into the valuation. With today's valuation not leaving much (if any) margin of safety, I'd prefer other names in the med-tech space.

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High Expectations for Growth: Is CR Bard Overvalued?

Seeking Alpha: For A Wild Ride, Consider GenMark Diagnostics

I really don't know if the next five years at GenMark Diagnostics (GNMK) are going to be more like Luminex (LMNX) or more like Cepheid (CPHD). If it's the former, the stock will chop around a lot as the company struggles to establish its system as a preferred option in multiplex molecular diagnostics testing. If it's the latter, GenMark will see strong adoption of a fast, accurate, easy-to-use system that becomes a new must-have in hospitals and reference labs.

I like GenMark's technology and I think there is room in the market for a strong automated multiplex MDx system. By no means does that guarantee success, though, and investors are going to have to put up with many years where valuation is based either on long-distant cash flows or very arbitrary multiples to forward revenue. For today, GenMark's value seems sandwiched in between a DCF approach that suggests the shares are overvalued (as it would have for Cepheid and Illumina before, and during, their huge runs) and a discounted EV/revenue approach that suggests the significant revenue growth potential isn't adequately reflected in the shares.

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For A Wild Ride, Consider GenMark Diagnostics

Seeking Alpha: Echo Therapeutics Facing Major Execution Risks In A Very Competitive Market

I go back a long way with the diabetes space, and glucose monitoring in particular, as that was a big part of my coverage group back in the sell-side research days. During that time, there was the occasional MiniMed (acquired by Medtronic (MDT)) or TheraSense (acquired by Abbott Labs (ABT)), but quite a few Integs for every one of those successes. Today, Echo Therapeutics (ECTE) is grinding along, hoping that its Symphony tCGM System vaults it into the winner's circle with existing glucose monitoring companies like Medtronic, Abbott, and DexCom (DXCM) and not into the scrap heap of failed testing companies.

I have very mixed feelings about this stock. The company has handled its financing needs with about as little finesse as possible, but the company has swapped out the CEO who oversaw those funding rounds. The company's device seems accurate enough to garner FDA approval, but the FDA has a habit of moving the bullseye on companies in this space, and I don't really have a good answer for how Echo will compete against the entrenched players and position the Symphony as the go-to system. All of that suggests to me that this is a binary outcome with a very uncertain future.

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Echo Therapeutics Facing Major Execution Risks In A Very Competitive Market

Seeking Alpha: Aspen Technology - Trees Don't Grow To The Sky

I'm a fan of the industrial and process automation sector, as I believe automation is a major factor in reducing operating costs across a variety of industries. As a leading provider of process optimization software, and one of the very few that is not captive within a much larger company, makes Aspen Technology (AZPN) a company worth knowing.

Valuation is problematic here. A forward EV/EBITDA ratio of over 31 and a forward EV/revenue ratio of over 10 certainly underline some of my concerns. Even though potential long-term free cash flow growth of 10% is quite attractive, it takes some pretty unconventional thinking to argue that Aspen is any kind of bargain today.

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Aspen Technology - Trees Don't Grow To The Sky

Seeking Alpha: A Small Skid At Old Dominion Isn't A Big Deal

Less than truckload (aka LTL) transportation company Old Dominion (ODFL) did something last week that it doesn't do often - it disappointed the Street and saw some margin erosion. Weather seems to have been a major contributing factor, though, and the company continues to show significantly better tonnage growth than its peers, while hauling that freight much more profitably. Old Dominion isn't exceedingly cheap, having risen another 15% since my last write-up, but it is still slightly undervalued and still an excellent stock for the long term.

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A Small Skid At Old Dominion Isn't A Big Deal

The Motley Fool: Biogen Idec Inc's Fortress Is Pricey Real Estate

Outside of orphan drugs it is difficult for drug companies to establish wide moats and essentially dominant a therapeutic area, but Biogen Idec (NASDAQ: BIIB  ) is well on its way to doing just that in multiple sclerosis. Not unlike Gilead in anti-viral therapies (particularly hepatitis C) and Novo Nordisk in diabetes, that strong market share has translated into healthy cash flow and robust premiums for Biogen's shares.

