tag:blogger.com,1999:blog-69470950916412434282024-03-05T05:07:55.373-05:00Kratisto InvestingFinancial analysis and personal commentary with a fundamental slantStephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.comBlogger8665125tag:blogger.com,1999:blog-6947095091641243428.post-86421196223966891712023-12-27T08:21:00.001-05:002023-12-27T08:21:05.292-05:00Hey Everyone!<p>I've basically let this page go fallow, as I was encountering various issues that I just didn't have time to address. Apologies for that. <br /><br />I may take another swing at this in 2024 to see if I can make this site more usable. What is more likely, though, is that I will migrate to Substack. Much of what I do there will be like what I do here - links to articles published on other sites - but I think I may start putting some original content there (and that will probably be behind a paywall). <br /><br />If anybody is still reading here and has thoughts about this, feel free to share. <br /><br />I wish everyone a very happy, healthy, and prosperous New Year!<br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com2tag:blogger.com,1999:blog-6947095091641243428.post-51190588468186413412023-01-25T20:34:00.000-05:002023-01-25T20:34:39.180-05:00Synovus Delivering On Growth And Leverage<p> There have long been vocal doubters on <strong>Synovus </strong>(<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/SNV?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Synovus Financial Corp.">SNV</a></span>),
and the company’s share price performance over the last couple of years
has lagged its peer group, but with above-average fourth quarter
results and guidance for<span class="paywall-full-content invisible">
2023, Synovus is getting a little more positive attention lately. While I
do think some of management’s growth targets for 2023 could prove
challenging (if not ambitious), 3% to 4% core growth can drive a
respective target price and anticipated return from here.</span></p><p> Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4571346-synovus-delivering-on-growth-and-leverage&source=gmail&ust=1674393580328000&usg=AOvVaw2R3WStPczCVqL_Wpc4C8sX" href="https://seekingalpha.com/article/4571346-synovus-delivering-on-growth-and-leverage" target="_blank">Synovus Delivering On Growth And Leverage</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-5769347061616419152023-01-20T20:47:00.001-05:002023-01-20T20:47:16.790-05:00Consistency Carrying Commerce BancsharesI believe that at least part of the reason that investors are willing to bid up <strong>Commerce Bancshares</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/CBSH?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Commerce Bancshares, Inc.">CBSH</a></span>) to above-average multiples is that this bank is built to weather the ups and<span class="paywall-full-content invisible">
downs of normal banking cycles without much drama. And so it would seem
to be the case in the fourth quarter as well, as the bank continues to
see solid, but not spectacular, results.</span> <p class="paywall-full-content invisible">Commerce shares are up a bit from <a href="https://seekingalpha.com/article/4548562-commerce-bancshares-in-tougher-times-the-platinum-tortoise-outperforms?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4548562-commerce-bancshares-in-tougher-times-the-platinum-tortoise-outperforms">my last update</a>,
outperforming peers in a market where there is still a lot of angst as
to what banking earnings will look like in 2023 due to rising deposit
costs and more limited operating leverage prospects. As much as it
surprises me to say this, I don't find the valuation all that bad, at
least relative to what passes for normal with Commerce, and<span class="paywall-full-content invisible no-summary-bullets">
while I can't really recommend it wholeheartedly as a bank stock likely
to generate substantial outperformance, I think it is a name for
investors who want less drama and volatility.</span></p><p> </p><p>Click the link to continue to the full article: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4571293-consistency-carrying-commerce-bancshares&source=gmail&ust=1674334738727000&usg=AOvVaw2kzEm_wvW4TtYXdNiYHk_Q" href="https://seekingalpha.com/article/4571293-consistency-carrying-commerce-bancshares" target="_blank">Consistency Carrying Commerce Bancshares</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-74774605569391697312023-01-20T20:46:00.002-05:002023-01-20T20:46:16.077-05:00Truist Looks Better Placed Than Many Banks For Better Growth In 2023Banking is all about leverage, and <strong>Truist</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/TFC?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Truist Financial Corporation">TFC</a></span>)
looks to be better-placed than most peer banks to drive rate and
operating leverage in 2023, setting the bank up for relatively better
operating performance. In the context of what I think<span class="paywall-full-content invisible">
is a still-too-low valuation, that's a positive set-up for investors
looking for names in the still out-of-favor banking sector.</span> <p class="paywall-full-content invisible">Truist had been outperforming its peer group since <a href="https://seekingalpha.com/article/4551174-truist-stock-underwhelming-results-in-a-supportive-market?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link">my last update</a>,
and a well-received earnings report certainly didn't hurt. While I
would be careful not to project too much onto a company that has
struggled to meet expectations since the transformative combination of
BB&T and SunTrust, it does seem as though this bank may finally be
getting its legs under it, and I still see opportunities to drive growth
and value creation from here. Below the mid-$50's, I think this is a
name to consider.</p><p> </p><p>Click here to continue: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4571288-truist-better-placed-than-many-banks-for-growth-2023&source=gmail&ust=1674333314709000&usg=AOvVaw3YruT7HR-VtWeqT3fHnHbX" href="https://seekingalpha.com/article/4571288-truist-better-placed-than-many-banks-for-growth-2023" target="_blank">Truist Looks Better Placed Than Many Banks For Better Growth In 2023</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-80946397164648957872023-01-20T20:45:00.002-05:002023-01-20T20:45:24.831-05:00UnitedHealth Seems Curiously Undervalued Given Multiple Growth DriversIn a business where scale is king <strong>UnitedHealth</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/UNH?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="UnitedHealth Group Incorporated">UNH</a></span>)
has all the scale that an investor could ask for and more. What’s more,
the company has actively built and pursued attractive growth
opportunities outside of<span class="paywall-full-content invisible">
its traditional (and more heavily regulated) medical insurance/benefits
business, including its OptumHealth provider business, OptumRx PBM, and
OptumInsight analytics/information systems businesses.</span> <p class="paywall-full-content invisible">I
like where UnitedHealth sits going into 2023. Normalization of
healthcare utilization will be a modest headwind, but the company’s
vulnerability to inflation and a potential recession are quite modest,
and higher rates benefit the business. On top of that, the company still
has opportunities to drive growth from its OptumHealth and Medicare
Advantage businesses. While there are some challenges on a straight
P/E-based valuation, I do think these shares are undervalued on a
longer-term core earnings basis.</p><p> </p><p>Click here to continue: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4570765-unitedhealth-stock-seems-curiously-undervalued-given-multiple-growth-drivers&source=gmail&ust=1674181716134000&usg=AOvVaw3_Xf1tHknmXk3LrPwjNGRw" href="https://seekingalpha.com/article/4570765-unitedhealth-stock-seems-curiously-undervalued-given-multiple-growth-drivers" target="_blank">UnitedHealth Seems Curiously Undervalued Given Multiple Growth Drivers</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-11764063737081480262023-01-20T20:44:00.004-05:002023-01-20T20:44:39.861-05:00Fulton Financial Could Use More Core Growth LeverageIt’s still early in the fourth quarter reporting cycle, but so far
the bank sector is not having the easiest time. The main drivers aren’t
all that surprising to me – I’ve been writing about the threats
presented by rising deposit betas, weaker operating leverage, and<span class="paywall-full-content invisible"> slowing loan demand for some time, but it seems as though the Street is taking it more seriously now.</span> <p class="paywall-full-content invisible"><strong>Fulton Financial</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/FULT?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Fulton Financial Corporation">FULT</a></span>)
came up short on fourth quarter results and 2023 guidance, although the
bank is actually performing well with respect to its deposit beta.
