Seeking Alpha: Is Roche At Risk Of Losing Its Way?

By just about any reasonable standard, Roche (OTCQX:RHHBY) is an exceptional pharmaceutical and diagnostics company. Through internal efforts and acquisitions large and small (particularly Genentech), Roche has become one of the largest players in oncology, with particular strength in biologics. That strength has in turn led to double-digit free cash flow growth over the past decade and solid recent share price performance.

As a shareholder, though, I'm starting to get a little concerned by some of the changes at and around Roche. I might be making mountains out of mole hills, but I also remember what a mentor told me when I joined the buy-side in my mid-20's, "Your job now is to be a professional worrier; it's the things you don't worry about and check out that will bite you in the ". With that in mind, while I see a lot of positives at Roche that merit ongoing ownership, the direction of the firm does leave me more willing to consider selling the shares.

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Is Roche At Risk Of Losing Its Way?

Seeking Alpha: Occidental Has A Good Plan, And Some Value Left

Despite relatively good returns on capital and a solid asset base, Occidental Petroleum (NYSE:OXY) hasn't really been at the top of the Street's list of favorites in the oil and gas sector. Now, management is pushing on with an ambitious restructuring plan that will see its once-core California business spun out on its own, a likely sell-down of its assets in the Middle East and North Africa, and a more aggressive drilling program in the Permian. All told, Occidental should be looking at better production growth and stronger returns than most large peers, with an enhanced oil recovery program supporting a decent dividend. A combination valuation methodology supports a fair value above $110, which I think is a decent implied return.

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Occidental Has A Good Plan, And Some Value Left

Seeking Alpha: Is Now The Time For Essex Rental?

The past year has been a pretty good one for the shares of at least some companies leveraged to commercial construction activity. The crane companies (Terex (NYSE:TEX), Manitowoc (NYSE:MTW), and Manitex (NASDAQ:MNTX)) had a rough time in the wake of second quarter results, they're up 27% to 42% over the past year. United Rentals (NYSE:URI) and Hertz (NYSE:HTZ), both of which rent various types of equipment to the construction industry, have also joined in, climbing over 100% and almost 20%, respectively.

Then there is Essex Rental (NASDAQ:ESSX). One of the largest owners and renters of crawler cranes in the United States, these shares are down almost 40% as the company continues to languish with weak utilization of traditional crawlers and uninspiring revenue and EBITDA performance. It seems to be getting better, though, as the company is implementing a new customer-centric strategy, expanding some of its offerings, and seeing improving utilization and order inquiries. Add in pretty positive recent trends in non-residential construction indexes and maybe this marks a potential turnaround point.

Before going further into the details, it is important to note that Essex is tiny (a sub-$100 million market cap) and not very liquid (an average volume of less than 50K shares/day). That increases the risk and makes it less likely that Essex Rental will gain the attention and support of sell-side analysts.

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Is Now The Time For Essex Rental?

Seeking Alpha: Synergy Pharmaceuticals Could Be A Diamond In The Rough

For a biotech that has reported encouraging clinical results and seeks to address a significant market, Synergy Pharmaceuticals (NASDAQ:SGYP) can't get much love. I can appreciate that there's a funding overhang here and that the market doesn't always embrace drugs that look like "me too's", not to mention a general move away from risky smaller names, but I think those concerns miss a lot of positives at this development-stage biotech.

I don't think plecanatide is just a Linzess wannabe, and I believe direct-to-consumer marketing efforts from Sucampo (NASDAQ:SCMP) and Actavis (NYSE:ACT) (and maybe Salix (NASDAQ:SLXP) down the road) will raise awareness of prescription treatments for constipation and IBS. Moreover, I think plecanatide offers some meaningful quality-of-life advantages that may be underappreciated today. It seems to me that the market currently values Synergy as though it will be forced to market plecanatide on its own (an expensive proposition), but I believe some sort of partnering arrangement, if not an outright sale of the company, is more likely and these shares look undervalued today.