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Biogen Idec Inc's Fortress Is Pricey Real Estate

The Motley Fool: Cameron International Corporation Getting Its Act Together

Getting orders is one thing. Executing on those orders is a completely different thing, and an area where Cameron (NYSE: CAM  ) had been struggling for most of 2013. Three straight miss-and-lower quarters shook the Street's confidence in the ability of Cameron's management to execute, though the company's order book has remained quite strong.

Things appear to be finally starting to fall into place. The fourth quarter was a badly needed beat-and-raise quarter, and a slowdown in industry order growth in 2014 could actually be a good thing for the company as it tries to catch up on capacity. Valuation standards in this sector are notoriously loose, with EV/EBTIDA as the favored approach, but I would nevertheless argue that Cameron looks like a strong rebound trade in 2014.

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Cameron International Corporation Getting Its Act Together

Seeking Alpha: Can Manitowoc Live Up To More Bullish Crane Expectations?

Amidst the still-shaky non-residential construction recovery, investors have cast strong votes in favor of incoming prosperity for Manitowoc (MTW). This crane and foodservice company is certainly among those to benefit if construction equipment orders improve, and such improvement is likely more "when" than "if", but the volatility of that "when" could still make for some interesting times in the stock.

Speaking of the stock, I think an investor's time horizon and dedication to intrinsic value are both pretty relevant here. Unless you think Manitowoc can transform itself into one of the best-run, most-profitable heavy equipment companies over the next decade, discounted cash flow just doesn't suggest much value here. On the other hand, if you believe that a recovery in construction demand will fuel double-digit EBITDA growth over the next three to five years and that that growth merits a double-digit multiple to 2014's EBITDA, there's still upside left in these shares.

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Can Manitowoc Live Up To More Bullish Crane Expectations?

Seeking Alpha: Headwaters Doing Well In An Improving Market

I have not been the biggest fan of Headwaters' (HW) twin strategies of growth-by-acquisition and acquisitions-funded-by-debt, but the reality is that this company is doing a pretty good job of growing at a time when many housing-leveraged materials companies have yet to really catch their stride. Better still, there's a chance that the company's architectural stone siding products could grow from rounding error in the overall U.S. siding market to a significant business, a move that would have significant implications for the company's revenue and profits.

Certainly there is a difference between what can happen and what will happen. I nevertheless lean positive on this company, as the housing recovery is still in its early years and just 1% share of the U.S. siding market could mean a 15% shift in revenue from FY2013's base.

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Headwaters Doing Well In An Improving Market

The Motley Fool: EMC Corporation's Transition Issues Have It Stuck in a Value Trap

These are not particularly enjoyable days to be an EMC (NYSE: EMC  ) shareholder. While the company's market share in its bread-and-butter storage offerings is quite strong, and EMC has launched numerous products/platforms with good long-term growth potential, the storage market itself has seen a lot of change and turbulence. With that, the Street seems virtually indifferent to the company's good margins and strong cash flows and is focused instead on short-term revenue growth concerns. EMC looks exceedingly cheap on a DCF basis, but readers thinking of buying today need to be prepared to ride out the transition issues of 2014.

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EMC Corporation's Transition Issues Have It Stuck in a Value Trap

The Motley Fool: Novo Nordisk A/S's Brief Value Run Seems Over

Novo Nordisk (NYSE: NVO  ) has long been one of the best-run, most-focused, and most-successful specialty drug companies. It has also long been one of the most expensive, as investors have happily paid up for clockwork growth, leading share, and an excellent R&D enterprise.

The past year was an unusual one for Novo, though, as there were some real setbacks in the company's operations. Those setbacks had the shares trading for as close to "value" as it has in a long time, but the 30% run since November has these shares back at a premium valuation.

