Friday, May 30, 2014

Seeking Alpha: Although Small, New Source Energy Partners LP Worth A Look

Investors in master limited partnerships (or MLPs) have long had plenty of choices in the midstream space, but E&P MLPs don't get quite as much attention. New Source Energy Partners LP (NSLP) is one of those worth a closer look. Although this is a small partnership almost solely focused on Oklahoma's Hunton formation, New Source Energy Partners has taken advantage of operational knowledge and Oklahoma's forced pooling rules to generate good production growth.

Looking down the line, the partnership's debt capacity and the potential for drop-downs from the sponsor should boost the growth potential. The risk here looks a little above-average, but a current yield of almost 10% and upside through the mid-$20s seems like more than adequate compensation.

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Although Small, New Source Energy Partners LP Worth A Look

Seeking Alpha: Pool Corp Looking To Richer Margins And Recovering Markets

If you like companies with almost impossible-to-match market share and good underlying market drivers, Pool Corporation (POOL) may be a name to look into further. While Pool Corp doesn't control the majority of the U.S. swimming pool market, it comes pretty close and its largest rival is only about 5% or 6% of its size. What's more, as residential property values and construction activity recover, so too should demand for new and replacement pools. Valuation is a concern, but the company should be able to deliver good earnings leverage for a few years.

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Pool Corp Looking To Richer Margins And Recovering Markets

Seeking Alpha: UniCredit's Valuation Seems Fair Given The Potential And The Risks

Like other European banks badly damaged in the credit crisis and the deep recession that followed, UniCredit SpA (OTCPK:UNCFF) has faced a difficult road back to normalcy. The company has had to turn to highly dilutive financing to stay in business and conditions in the company's core Italian market have not really improved all that quickly. Even so, the company's shares have followed a similar trajectory to damaged-but-not-dead European banks like Societe Generale (OTCPK:SCGLY), Santander (SAN), and Intesa Sanpaolo (OTCPK:ISNPY), with the stock up about 47% over the past year and over 130% over the past two years.

UniCredit is a challenging case from a valuation perspective. The company's sizable exposure to Central and Eastern Europe (or CEE), which includes Russia and Turkey, is a major potential growth driver, as would be an economic recovery in Italy. Management has laid out ambitious goals for 2018, but I believe they are achievable. Unfortunately, the shares just don't look all that cheap today and Societe Generale may well still be the better option.

Investors considering these shares should note that the U.S. ADR has limited and erratic liquidity. Investing in the Milan-listed shares (RIC: CRDI.MI, BBG: UCG.IM) will offer more consistent liquidity.

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UniCredit's Valuation Seems Fair Given The Potential And The Risks

Thursday, May 29, 2014

The Motley Fool: Why Stryker Should Buy Smith & Nephew

The M&A wheel continues to turn in med-tech, spurred on in part by the reality that making money the old fashioned way ("earning it", for those too young to remember the John Houseman commercials) is getting harder and harder. The latest rumor, that Stryker (NYSE: SYK  ) was taking a look at Smith & Nephew (NYSE: SNN  ) , was not only confirmed by Stryker but goes to show the depth of consolidation in med-tech as maturing markets leave fewer and fewer opportunities for sub-scale players.

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Why Stryker Should Buy Smith & Nephew

The Motley Fool: Why Valeant's Offer Is Unlikely to Move the Needle

In the real world, if you ask a person out and they not only tell you "no" but then proceed to offer a multipage summary of all of your failings (at least in their eyes) and why they would be better off alone than with you, it's usually safe to say that it is time to move on. While corporate finance is part of the real world (allowing for liberal definitions of "real"), it certainly doesn't take the same view on rejection – while Allergan (NYSE: AGN  ) has, in so many words, told Valeant (NYSE: VRX  ) to drop dead and take its unsolicited offer with it, Valeant remains undeterred and has come back with yet another offer.

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Why Valeant's Offer Is Unlikely to Move the Needle

Seeking Alpha: GSI Technology Struggles Amidst A Fading Market

Around seven months ago, I wondered whether GSI Technology (GSIT) was an undervalued tech turnaround candidate or a value trap stuck in a fading market. The story isn't over yet, but the latter option seems like the more likely one at this point. Not only do companies appear to be replacing static RAM with DRAM, pseudo-static RAM technologies like 1T-SRAM, and other memory options, but Cypress Semiconductor (CY) would appear to be faring better in this fading market. A cash-rich balance sheet (the company's enterprise value is half of market cap at around $79 million) guards the downside risk, but it's hard for me to see how the company prospers outside of success in its antitrust litigation, and that will likely take years to resolve.

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GSI Technology Struggles Amidst A Fading Market

Seeking Alpha: Turkcell Executing On The Ground, But Litigation Still A Sizable Hurdle

The spat between three of Turkcell's (TKC) major shareholders was ridiculous one and a half years ago and it hasn't gotten any better since then. With a recent U.K. ruling reinstating TeliaSonera's (OTCPK:TLSNY) nearly $1 billion claim against Cukurova and the $1.6 billion payment from Cukurova to Alfa/Altimo still pending, it seems unlikely that tomorrow's annual meeting will go forward, meaning that the wait for clarity on dividends and the shareholder structure drags on.

If there's a bright side to the story it is that Turkcell is operating relatively well in its core Turkish mobile operations. Fierce competition with Vodafone (VOD) and Avea is still very much a threat, but EBITDA growth has been getting better and Turkcell should be a major beneficiary of more rational competition going forward. The dispute between Turkcell's major shareholders is definitely an ongoing risk factor, but Turkcell has been building up quite a cash pile and resolution of the dispute should lift a meaningful non-operating cloud from the shares before 2014 is over.

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Turkcell Executing On The Ground, But Litigation Still A Sizable Hurdle

Seeking Alpha: MTN Group One Of The Few Telcos With Real Growth Opportunities

I've lamented on more than one occasion that growth is getting harder and harder to find for many, if not most, global wireless service providers. Not only are most developed markets already saturated, but many so-called emerging markets have already emerged, leaving many service providers with few options other than to engage in withering price and marketing competition. That's not the case for Africa's MTN Group (OTCPK:MTNOY), as the company continues to see high single-digit sub growth overall across its 22 markets. Better still, data, mobile money, and higher end services (3G and so on) are only just starting to make real contributions to results. MTN Group doesn't offer a rock-bottom valuation, but the growth prospects are good enough to make this a name worth consideration.

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MTN Group One Of The Few Telcos With Real Growth Opportunities

Seeking Alpha: Despite Aggressive Competition, SK Telecom Has Remained On Top

As I have written recently in reference to companies like America Movil (AMX), Orange (ORAN), and NTT DoCoMo (DCM), navigating competition in the mobile services market has only gotten more challenging in most markets. SK Telecom (SKM) has the mixed blessing of operating in one of the most difficult markets of all, with KT Corp. (KT) and LG Uplus straddling, if not often crossing, the line between fierce and irrational competition in South Korea.

A recent move from regulators to punish all three carriers for violating rules on subsidies impacted first-quarter results, but there's at least a chance that a new rule will eliminate these moves in the future and make competition a little more reasonable. The more rational SK Telecom's rivals get, the better for SK Telecom, and these shares do look a little undervalued today. Combined with a good yield, these shares do hold some appeal on the prospect of better earnings potential in South Korea.

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Despite Aggressive Competition, SK Telecom Has Remained On Top

Wednesday, May 28, 2014

Seeking Alpha: Can More Be Squeezed From Microchip Technology In This Cycle?