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Synergy Pharmaceuticals Could Be A Diamond In The Rough

Seeking Alpha: Hurco Delivers Once Again

Companies leveraged to metalworking have seen pretty mixed performance in both their reported financials and stock performance this year. Hardinge (NASDAQ:HDNG) and Kennametal (NYSE:KMT) are both down double-digits on a year-to-date basis (about 22% and 15%, respectively), while MSC Industrial (NYSE:MSM) (a distributor, not a manufacturer) is up more than 12% and Hurco (NASDAQ:HURC) is up close to 50%.

I continue to be bullish on Hurco. The company's announcement in mid-July of a patent on combination 3D-printing and CNC machining certainly got some attention, but the basic underlying business at Hurco is progressing well and I believe that is the more important factor. I do have some concerns about the sustainability of order growth and gross margins, but these shares continue to look undervalued to me.

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Hurco Delivers Once Again

Seeking Alpha: Finisar Taking Its Lumps

Optical components manufacturer Finisar (NASDAQ:FNSR) has become a miserably bad call for me. Six months ago, I wrote that I would never want to hold Finisar for the long term and that I thought the shares were already trading at their inherent DCF-based value (with some bullish assumptions). I also thought, though, that momentum in the datacom business would support the business in the near term and lend strength to the shares. With the stock down more than 20% over the past six months, though, that clearly has not happened.

Along with fellow component manufacturer JDS Uniphase (NASDAQ:JDSU) and telecom equipment companies like Alcatel Lucent (NYSE:ALU) and Ciena (NYSE:CIEN), Finisar is contending with weaker than expected telecom carrier spending. Finisar is also seeing lumpier datacom spending from Web 2.0 customers and weakening growth in wireless transceivers while pursuing lower-margin sales into the Chinese telecom market.

I didn't see a lot of intrinsic value in the shares six months ago, and I don't see much now either given the company's lower guidance. I can also construct a bearish scenario that would see the company retest the $11-$13 range. Finisar is part of a volatile sector and is heavily shorted, though, and the shares could bounce if business conditions improve and the company delivers beat-and-raise quarters. I do think that Finisar has good technology in 40G/100G transceivers and transponders, as well as opportunities with its wavelength selective switches and ROADM cards, but this is a pretty tough sector for value-oriented buy-and-hold investors like me.

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Finisar Taking Its Lumps

Seeking Alpha: Mueller Water Products Showing Signs Of Real Recovery

Prior to a very strong August, the past six months finally saw Wall Street lose some of its ardor for water and flow control companies like Xylem (NYSE:XYL) and Mueller Water Products (NYSE:MWA). I did think that Mueller Water looked a little pricey on the fundamentals back in March, but I didn't expect the Street to ditch housing and water plays like Mueller just because of valuation. While the shares are down about 4% from my March article, it was actually quite a bit worse than that (a 20% drop) before a strong recovery after fiscal third quarter earnings.

Even though Mueller has lagged the S&P 500 by more than 10% over the past six months, that comes after a good run of performance and the shares aren't exactly strikingly cheap unless you're willing to go along with double-digit forward EBITDA multiples and aggressive assumptions regarding future cash flow. I do like this business, and it looks like both municipal spending and land development activity are improving.

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Mueller Water Products Showing Signs Of Real Recovery

Seeking Alpha: Ciena Goes Back Into The Penalty Box

When I cooled on Ciena (NYSE:CIEN) six months ago, my concerns were largely about valuation and the risk that market expectations were getting a little hot for a company that still had some real challenges in boosting margins (not to mention competing with the likes of Huawei, Alcatel Lucent (NYSE:ALU), and Infinera (NASDAQ:INFN)). I didn't expect a 23% fall, though, and the reaction to Ciena's disappointing fourth quarter guidance seems a bit much.