Leveraging the Prudential Bancorp deal will be an important driver in
2023, as will the health of the economy in the Philadelphia region, but
this remains a bank that has something to prove to the Street where
operating leverage and organic growth are concerned.</p> <p class="paywall-full-content invisible">These shares have fallen about<span class="paywall-full-content invisible no-summary-bullets"> 10% since </span><a class="paywall-full-content invisible no-summary-bullets" href="https://seekingalpha.com/article/4496215-fulton-financial-stock-getting-active-value-creation-not-certain?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4496215-fulton-financial-stock-getting-active-value-creation-not-certain">my last update</a><span class="paywall-full-content invisible no-summary-bullets">,
more or less matching regional bank peers. I do think the shares are
likely undervalued here, but with a challenging 2023 ahead and not a lot
of clear positives to tie a bullish thesis to, I can’t really muster
that much enthusiasm today.</span></p><p><br />Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4570737-fulton-financial-could-use-more-core-growth-leverage&source=gmail&ust=1674170695743000&usg=AOvVaw1G7YHQavi9jgBysQ0KPxvw" href="https://seekingalpha.com/article/4570737-fulton-financial-could-use-more-core-growth-leverage" target="_blank">Fulton Financial Could Use More Core Growth Leverage</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-4154889772560397992023-01-20T20:43:00.004-05:002023-01-20T20:43:44.981-05:00First Republic Planting The Seeds For A Later HarvestIt may be an exaggeration to say that 2023 is a lost year for <strong>First Republic</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/FRC?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="First Republic Bank">FRC</a></span>), particularly in mid January, but I don’t think it’s an exaggeration to say that the results this bank will post this year<span class="paywall-full-content invisible">
will not be representative of the real long-term earnings power of the
business. First Republic is going to take a hit from much higher funding
costs, but the bank is willing to pay that short-term cost to reap the
long-term benefits of continuing to build a base of high net-worth
customers that can continue to support above-average loan growth and
profitability over the longer term.</span> <p class="paywall-full-content invisible">First Republic shares have done pretty well in the brief time since <a href="https://seekingalpha.com/article/4563314-first-republic-paying-a-steep-cost-for-growth?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4563314-first-republic-paying-a-steep-cost-for-growth">my last update</a>,
climbing more than 12% in the last six weeks and outperforming peers
(particularly smaller regional banks). The call on this stock is a fair<span class="paywall-full-content invisible no-summary-bullets">
bit more challenging today – while I think the shares are undervalued
for investors looking for a long-term buy-and-hold name, I do think
there's a better-than-average chance of another chance to buy at more
attractive levels this year, particularly if the Fed maintains a harder
line on rates through the end of the year.</span></p><p>Follow this link for the full article: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4570389-first-republic-earnings-planting-seeds&source=gmail&ust=1674126345174000&usg=AOvVaw0fkANuxck1msLPOfimgjx5" href="https://seekingalpha.com/article/4570389-first-republic-earnings-planting-seeds" target="_blank">First Republic Planting The Seeds For A Later Harvest</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-18170536371268465472023-01-20T20:42:00.009-05:002023-01-20T20:42:56.263-05:00JPMorgan Executing Well In Challenging Times And Still Undervalued<p></p><p>This year is likely to be one where management and business quality,
as well as past strategic decisions, really show up in the results of
bank companies. Most banks will likely see net interest margins peak
between Q4’22 and Q2’23, operating leverage will be<span class="paywall-full-content invisible">
harder to come by, deposit costs will rise and so too will credit
costs. With above-average funding, loan growth and market share growth
prospects, and fee-generating businesses, I think </span><strong class="paywall-full-content invisible">JPMorgan</strong><span class="paywall-full-content invisible"> (</span><span class="ticker-hover-wrapper paywall-full-content invisible">NYSE:<a href="https://seekingalpha.com/symbol/JPM?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="JPMorgan Chase & Co.">JPM</a></span><span class="paywall-full-content invisible">)
is better placed than most, though I do acknowledge that operating
leverage could still prove to be a headwind for this large bank.</span></p> <p class="paywall-full-content invisible">My <a href="https://seekingalpha.com/article/4563418-jpmorgan-stock-less-near-term-excitement-strong-bank?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4563418-jpmorgan-stock-less-near-term-excitement-strong-bank">last update</a> on <span class="j3" id="jS$105">JPMorgan </span>was
fairly recent, but the shares have continued to outperform since then,
as well as outperforming over the past six and 12 months. My core
assumptions haven’t changed that much, though my 2023 numbers are a bit
higher now. I’m expecting<span class="paywall-full-content invisible no-summary-bullets">
long-term core growth in the 4% to 5% range, driven not only by
fee-generating businesses like its payment operations, but share gains
in commercial lending as well. Below the high-$140s to low-$150s I
believe these shares are worth consideration.</span></p><p>The full article can be found here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4570383-jpmorgan-executing-in-challenging-times-still-undervalued&source=gmail&ust=1674126345190000&usg=AOvVaw0Wn0PreWvr_qzw2UhMlgcJ" href="https://seekingalpha.com/article/4570383-jpmorgan-executing-in-challenging-times-still-undervalued" target="_blank">JPMorgan Executing Well In Challenging Times And Still Undervalued</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-47844282463263552292023-01-20T20:42:00.001-05:002023-01-20T20:42:04.700-05:00Keysight Technologies Offers Enough Quality Growth To Support A Robust ValuationThere are plenty of sayings (and cliches) regarding valuation and
quality in the investment world, but it is nevertheless true that
quality, value, and price are all distinct characteristics. I mention
this because I think it’s an important backdrop for looking at Keysight
Technologies (<span class="ticker-hover-wrapper paywall-full-content invisible">NYSE:<a href="https://seekingalpha.com/symbol/KEYS?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Keysight Technologies, Inc.">KEYS</a></span><span class="paywall-full-content invisible">).