I'll state off the top that I like Microchip Technology (MCHP) as a company. The company has established itself as a top five player in microcontrollers (or MCUs) and is poised to benefit from the growing Internet of Things (or IoT) opportunity, as the company offers strong complementary technologies in MCUs, analog, and connectivity. The downside is valuation, where I just don't see as much upside potential and would prefer Atmel (ATML) on a head-to-head basis.

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Can More Be Squeezed From Microchip Technology In This Cycle?

Seeking Alpha: LHC Group Looking For M&A And Hospice Growth To Offset Reimbursement

Six months after I last wrote on LHC Group (LHCG), not all that much has changed in the home health provider world. While the industry got a partial reprieve in a one-year delay in Sustainable Growth Rate (or SGR) cuts, rebasing is still going to lead to significant revenue and margin pressure for many players. LHC Group is likely to fare relatively better due to its focus on rural locations and states that require Certificates of Need (or CONs), as well as its growing hospice business and desire to act as a consolidator in the space. LHC Group shares do still look undervalued on a long-term cash flow basis, but this remains a tough, tough industry right now.

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LHC Group Looking For M&A And Hospice Growth To Offset Reimbursement

Seeking Alpha: Ensign Group's Model Still Works

Ensign Group (ENSG) continues to stand out as a solid operator in a difficult, highly fragmented market. The company is still looking at a long runway of acquire-and-improve prospects in the core skilled nursing facility (or SNF) business, not to mention opportunities to expand into related/complementary businesses like home health, hospice, and all-skill facilities. While reimbursement is not likely to ever be an easy or supportive part of the story, the opportunity to make money still seems valid for the company. The impending CareTrust spinoff seems to be adding a meaningful amount of support to the valuation, though, so I'm still not all that attracted to the value proposition here.

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Ensign Group's Model Still Works

Seeking Alpha: More R&R Won't Mean Much Rest For Norcraft

As residential property values continue to recover, it should only mean good things for demand for Norcraft's (NCFT) kitchen and bathroom cabinets. One of the top five cabinetmakers in the country, and one of the top three in the dealer channel, Norcraft's sales are leveraged in part to improving remodel and renovation demand (which is, in turn, leveraged to improving home values). With experienced management and a tailwind to margins from higher capacity utilization, Norcraft shares still appear to be priced to offer some upside to the ongoing housing recovery.

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More R&R Won't Mean Much Rest For Norcraft

Tuesday, May 27, 2014

The Motley Fool: Is Biogen Idec Inc a Buy?

This year has turned against biotech investors, as the long-awaited correction came on hard in March and April. While conditions seem to have stabilized for the time being, Biogen Idec (NASDAQ: BIIB  ) remains an outperformer as investors have slower to dump shares of more established biotechs with strong launch and pipeline stories like Biogen, Gilead, and Regeneron. Biogen's pipeline is has higher risk than many of its peers, but the rewards if SMNrx, STX-100, or the anti-LINGO antibody BIIB 033 work out will be considerable and Biogen has lower risk drivers like the ongoing Tecfidera launch and rollout of new hemophilia compounds to keep investors engaged.

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Is Biogen Idec Inc a Buy?

The Motley Fool: Johnson & Johnson Focusing on Quality Over Quantity

On May 22, Johnson & Johnson (NYSE: JNJ  ) hosted an all-day analyst day for its medical device business. This meeting didn't really offer any major surprises, but did highlight management's intention to run this business with a focus on returns and scale and an understanding of where the company can (or cannot) likely earn attractive returns for shareholders. All told, this update was not especially bullish for Covidien (NYSE: COV  ) or Intuitive Surgical (NASDAQ: ISRG  ) , but it may stoke ongoing speculation as to additional areas where Johnson & Johnson may look to shrink or expand via M&A.

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Johnson & Johnson Focusing on Quality Over Quantity

The Motley Fool: Can Novartis AG Maintain Its Momentum?

Novartis (NYSE: NVS  ) has done better over the past six months than I thought it would back in December of 2013, as investors have liked what they've seen with the company's restructuring efforts and surprisingly positive clinical data on heart failure drug candidate LCZ696. In the "what have you done for me lately?" world of Wall Street, though, I do wonder whether Novartis has enough potential catalysts in hand to keep up a level of enthusiasm that frankly seems outsized relative to the valuation.

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Can Novartis AG Maintain Its Momentum?

Sunday, May 25, 2014

Seeking Alpha: Marvell Moving On Mobile

In the relatively short time since I last wrote on Marvell Technology (MRVL), the company's shares have done all right - rising about 3% and keeping pace with the SOX Index while modestly outperforming Qualcomm (QCOM) and Broadcom (BRCM). I continue to have my concerns about the company's long-term positioning in mobile/wireless, but the shares don't seem all that expensive in a semiconductor sector that doesn't have too many bargains. What's more, if the company gets a few breaks going its way (including holding off rivals like MediaTek and Spreadtrum in China), there could be some worthwhile upside to my assumptions.

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Marvell Moving On Mobile

Seeking Alpha: The Storage Shakeout Is Tossing Brocade Around Too

Brocade's (BRCD) strong recovery rally ended on April Fool's Day, in large part due to growing pessimism about enterprise storage demand and the resulting demand for Brocade's fibre channel storage area network (or SAN) switches. Add to that some ongoing pessimism regarding the company's ability to compete in IP networking and whether there's much incremental leverage to squeeze from the business and Brocade is back to a "show me" story.

I continue to believe that Brocade shares are undervalued, but the market is notoriously unkind to low-growth free cash flow rich tech stories and the storage market is going to need a few more quarters to sort itself out. At a minimum, I think that means that readers considering Brocade for its potential value will need to be patient as it works through these challenges.

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The Storage Shakeout Is Tossing Brocade Around Too

Seeking Alpha: Aruba Networks Still Searching For Margin Leverage

It's always something with Aruba Networks (ARUN) and its shares. If investors aren't worried about competitive share loss to Cisco (CSCO), there are worries about smaller rivals like Meru (MERU) or Aerohive (HIVE). If competition isn't a problem, then questions about the company's ability to generate attractive long-term operating leverage come back into play. I don't mean to suggest that these aren't all relevant and important questions. My point is rather to offer some reason as to why these shares are often so volatile around earnings reports.

As it looks today, I continue to believe that Aruba is undervalued, with fair value in the low-to-mid $20s. I really would like to see more evidence of sustained operating leverage before buying in myself, but by the time that's evident the shares are likely to have already had their run.

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Aruba Networks Still Searching For Margin Leverage

Seeking Alpha: Can Patterson Companies Get It's Mojo Back?

Investors have generally been pretty willing to buy medical distributors at rich multiples, as the large sales forces, scale-based efficiencies, and long-term relationships with both suppliers and clients create some barriers to entry and the nature of the business tends toward solid cash generation. Patterson Companies (PDCO) has had some recent challenges, though, and investors are not going to remain patient forever. While I like the potential of this company to continue to generate excess capital that can be passed along to shareholders, management will need to show better performance in the dental business to get the shares moving forward again.

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Can Patterson Companies Get It's Mojo Back?

Friday, May 23, 2014

Seeking Alpha: Super-Cyclical Xcerra Seems To Have More Left In The Tank

Semiconductor companies have enough cyclical volatility to frustrate most investors. Semiconductor equipment companies are even worse. Semiconductor test equipment is its own special corner of cyclical-hell, as peak-to-trough moves can easily exceed 66%. What goes down can go up again, though, and while Xcerra (XCRA) (LTXC) has more than doubled over the past year, momentum in the testing market and the stock's valuation suggests there could still be more gains in store.

