Seeking Alpha: W.R. Berkley Pushing On Through A Tough Market

Tougher times are in the property and casualty insurance market, as insurers like ACE Limited (NYSE:ACE), Chubb (NYSE:CB), Hartford (NYSE:HIG), Travelers (NYSE:TRV), and W.R. Berkley (NYSE:WRB) are finding it harder to push rate increases and weak interest rates limit returns on conventional investment options. With loss trends having been pretty benign in recent years, there are worries among some investors and analysts that the industry is setting itself up for a string of weak performance as losses bite into capital and push down returns.

I'm really not that concerned about W.R. Berkley in that context. I am worried about limited premium growth potential and the year-to-year risks of the company's more aggressive investment philosophy, but I think the company's underwriting quality has shown itself over time and I still see opportunities for the company to grow its underwriting operations organically. I'm still not crazy about the valuation, but bargains in the P&C are hard to find these days.

Continue here:
W.R. Berkley Pushing On Through A Tough Market

Seeking Alpha: The Pepsi Launch Approaches, But Senomyx Needs To Deliver On Its Own Sales Efforts

The wait drags on for Senomyx (NASDAQ:SNMX), testing the patience of shareholders ahead of a long-anticipated launch from its major partner PepsiCo (NYSE:PEP). Chemophobia-laced "healthy living" nonsense aside, the fact remains that additives remain integral to the packaged food and beverage industries and a large revenue opportunity for Senomyx in the coming years.

The key question remains as to whether Senomyx can convert that large opportunity to real sales. Although the company's direct sales efforts have long lead times (up to, or beyond, two years in some cases), some fruits of those efforts should be visible in the next twelve months. Likewise, investors will know soon enough whether PepsiCo is going to launch products incorporating Senomyx's Sweetmyx S617 with its full marketing vigor or whether it will be a more cautious and limited effort. Delays in commercialization efforts and increased execution risk in my model have led to a lower fair value, but that fair value target remains close to $10 and offers substantial upside if those orders do in fact materialize.

Continue reading here:
The Pepsi Launch Approaches, But Senomyx Needs To Deliver On Its Own Sales Efforts

Seeking Alpha: PMC-Sierra Leveraged To High-End Product Cycles

These aren't the best of times for the storage and carrier hardware industries, but PMC-Sierra (NASDAQ:PMCS) is looking to leverage new product introductions, the move toward software-defined networking in the data center, and a capex shift toward optical transport networking (or OTN) equipment to drive a meaningful upturn in revenue and further leverage in margins.

Mid-to-high single-digit revenue growth and low double-digit FCF growth can support today's stock price and the company's margins do argue for a higher revenue multiple than today's level. It's also worth noting that acquisition activity has picked up in the chip space and PMC-Sierra would fit in with multiple suitors that have the wherewithal to make a deal. I don't see a large discount to fair value here, but the company has a legitimate opportunity to gain share in multiple markets and the company is still of a size where a few extra points of market share can drive meaningful extra value.

Follow the link for more:
PMC-Sierra Leveraged To High-End Product Cycles

Seeking Alpha: For Ever-Volatile Maxwell, New Markets Must Start Placing Orders

Maxwell Technologies (NASDAQ:MXWL) shares have always been volatile, but the direction of that volatility has been decidedly negative over the last year. Investors have grown increasingly frustrated over the erratic performance of the company's Chinese hybrid bus market and the lack of significant orders or momentum in supposed-to-be-big markets like autos, trucks, and trains.

As speculations go, this could be an interesting stock for aggressive investors to consider. The company now counts PACCAR (NASDAQ:PCAR) as an OEM heavy duty truck customer and management has been guiding to greater auto adoption in the 2016 model year. Admittedly there is still frustratingly little substance for these shares to trade on, but that's the nature of emerging/speculative tech and the long-term rewards could still prove meaningful.

Continue reading here:
For Ever-Volatile Maxwell, New Markets Must Start Placing Orders

Seeking Alpha: Out Of Recovery, Popular Needs A Healthier Home Market

Popular (NASDAQ:BPOP), the market-leading bank in Puerto Rico, has done a lot of good things to clean up its operations since the banking meltdown. The shares haven't really outpaced the sector over the last year, though, and I believe that has a lot to do with the ongoing struggles of the Puerto Rican economy.

I believe management's acquisition of assets from the wreckage of Doral (DRLCQ) was a relatively good move, but the company is likely still looking at tepid loan growth and comparatively high credit risk in the short-term. Higher rates would help (as it would for many other banks), but a better economy in Puerto Rico would help even more. I'm not bearish on Popular, but the shares only look about 10% or undervalued to me today and that's not quite enough to get me interested in adding them to my portfolio.

