Hurco Not Out Of The Woods, But Investors Already Thinking Recovery

Trading below book value when I last wrote about (and recommended) the stock, Hurco (HURC) shares are up about 30% since then - more or less keeping pace with the broader industrial sector. As expected, Hurco's financials are getting pummeled by the sharp business downturn instigated by COVId-19, but investors have already started bidding up industrial stocks in expectation of a V-shaped recovery in many manufacturing sub-sectors.

While I do think Hurco will recover and that the shares are still priced for a double-digit long-term total annualized return, I'm concerned that industrial stocks have come back too far too fast. Given incremental updates on manufacturing end-markets and companies cutting spending to bare bones, I think it'll be at least another quarter or two before Hurco starts seeing evidence of a turn, but I think some of the worst-case scenario risk is leaving the table. All in all, I think Hurco is worth owning here, but I think we may see another pullback before the dust settles.

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Hurco Not Out Of The Woods, But Investors Already Thinking Recovery

Clinical Data Reaffirm That Lumasiran Will Almost Certainly Be Alnylam's Third Commercial Product

Alnylam (ALNY) is well on its way to having its third commercial product before the end of 2020. A prior release of positive top-line data from the company's pivotal ILLUMINATE-A study of lumasiran already indicated approvable efficacy, but the full data presented on Sunday June 7 added some valuable context to what should be a worthwhile commercial opportunity for the company.

As I indicated in my last article on Alnylam, I still regard this stock as a long-term holding in my portfolio, but I wasn't as excited about the near-term price performance potential in early May. With the shares down about 10% since then, the opportunity is more interesting now, though I have some modest "strategic" concerns that the strong rally in biotech relative to the S&P could leave the sector more vulnerable to near-term profit-taking as investors regain confidence in a stronger/quicker post-Covid-19 economic recovery.

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Clinical Data Reaffirm That Lumasiran Will Almost Certainly Be Alnylam's Third Commercial Product

Another Systemic Shock Creates Another Opportunity With Kirby

Barge operator Kirby (KEX) often trades at a robust premium during the good times; while the company’s historically strong operating margins and strong market share would support that to some extent, I’ve often thought that the valuation was just too rich in recent years – and the stock’s performance relative to the S&P 500 has been pretty poor over the last five years. Some of that can be tied to the company’s ill-fated expansion into fracking-related oil & gas machinery services, but some of it, I believe, is also tied to actual underlying free cash flow performance not being as robust as the valuation would other presuppose and the cyclicality of the business itself.

That may seem like a downbeat intro, but I actually think Kirby is a good company. The expansion into oil & gas within the Distribution and Services (or DES) business is an issue, but the core marine operations (inland and coastal barging) are about as solid as you could ask for, and I see little reason to believe that will change. Covid-19 has created some severe disruptions in the energy market, not to mention the economy as a whole, but I believe Kirby offers interesting long-term opportunity at this price.

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Another Systemic Shock Creates Another Opportunity With Kirby