This leader in electronic design and test and measurement tools isn’t
conventionally cheap, but I do think the less-cyclical nature of the
business, the quality of the business, and the longer-term growth and
margin potential combine to make a stronger value call than the
multiples might otherwise suggest.</span> <p class="paywall-full-content invisible">I’m
not saying that Keysight is cheap, but I do think investors can expect
to get solid value for the money here. I do see some risk that macro
headwinds could prove stronger than the Street expects in calendar 2023,
but I like the company’s long-term leverage to macro trends<span class="paywall-full-content invisible no-summary-bullets">
like data traffic growth, connectivity, and electrification. At $165 or
below this would feel like an easier (or safer) call, but even at
today’s price I think long-term investors can reasonably expect to be
happy with the long-term returns.</span></p><p> </p><p>Read more here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569835-keysight-technologies-offers-enough-quality-growth-to-support-a-robust-valuation&source=gmail&ust=1674126349409000&usg=AOvVaw399bMYuykvC2lFSCN1LobR" href="https://seekingalpha.com/article/4569835-keysight-technologies-offers-enough-quality-growth-to-support-a-robust-valuation" target="_blank">Keysight Technologies Offers Enough Quality Growth To Support A Robust Valuation</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-48595960378046043002023-01-20T20:41:00.004-05:002023-01-20T20:41:19.610-05:00Cirrus Logic's Current Valuation Seems Less Than Completely Logical<p></p><p>A carefully cultivated skepticism can be an investor’s best friend,
and when a stock looks too cheap, it’s absolutely a good idea to wonder
why. In the case of <strong>Cirrus Logic</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/CRUS?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Cirrus Logic, Inc.">CRUS</a></span>), I understand concerns about<span class="paywall-full-content invisible"> the company’s heavy reliance on </span><strong class="paywall-full-content invisible">Apple</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/AAPL?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Apple Inc.">AAPL</a><span class="paywall-full-content invisible">)
and a soft outlook for smartphone units in CY’23, but even with those
concerns accounted for, the share price here looks surprisingly
attractive.</span></p> <p class="paywall-full-content invisible">I like
the efforts the company has taken to diversify beyond its long-held
strength in audio, and I think there is still plenty of room for the
High-Performance Mixed Signal (or HPMS) business to grow from here. I
likewise think additional M&A deals are more likely than not. All
things considered, then, I think this is a name where readers might want
to consider some due diligence and investigation of their own.</p><p>To continue reading, follow this link: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569662-cirrus-logic-stock-current-valuation-less-than-completely-logical&source=gmail&ust=1674126351118000&usg=AOvVaw0isOXxeM2HwQVsvoL-fPGQ" href="https://seekingalpha.com/article/4569662-cirrus-logic-stock-current-valuation-less-than-completely-logical" target="_blank">Cirrus Logic's Current Valuation Seems Less Than Completely Logical</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-26378886724530949592023-01-20T20:40:00.003-05:002023-01-20T20:40:30.596-05:00Penumbra Riding Higher On Upcoming Launches And Rerating<p>When I last wrote about Penumbra (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/PEN?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Penumbra, Inc.">PEN</a></span>)
in August of 2022 I was bullish on the company based on the prospects
for meaningful upcoming product launches and a material rerating for the
shares. This has largely panned out<span class="paywall-full-content invisible">
since then, with the company recently launching the Lightning Flash in
the U.S. and seeing valuation multiples expand again on more bullishness
around the company’s ability to hit 20% revenue growth in 2023.</span></p> <p class="paywall-full-content invisible">The shares are up more than 35% since <a href="https://seekingalpha.com/article/4535566-sector-rerating-has-cast-a-shadow-over-penumbra?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link">that last article</a>, handily beating the Dow Jones Select Medical Equipment Index over that time, as well as rival Inari (<a href="https://seekingalpha.com/symbol/NARI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Inari Medical, Inc.">NARI</a>).