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Super-Cyclical Xcerra Seems To Have More Left In The Tank

Seeking Alpha: Amidst Restructuring Efforts, Weatherford Still Thinking About Growth

Energy services company Weatherford (WFT) has come a long way since my February 2013 piece, with the company not only putting tax and accounting issues behind it, but also moving forward with a sizable restructuring effort. Weatherford is selling, spinning off, or shutting down non-core operations where either the company's market position or margin potential isn't good enough to warrant ongoing operations.

Amidst these turnaround efforts, though, the company is not ignoring the need to keep the company in position for future growth.

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Amidst Restructuring Efforts, Weatherford Still Thinking About Growth

Seeking Alpha: SABMiller Pretty Foamy, But With Great Emerging Market Leverage

As a long-time shareholder of SABMiller (OTCPK:SBMRY), I really can't complain - the shares may have lagged Carlsberg (OTCPK:CABGY), Heineken (OTCQX:HEINY), Molson Coors (TAP), and Anheuser Busch InBev (BUD) over the past 12 months, but over the last five and 10 years, they've blown away the field (and it's not really even close). Looking ahead, I'm admittedly concerned by the take-no-prisoners valuation, but also encouraged by the company's leverage to growing, under-penetrated emerging markets, strong asset and cash flow leverage, and potential for further accretive acquisitions.

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SABMiller Pretty Foamy, But With Great Emerging Market Leverage

Seeking Alpha: NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

Conditions in the storage market are pretty lousy. Smaller, newer companies like Nimble Storage (NMBL), Pure Storage, and Tintri are doing alright, but the legacy players like EMC (EMC), IBM (IBM), and NetApp (NTAP) are having a rough go of it as enterprise customers run older systems for longer and continue to approach storage spending cautiously as they evaluate cloud and flash alternatives.

I don't believe that NetApp is never going to grow again, but I do think the company is paying a price for years of prioritizing margins and cash flow and being reticent to spend its cash on M&A to support its growth prospects. I believe EMC (which I own) has done a better job of diversifying its business and positioning itself for the changes underway in the storage market, but NetApp shares look over-punished and undervalued provided that emerging threats like cloud and software-defined storage do not completely gut the market.

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NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

Seeking Alpha: Stage Stores On Sale Again

Stage Stores (SSI) is giving its shareholders a roller coaster ride through retail. I liked the shares in late January, after which they climbed about 20%, and then pulled back a bit on the enthusiasm in early March. The shares have fallen 27% since then and while the company did get the year off to a disappointing start, I think there's a lot of value in this small retailer.

Stage Stores not only has self-improvement potential from new and improved markdown and assortment initiatives, but also from accelerating e-commerce, store refurbishments, and private credit cards. Add to that the fact that Stage Stores is one of the relatively few department store-style retail stories with meaningful square footage growth potential, and there's a good growth element as well. I do think the next quarter or two could still be pretty turbulent, but I believe these shares should trade closer to $25, suggesting nearly 40% undervaluation.

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Stage Stores On Sale Again

Thursday, May 22, 2014

The Motley Fool: Good News at Boston Scientific: What's Next

Flashy moves aren't always the best moves in med-tech. Medtronic (NYSE: MDT  ) shelled out big bucks for Aterial Vascular Engineering, CoreValve, and Ardian, and the first two led to significant patent infringement issues and the third may never lead to a marketable product (renal denervation). I don't want to pick on Medtronic alone, as Hologic, Johnson & Johnson, and Boston Scientific (NYSE: BSX  ) have all made some big deals that went south and squandered shareholder capital.

With that in mind, I like the recent updates from Boston Scientific. Between two clinical trial updates and a small acquisition, Boston Scientific is laying the groundwork for what should be some good incremental revenue and profit growth in the coming years. I don't believe these items are enough to vault the company's stock to the level of great buy, but they are positive developments nevertheless.

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Good News at Boston Scientific: What's Next

Seeking Alpha: Lenovo Making The Right Strategic Moves To Build Value

Lenovo (OTCPK:LNVGY) has come along nicely since I wrote about the company as a Top Idea in late July of 2013. Up more than 30%, Lenovo has done well on continued PC, handset, and tablet growth. The shares were rocked when Lenovo followed up the long-expected acquisition of IBM's (IBM) x86 server business with the not-nearly-so-expected acquisition of Motorola from Google (GOOG). Integrating one damaged business was doing to be hard enough, but now Lenovo is paying more than $5 billion for two sizable businesses that need a lot of TLC to turn around.

I continue to be bullish on Lenovo (and a shareholder), as I believe the company does have relevant experience in integrating large acquisitions. What's more, I think the IBM and Google deals address a lot of the remaining deficits in Lenovo's portfolio from a strategic perspective, while Lenovo's demonstrated capabilities in sourcing, manufacturing, and distribution efficiency can fix a lot of what ails these businesses. With a fair value in the high $20s on an elevated discount rate, I continue to believe Lenovo can be a good stock from here.

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Lenovo Making The Right Strategic Moves To Build Value

Seeking Alpha: Premium-Priced Hormel Sells Off On A Less Than Perfect Quarter

To be clear from the outset, I think that Hormel (HRL) is a great company, but I do believe that a truly great stock idea needs a confluence of great company and an attractive price and that hasn't always been available with Hormel. A high price tag hasn't kept other investors away, though, and the shares have done pretty well over the past one and two-year periods (up about 14% and 65%) and have steadily outperformed rivals like Hillshire Brands (HSH) and ConAgra (CAG) while lagging Tyson (TSN).

Hormel remains pretty expensive at nearly 12x forward EBITDA, though the company has done a very good job with Skippy so far and has the financial resources to make other value-creating acquisitions. Close to my fair value on a discounted cash flow basis, I think these shares are definitely worth watching if the disappointment around earnings persists.

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Premium-Priced Hormel Sells Off On A Less Than Perfect Quarter

Seeking Alpha: Healthy Auto And Industrial Markets Could Take Analog Devices A Little Further

Analog specialist Analog Devices (ADI) has been a middle-of-the-road performer over the past year. While the company's margins remain at or near the top of the charts, revenue growth has been relatively less impressive and the stock performance (up about 12% over the past year) is squarely in the middle of analog peers/rivals like Texas Instruments (TXN), Linear Technology (LLTC), Maxim Integrated (MXIM), and ON Semiconductor (ONNN).

I'm not looking for Analog Devices to be a huge outperformer from here. The company's decision to steer 80% of free cash flow to shareholders won't hurt, and neither will the company's strong position in industrial and auto markets nor its leverage to China's LTE rollout. My discounted cash flow model doesn't suggest all that much long-term undervaluation today, though the company's margins do argue for a fair value closer to the mid-$50s.

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Healthy Auto And Industrial Markets Could Take Analog Devices A Little Further

Seeking Alpha: Orange SA Needs Market Repair To Fuel Another Leg

France's CAC 40 has done reasonably well this year, beating the S&P 500 and major European indexes like the FTSE, but Orange SA (ORAN) has blown the overall French market out of the water with the shares up almost 40% year to date. Shareholders have definitely embraced the company's ongoing cost reduction efforts and the company's major markets have largely settled down in terms of pricing.