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Novo Nordisk A/S's Brief Value Run Seems Over

Seeking Alpha: New Products, An Improving Market Helping Fortinet

Looking at the pace of upgrades, Wall Street has fallen back in love with Fortinet (FTNT) and its growth potential in the unified threat management world. From 12 strong buy/buy ratings three months ago to 18 today, the shares have gone from a sub-$17 dip in early December back into the low $20's. Perhaps just as important, though, is a more general recovery in security market conditions for Fortinet, Check Point (CHKP), and Palo Alto Networks (PANW).

Execution is still a concern, as the company needs to reverse this recent slide in margins. Likewise, there are still questions as to whether Fortinet's proprietary ASIC-driven performance advantages can stay relevant as the security market evolves. Those are valid questions, but I think Fortinet is likely to be a long-term winner, unless a buyout precludes that opportunity. The 25% rally in the shares has taken some of the cheapness away, but I still think this is an undervalued tech stock worth further research.

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New Products, An Improving Market Helping Fortinet

Seeking Alpha: Cavium Still Trying To Prove It Is More Than A Niche Specialist

Analysts and investors seem to be of two minds when it comes to companies with specialized or "niche" products. On one hand, these companies often have good market shares and strong margins, but at the cost of a smaller addressable market and the risk of competition from larger, generalist rivals. When it comes to Cavium (CAVM), there is still active debate as to whether the company's efforts to enlarge and expand beyond its specialized multi-core network processor market will pan out.

I guess I would call myself a cautious bull on Cavium. There is a large pool of potential revenue out there if Cavium can succeed in lower core-count markets and if new efforts like Neuron, Fusion, and Project Thunder gain share. It is not going to be easy, though, as few companies achieve long-term revenue growth in excess of 20% and Cavium will have to do so in the face of competition from Intel (INTC), Freescale (FSL), Broadcom (BRCM) and Qualcomm (QCOM). This is by no means a widows-and-orphans stock, but for readers looking for high-fliers, this is a name worth further due diligence.

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Cavium Still Trying To Prove It Is More Than A Niche Specialist

Seeking Alpha: Alaska Air Looks To Withstand Healthier Rivals

The great story that is Alaska Air Group (ALK) has continued to roll on, with the stock racking up almost 60% gains over the past year. What makes Alaska Air special among the airlines isn't really a big mystery anymore - the company has limited itself to a somewhat narrow geographic focus, established a low cost base, and then leveraged good customer satisfaction into strong market share, good profitability, and an uncommonly strong balance sheet.

If there is a problem with top performers, it is in figuring out what more they can do to excel. To be sure, Delta (DAL) is putting some pressure on Alaska Air, as are JetBlue (JBLU) and Virgin America. Alaska Air has the option to expand its service into incremental markets, and that should be a positive for growth. These shares remain undervalued by conventional industry metrics, though, and I don't think the ride is going to be over soon.

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Alaska Air Looks To Withstand Healthier Rivals

Seeking Alpha: Wall Street Continues To Prize FEI Company's Market Share And Growth Prospects

Good companies have a knack for going further than you might otherwise think, and FEI Company (FEIC) is a good case in point. This leading electron microscopy company has continued to impress investors with both its market share and growth potential as electron microscopy becomes increasing relevant to a larger group of end markets. Not exactly cheap back in September, these shares have nevertheless beaten the market in the last five months while rising more than 10%.

It is going to take a pretty ugly set of circumstances for FEI Company to ever look cheap on conventional metrics. I'm not going to argue against strong growth in markets like natural resources and life sciences, nor the growing potential of selling into key emerging markets like China. Instead, I will simply observe that I would be nervous about holding shares when the music stops and the market suddenly reconsiders just how much it is willing to pay for growth and market share, but that may not occur for many years.