Read the full article here:
Out Of Recovery, Popular Needs A Healthier Home Market

Seeking Alpha: Amidst Multiple Distractions, PRA Group Keeps On Collecting

PRA Group (NASDAQ:PRAA) has gone nowhere fast over the last two years, as the company has seen a shift in the profitability of the charged-off debt it can buy and the debt collection industry has continued to evolve. Management has also added complexity, integration risk, forex risk, and regulatory risk to the model in expanding into the European market through its acquisition of Aktiv. Now add in an ongoing investigation from the CFPB that will almost certainly result in some sort of payout from the company.

Despite that backdrop, I still think the shares are undervalued and that the company's performance is starting to improve again. Amortization rates are higher, recent purchases are performing well, and the quality of the receivables looks good. From an industry perspective, there are still reasons to believe that substantial volume could become available in the next year or two and Aktiv offers sizable opportunities for capital deployment. There are above-average risks inherent to this company's model, but I believe fair value is in the mid-$60's to low-$70's today.

Follow this link for more:
Amidst Multiple Distractions, PRA Group Keeps On Collecting

Seeking Alpha: Commercial Vehicle Still A Great Story That Nobody Cares About

The line between patient and stubborn can be a little fuzzy at times, but sometimes investors have to have the stamina to wait for the market to wake up to a story. That is still my approach to Commercial Vehicle Group (NASDAQ:CVGI), as management continues to execute on a plan to drive not only sales growth, but greater diversification and higher margins in the years to come.

Commercial Vehicle Group has badly lagged other commercial vehicle suppliers like Cummins (NYSE:CMI), Allison (NYSE:ALSN), WABCO (NYSE:WBC), and Grammer (OTC:GMEGF) over the past year despite double-digit revenue growth and noticeable improvements in margins. Some of that could be tied to the company's leverage to the possibly peaking North American truck market, but perhaps also because this barely-followed stock is just not on anybody's must-watch list.

Whatever the case may be, I continue to believe this is an interest relative and absolute value story today. I don't think my forecast of 5% long-term annualized revenue growth is that ambitious, particularly given the company's efforts to target growth in agriculture and construction, nor do I believe my mid-single digit FCF margin is ambitious relative to the norms in this sector. Those inputs still support a nearly $9 fair value, though, so I believe this is still a stock well worth consideration.

Read the full article here:
Commercial Vehicle Still A Great Story That Nobody Cares About

Seeking Alpha: A New Beginning For Lundbeck, But Not A Clean Start

These are interesting times for H. Lundbeck (OTCPK:HLUYY) (LUN.CO) and its shareholders. This smallish Danish specialty pharmaceutical company is attempting to launch new drugs into crowded markets with questionable differentiation and has a relatively modest (and high-risk) pipeline, as well as limited resources with which to acquire new candidates. Amidst these challenges, the company saw its CEO resign for violating its code of ethics - hardly what investors ever want to see amidst challenging multi-market drug launches.

Wednesday may go down as a big turning point. There are still very legitimate worries about the future of the company's newest launches, but the company announced the hiring of a very well-regarded pharma executive as its new CEO. His options may be limited by Lundbeck's resources and reputation, but investors who are positive on the company's new drugs and underlying approach to drug development are going to very much look forward to what he can offer in terms of better sustained performance.

Click this link for the full article:
A New Beginning For Lundbeck, But Not A Clean Start

Seeking Alpha: Margin Leverage Limiting WESCO's Potential

None of the major industrial distributors have been doing especially well of late (other than HD Supply (NASDAQ:HDS)), but WESCO (NYSE:WCC) has had a rough time of it as industrial spending has weakened and the company has struggled to generate meaningful margin leverage. WESCO's steady-eddy performance is one of its strong points during the tough times, but the company's going to be hard-pressed to generate substantial margin upside without some underlying inflation as rivals compete hard for business and customers push back on pricing.

I like WESCO as a company, but I think management has a tough challenge in front of them - very lean SG&A spending doesn't leave much room for meaningful cost-cutting, pricing power limits the gross margin potential that I see, and breaking out of the company's long-term average revenue growth rate range in the mid-single digits may well require M&A at the cost of risk and leverage.

Read more here:
Margin Leverage Limiting WESCO's Potential

Seeking Alpha: After Flaring Off The Excess Enthusiasm, Chart Industries Looks More Interesting

Around nine months ago investors still had to go to pretty great lengths to come up with a growth scenario that made Chart Industries' (NASDAQ:GTLS) valuation look reasonable. With Chart Industries and other "natural gas economy" stocks like Westport Innovations (NASDAQ:WPRT) and Quantum Fuel Systems (NASDAQ:QTWW) having gotten hammered down in the ensuing months, though, it's worth taking another look at some of the better names leveraged to growth in LNG.