Orange SA still has some opportunities to improve on its own, including 4G and fiber rollouts, but the shares valuation seems to factor a lot of that in right now. For the shares to keep up this momentum, I think the market needs to see more consolidation. With rumors out that Orange has approached Bouygues (OTCPK:BOUYY) and the French government previously indicating it was open to further consolidation, Orange may be able to push the French market toward much-needed market repair and unlock more value.

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Orange SA Needs Market Repair To Fuel Another Leg

Seeking Alpha: Semperit Offers Real Value In Obscurity

You might not think there would be all that much to like in an obscure Austrian manufacturer of rubber and plastic products, but Semperit (OTC:SEIGF) (SMPV.VI or SEM.VI) is definitely a case where investors should take a much closer look. Rubber gloves, industrial hoses, and conveyors may not sound like attractive markets, but Semperit has managed to generate double-digit returns on capital and respectable margins on a pretty consistent basis. Semperit shares appear to be at least 10% undervalued on a low-ball EV/EBITDA basis, while a DCF model suggests a fair value over 35% higher than today's price.

Semperit is going to be a little more challenging to buy than the average stock. The company offers ample information in English, but the ADRs are not at all liquid. While I normally have no problem turning to a company's home European market when U.S. liquidity is insufficient, the average volume in Vienna is scarcely better with an average volume of less than 8K shares per day. I certainly believe some of the value here is a byproduct of the illiquidity and investors have to appreciate the risk that a speedy entry/exit with no slippage may be difficult.

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Semperit Offers Real Value In Obscurity

Wednesday, May 21, 2014

Seeking Alpha: Valeo In The Right Places At The Right Time

At first glance, there's a lot to like about France's Valeo SA (OTCPK:VLEEY). More than half of the company's product portfolio addresses CO2 emissions reduction and the company is among the industry leaders in multiple lines of business. Valeo also boasts a fast-growing, share-gaining business in China, where margins are meaningfully better than in Europe. All this and an EV/EBITDA valuation below peer-group averages.

There are some flies in the ointment, however. Valeo's apparent improvements in operating performance may not be all they appear and valuation isn't quite as compelling after making a few adjustments. I wouldn't sell or avoid Valeo purely on the basis of valuation and non-cash accounting adjustments, though, and this is still a reasonably priced alternative to other quality parts/component companies like BorgWarner (BWA) or Cummins (CMI).

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Valeo In The Right Places At The Right Time

Seeking Alpha: Euronet Still Looking To Transfer Growth Into Shareholder Value

Around six months ago, I tagged Euronet Worldwide (EEFT) with the "interesting company, not so interesting stock" label and I can't say that I feel like I've missed much. The shares are up about 5% since then, trailing the S&P 500 and really only performing well after a money transfer business agreement with Wal-Mart (WMT). I'm more favorably inclined toward Euronet at this point, though, as I like the Wal-Mart agreement and the HiFX acquisition and the shares appear priced to offer a decent return.

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Euronet Still Looking To Transfer Growth Into Shareholder Value

Tuesday, May 20, 2014

The Motley Fool: Why I'm Still Bullish on Medtronic

t seems like there's a cottage industry on the sell-side in "What's wrong with Medtronic (NYSE: MDT  ) ?" pieces, but the stock has actually done OK since I last wrote on the company in late February. With Covidien pretty much flat in that time and Boston Scientific (NYSE: BSX  ) and St. Jude Medical (NYSE: STJ  ) both down, drug-fueled Johnson & Johnson is one of the few peers to really exceed the company's performance (while Bard has basically kept pace). 
I continue to believe that Medtronic is undervalued as a low-growth/high-quality med-tech supergiant. The company has unquestionably seen multiple significant setbacks over the last year or so, but the company still has lucrative franchises in CRM, spine, neuromodulation, and diabetes that throw off plenty of cash and allow the company to buy its way into future growth markets.

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Why I'm Still Bullish on Medtronic

Seeking Alpha: Kraton Offers A Good Story But Some Valuation Questions

Kraton Performance Polymers (KRA) is the kind of stock that gives investors early gray hairs. A cyclical, seasonal chemical company with significant raw material risk, the company also has uncommonly high share in its markets. I like the company's history of innovation and product development, not to mention the major synergy potential of the proposed merger with LCY Chemical's SBC business. The cyclicality of the business make discounted cash flow trickier, while reasonable debate on the "right" EV/EBITDA multiple could lead to a fair value between $22 and $3

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Kraton Offers A Good Story But Some Valuation Questions

Seeking Alpha: COPEL Has Enjoyed A Good Run, But Brazilian Utilities Remain Tricky

I thought COPEL (ELP) (or Companhia Paranaense de Energia) was trading too cheaply back in December of 2013 and said so here. Since then, the shares have risen almost 18%, handily beating the Bovespa (up 5%) as well as beating the Brazilian shares and the ADRs of CEMIG (CIG), Enerbras (EBR), and AES Tiete (OTCPK:AESAY). COPEL has certainly benefited from selling uncontracted electricity at high spot prices, but what the rains give they can take away. There's also a lot of lingering uncertainty about this year's tariff adjustment, renewal of its distribution concessions, and management's future plans after a change in the CEO.

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COPEL Has Enjoyed A Good Run, But Brazilian Utilities Remain Tricky

Seeking Alpha: FLSmidth Doing Better Than Expected Through The Trough

I may have been right about the serious impending erosion of orders, revenue, and EBITDA at FLSmidth (OTCPK:FLIDY) when I wrote about the company in June of 2013, but I missed the extent to which investors would cheer the company's cost-cutting and return improvement efforts. With the shares up 30% over the past year in U.S. dollars (and about 10% in the local Danish kroner), FLSmidth has handily outperformed most of its mining capex peers like Outotec (OTCPK:OUKPY) and Metso (OTCQX:MXCYY), as well as Joy Global (JOY).

I continue to believe that FLSmidth is looking at some challenging times in its end markets. Mining capex continues to fall and the company is facing more competition and consolidation in its large cement operations. Bold (but achievable) cost-cutting targets lead to me to a higher estimated fair value, but I have my doubts as to the company's ability to offset order declines with lower costs. Should orders continue to come in better than expected, though, and/or if the cycle isn't as bad as feared, FLSmidth's leverage to capex spending could send the shares higher.

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FLSmidth Doing Better Than Expected Through The Trough

Seeking Alpha: Graincorp Not Strikingly Cheap Amidst Multiple Challenges

Continuing my global tour of ag companies, today's subject is GrainCorp (OTCPK:GRCLF) (GNC.AX) - an Australian grain handling/storage company that is also a significant global player in malt and a regional player in edible oils. GrainCorp is probably best known as the target of Archer Daniels Midland's (ADM) unsuccessful takeover attempt in 2013, as the Australian government wanted to protect a "national champion" in a strategic sector.

GrainCorp doesn't appear to be the investment opportunity that I had hoped to find. Not only is the company facing near-term challenges from a potential El Nino weather cycle and global overcapacity in the malt industry, there is also growing competitive risk as rivals are building their own east coast port facilities. I do believe that GrainCorp still holds a lot of value for a company like ADM, and I believe the government of Australia could be more receptive to a takeover bid a few years from now, but I don't generally like investment situations where so much of the value is underpinned by future M&A potential.