To buy Ciena today I think you need to have confidence that the upgrade cycle is going to last at least five years, that non-traditional customers (like Web 2.0 companies) will continue to represent a growth opportunity, that Cisco's (NASDAQ:CSCO) efforts to move down the stack will only go so far, and that Ciena can leverage the Ericsson (NASDAQ:ERIC) partnership to improve its OUS share and its overall margins. That's a lot to digest, and I don't want to suggest that you have to accept all of that to be more bullish than the Street, but if Ciena can reach (and keep) a double-digit FCF margin and generate long-term revenue growth in the mid-single digits, these shares are getting interesting again.

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Ciena Goes Back Into The Penalty Box

Seeking Alpha: Novadaq Technologies Knocked Back, But A Large Opportunity Remains

In prior pieces on small-cap med-tech Novadaq Technologies (NASDAQ:NVDQ) I've warned investors that emerging med-tech stories don't have smooth, seamless ramps and that this stock's exceptionally high valuation (at least on the short-term outlook) was an invitation to volatility. That has all come home to roost, as the shares that were once 68% above the price where I wrote on them as a Top Idea are now 2% below that level and down about 5% from my more recent piece in May.

I remain a believer in the technology and the market opportunity for Novadaq. There are literally hundreds of thousands of procedures (if not millions) every year where Novadaq's imaging technology makes clinical and economic sense, and with revenue potential of hundreds of dollars per procedure the numbers can get big pretty quickly. Competitive entries seem inevitable (though Intuitive Surgical (NASDAQ:ISRG) has gone unchallenged for a while now) and the company has to navigate an increasingly contentious end to its relationship with LifeCell. Even with those risks, I remain bullish on these shares and believe a fair value in the high teens is reasonable.

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Novadaq Technologies Knocked Back, But A Large Opportunity Remains

Seeking Alpha: Miller Still Underfollowed And Undervalued

As Top Ideas go, Miller Industries (NYSE:MLR) hasn't really worked out so far. Up about 13% since my original late September piece, the shares have done alright compared to Spartan Motors (NASDAQ:SPAR) and Oshkosh (NYSE:OSK), but they've lagged the S&P 500 and Supreme Industries (NYSEMKT:STS). While none of these are particularly good comps (Supreme is more focused on truck bodies, Spartan on emergency response and delivery vehicles, Oshkosh on aerial work platforms, defense, and fire/rescue/refuse), I think the problem is that access to capital for small businesses (and most towing companies are smaller businesses) is still limited and Miller is an illiquid stock with no sell-side support.

I still believe this is a stock that can generate market-beating returns over the long term. Double-digit revenue growth is not the "new normal", but catch-up/replacement spending should generate above-market growth for a few years and the company's offshore growth efforts offer meaningful upside. I'm not looking for particularly ambitious margin improvements, but I think the shares are about 20% undervalued today.

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Miller Still Underfollowed And Undervalued

Seeking Alpha: Silver Wheaton Still Looks Like A Quality Option

Investors have plenty of options for investing in silver, including silver miners like Fortuna Silver Mines (NYSE:FSM), Pan American Silver (NASDAQ:PAAS), and Coeur Mining (NYSE:CDE), bullion ETFs (as well as mining ETFs), physical bullion, numismatic silver, and so on. Amidst those options, I think streaming specialist Silver Wheaton (NYSE:SLW) remains a strong candidate, given its low fixed cost structure, attractive balance sheet/liquidity, and disciplined approach. Although weaker silver prices and producer missteps are both threats, weaker prices would at least potentially create more streaming opportunities to generate long-term value.

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Silver Wheaton Still Looks Like A Quality Option

Seeking Alpha: Air Transport Group Finally Delivering

It has taken a while, but Air Transport Group (NASDAQ:ATSG) is finally starting to show some of the potential I thought I saw back in September of 2013 and again in March of this year. While the shares are up almost 30% since that March piece, they are up only about 15% over the September piece and lagging the market isn't a cause for celebration.

Air Transport Group appears to be in the right place and if not at the right time, at least at a better point in time. The company has retired its DC-8 fleet, has a solid fleet of 767s and good growth potential in its relationships with Cargojet (OTC:CGJTF) and West Atlantic. Air cargo demand is improving (particularly for mid-sized freighters) and the company should start generating free cash flow this year. I think relatively conservative assumptions can support a fair value well into the $9s, and it is not that hard to get into the low double-digits, and I think there's still further for these shares to go.