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Wall Street Continues To Prize FEI Company's Market Share And Growth Prospects

The Motley Fool: Amgen Inc's Deep Pipeline Offsets Some of the Price Risk

Like so many other drug stocks today, Amgen's (NASDAQ: AMGN  ) shares are not obviously cheap. What Amgen does have going for it, though, is a deep late-stage pipeline that helps offset some of the clinical risk. If the company's cholesterol drug evolocumab stays on track and oncology trial results in 2014 are favorable, I could see these shares outperforming in what is already pricey real estate in the stock market.

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Amgen Inc's Deep Pipeline Offsets Some of the Price Risk

The Motley Fool: Danaher Corporation Rarely Cheap, But A Proven Winner

If you're looking for a well-run conglomerate trading at a significant discount to fair value, you're probably going to pass over Danaher (NYSE: DHR  ) . That's typically the case, though, as this company's demonstrated strength in generating margins, cash flow, and returns on capital makes it a perennial favorite with institutional investors.

Even if the expected returns from the stock don't meet your hurdle rate today, Danaher looks like a good name for a watch list. Management has over $8 billion in dry powder for M&A activity and a clear desire to do a large deal (or two). Combine that with a turned-around diagnostics business and underappreciated growth opportunities in product ID and water treatment, and this is a company with solid long-term prospects.

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Danaher Corporation Rarely Cheap, But A Proven Winner

Seeking Alpha: Waiting For Ultratech, Or Waiting For Godot?

The difficult wait at Ultratech (UTEK) goes on, as investors are growing restless with the lack of much-needed laser spike annealing orders. While I still believe that Ultratech has very competitive technology in this market and that LSA is going to be vital to sub-20nm chip production, that belief is being tested in the face of poor ordering results. In the meantime, growth in the advanced packaging, metrology, and ALD is nice to see, but not enough to drive the stock.

Recreating the company's past market share in LSA in this next generation of chips would still make this a stock very much worth owning. I would also point out that the company has nearly $10 a share in cash on the balance sheet on a fully-diluted basis. It must be said, though, that Ultratech is getting very close to that "put up or shut up" point where talking about technology and revenue potential feels pointless in the face of relative performance data from Applied Materials (AMAT), Dainippon Screen (OTC:DINRY), and perhaps Mattson (MTSN).

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Waiting For Ultratech, Or Waiting For Godot?

Seeking Alpha: After A Strong Run, Advanced Energy Industries Still Controversial

A strong market-beating run over the past year hasn't done much to resolve the arguments about Advanced Energy Industries (AEIS). Depending upon which sell-side analysts you follow, AEIS is either a deeply cyclical supplier to the semiconductor industry or an emerging growth story in solar power. As is often the case, the truth probably lies in between - the inverter business at AEIS has some very legitimate growth potential as solar power markets develop, but it will be a while before the growth of solar and the non-semiconductor applications for the thin films business can offset the inherent cyclicality of semiconductor capital equipment.

I'm not as bullish on AEIS now as I was in my September write-up, but that's almost solely because the nearly 50% move in the meantime has taken the significant undervaluation out of the stock. I'm still bullish on the company on balance, and very interested to see what the company can accomplish in terms of new market opportunities for thin films. I'd need a pullback into the low $20's to get really excited about the shares again, but I'd be in no rush to sell if I already held them.

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After A Strong Run, Advanced Energy Industries Still Controversial

Seeking Alpha: Lundbeck Offering A Lot Of 'If's' And Potential

If everything works out, H. Lundbeck A/S (OTCPK:HLUYY) is going to be one of the best European mid-cap drug stocks over the next couple of years. If a few key programs fail to work out, though, it's going to be hard to justify even today's price, let alone a higher one. That puts Lundbeck squarely into an investing grey zone, as the risk and reward are much higher than for a typical pharmaceutical company, but quite a bit less than for a true biotech.

I continue to be bullish on the company's outlook and prospects. Lundbeck is a CNS specialist, and one that has been clearly trying to learn from industry experience in depression, Alzheimer's, schizophrenia, and other diseases to design more effective drugs with better tolerability. The weakness of the early-stage pipeline argues for M&A, while investor impatience with the Brintellix roll-out could also be a threat to the stock. Several key data readouts in 2014 should move these shares, and I continue to believe there is 20% upside from current levels.