To be sure, I don't think my model for Chart Industries is exactly conservative, as I'm still looking for annualized revenue growth of nearly 7% and margin leverage based on a North American LNG build-out that may never materialize. That said, those numbers support a fair value above $45 and an EV/EBITDA multiple of less than 7x for a company that could grow at a 10% clip for the next decade seems like an interesting valuation for an admittedly speculative opportunity.

Read the full article here:
After Flaring Off The Excess Enthusiasm, Chart Industries Looks More Interesting

Seeking Alpha: PCTEL Still Looking To Leverage Growing Wireless Opportunities

Three months ago, I thought that PCTEL (NASDAQ:PCTI) was an interesting, albeit high-risk, opportunity to play growth in antenna-based applications like WLAN and transportation and China's LTE rollout through antennas and test equipment. So far the early returns have not been encouraging, as the shares have lagged both the Nasdaq and antenna rival Laird (OTC:LAIRY). The underlying opportunity is still sizable, though, and the shares offer a worthwhile opportunity to leverage growth in antenna-based applications and eventual wireless deployments.

Click this link for the full article:
PCTEL Still Looking To Leverage Growing Wireless Opportunities

Seeking Alpha: Monsanto Doesn't Need Syngenta

Rumors have once again heated up around the idea that Monsanto (NYSE:MON) is trying to acquire its rival Syngenta (NYSE:SYT). To a certain extent, this is nothing new. Syngenta has long been thought to be a future M&A candidate, with past rumors tying them to Monsanto, DuPont (NYSE:DD), and Dow (NYSE:DOW), but the company's less-than-impressive run of performance (including a poor first quarter in 2015) has apparently reignited those speculations.

As a Monsanto shareholder, I'm hoping the company does not execute this deal. While I like the idea of Monsanto gaining more exposure to vegetables and crops outside of the corn/soy complex, as well as access to Syngenta's technology and diversification into the ag chemical business, I think Monsanto would be hard-pressed to earn a good return on the price paid, particularly after factoring in divestments and the probable reinvestments that need to be made into Syngenta.

Read more here:
Monsanto Doesn't Need Syngenta

Seeking Alpha: Turkcell Looking At Short-Term Pain For Long-Term Gain

Neither Turkcell (NYSE:TKC) nor its local rival Turk Telecom (OTC:TRKNY), who operates Avea, have been getting much love in the market and it gets even worse when you factor in the currency moves between the dollar and lira. That comes despite the fact that the Turkish mobile market is actually pretty healthy relative to other emerging markets (South Africa, Russia, the Middle East, North Africa, et al) and there are credible reasons to think that the market will get more rational.

Turkcell at long last managed to hold its annual meeting and pass a dividend, a move that investors were waiting literally years to see. Turkcell being Turkcell, there are still challenges and controversies - Cukurova is trying to gain control of the company via a "shotgun clause" (that the Turkish government could reject), the company is adjusting to a new CEO, the company may be looking to make an acquisition in Ukraine, and the company will be looking at spending billions on new 4G licenses and equipment. While there are definitely some risks that cash could be flying out of the company for the next few years, I think the long-term advantages of the 4G migration outweigh the short-term volatility.

Read more here:
Turkcell Looking At Short-Term Pain For Long-Term Gain

Seeking Alpha: Societe Generale Improving, But Still Unsettled On Several Fronts

ADRs are a very useful way of adding global exposure to a portfolio, but there can be that frustrating dichotomy between local performance and your actual results when currency moves get in the way. Such is the case with Societe Generale (OTCPK:SCGLY). While this giant French bank has put at least some of its troubles behind it and gotten some appreciation for that in the market since my last article (the local shares are up more than 25%), the ADRs have only posted a mid-single digit gain.

I continue to believe that SocGen can do better and merit a higher valuation, but there are still some significant challenges to surmount. SocGen needs to reignite growth in its French Retail operations and manage through the extreme challenges it is facing in its Russian operations, while also building the groundwork for future growth in areas like Africa. I believe the bank will fare better than the Street expects, but not all investors may see the 10% to 20% potential return as compelling enough to take on the currency risks, regulatory risks, and other assorted headaches that may accompany SocGen.

Read the full article:
Societe Generale Improving, But Still Unsettled On Several Fronts

Seeking Alpha: Arch Coal Holding On For An Appalachian-Driven Rebound

U.S. coal stocks have been almost universally pasted, and it's not hard to see why. Many price indexes have carved out new lows, and EBITDA has shrunk to a point where many companies are in a tight squeeze with respect to interest and debt payments. Worse still, there are signs that several key markets may be changing (or have already changed) in ways that fundamentally alter the long-term outlook for U.S. coal producers.