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Air Transport Group Finally Delivering

Seeking Alpha: Dana Holding Still Good, But Not So Cheap

Back in the spring of this year, I thought Dana Holding (NYSE:DAN) looked like a good name to own in the commercial vehicle components/parts space. Since then, the shares have outperformed a range of rivals and comps, including American Axle (NYSE:AXL), Federal Mogul (NASDAQ:FDML), GKN plc (OTCPK:GKNLY), and Cummins (NYSE:CMI) (a commercial vehicle comp, but not a competitor), but have lagged the S&P 500 in part due to weaker-than-expected demand for trucks in South America and weaker global demand for ag equipment. I still believe there's a solid margin improvement story here (one that management is delivering), leverage to emerging market growth, and the potential for value-adding M&A, but the undervaluation of the shares isn't enough to call it a must-buy today.

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Dana Holding Still Good, But Not So Cheap

Seeking Alpha: Ur-Energy Finally Seeing That Turn?

I wasn't all that bullish on Ur-Energy (NYSEMKT:URG) six months ago, as I thought the company's positive qualities as a top-quartile U.S. uranium producer were offset by the ongoing risks in the uranium market at that time (and excessive optimism for a near-term price recovery). I didn't necessarily expect another 25% drop in Ur-Energy's share price over the following six months, though, and today's price is a lot more interesting as a play on an eventual recovery in the market. Though I'm still concerned that Japanese reactor restarts will underwhelm and that Kazatomprom is ready and waiting to increase supply on a price recovery, the combination of low-cost reserves, expansion potential, and disciplined management at Ur-Energy is getting more and more compelling.

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Ur-Energy Finally Seeing That Turn?

Seeking Alpha: Monsanto Looking To Balance The Near-Term And Long-Term Opportunities

I don't think it's unfair to ask if Monsanto (NYSE:MON) is running out of rabbits to pull out of its hat to satisfy the notoriously short-term attention spans of the Street. The Brazilian launch of Intacta has gone well, the company's Climate Corp offerings are off to a good start, the company maintains an impressive lead in trait development, and has multiple long-term opportunities like dual-stack soybeans, microbials, and biocides. Yet, the company no longer posts big quarterly beats and expectations for next year have come down due in part to weaker fundamentals in the corn market.

I believe it's a matter of perspective. For long-term investors, I don't think there's a better ag company out there, and I expect Monsanto to widen its lead in the seed/traits business, add new opportunities to its productivity/protection business, and really make the most of its Climate Corp offerings. In the short term, though, the shares have held their own with DuPont (NYSE:DD) and Bayer (OTCPK:BAYRY) and beaten Syngenta (NYSE:SYT), but the going may be getting a little tougher.

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Monsanto Looking To Balance The Near-Term And Long-Term Opportunities

Seeking Alpha: FEI Company's Retreat Not Quite Enough

I have a feeling that FEI Company (NASDAQ:FEIC) is going to be the sort of stock that adds to my collection of grey hairs. There's not a lot to criticize in terms of the quality of the company - it has built leading share in electron microscopy with a broad range of offerings (scanning electron, transmission electron, dual-beam, fixed ion beam, et al) and has made a point of using innovation and product development to essentially create new market opportunities for its technology. Margins are pretty good and the company has put together a solid recent run of annual returns on invested capital.

The issue, then and now, is price. I thought FEI Company looked too pricey in February and the market did punish the company for consecutive cuts to sales guidance, but it's not exactly cheap yet. On the other hand, quality scientific equipment companies don't often trade at bargain prices and FEI Company is looking at multiple growth opportunities across its end markets. I'm inclined to maintain "price discipline" here and wait for a better price/value trade-off, but I won't be surprised if a strong third quarter (a beat-and-raise) sends these shares back into the high $80s or above.