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Graincorp Not Strikingly Cheap Amidst Multiple Challenges

Monday, May 19, 2014

The Motley Fool: 4th Time Not (Yet) the Charm for Pfizer

Pfizer (NYSE: PFE  ) is certainly not letting AstraZeneca (NYSE: AZN  ) slip away without a good fight. While Pfizer has been on a charm offense on both sides of the ocean trying to convince politicians that the deal is a legitimate business combination and not a cost-cutting tax dodge, the company has also stepped up its financial consideration to AstraZeneca shareholders. With AstraZeneca's board rejecting the latest and according to Pfizer the "final" offer, it remains to be seen if the international charm offensive can win over enough AstraZeneca shareholders to lead them to put pressure on their board to come to the negotiating table.

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4th Time Not (Yet) the Charm for Pfizer

The Motley Fool: ASCO 2014: Making and Breaking Cancer Drugs

As oncology has become the hottest space within pharmaceuticals and biotech, the annual American Society of Clinical Oncology (ASCO) is pretty much now the Super Bowl for companies in this space. Meetings like ASCO certainly do lead to companies releasing important data on pipeline candidates, as well as often hosting meetings/presentation to explain their pipelines and development strategies in more details. It's worth remembering, though, that a lot of what is presented is early stage, includes limited number of patients, and often focuses on metrics like response rate that are ultimately less significant than metrics like overall survival. 

All of that said, with the abstracts for the meeting now out, it looks like incrementally good news for Roche (NASDAQOTH: RHHBY  ) and Merck (NYSE: MRK  ) , and encouraging news for AstraZeneca (NYSE: AZN  ) and Lilly (NYSE: LLY  ) . For Bristol-Myers Squibb (NYSE: BMY  ) the reaction is likely to be far less positive from investors, though it is early to make any sweeping pronouncements. 

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ASCO 2014: Making and Breaking Cancer Drugs

Sunday, May 18, 2014

Seeking Alpha: Growth Is The Question, Answer, Problem, And Solution For CA, Inc

The story remains frustratingly consistent at CA, Inc. (CA). In a software investing world, where share price performance is often correlated pretty closely with revenue growth and margins, CA scores strongly on the second metric, but consistently poorly on the first. The basic investment thesis at CA hasn't really changed much in several years now - the mainframe business is an excellent source of high-margin revenue and cash flow, but the company just cannot seem to generate enough growth in the Enterprise business. Talking about improved go-to-market strategies and more consistent sales execution hits the right buzzwords for the sell-side community, but it's hard to say that the implication in CA's price of little-to-no growth unfairly maligns the company.

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Growth Is The Question, Answer, Problem, And Solution For CA, Inc

Seeking Alpha: Adecoagro Showing Some Life

I know there are at least a few Seeking Alpha readers who own Adecoagro (AGRO) for the potential this company offers in becoming a bigger player in Brazil's sugar and ethanol industries and realizing value growth in its land holdings. I also know that they've gotten a little frustrated with the stock's performance as the company has muddled through worries about crop prices, weather, and issues in Argentina.

The shares did well from the summer of 2013 into the fall and then went to sleep for about half a year. More recently the shares have headed higher again, as Brazilian equities in general have come around and sugar/ethanol producers like Cosan (CZZ) and Sao Martinho (OTC:SRTOF) have rebounded as well. With sugar prices and ethanol prices looking pretty solid, Adecoagro could be in for a better year, though currency moves could create some considerable choppiness in the numbers.

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Adecoagro Showing Some Life

Seeking Alpha: Cosan Continues To Build A Diverse Set Of Businesses

Cosan Ltd (CZZ) continues to be a frustrating stock, even though it's connected to a good collection of Brazilian businesses. While the merger/spin off involving America Latina Logistica (OTCQX:ALLAY), Cosan SA, and Cosan Logistica is a little complicated, it will have the end result of improving Cosan's logistics operations and simplifying the corporate structure of Cosan Ltd. With quality operations in sugar/ethanol, fuel distribution, natural gas, logistics, lubricants, and farming, Cosan Ltd remains a good stock to consider as it has lagged the rally in Brazil.

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Cosan Continues To Build A Diverse Set Of Businesses

Seeking Alpha: E.ON Still Trying To Find A New Way Forward

Life has not been easy for E.ON (OTCQX:EONGY). It would be bad enough if all the company had to deal with were declines in demand and weak pricing related to the economic malaise in Europe or the volatile price of natural gas. But there's a lot more impacting this story, including Germany's abandonment of nuclear energy, weak returns on emerging market assets, and guaranteed renewables feed-in tariffs.

Gone on are the days when E.ON was a safe, if boring, way to generate some solid dividend-fueled returns with the added boost of international diversification. While I do think the situation at E.ON isn't as bad as the market appears to be discounting, the level of operating uncertainty here is pretty high.

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E.ON Still Trying To Find A New Way Forward

Thursday, May 15, 2014

The Motley Fool: Healthcare Buyout Mania: Now What?

It feels like there's nothing to talk about in the pharmaceutical space these days other than the latest M&A bid. Just in the last day and a half, investors have seen news on five completed or proposed transactions. And I doubt the deal-making is done.

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Healthcare Buyout Mania: Now What?

Seeking Alpha: Investors Seem Surprisingly Willing To Buy ThyssenKrupp's Weird Brew

Imaging putting together bits and pieces of United Technologies (UTX), U.S. Steel (X), Technip (OTCQX:TKPPY), TRW Automotive (TRW), and Allegheny Technologies (ATI) and you might end up with something that resembles German conglomerate ThyssenKrupp (OTCPK:TYEKF) (TKAG.DE). ThyssenKrupp is the third-largest steelmaker in Europe, but also a large player in metal marketing/logistics, elevators, large-scale plant construction, and vehicle components.

It has been a while since ThyssenKrupp has reported good earnings or margins, a byproduct of the same steel down-cycle that has hit ArcelorMittal (MT) and Salzgitter, but management has made some curious moves with respect to asset sales and take-backs. Investors seem confident in this name as a rebound and restructuring play, but it seems like a lot of improvement is already factored into the share price.

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Investors Seem Surprisingly Willing To Buy ThyssenKrupp's Weird Brew

Seeking Alpha: LipoScience Nearly Back To Square One

LipoScience (LPDX) has developed a blood test (NMR LipoProfile) that has the potential to meaningfully improve outcomes for patients at risk of cholesterol-related cardiovascular problems, but it takes more than an FDA-approved test to make a business work. LipoScience is perilously close to becoming a company with a great future in its past, as the company continues to struggle to generate commercial interest in its test. A journal article based upon a retrospective analysis of LDL-P measurement could help spur interest and a takeover is a credible potential outcome, but LipoScience's current circumstances make this a highly speculative stock.

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LipoScience Nearly Back To Square One

Seeking Alpha: Will Vivendi Make The Best Use Of Its Incoming Tsunami Of Cash?

Vivendi (OTCPK:VIVHY) investors are finally getting what they've long said (or most of them, at any rate) they want - management is unwinding the conglomerate, having sold down its stake in Activision Blizzard (ATVI) and reached agreements to sell Maroc Telecom and SFR. The sale of the latter two will bring in close to EUR 17.2 billion, leaving the company's management with a lot of options regarding the future.

The company has already announced significant dividend payouts over the next two years, but between the remaining cash, additional asset sales, and levering up the business, Vivendi has billions to spend. The biggest question for investors now is whether management is likely to identify value-building acquisitions or whether it would be best (and/or likely) to sell even more.

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Will Vivendi Make The Best Use Of Its Incoming Tsunami Of Cash?