Arch Coal (NYSE:ACI) is one of the companies that finds itself in a tricky spot. While the company should have adequate liquidity for several more years, that liquidity won't last indefinitely, and this is one of the companies potentially at risk from fundamental changes to the markets it has served for so many years. Arch Coal does offer impressive leverage to any near-term recovery in coal prices, akin to what investors have seen with some of the more leveraged and commoditized energy service companies lately, but this is by no means a safe play on a troubled sector.

Continue reading via this link:
Arch Coal Holding On For An Appalachian-Driven Rebound

Seeking Alpha: Cost Reductions Alone Can't Save Alpha Natural Resources

Unlike Cloud Peak Energy (NYSE:CLD) and Peabody Energy (NYSE:BTU), I'm not certain that Alpha Natural Resources (NYSE:ANR) will have the staying power to exploit a recovery in the high-quality coal that it mines in Appalachia. As is the case with commodity stocks, there is a return/quality trade-off here that may seem counterintuitive - Alpha Natural doesn't appear to have staying power at today's coal prices, but a solid recovery in prices would have a much more profound impact on the stock price than for Cloud Peak or Peabody (and likely Arch Coal (NYSE:ACI) as well).

Read more here:
Cost Reductions Alone Can't Save Alpha Natural Resources

Seeking Alpha: Peabody Energy Not In Serious Danger, But Still Needs Higher Prices

As I work my way through the coal companies that interest me, Peabody Energy (NYSE:BTU) is in a tricky spot. Relative to Alpha Natural Resources (NYSE:ANR) and Arch Coal (NYSE:ACI), I don't think there's really a long-term liquidity problem here, but then the company also needs to see a real recovery in metallurgical coal and I'm not sold on the company's position here.

Peabody's share price still seems to include a quality premium and I don't have a problem with that. The balance sheet isn't pristine, and the company slashed the dividend to preserve liquidity, but the company's well-placed in the U.S. Powder River Basin (or PRB) market and leveraged to growing coal imports in China and India.

Follow this link for the full article:
Peabody Energy Not In Serious Danger, But Still Needs Higher Prices

Seeking Alpha: Cloud Peak Energy Dug In For The Long Haul

Cloud Peak Energy (NYSE:CLD) has done better than most of its peer group over the past year, but does that really count for much when the shares are still down almost two-thirds? Making matters worse, pricing for thermal coal continues to be weak both in the U.S. and in the export markets, giving producers like Cloud Peak no place to hide.

Powder River Basin (or PRB) coal is barely competitive with natural gas at current prices and isn't competitive with Australian or Indonesian coal in Asian markets, but there is some hope that coal and gas prices could bottom this year. Cloud Peak also benefits from a low cost basis and a relatively comfortable liquidity position. The shares of coal companies are pretty speculative today, particularly as the industry is likely is long-term decline in the U.S., but Cloud Peak does still offer some worthwhile upside if/when coal prices do finally reach that bottom.

Continue here:
Cloud Peak Energy Dug In For The Long Haul

Seeking Alpha: Accuray On Its Way To Being A "Why Bother?" Stock

Small-cap radiation oncology equipment company Accuray (NASDAQ:ARAY) continues to give investors more than enough reasons to strike it from their lists and move on. I believe that the clinical evidence continues to support stereotactic body radiation as a very effective method of treating certain difficult cancers and that Accuray's CyberKnife is a very good SBRT system. I also believe that Accuray need only establish a mid-teens market share in the radiation oncology market with its specialized Tomo and CyberKnife systems for the stock to do well.

The problem is that Accuray just isn't on a clear path to growth at this point. While the financial results in the third quarter weren't awful, another sizable miss with orders puts near-term revenue growth at risk and reignites concerns as to whether Accuray really can keep its foot in the door with radiation oncologists. These shares are still priced to potentially produce above-average returns, but the inability to establish a firm, sustained trajectory of orders is a major worry and sufficient cause, at least in my mind, to consider moving on to other ideas.

Read the full article here:
Accuray On Its Way To Being A "Why Bother?" Stock

Seeking Alpha: FEMSA Leveraging OXXO And Has Ample Dry Powder

The Mexican economy isn't helping much, but FEMSA (NYSE:FMX) continues to post respectable results on the back of its strong OXXO convenience store chain. Taxes in Mexico and extreme currency problems in Venezuela are hurting the company's stake in Coca-Cola FEMSA (NYSE:KOF), but FEMSA continues to explore new avenues of growth in Mexican retail like pharmacies, restaurants, and now gas stations and has the option of using its Heineken (HINKY) stake to fund larger initiatives.

Operationally, FEMSA still looks like an attractive stock to hold, but currency moves have negatively impacted my valuation. At around $90 or below, I would certainly give strong consideration to adding this name to a portfolio, as I believe it not only one of the best-run Latin American companies, but also one with extensive growth options for the coming years.

Read the full article here:
FEMSA Leveraging OXXO And Has Ample Dry Powder