Valuation is never completely straightforward with growth med-tech like
Penumbra, but at this point I see the valuation as much less of a
bargain, but I don’t discount the possibility of even further positive
rerating if Penumbra can<span class="paywall-full-content invisible no-summary-bullets"> log some beat-and-raise quarters on the back of Lightning Flash and other new products heading to the market this year.</span></p><p> </p><p>Follow this link to the full article: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569634-penumbra-riding-higher-on-upcoming-launches-and-rerating&source=gmail&ust=1674126351124000&usg=AOvVaw0f5NdRQUm2HIemyRLZl140" href="https://seekingalpha.com/article/4569634-penumbra-riding-higher-on-upcoming-launches-and-rerating" target="_blank">Penumbra Riding Higher On Upcoming Launches And Rerating</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-69353501834816420022023-01-20T20:39:00.004-05:002023-01-20T20:39:44.414-05:00Power Integrations Seeing A Temporary BrownoutEven differentiated growth stories are often bounded by the
performance of the underlying markets they serve, and so it seems with <strong>Power Integrations</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/POWI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Power Integrations, Inc.">POWI</a></span>). After a soft third quarter that saw 13% sequential revenue contraction, management guided to even weaker<span class="paywall-full-content invisible">
fourth quarter results and the company is likely to see a
year-over-year decline in 2023 as the company sees inventory corrections
across much of its business.</span> <p class="paywall-full-content invisible">Even
so, the shares have held up pretty well, only declining about 7% over
the past year and outperforming the semiconductor industry index (the
SOX) by more than 20%. Performance compared to other power-heavy
semiconductor stocks has been more mixed, with <strong>onsemi</strong> (<a href="https://seekingalpha.com/symbol/ON?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="ON Semiconductor Corporation">ON</a>) and <strong class="highlighted_text">Analog Devices</strong> (<a href="https://seekingalpha.com/symbol/ADI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Analog Devices, Inc.">ADI</a>) outperforming and <strong>Infineon</strong> (<a href="https://seekingalpha.com/symbol/IFNNY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Infineon Technologies AG">OTCQX:IFNNY</a>) underperforming. Pull the comparison out to three years and Power Integrations has done a little better<span class="paywall-full-content invisible no-summary-bullets">
than the SOX, a little worse than Analog and Infineon, and nowhere near
as well as onsemi, which I attribute at least in part to POWI’s robust
valuation in years past.</span></p> <p class="paywall-full-content invisible no-summary-bullets">Looking at the investment case, I see some similarities with names like <strong>Lattice</strong> (<a href="https://seekingalpha.com/symbol/LSCC?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Lattice Semiconductor Corporation">LSCC</a>) and <strong>Silicon Labs</strong> (<a href="https://seekingalpha.com/symbol/SLAB?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Silicon Laboratories Inc.">SLAB</a>)
where valuations have gotten a little less demanding but where it’s
still hard to call them conventional bargains. I’m not a big believer in
“ignore valuation and just buy”, but if you want a solid multiyear
growth semiconductor story this is a name to look at today.</p><p> </p><p>Read more here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569604-power-integrations-seeing-a-temporary-brownout&source=gmail&ust=1674126352118000&usg=AOvVaw2WuTmzJTZItFLvBB6pkzLU" href="https://seekingalpha.com/article/4569604-power-integrations-seeing-a-temporary-brownout" target="_blank">Power Integrations Seeing A Temporary Brownout</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-17815990752074123302023-01-20T20:38:00.006-05:002023-01-20T20:38:56.326-05:00Cosan: Volatility In SEE Markets Only Adds To The ComplexityBrazilian conglomerate Cosan (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/CSAN?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Cosan S.A.">CSAN</a></span>)
is a complicated story in the best of times, as this company pursues a
holding company structure to invest in a wide range of businesses,
including its Raizen joint venture with Shell (<a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/SHEL?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Shell plc">SHEL</a><span class="paywall-full-content invisible">)
in sugar, ethanol, and retail fueling, its Rumo rail operations, and
other businesses like natural gas distribution, lubricants, and land
development. On top of this “chosen” complexity, the company is now also
dealing with a more volatile environment for its core sugar, ethanol,
and energy (or SEE) operations, with weaker ethanol prices in Brazil and
more risk in the sugar market.</span> <p class="paywall-full-content invisible">Cosan
is a difficult stock to recommend in some respects, as there are a lot
of moving parts to track and this isn’t the easiest investment for
investors to assess. I do believe management has built a track record<span class="paywall-full-content invisible no-summary-bullets">
of value creation, but it looks as though the business will only get
more complex and diversified over time. I do believe this pullback in
the shares is an opportunity for investors who can look past increased
near-term volatility, but this isn’t really a “sleep well at night” sort
of stock.</span></p><p> </p><p>Click the link for the full article: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569574-cosan-volatility-in-see-markets-only-adds-to-the-complexity&source=gmail&ust=1674126352123000&usg=AOvVaw3H6WmZvN1dcr1c4aFpu782" href="https://seekingalpha.com/article/4569574-cosan-volatility-in-see-markets-only-adds-to-the-complexity" target="_blank">Cosan: Volatility In SEE Markets Only Adds To The Complexity</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-89306439314524470992023-01-20T20:38:00.001-05:002023-01-20T20:38:04.518-05:00S&W Seed: Trying To Thread The Needle With A Refreshed Product Lineup And Growth StrategyIt's been a while since I've written about <strong>S&W Seed Company</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/SANW?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="S&W Seed Company">SANW</a></span>)
and the intervening period has not been particularly kind to this small
ag-tech company. The company has continued to struggle to get<span class="paywall-full-content invisible"> farmers to use its higher-value improved alfalfa varieties and a distribution agreement with </span><strong class="paywall-full-content invisible">Corteva</strong><span class="paywall-full-content invisible">'s (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/CTVA?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Corteva, Inc.">CTVA</a><span class="paywall-full-content invisible">)
never really produced the hoped-for benefits; likewise with a venture
into sunflower seed development. Management hasn't given up, though, and
the company is hoping that new efforts in sorghum and stevia, in
addition to better execution in the alfalfa and forage/cover crop
businesses, can finally drive some momentum in the business.</span> <p class="paywall-full-content invisible">This
is an exceedingly risky proposition, and the company now has the
dreaded "going concern" warning in its financial filings. It does seem
that the new Double Team herbicide-resistant sorghum product is gaining