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Lundbeck Offering A Lot Of 'If's' And Potential

The Motley Fool: Sanofi SA Looks Like One Of The Better Bargains In Big Pharma

Even with the recent weakness in the market, there is no surfeit of cheap pharma stocks. Maybe it's not so surprising that Sanofi (NYSE: SNY  ) , a company which has taken a different path than most of its Big Pharma peers, stands out as an exception. Sanofi has not concentrated so keenly on the oncology or anti-inflammatory spaces, and the company has a sizable direct presence in many emerging markets.

While Sanofi's guidance for 2014 was both disappointing and short on details, I think these shares are worth consideration. Strong franchises in diabetes, rare diseases, and vaccines generate good cash flow, and a broad pipeline gives the company a more diversified business mix. My growth expectations are higher than for most pharma companies, but I believe the shares ought to trade in the $50's today.

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Sanofi SA Looks Like One Of The Better Bargains In Big Pharma

Seeking Alpha: Great Growth Doesn't Come Cheap With Cepheid

Investors looking for good plays in the diagnostics space have some difficult choices to make. High-quality companies like Becton Dickinson (BDX) or Trinity (TRIB) don't come all that cheap, while others like LipoScience (LPDX) have some serious issues to address. Cepheid (CPHD) is definitely in that former camp, as the company's GeneXpert system is an excellent automated molecular diagnostics platform that has garnered leading share in hospital-acquired infections and continues to leverage new test launches.

Cepheid is expensive by almost any metric, but med-tech investors are willing to pay for growth and Cepheid's strong share and differentiated platform could yet attract strategic buyers. These shares are definitely vulnerable to any operational stumble, not to mention a sudden shift in market sentiment regarding the appropriate premium for growth, but I wouldn't step in front of them (to short), nor would I rush to sell if I owned them.

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Great Growth Doesn't Come Cheap With Cepheid

Seeking Alpha: Hypermarcas Offers A Brazil Play With Double The Punch

This has been a lousy stretch for owning Brazilian stocks, particularly those exposed to the Brazilian consumer. If you believe that what comes around in forex rates also eventually goes around, and that the Brazilian consumer market is an attractive one for the longer term, this may be a good time to consider Hypermarcas (OTCPK:HYPMY). A little like the Johnson & Johnson (JNJ) of Brazil, Hypermarcas is a leader in over-the-counter, branded generic, and generic pharmaceuticals, as well as consumer products like diapers, lotions, condoms, and various beauty/cosmetic/oral care products.

Like most Brazilian stocks, the moves in the dollar/real exchange rate have worsened an already difficult situation, and HYPMY shares down almost 30% over the past year (versus just under a 15% decline for the HYPE3.SA shares). With that, I believe the shares are priced to deliver an above-average annual return (relative to the S&P 500) on the strength of low-to-mid teens cash flow growth.

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Hypermarcas Offers A Brazil Play With Double The Punch

The Motley Fool: Merck & Co., Inc. Pushing The Throttle On Oncology

Diversification has fallen somewhat out of favor in Big Pharma, as many companies are looking to a smaller number of larger therapeutic areas to generate better growth and cash flow. Merck (NYSE: MRK  ) is among them, as the company has made it clear that immuno-oncology is a top priority, along with hepatitis C (HCV) and vaccines to lesser extents.

It is certainly true that focusing intensely on oncology has done Roche (NASDAQOTH: RHHBY  ) no harm, and it is a path that Bristol-Myers Squibb (NYSE: BMY  ) is also choosing to follow. Merck also has some opportunities and options for restructuring its animal health and consumer businesses in a way that could add value. Although investor enthusiasm for immuno-onocology has driven these shares to a strong performance over the past year, they are not unreasonably priced for long-term investors.

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Merck & Co., Inc. Pushing The Throttle On Oncology