Seeking Alpha: Even With A Pullback, Amira Nature Foods Not A Value Story

I've been pretty bullish on Amira Nature Foods (ANFI) over the past 18 months (writing here and here), and the shares have definitely not been dull. While the company has posted very strong year-over-year revenue growth, backed with double-digit growth in volume and pricing, Amira has yet to convince everyone that this is a sustainable growth story. If the short interest reported on the Yahoo! Finance page for Amira is accurate, this is going to be a wild stock into earnings later this month. Leaving aside the near-term pyrotechnics, I don't see as much long-term value in the shares but short-term EV/EBITDA could offer more support to those looking for growth stories in the food sector.

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Even With A Pullback, Amira Nature Foods Not A Value Story

Tuesday, May 13, 2014

The Motley Fool: Alnylam Pharmaceuticals, Inc. Managing Multiple Irons In The Fire

Not only has the bloom left the rose of the biotech boom, investors have started plucking off the petals too. That has led to bowel-clenching declines for many biotechs, including Alnylam Pharmaceuticals (NASDAQ: ALNY  ) . While the market is going to do what it's going to do, Alnylam has an uncommonly deep pipeline, with multiple rare disease shots on goal and strong delivery technology in a therapeutic area where many Big Pharmas have thrown in the towel.

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Alnylam Pharmaceuticals, Inc. Managing Multiple Irons In The Fire

Seeking Alpha: For NTT DoCoMo, It's Evolve... Or Else

Going on 23 years old, calling NTT DoCoMo (DCM) a dinosaur is a probably a bit harsh, but the reality is that that mobile services market in Japan has changed a lot and this incumbent leader hasn't done the best job of changing with the times. It has become increasingly difficult to compete on the basis of network/service quality and OS manufacturers have disintermediated a lot of value-added services. The yield isn't bad here, but a shift in regulation may not deliver the hoped-for upside and this could be a sluggish player for some time to come.

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For NTT DoCoMo, It's Evolve... Or Else

Seeking Alpha: America Movil Going Global In A Search For Value

The last year has been a challenging one for America Movil (AMX). While profits are improving in the Brazilian operations, a softer Mexican economy impacted results as regulators increasingly look to clip America Movil's wings. A recent decision to assume operating control of Telekom Austria (OTCPK:TKAGY) is not at all surprising, but the company has yet to clearly outline the value proposition for expansion into Europe as opposed to other Latin American markets. All told, America Movil is likely undervalued today on the basis of is long-term cash flow generation potential, but the company will likely have to show that it can deal with the new regulatory system in Mexico and extract value from Telekom before the Street gives it the full benefit of the doubt.

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America Movil Going Global In A Search For Value

Seeking Alpha: ADM Getting More Than The Usual Benefit Of The Doubt

Archer Daniels Midland (ADM) is a well-run giant in agricultural processing and logistics, but that is an inherently volatile business and one where Wall Street often runs hot and cold. Sentiment appears to be leaning "hot" these days, as the shares trade at a higher than normal EBITDA multiple and analysts talk more of "it's different this time" in ethanol while looking for crop availability and weather issues to reverse. At the right price I have been and would be a willing buyer of ADM, but it seems like a lot of positive sentiment is already in the shares at these levels.

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ADM Getting More Than The Usual Benefit Of The Doubt

Seeking Alpha: Will Sunshine Heart Get Schooled If Enrollment Disappoints Again?

Sunshine Heart (SSH) shares have taken a beating since their fall 2013 peak, falling about 60% from their peak on a combination of slow pivotal trial enrollment and a sharp turn away from risky, speculative health care stocks. With Sunshine Heart due to report results tomorrow (May 13), it is a safe bet that investors will be keenly focused on the enrollment figures for the COUNTER-HF study, even though it may be too optimistic to assume that the company's awareness efforts have had a major impact at this point.

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Will Sunshine Heart Get Schooled If Enrollment Disappoints Again?

Monday, May 12, 2014

The Motley Fool: Valeant Pharmaceuticals's Earnings Take a Back Seat To Allergan News

Canadian health care magpie Valeant (NYSE: VRX  ) certainly knows how to stay in the spotlight. Investors simply aren't all that interested in quarterly earnings at a time when the company is actively trying to ratchet up the pressure on Allergan  (NYSE: AGN  ) to accept the company's acquisition offer. Valeant continues to look undervalued as it is likely still in the early to-middle years of a debt-fueled grab for scale. However, as the pushback from Allergan shows, not all of the targets Valeant may choose will welcome the company's efforts at empire-building.

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Valeant Pharmaceuticals's Earnings Take a Back Seat To Allergan News

Seeking Alpha: Atmel Now An Execution Story

Opportunity is not the problem for Atmel (ATML). There are multiple growth avenues for the company's large microcontroller business, not the least of which is the Internet of Things (or IoT) opportunity. There is also still an opportunity for Atmel to make good on the potential of XSense, participate in auto market growth, and continue to wring cash from its memory business.

The problem is execution. The company's touch business, and XSense in particular, haven't developed as hoped and the company has more of a recent history of promising rather than delivering. The potential is there to take this stock to $10 (or higher), and management compensation appears aligned with investor interests, but Wall Street seems to be sliding into a "show me" skepticism with this company and this stock.

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Atmel Now An Execution Story

Seeking Alpha: Check Point Software Offers A Good Risk-Reward Trade-Off

After a tough couple of years in which analysts and investors questioned whether Check Point Software Technologies (CHKP) could maintain its market share against more aggressive up-and-comers like Palo Alto Networks (PANW) and Fortinet (FTNT) and whether the company's prioritization of margin over share was the right strategy, 2013 was a good year for the shares. That momentum has been holding up of late, as although Check Point didn't have a great first quarter, the company has avoided a lot of the negativity that has hit Fortinet, Palo Alto, and FireEye (FEYE) recently.

As a stock, Check Point is a much different proposition than Palo Alto, FireEye, or Fortinet. This company isn't disrupting the market and isn't likely going to be growing revenue at a frequent annual double-digit rate. On the other hand, it has strong market share and a good margin and free cash flow base. I don't see the same overall upside to Check Point as its smaller rivals, but on a risk-adjusted basis, the return is still good enough to make this a worthwhile stock for less risk-tolerant investors.

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Check Point Software Offers A Good Risk-Reward Trade-Off

Seeking Alpha: Dril-Quip Not So Cheap And Market Positioning Is A Question

This has been a weird stretch for energy equipment companies like Cameron (CAM), FMC Technologies (FTI), and Dril-Quip (DRQ) as investors reconcile the long-term offshore opportunities with short-term order volatility and periodic questions about the companies' ability to profitably manufacture and deliver those orders. Dril-Quip has proven itself over the long term as a high-quality operator, but I do have some concerns about whether the company is well-positioned for the short term. Combined with a valuation that doesn't strike me as particularly cheap, I can't work up a lot of enthusiasm for this stock.

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Dril-Quip Not So Cheap And Market Positioning Is A Question

Seeking Alpha: Louisiana-Pacific Hit With Weak Pricing And Trouble With Regulators

Wood building products manufacturer Louisiana-Pacific (LPX) is having a tough time of it, as residential housing has been in a slow, erratic recovery and competitive OSB supply returns to the market. Making matters worse, regulators have not gone along with the company's contemplated acquisition of Ainsworth (OTCPK:ANSBF). Between poor OSB pricing and worries about the merger going through, Louisiana-Pacific shares have been left behind by other residential housing plays like Headwaters (HW), Stock Building Supply (STCK), and Universal Forest Products (UFPI).