some traction, but the company is pressed<span class="paywall-full-content invisible no-summary-bullets">
on liquidity and has only a narrow path forward, particularly as
growing the sorghum business will require reinvestment. I can see
meaningful upside from here if management can thread that needle, but
readers should realize that this is an exceptionally speculative stock.</span></p><p> </p><p>Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569461-s-and-w-seed-trying-to-thread-the-needle-with-a-refreshed-product-lineup-and-growth-strategy&source=gmail&ust=1674126352136000&usg=AOvVaw2VY7Rz8CFBbe4Jc8zXRGuA" href="https://seekingalpha.com/article/4569461-s-and-w-seed-trying-to-thread-the-needle-with-a-refreshed-product-lineup-and-growth-strategy" target="_blank">S&W Seed: Trying To Thread The Needle With A Refreshed Product Lineup And Growth Strategy</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-65573183686439967972023-01-20T20:37:00.002-05:002023-01-20T20:37:14.452-05:00SKF's Rally Into 2023 Seems OverdoneIndustrials have certainly recovered of late. With investors feeling
more confident that the impending downturn will be mild and that rate
hikes are close to an end, the industrials have climbed about 20% over
the last three months, and Sweden’s <strong class="paywall-full-content invisible">SKF</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/SKFRY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="AB SKF (publ)">OTCPK:SKFRY</a><span class="paywall-full-content invisible">) has gone along for the ride, though the shares are still down about 20% over the last year.</span> <p class="paywall-full-content invisible">I
think this rally may prove to be too much too soon. With global PMIs
falling and the company likely to see weaker end-market demand coupled
with price/cost pressures, 2023 isn’t going to be an easy year and if
the market is wrong about a mild slowdown, there could still be
meaningful downside to estimates. I don’t think SKF is particularly
expensive now (and my near-term expectations are below sell-side
averages), but I see a relatively unfavorable risk/reward balance going
into the fourth quarter<span class="paywall-full-content invisible no-summary-bullets"> reporting season.</span></p><p>Read more here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569356-skfs-rally-into-2023-seems-overdone&source=gmail&ust=1674126352534000&usg=AOvVaw2kgcl6f77L1x2KgoOOc_ny" href="https://seekingalpha.com/article/4569356-skfs-rally-into-2023-seems-overdone" target="_blank">SKF's Rally Into 2023 Seems Overdone</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-9739954128510407912023-01-20T20:36:00.003-05:002023-01-20T20:36:31.284-05:00EnPro Becoming A Slimmer, More Profitable, And Less Cyclical Multi-Industrial<strong>EnPro</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/NPO?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="EnPro Industries, Inc.">NPO</a></span>)
management has been transparent about its intentions to continue to
remake the company into a more niche-oriented multi-industrial focused
on less-cyclical, faster-growing markets, and with a product portfolio
more skewed to high barriers to<span class="paywall-full-content invisible">
entry driven by engineering and sticky customer relationships. With the
sale of GGB done, EnPro goes into 2023 focused on its specialty Sealing
Technologies and Advanced Surface Technologies businesses, both of
which offer better growth and margins than the company's historical
trends.</span> <p class="paywall-full-content invisible">These shares have done well since <a href="https://seekingalpha.com/article/4499799-enpro-continued-to-pivot-toward-less-cyclical-more-profitable-business?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link">my last update</a>, appreciating more than 15% and beating both the S&P 500 and the wider industrial group.</p> <p class="paywall-full-content invisible">I
do see some near-term sentiment risk for EnPro, as the company is
heavily dependent upon the semiconductor industry and still has
meaningful exposure to cycle markets like heavy-duty trucks and
short-cycle "general industrial". While 2023 likely<span class="paywall-full-content invisible no-summary-bullets">
won't be a banner year, I do think the company is well-placed for
organic growth in the mid-single-digits and strong EBITDA and free cash
flow margins. The shares aren't particularly cheap now, and I'd rather
wait in the hopes of a pullback, but I like the strategy management is
following, and I think EnPro can be a long-term outperformer in the
multi-industrial segment.</span></p><p> </p><p>The full article is available here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569326-enpro-a-slimmer-more-profitable-less-cyclical-industrial&source=gmail&ust=1674127377087000&usg=AOvVaw0gw6kpPosrK2XidznZkirN" href="https://seekingalpha.com/article/4569326-enpro-a-slimmer-more-profitable-less-cyclical-industrial" target="_blank">EnPro Becoming A Slimmer, More Profitable, And Less Cyclical Multi-Industrial</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-73895312051806142272023-01-20T20:35:00.004-05:002023-01-20T20:35:40.744-05:00Teleflex Already Getting A Pretty Good Benefit Of The Doubt<strong>Teleflex</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/TFX?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Teleflex Incorporated">TFX</a></span>)
goes into 2023 needing to prove that the company can get the business
growing back to a level more in line with investor expectations, and
that includes the key UroLift product. The company<span class="paywall-full-content invisible">
has faced challenges including disrupted office visit trends and supply
shortages, but the market is not going to be particularly forgiving if
the business doesn’t start showing real acceleration over the next few
quarters.</span> <p class="paywall-full-content invisible">I can’t
say that I’m all that bullish on the shares today. I think
reaccelerating the UroLift business may be more challenging than
management believes, and I’m concerned that the company is going to find
itself challenged to meet Street growth expectations. M&A remains a
wild card, and management has a good track record here, but I just
don’t see the combination of growth and margins that would lead me to<span class="paywall-full-content invisible no-summary-bullets"> get all that excited about today’s valuation.</span></p><p> </p><p>Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569259-teleflex-already-getting-a-pretty-good-benefit-of-the-doubt&source=gmail&ust=1674127388196000&usg=AOvVaw0EBJoZJem-4-j3pGIgUrjl" href="https://seekingalpha.com/article/4569259-teleflex-already-getting-a-pretty-good-benefit-of-the-doubt" target="_blank">Teleflex Already Getting A Pretty Good Benefit Of The Doubt</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-40752823227506095942023-01-20T20:34:00.004-05:002023-01-20T20:34:53.208-05:00Adecoagro Hit Hard By A Weakening Outlook For Ethanol And Sugar ProductionBrazil’s<strong> Adecoagro</strong> (<span class="ticker-hover-wrapper">NYSE:<a href="https://seekingalpha.com/symbol/AGRO?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Adecoagro S.A.">AGRO</a></span>)
is a good case-in-point that a commodity company can do everything
right (or at least do many things right) and still see larger commodity
and economic trends, and investor worries about those trends, undo that
hard work. Adecoagro, for its<span class="paywall-full-content invisible">
part, as long been a low-cost producer of sugar and ethanol (or SEE) in
Brazil, as well as a low-cost producer of grain and other agricultural
products in Argentina, but it has meant basically nothing for long-term
investors, as annualized returns over the last three, five, and 10 years