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FEI Company's Retreat Not Quite Enough

Seeking Alpha: Can Newfield Exploration Make Another Major Move?

I did think that Newfield Exploration (NYSE:NFX) was undervalued by the Street back in mid-Feburary, but more on the order of 40% and not the nearly 75% move the stock has delivered since then. Selling the Granite Wash assets for nearly $600 million was a nice development and the company has posted good results from recent wells drilled in Oklahoma and the Uinta. Looking ahead, the company is prioritizing the de-risking of the Oklahoma SCOOP and STACK plays and looking to sell its Chinese assets. I may yet be underestimating the potential here, but a 75% move in six and a half months seems like plenty for now.

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Can Newfield Exploration Make Another Major Move?

Seeking Alpha: Can Penn Virginia Really Be This Cheap?

It may be a cliché, but there's something to the idea that investors ought to be cautious when a stock price seems too good to be true. I'm quite well aware of the vulnerabilities and problems of modeling net asset values for E&P companies like Penn Virginia (NYSE:PVA) (it's a pretty typical case of "garbage in, garbage out"), and I'm likewise aware that the Street doesn't like stories where the company has been missing production expectations.

Penn Virginia shares are up about 13% from the last time I wrote on the company, beating the EPX Index but lagging other notable Eagle Ford operators like EOG (NYSE:EOG), Halcon (NYSE:HK), and SM Energy (NYSE:SM). That appreciation would seem to understate the meaningful value added since then through acreage acquisitions, ongoing drilling success in the core Lower Eagle Ford, and more recent success in wells testing the Upper Eagle Ford. While another recent downward production revision hasn't helped sentiment, and neither has recent weakness in oil prices, these shares look too cheap unless you believe oil prices can't hold $90 and/or the Upper Eagle Ford won't live up to these initial hopes.

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Can Penn Virginia Really Be This Cheap?

Seeking Alpha: Lightstream Resources Up, Down, And All Around

It hasn't been a boring six months since the last time I looked at Lightstream Resources (OTCPK:LSTMF) (LTS.TO). I was pretty lukewarm on the shares at that time given the company's high debt, iffy production growth outlook, and execution challenges in the Bakken. Since that last article, the shares dropped about 15% in the first month, roared back with a nearly 70% gain, and then pulled back by a third, ending down about 2% since my earlier article.

So will the real Lightstream please stand up? On the plus side, Lightstream earns some of the best netbacks in the Canadian E&P sector, has a pretty robust drilling inventory across the Cardium, Bakken, and Swan Hills, and generates good capital returns. On the negative side, recent disappointments with Swan Hills and mechanical issues with Cardium wells have rattled investors and management still has some work ahead to deliver on 2014 asset sale goals. On balance I see less execution risk at Baytex (NYSE:BTE) for investors looking for smaller E&P companies with sizable dividends, but Lightstream's relative underperformance has left it looking quite a bit cheaper.

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Lightstream Resources Up, Down, And All Around

Seeking Alpha: Oasis Petroleum Getting Less Than Its Full Due

As one of the large operators in the Bakken (in terms of leased acres), Oasis Petroleum (NYSE:OAS) certainly isn't immune to the various concerns investors have about the space, including price differentials and the threat that well returns will decline as less promising formations are targeted. Oasis also has to deal with some concerns that are more company-specific like the question of whether their acreage is of lower quality and whether the company will overpay for acquisitions.

Despite these concerns, Oasis has done okay since my last write-up - rising almost 16% while the EPX Index has risen about 11%. On the other hand, when compared to the performance of other Bakken operators like Continental Resources (NYSE:CLR), Whiting (NYSE:WLL), or Triangle Petroleum (NYSEMKT:TPLM) that comparison becomes much less favorable, as these producers have seen their shares rise more than 40% and more than 50% (WLL, TPLM) over that same time period. Although I think there are reasons for Oasis to trade at some discount to these other names, the results over the last half-year or so seem a little extreme and Oasis is starting to look more interesting again on a relative basis.

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Oasis Petroleum Getting Less Than Its Full Due