LP still looks undervalued, but it's harder case to make. OSB pricing has shown signs of life and a pickup in residential building should be a "when, not if" question. An inability to close a value-creating deal with Ainsworth would likewise be a meaningful setback. Stripping the Ainsworth deal out, a key part of why I wrote LP as a Top Idea in September, I still believe that fair value for these shares is in the high teens, but it's hard to keep making a call based around patiently waiting for better operating conditions.

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Louisiana-Pacific Hit With Weak Pricing And Trouble With Regulators

Saturday, May 10, 2014

Seeking Alpha: Manitex Takes A Small Step Back In A Tough Quarter

If the crane businesses of Terex (TEX) and Manitowoc (MTW) had a severe case of the sniffles this quarter, it stands to reason that Manitex (MNTX) would catch cold as well. The good news is that Manitex showed cost discipline and orders seem to be recovering nicely. There's not a lot of obvious value left in these shares, though, so more value-oriented investors may not find as much to like right now.

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Manitex Takes A Small Step Back In A Tough Quarter

Seeking Alpha: ArcelorMittal Looks To Ride Recovering Steel Demand Back Into The High Teens

As the world's largest steel producer, however steel markets go so goes ArcelorMittal (MT). That does not mean that the company cannot, or has not, make meaningful cost improvements and/or reposition production to take advantage of particular market opportunities, but ArcelorMittal is more leveraged to an overall European and North American steel recovery than more focused/specialized companies like Voestalpine (OTCPK:VLPNY) or Acerinox (OTCPK:ANIOY).

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ArcelorMittal Looks To Ride Recovering Steel Demand Back Into The High Teens

Seeking Alpha: There May Be More Moves Involving Salix Before The Year's Done

There has been ample M&A activity in the drug sector, with companies like Valeant (VRX), Endo International (ENDP), and Actavis (ACT) all looking to add scale and exploit low interest rates and low tax rates. Salix (SLXP) has been busy too, paying around $2.6 billion to acquire Santarus and adding scale in primary care and GI drugs. Salix's valuation suggests that investors may still be expecting more action, as Salix's focused portfolio and high effective tax rate could make it a player either as an acquirer seeking a tax inversion deal or a target.

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There May Be More Moves Involving Salix Before The Year's Done

Friday, May 9, 2014

Seeking Alpha: Brookfield Asset Management Offers Steady Alternative Asset Exposure

Investors will find no shortage of papers and studies highlighting the return and diversification advantages of so-called "alternative investments", but actually finding investment vehicles that are accessible to retail investors is not as easy. Brookfield Asset Management (BAM) offers a good option in that regard; BAM's operations are spread across publicly-traded LPs in commercial real estate, renewable energy, and infrastructure assets, as well as alternative asset management and private equity fund operations.

Brookfield is a slow-and-steady sort of investment option, with both net asset value accretion potential and a decent dividend. It's not an especially cheap stock today, but the shares do usually offer 10% pullbacks every so often.

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Brookfield Asset Management Offers Steady Alternative Asset Exposure

Seeking Alpha: Middleby Continues To Defy Gravity

It says something about Middleby's (MIDD) valuation that a 20% pullback from its recent 52-week high still has the shares trading at around 15 times forward EBITDA. Then again, this is a company that continues to post organic revenue growth and profit growth well in excess of its industry peers while still looking at a large, mostly unpenetrated global market. While I can't really get all that comfortable with the valuation here, the operational story continues to be one of continued performance.

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Middleby Continues To Defy Gravity

Seeking Alpha: Novadaq On A Good Growth Path, But Valuation Makes It Volatile

When a stock trades at more than twice the upper limit of what's considered "normal" for growth stocks in its sector, investors need to be prepared for some significant volatility. It doesn't appear that there's anything really wrong with Novadaq Technologies (NVDQ) other than that this is an emerging med-tech growth story still working to build up its sales capabilities and with a momentum-driven institutional investor base.

That operating expense ran high should surprise nobody who has followed emerging med tech. Placements continue to look strong and while flat recurring SPY revenue was a little disappointing, I believe it is a bump in the road. Valuation is steep here and predicated on major sales and profit acceleration, but this is an interesting speculative med-tech growth story after this pullback.

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Novadaq On A Good Growth Path, But Valuation Makes It Volatile

Seeking Alpha: Lundbeck Starting Slow, But Still Looking For The Big Finish

H Lundbeck A/S (OTCPK:HLUYY) (LUN.CO) remains in a "hurry up and wait" gray area. Key drugs like Brintellix and Abilify Maintena are only just getting started and investors are on tenterhooks waiting for Phase III data on key pipeline candidates like brexpiprazole and desmoteplase. While the shares still look undervalued today, further progression in the Brintellix launch and key pipeline updates will likely lead to significant revisions in estimated value before 2014 is over.

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Lundbeck Starting Slow, But Still Looking For The Big Finish

Thursday, May 8, 2014

The Motley Fool: Can Allergan Remain Independent of Valeant?

Thanks to the now-public interest of Valeant (NYSE: VRX  ) in making Allergan (NYSE: AGN  ) its own, not to mention the vocal and financial support of Pershing Square and Bill Ackman, the status quo is gone for good at Allergan. Good first quarter results and improved guidance for the year were both nice to see, but Allergan is going to have to do a lot more to convince its shareholders that a plan for the future that excludes selling out to Valeant has their best interests at heart.

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Can Allergan Remain Independent of Valeant?

The Motley Fool: Why Merck's Bayer Deal Makes Sense

Pharma giant Merck (NYSE: MRK  ) has been a little more active than normal lately, with most of its activities pointing toward better value creation for its shareholders. In addition to strong phase 2 hepatitis C data that vaults the company back into serious competition, Merck was the first to file for approval for its PD-1 drug, putting it in the lead to be first-to-market with this next generation of oncology immunotherapies.

Merck also recently reported earnings, updated investors on its R&D and strategic priorities, and finalized the sale of its consumer health business to Bayer (NASDAQOTH: BAYRY  ) . All of this activated hasn't radically changed the company's earnings prospects, though it does free up significant capital that can be returned to shareholders or invested back into the business.

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Why Merck's Bayer Deal Makes Sense

Seeking Alpha: ICU Medical Back At The Drawing Board

After years of under-investment and, in my opinion, complacency regarding its high-quality infusion business, ICU Medical (ICUI) is paying the price. Revenue declined in FY 2013 and likely will decline again in FY 2014. Some of this can be laid on the head of Hospira (HSP), a major customer that has badly mismanaged its infusion/medication management business, but the reality is that ICU Medical has had more than enough time to recognize the issues with Hospira.

Now there's a new sheriff in town, or more accurately a new CEO running the company. Vivek Jain is saying the right things about improving the company's operating performance and increasing its investment in R&D. It also sounds as though management is looking to mobilize that sizable cash hoard. ICU Medical isn't especially well-followed and the company's sluggish near-term growth prospects aren't going to help raise its profile. Even so, I think there's value here and risk-tolerant investors should take a closer look.

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ICU Medical Back At The Drawing Board

Seeking Alpha: A Step In The Right Direction For Tornier

I've never been particularly fond of orthopedic extremity specialist Tornier (TRNX), but even I wouldn't have expected the wild ride these shares have been on over the past year. Management's decision to shift its sales/distribution strategy has introduced a lot of noise into quarterly earnings and I believe the shares have also gotten caught up in the sell-off in riskier healthcare names. Tornier's business is still pretty messy, but the company has a very good shoulder franchise and extremities could be the next area of consolidation in the device space.