is basically flat to negative.</span> <p class="paywall-full-content invisible"><a href="https://seekingalpha.com/article/4451594-adecoagro-benefiting-from-past-investments-and-a-tight-see-market?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4451594-adecoagro-benefiting-from-past-investments-and-a-tight-see-market">I was bullish on the prospects</a>
for Adecoagro to leverage attractive energy, sugar, and crop prices
into solid cash flow that would be returned to shareholders in the wake
of completing a major multiyear investment program. While the company
has indeed instituted a dividend and buyback, the<span class="paywall-full-content invisible no-summary-bullets"> shares are still down about 15% since that last update – outperforming </span><strong class="paywall-full-content invisible no-summary-bullets">Cosan</strong><span class="paywall-full-content invisible no-summary-bullets"> (</span><a class="paywall-full-content invisible no-summary-bullets" href="https://seekingalpha.com/symbol/CSAN?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Cosan S.A.">CSAN</a><span class="paywall-full-content invisible no-summary-bullets">) and </span><strong class="paywall-full-content invisible no-summary-bullets">Sao Martinho</strong><span class="paywall-full-content invisible no-summary-bullets">, but still down (and worse than the performance of other ag names like </span><strong class="paywall-full-content invisible no-summary-bullets">Cresud</strong><span class="paywall-full-content invisible no-summary-bullets"> (</span><a class="paywall-full-content invisible no-summary-bullets" href="https://seekingalpha.com/symbol/CRESY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria">CRESY</a><span class="paywall-full-content invisible no-summary-bullets">) and </span><strong class="paywall-full-content invisible no-summary-bullets">SLC Agricola</strong><span class="paywall-full-content invisible no-summary-bullets"> (</span><a class="paywall-full-content invisible no-summary-bullets" href="https://seekingalpha.com/symbol/SLCJY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="SLC Agrícola S.A.">OTCPK:SLCJY</a><span class="paywall-full-content invisible no-summary-bullets">)).</span></p> <p class="paywall-full-content invisible no-summary-bullets">The
trouble with assessing Adecoagro today is that whenever you find
yourself asking “how could it get worse?” with a commodity company, the
market has an uncanny way of showing you just exactly how it could get
worse. I do think that Adecoagro’s valuation is low, but with real
concerns about ethanol and sugar prices over the next 12-18 months, as
well as crop yields and profitability, this is a tough place to go
bargain-hunting.</p><p> </p><p>Continue reading here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569157-adecoagro-hit-hard-by-a-weakening-outlook-for-ethanol-and-sugar-production&source=gmail&ust=1674127429382000&usg=AOvVaw0sVBr140YAH3pYJMBHMQkS" href="https://seekingalpha.com/article/4569157-adecoagro-hit-hard-by-a-weakening-outlook-for-ethanol-and-sugar-production" target="_blank">Adecoagro Hit Hard By A Weakening Outlook For Ethanol And Sugar Production</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-78425543707710029042023-01-20T20:33:00.005-05:002023-01-20T20:33:48.376-05:00Housing Turbulence Could Open A Window Of Opportunity With RayonierWhile it’s true that timberlands can be a good investment category
over time (if bought and managed properly), it doesn’t automatically
follow that timber REITs are a can’t-miss investment opportunity, as the
market has frequently assigned robust multiples to these businesses. In<span class="paywall-full-content invisible"> the case of </span><strong class="paywall-full-content invisible">Rayonier</strong><span class="paywall-full-content invisible"> (</span><span class="ticker-hover-wrapper paywall-full-content invisible">NYSE:<a href="https://seekingalpha.com/symbol/RYN?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Rayonier Inc.">RYN</a></span><span class="paywall-full-content invisible">), for instance, an investor who bought the shares on the day after the spinoff of </span><strong class="paywall-full-content invisible">Rayonier Advanced Materials</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/RYAM?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Rayonier Advanced Materials Inc.">RYAM</a><span class="paywall-full-content invisible">) and reinvested the distributions would have an annualized return of around 3.5%, while an investment in </span><strong class="paywall-full-content invisible">Weyerhaeuser</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/WY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Weyerhaeuser Company">WY</a><span class="paywall-full-content invisible">) would have returned around 3.4%, and </span><strong class="paywall-full-content invisible">PotlatchDeltic</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/PCH?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="PotlatchDeltic Corporation">PCH</a><span class="paywall-full-content invisible">) would have returned around 6.7%.</span> <p class="paywall-full-content invisible">Still,
for almost any going concern, there’s a price where it makes sense to
consider (or reconsider) the investment case. I don’t think Rayonier is
quite there today, but were the shares of this timber REIT to sell off
on weaker near-term results due to the temporary<span class="paywall-full-content invisible no-summary-bullets">
downturn in U.S. housing, it’s a name I’d certainly consider,
particularly for investors who want some resource/commodity exposure.</span></p><p> </p><p>Click here to continue: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569118-rayonier-stock-housing-turbulence-open-window-opportunity&source=gmail&ust=1674127434175000&usg=AOvVaw2bvaXaPn9Wh9Jf5GU6xt4n" href="https://seekingalpha.com/article/4569118-rayonier-stock-housing-turbulence-open-window-opportunity" target="_blank">Housing Turbulence Could Open A Window Of Opportunity With Rayonier</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-76862139550346633822023-01-20T20:32:00.007-05:002023-01-20T20:32:58.995-05:00Acuity Continues To Execute, But Weaker Non-Resi Trends Seem To Be Weighing On SharesOne of the more frustrating investment situations to be in is to see a
company executing a little better than expected, but see the shares
drift lower anyway. Such is the case with <strong>Acuity Brands</strong><span class="paywall-full-content invisible"> (</span><span class="ticker-hover-wrapper paywall-full-content invisible">NYSE:<a href="https://seekingalpha.com/symbol/AYI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Acuity Brands, Inc.">AYI</a></span><span class="paywall-full-content invisible">),
where two decent quarters (relative to sell-side expectations) and
inline guidance for FY’23 hasn’t been enough to maintain investor
enthusiasm. Down about 5% since </span><a class="paywall-full-content invisible" href="https://seekingalpha.com/article/4535844-acuity-brands-doing-more-than-just-keeping-the-lights-on?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link">my last update</a><span class="paywall-full-content invisible">
on the company, Acuity has modestly outperformed the S&P 500 but
underperformed the broader industrial space, including other
non-resi-skewed comps like </span><strong class="paywall-full-content invisible">Allegion</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/ALLE?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Allegion plc">ALLE</a><span class="paywall-full-content invisible">), </span><strong class="paywall-full-content invisible">Hubbell</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/HUBB?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Hubbell Incorporated">HUBB</a><span class="paywall-full-content invisible">), </span><strong class="paywall-full-content invisible">Johnson Controls</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/JCI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Johnson Controls International plc">JCI</a><span class="paywall-full-content invisible">), and </span><strong class="paywall-full-content invisible">Otis</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/OTIS?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Otis Worldwide Corporation">OTIS</a><span class="paywall-full-content invisible">).</span> <p class="paywall-full-content invisible">I’ve
written in the past about the risk of “boredom” with this stock; it’s
not well-covered and the long-term growth potential in the core business
(lighting) isn’t very exciting. Still, while recognizing risks like
increased competition from overseas lighting manufacturers and
overpaying for growth-oriented M&A (for the Intelligent Spaces<span class="paywall-full-content invisible no-summary-bullets">
Group, or ISG), not to mention my weaker-than-the-Street outlook for
non-resi activity in 2023/24, the share price does look too low to me
and this may be a name for value-driven investors to consider.</span></p><p> </p><p>Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569086-acuity-weaker-non-residential-trends-weighing-on-the-stock&source=gmail&ust=1674127441627000&usg=AOvVaw2O-ySZJDmFkRe5aAnrMNBf" href="https://seekingalpha.com/article/4569086-acuity-weaker-non-residential-trends-weighing-on-the-stock" target="_blank">Acuity Continues To Execute, But Weaker Non-Resi Trends Seem To Be Weighing On Shares</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-45574877172219735352023-01-20T20:32:00.001-05:002023-01-20T20:32:11.524-05:00Alnylam Pharmaceuticals Starts 2023 With In-Line Revenue And A Full Slate Of Clinical Read-Outs<span><span>This will be another busy year for <strong>Alnylam Pharmaceuticals</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/ALNY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Alnylam Pharmaceuticals, Inc.">ALNY</a></span>),
as this leading RNAi biotech expects to release clinical updates on
five different clinical programs, in addition to anticipated updates
from partnered programs and multiple potential IND filings. Though the<span class="paywall-full-content invisible">
company has a relatively thin late-stage pipeline, positive early-stage
updates from programs with large addressable markets could be enough to
maintain a positive level of investor enthusiasm. </span></span></span> <p class="paywall-full-content invisible"><span><span>Alnylam shares have continued to outperform since </span></span><a href="https://seekingalpha.com/article/4551126-alnylam-offers-proven-undervalued-rnai-platform-doubts-attr-remain?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4551126-alnylam-offers-proven-undervalued-rnai-platform-doubts-attr-remain"><span><span>my last update</span></span></a><span><span>, besting the <strong>SPDR S&P Biotech ETF</strong> (<a href="https://seekingalpha.com/symbol/XBI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="SPDR S&P Biotech ETF">XBI</a>)
by about 10%. Some minor adjustments to my model take my fair value
above $240, and while that isn’t especially robust return potential
given the risks with biotech investing, I would note that clinical and
regulatory milestones during the year could meaningfully add to that
fair value. Still, I would characterize today’s price more as “good, not
great”, even though I am<span class="paywall-full-content invisible no-summary-bullets"> a big believer in the company and its core technologies. </span></span></span></p><p class="paywall-full-content invisible"><span><span><span class="paywall-full-content invisible no-summary-bullets"> </span></span></span></p><p>Follow this link to the full article: </p><p> <a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4569036-alnylam-pharmaceuticals-starts-2023-with-in-line-revenue-and-a-full-slate-of-clinical-read-outs&source=gmail&ust=1674127445689000&usg=AOvVaw2Wc84VBWmKVWYmCcNKVKif" href="https://seekingalpha.com/article/4569036-alnylam-pharmaceuticals-starts-2023-with-in-line-revenue-and-a-full-slate-of-clinical-read-outs" target="_blank">Alnylam Pharmaceuticals Starts 2023 With In-Line Revenue And A Full Slate Of Clinical Read-Outs</a></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-69675948531827096322023-01-20T20:30:00.003-05:002023-01-20T20:30:25.557-05:00Cycle Worries Weighing On Renesas Electronics And Creating A Bargain ValuationSemiconductor stocks are off their lows, but I certainly wouldn’t say
that sentiment is particularly healthy – lead-times have started to
shrink and companies have started openly acknowledging customers
inquiring about pushouts (if not outright cancelations). With declining
ASPs likely to push total industry revenue<span class="paywall-full-content invisible"> into contraction next year, valuations have retreated to the low end of historical ranges.</span> <p class="paywall-full-content invisible">Japan’s <strong>Renesas Electronics</strong> (<a href="https://seekingalpha.com/symbol/RNECF?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="Renesas Electronics Corporation">OTCPK:RNECF</a>) (<a href="https://seekingalpha.com/symbol/RNECY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="Renesas Electronics Corporation">OTCPK:RNECY</a>) (6723.T) has been holding up relatively well with respect to reported results since <a href="https://seekingalpha.com/article/4536434-renesas-growth-opportunities-underappreciated?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4536434-renesas-growth-opportunities-underappreciated">my last update</a>, and the shares haven’t done too badly – more or less keeping pace with peers like <strong>NXP Semiconductors </strong>(<a href="https://seekingalpha.com/symbol/NXPI?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="NXP Semiconductors N.V.">NXPI</a>) and <strong><span class="j3" id="jS$103">ON Semi</span></strong> (<a href="https://seekingalpha.com/symbol/ON?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="ON Semiconductor Corporation">ON</a>), though modestly lagging <strong>Microchip </strong>(<a href="https://seekingalpha.com/symbol/MCHP?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Microchip Technology Incorporated">MCHP</a>) and <strong>Texas Instruments</strong> (<a href="https://seekingalpha.com/symbol/TXN?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Texas Instruments Incorporated">TXN</a>), and lagging SiC-driven rivals like <strong>Infineon</strong> (<a href="https://seekingalpha.com/symbol/IFNNY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Infineon Technologies AG">OTCQX:IFNNY</a>) and <strong>STMicro</strong> (<a href="https://seekingalpha.com/symbol/STM?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="STMicroelectronics N.V.">STM</a>) more significantly.</p> <p class="paywall-full-content invisible">At this point I continue to believe that Renesas shares are meaningfully undervalued. Auto chip demand is<span class="paywall-full-content invisible no-summary-bullets">
holding up better and inventories are not particularly robust heading
into a year where many OEMs are looking to catch up on deferred
production schedules. I don’t ignore the risk of a steeper decline in
the non-auto business, but I like Renesas’s leverage to auto MCUs and
ADAS, as well as longer-term opportunities in industrial MCUs and