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A Step In The Right Direction For Tornier

Seeking Alpha: Endurance Specialty Still Undergoing Substantial Shifts

Endurance Specialty Holdings (ENH) hasn't quite settled into its new normal yet, which makes quarter-to-quarter forecasting quite a bit more challenging. Expenses are still running high, but premium growth in the insurance business should lead to better leverage down the road. Still, there is a lot of uncertainty about the long-term profitability of business being written today in the insurance sector, and Endurance's pursuit of Aspen (AHL) adds yet another layer of uncertainty. I seem to be a little more bullish than most sell-side analysts on Endurance's long-term profitability, as an assumption of a five-year ROE of 10% leads to a fair value estimate above $58.

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Endurance Specialty Still Undergoing Substantial Shifts

Seeking Alpha: Advanced Energy Industries Steps Back On Softer Demand

Advanced Energy Industries' (AEIS) first-quarter results reflect at least some of the reasons why I wasn't too eager to overpay for the stock back in early February. While AEIS has good technology and products for both the semiconductor equipment and solar industries, these are volatile businesses, and demand/orders for semi equipment in particular has proven to be quite volatile this year. The company has a lot of work left to do in bringing the solar inverter business to profitability, but the nearly 50% haircut since late February does have this stock at a more interesting level.

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Advanced Energy Industries Steps Back On Softer Demand

Wednesday, May 7, 2014

The Motley Fool: Why 3M Co's Performance Is Better Than It Looks

3M (NYSE: MMM  ) carries a reputation for playing it a little too conservative and not offering the best performance early in a recovery. However, 3M's current management team seems to be moving more aggressively to reposition the company for more dynamic full-cycle results. Although it's not really a quarter-to-quarter type of company, 3M's underlying performance was better than the quarterly report results (and Wall Street's reaction to them) might otherwise suggest.

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Why 3M Co's Performance Is Better Than It Looks

Seeking Alpha: Commercial Vehicle Still Improving, But Not As Cheap

With Commercial Vehicle Group (CVGI) shares up about 25% year-to-date and 18% since my last article, I can't really complain as a shareholder. In that time period, CVGI's performance has easily outdistanced better commercial vehicle components companies like Cummins (CMI), BorgWarner (BWA), Allison (ALSN), and Grammer (OTC:GMEGF). Some of this can be tied to the strong underlying growth in North American Class 8 orders, but I believe some of it is likely due to the recognition that Commercial Vehicle's new management team has a new, better vision for how to operate this company.

The question with a turnaround is when to take your winnings and move on. I have to admit that I'm close to that point with Commercial Vehicle. I do believe that the company has the potential to gain share outside of its core North American truck market and even relatively small changes in operating margin, EBITDA margin, or FCF margin assumptions lead to meaningful changes in estimated fair value. The shares still look poised for low double-digit returns, but investors shouldn't forget that this is not an inherently high-margin business and they shouldn't overstay their welcome reaching for that next dollar.

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Commercial Vehicle Still Improving, But Not As Cheap

Seeking Alpha: Good Progress At Argo Group

Argo Group (AGII) has a good platform of excess & surplus and commercial specialty insurance, and the company's premium growth, loss ratios, and reserve developments have been typically been as good or better than peers over the last five years. The sticking point has been the company's uncommonly high expense ratio and its impact on reported returns. These shares have headed about 10% higher since I last wrote on them, and Monday's earnings suggest that optimism about better expense control and higher reported income is the correct position for now.

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Good Progress At Argo Group

Seeking Alpha: AXA's Progress Not Fully Reflected In The Shares

French multinational, multiline insurance company AXA SA (OTCQX:AXAHY) was badly dented during the credit crisis, particularly as the cost of hedging its large variable annuity exposure got so expensive. Not unlike MetLife (MET), AXA has pursued a plan designed to increase the cash flow generated per dollar of revenue and underlying profit while shifting business toward more protection-oriented and less capital-intensive products. While AXA still has a lot of leverage, the shares appear undervalued on a long-term basis.

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AXA's Progress Not Fully Reflected In The Shares

Seeking Alpha: Can New Markets And New Machines Assemble More Value At KUKA?

Robots still have a bit of the "gee whiz" about them, even if they've been on site in automobile plants for almost 50 years now. KUKA AG (OTC:KUKAY) has built itself into the world's third-leading robot company, but still generates about half of its robot sales (and three-quarters of overall sales) from the automotive industry. KUKA could be undervalued here, but a large part of the company's incremental value rests on gaining share outside its core automotive end market and boosting its margins.

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Can New Markets And New Machines Assemble More Value At KUKA?

Seeking Alpha: Should Basilea Pharmaceutica Be Trading At Twice This Price?

The biotech sector has fallen on hard times, with momentum investors fleeing the space and those who remain taking a much more careful look at just how much they are willing to pay for these speculative stocks. Caught up in the mix is the very under-covered Basilea Pharmaceutica (OTC:BPMUF), a small-cap Swiss biotech focused on antibiotics, antifugals, and oncology drugs. While the company does not yet have a drug approved in the U.S., key filings are close at hand for multiple drugs.

Investors should note that Basilea's U.S. ADRs are very illiquid. With less than 10 million shares outstanding, an average volume of about 110,000, and three analysts covering the company it is not as though the Swiss-listed shares (SIX:BSLN) are rolling in ample liquidity either. This makes an already risky situation a little more challenging for U.S. investors.

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Should Basilea Pharmaceutica Be Trading At Twice This Price?

Tuesday, May 6, 2014

The Motley Fool: Does Stryker's Skid Offer a Buying Opportunity?

Long-term investing is generally the way to go, but that does not mean that investors shouldn't take advantage of short-term moves that work in their favor. Stryker (NYSE: SYK  ) remains a very well-run company in the med-tech space, with good exposure to orthopedics, surgical instruments, and neurology, but a recent slide in the stock appears to have opened up a little window of opportunity in the shares.

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Does Stryker's Skid Offer a Buying Opportunity?

Seeking Alpha: Despite Challenging Conditions, Investors Buying Anglo American's Self-Improvement Potential

These are not particularly easy times for Anglo American plc (OTCPK:AAUKY). Copper prices have been holding up, but iron ore has been weak, met coal remains weak, and the company's platinum business has been hit by a major strike. Even so, Anglo's share price is within 10% of its 52-week high due in part to optimism regarding the long-term potential of the company's restructuring efforts. Anglo American shares don't look too expensive today, but investors do need to appreciate the elevated operating risk relative to names like Rio Tinto (RIO), BHP Billiton (BHP), and Glencore Xstrata (OTCPK:GLNCY).

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Despite Challenging Conditions, Investors Buying Anglo American's Self-Improvement Potential

Seeking Alpha: Alliance Grain Traders Still Pulsing With Opportunity

Alliance Grain Traders (OTCPK:AGXXF) (AGT.TO) has done alright since I last discussed the company, with the shares up about 15% over a period where the S&P 500 rose about half that amount and Archer Daniels Midland (ADM) rose about 6%. In that time, Alliance Grain Traders has faced some challenges related to rail logistics, but has also continued to make progress on its food ingredient and retail strategies. While this business is likely to remain a low-margin operation with meaningful year-to-year volatility, the shares don't seem to reflect the potential of the ingredients business.

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Alliance Grain Traders Still Pulsing With Opportunity