integrated solutions, and I think today’s valuation is too low.</span></p><p> </p><p>The full article can be found here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4568862-renesas-electronics-stock-cycle-worries-weighing-creating-bargain-valuation&source=gmail&ust=1674127453673000&usg=AOvVaw2n3OnvjBRkXAaibA9u-jMK" href="https://seekingalpha.com/article/4568862-renesas-electronics-stock-cycle-worries-weighing-creating-bargain-valuation" target="_blank">Cycle Worries Weighing On Renesas Electronics And Creating A Bargain Valuation</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-89159525565358052952023-01-20T20:29:00.003-05:002023-01-20T20:29:31.515-05:00A Turn In Short-Cycle Industrial Demand Only Adds To IPG Photonics' Challenges<p></p><p><strong>IPG Photonics</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/IPGP?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="IPG Photonics Corporation">IPGP</a></span>)
has continued to have a difficult time of it. Russia’s invasion of
Ukraine, and the sanctions that followed, were always going to make 2022
more challenging for the company, but IPG Photonics has also had to
deal with interruptions<span class="paywall-full-content invisible"> in China’s economy from its COVID-19 policies, as well as emerging weakness in many short-cycle industrial markets.</span></p> <p class="paywall-full-content invisible">I thought IPG Photonics had some high-risk contrarian attributes <a href="https://seekingalpha.com/article/4487606-ipg-photonics-hit-hard-by-ongoing-share-loss-and-global-tensions?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4487606-ipg-photonics-hit-hard-by-ongoing-share-loss-and-global-tensions">roughly a year ago</a>,
but the shares have lost another quarter of their value, lagging the
broader industrial space, but performing more in line with <strong>nLIGHT</strong> (<a href="https://seekingalpha.com/symbol/LASR?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="nLIGHT, Inc.">LASR</a>) and Chinese laser rivals <strong>Han’s Laser</strong> (002008.SZ) and <strong>Raycus</strong>
(300747.SZ). At this point, I do see elevated risks to short-cycle
demand, but I also think the share price discounts a lot of that. I’m
reluctant to double-down on a “buy” call that has failed, but
mid-single-digit growth<span class="paywall-full-content invisible no-summary-bullets"> can support a double-digit return from here, and I don’t think that’s an overly demanding outlook.</span></p><p> </p><p>Read the full article at Seeking Alpha: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4568853-ipg-photonics-stock-turn-short-cycle-industrial-demand-adds-challenges&source=gmail&ust=1674150372627000&usg=AOvVaw3O0M3Ueo4LUBel-cvaebwv" href="https://seekingalpha.com/article/4568853-ipg-photonics-stock-turn-short-cycle-industrial-demand-adds-challenges" target="_blank">A Turn In Short-Cycle Industrial Demand Only Adds To IPG Photonics' Challenges</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-59146194677384604492023-01-20T20:28:00.004-05:002023-01-20T20:28:44.466-05:00Beaten-Down MaxLinear Starting To Look More InterestingThe last year has been a rough one for <strong>MaxLinear</strong> (<span class="ticker-hover-wrapper">NASDAQ:<a href="https://seekingalpha.com/symbol/MXL?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="MaxLinear, Inc.">MXL</a></span>),
with the shares down about 46% (underperforming the broader
semiconductor market by almost 20%) despite strong growth in the
company’s WiFi connectivity business. Not only have investors become
more cautious<span class="paywall-full-content invisible"> on chip
stocks in general, but there are greater concerns now about potentially
slowing cable net-adds in 2023 hurting the Broadband business as well as
ongoing concerns about the proposed </span><strong class="paywall-full-content invisible">Silicon Motion</strong><span class="paywall-full-content invisible"> (</span><a class="paywall-full-content invisible" href="https://seekingalpha.com/symbol/SIMO?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Silicon Motion Technology Corporation">SIMO</a><span class="paywall-full-content invisible">) deal.</span> <p class="paywall-full-content invisible">Down more than 40% since <a href="https://seekingalpha.com/article/4492233-maxlinear-continues-to-execute-remarkably-well-in-connected-home?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" target="_blank" title="https://seekingalpha.com/article/4492233-maxlinear-continues-to-execute-remarkably-well-in-connected-home">my last update</a>
on the company, the shares are quite a bit more interesting now even
with those fears around cable subscriber growth. I’m not particularly
positive on the Silicon Motion deal, and I think the company continues
to overstate the opportunity in PAM-4, but I think a lot of bullishness
has been beaten out of these shares and I think the longer-term
potential<span class="paywall-full-content invisible no-summary-bullets">
in home connectivity and 5G is enough to support the shares from here,
with any progress in optical interconnect and the Silicon Motion deal
constituting upside beyond that.</span></p><p> </p><p>Click the link to continue: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4568798-beaten-down-maxlinear-starting-to-look-more-interesting&source=gmail&ust=1674150378589000&usg=AOvVaw1sYZ1Em5pJTFLIMSXbX1v1" href="https://seekingalpha.com/article/4568798-beaten-down-maxlinear-starting-to-look-more-interesting" target="_blank">Beaten-Down MaxLinear Starting To Look More Interesting</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0tag:blogger.com,1999:blog-6947095091641243428.post-41114471371480809582023-01-20T20:27:00.005-05:002023-01-20T20:27:49.016-05:00Cycle Worries Have Opened A Window Of Opportunity At Shin-Etsu ChemicalEven the best companies aren’t immune to macro challenges, and that’s certainly the case these days at <strong>Shin-Etsu Chemical</strong> (<a href="https://seekingalpha.com/symbol/SHECY?source=content_type%3Areact%7Csection%3Amain_content%7Cbutton%3Abody_link" title="Shin-Etsu Chemical Co., Ltd.">OTCPK:SHECY</a>) (4063.T) (“Shin-Etsu”). One of the best-run companies I know in the broader chemical space (and perhaps<span class="paywall-full-content invisible">
irrespective of industry grouping), Shin-Etsu shares have come under
pressure on worries about the impact of weaker housing on polyvinyl
chloride (or PVC) prices/margins, as well as concerns about weakness in
the semiconductor and electronics markets.</span> <p class="paywall-full-content invisible">Concern
is appropriate, and Shin-Etsu is very likely to see weaker profits over
the next 12-18 months, but I think the downturn needs to be kept in
context. Namely, this remains the world leader in PVC cost structure and
North American capacity, and the U.S. housing market should resume
growing after this upcoming correction. Likewise, while I do see some
risk to semiconductor demand, demand for leading-edge chips is unlikely
to weaken<span class="paywall-full-content invisible no-summary-bullets">
substantially for long. Even with some risk to earnings expectations
over the next 12 months, I believe the shares are priced for attractive
long-term returns.</span></p><p> </p><p>Read the full article here: </p><p><a data-saferedirecturl="https://www.google.com/url?q=https://seekingalpha.com/article/4568762-cycle-worries-open-a-window-of-opportunity-for-shin-etsu&source=gmail&ust=1674150383076000&usg=AOvVaw3N-3YNdU2EBgDO6bLEZtGO" href="https://seekingalpha.com/article/4568762-cycle-worries-open-a-window-of-opportunity-for-shin-etsu" target="_blank">Cycle Worries Have Opened A Window Of Opportunity At Shin-Etsu Chemical</a> <br /></p>Stephen Simpsonhttp://www.blogger.com/profile/12872161469696334548noreply@blogger.com0