Seeking Alpha: Order Growth Starting To Support The MTS Systems Story

MTS Systems (NASDAQ:MTSC) is not at all a well-known company - just two analysts follow this manufacturer of industrial testing systems and sensors - but what it lacks in popularity may not matter to patient investors. The company is well-placed to take advantage of growth in the Chinese auto OEM sector, as well the ongoing trend across multiple industries to make greater use of composite materials, and is supplementing its traditional strength in testing systems with a growing higher-margin sensor business and an increased focus on service.

These shares have more or less tracked the S&P 500 since my initial write-up in September, but better things could be in store relatively soon. Order levels have accelerated recently and the company should be nearing the end of margin pressures tied to upfront spending meant to grow the service business. Although I still do not believe the company will hit management's ambitious revenue growth targets over the next few years, the shares do appear undervalued and hitting those targets could be an invaluable source of upside.

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Order Growth Starting To Support The MTS Systems Story

Seeking Alpha: Rofin-Sinar Still Not Up To Speed

Rofin-Sinar Technologies (NASDAQ:RSTI) remains frustratingly stuck in "muddle through" mode as waiting for a return to growth has sometimes felt like waiting for Godot. The company's performance in fiber lasers continues to be erratic and while management has made some progress with underlying manufacturing margins, improvements in demand from machine tool and semiconductor customers haven't offset weakness in consumer electronics and solar markets.

What to do about the shares, then? I still like IPG Photonics (NASDAQ:IPGP) better as a business, but back in February/March I thought that Rofin-Sinar looked a little undervalued on a relative basis. Since my last Rofin-Sinar piece, Rofin-Sinar shares have risen about five percent and outperformed its peer group (except for GSI Group (NASDAQ:GSIG)), but not by a lot. I still think these shares are undervalued on a long-term basis (assuming mid-single digit revenue and FCF growth), but the combined impact of high-end fiber laser competition from IPG Photonics and low-end competition from Chinese manufacturers is a real risk to consider.

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Rofin-Sinar Still Not Up To Speed

Seeking Alpha: XPO Logistics Sticking To Its Guns

XPO Logistics (NYSE:XPO) is quite possibly one of the most controversial names I follow, with every article I write seemingly bringing more than its share of "I'll believe it if/when I see it" skepticism on the company's growth-by-acquisition plans. There is no doubt that management's strategy is exceptionally aggressive and the company has shifted (or perhaps broadened) its strategy from asset-light truck brokerage to a more comprehensive third-party logistics (or 3PL) portfolio.

There are good reasons to be skeptical of stories like XPO Logistics. Rampant M&A makes it harder to suss out the real underlying performance of the business and creates opportunities for accounting that runs from ambitious to aggressive to outright wrong. On the other hand, the shares are up more than 80% from when I first wrote on them and the 3PL sector not only offers good underlying growth but numerous consolidation opportunities. I won't dismiss the risk that this is a big game of musical chairs, but I know that Wall Street can't help itself when it comes to growth and XPO Logistics could have a great deal more of that in store in the coming years.

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XPO Logistics Sticking To Its Guns

Seeking Alpha: Hollysys Offsetting Weak IA With Strong Rail

Chinese automation and control systems developer HollySys Automation Technologies (NASDAQ:HOLI) continues to come along nicely. The shares are up more than 100% from when I first mentioned them on Seeking Alpha, and up more than 20% since my last write-up, as the company continues to gain share in the Chinese industrial automation sector and leverage growth in train infrastructure. Although the shares are not extremely cheap (at least not on the basis of my current assumptions), the opportunity to leverage double-digit underlying growth in rail infrastructure and take more share in the industrial automation market, all while growing its ex-China business, is still pretty significant and I wouldn't be in a hurry to exit or dismiss this story.

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Hollysys Offsetting Weak IA With Strong Rail

Seeking Alpha: Taminco Should Be Switching Over To Cash Generation

The ag chemical market has slowed, as seen recently at FMC (NYSE:FMC) and DuPont (NYSE:DD), but Taminco's (NYSE:TAM) strong market share and diverse end markets for its alkylamine products are serving the company pretty well. The shares have done okay since my mid-February write-up, rising about 10% and doing pretty well relative to direct rivals like DuPont and BASF (OTCQX:BASFY) and the Dow Jones Specialty Chemicals Index. I continue to believe that Taminco is a solid specialty chemical company with better growth and return on capital prospects than its peers, not to mention deleveraging potential, but the valuation is creeping up a bit and this looks more like a "buy on weakness" than outright buy right now.

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Taminco Should Be Switching Over To Cash Generation

Seeking Alpha: Chart Industries Has Deflated On A Slower LNG Buildout

It's been a rough year for companies tied to the LNG infrastructure market, as once-rich valuations continue to smack into the reality that development of the U.S. market remains frustratingly slow and China continues to be consistently inconsistent. Chart Industries (NASDAQ:GTLS) is down another 15% or so from when I last wrote about the company but still sports a double-digit trailing EBITDA, while Westport (NASDAQ:WPRT), Clean Energy (NASDAQ:CLNE), Linde (OTCPK:LNEGY), and CBI (NYSE:CBI) are likewise all down on a year-to-date basis.

The arguments for an LNG capacity build out still make sense - the U.S. has extensive natural gas reserves and LNG offers not only an alternative to oil-based fuels but also a way for countries like China to address air quality issues. Chart Industries addresses those opportunities with leading technologies in heat exchangers, storage, and distribution, but even after a 40% pullback the expectations built into the valuation don't exactly seem undemanding.

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Chart Industries Has Deflated On A Slower LNG Buildout

Seeking Alpha: Can DigitalGlobe Relaunch After A Reset To Expectations?

Overheated expectations for DigitalGlobe's (NYSE:DGI) commercial business came home to roost earlier this year, when weak guidance after fourth quarter earnings sent the shares down 30%. Since then, management has seen a successful satellite launch and the U.S. government agree to allow them to sell higher-resolution images to its customers, as well as announcing a share buyback. Although the commercial opportunity is still a "show me story", DigitalGlobe does have the advantage of offering the best quality images in the market. Revised expectations still offer upside, but the company would probably serve its interests more effectvely by better managing analyst expectations.

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Can DigitalGlobe Relaunch After A Reset To Expectations?

Seeking Alpha: Thompson Creek Not Yet Past The Point Of Hard Decisions

This has been a pretty good year for a number of Canadian base metal miners, with First Quantum (OTCPK:FQVLF), HudBay (NYSE:HBM), Copper Mountain (OTCPK:CPPMF), and Thompson Creek (NYSE:TC) all doing pretty well since the start of the year. Thompson Creek's path to this point hasn't exactly been smooth (the shares are down about 25% over the past 12 months), and there are still quite a few uncertainties with respect to the company's plans for its molybdenum operations, as well as it how will resolve ongoing ore hardness issues at Mt. Milligan.

The company seems to be past the worst of its liquidity pressures, though, and should be free cash flow-positive from 2014 forward (unless base metal prices get very weak). Future decisions on how to proceed at the Thompson Creek mine and whether to add a second crusher to Mt. Milligan could have material impacts on the net asset value, but as things stand today, I believe the shares are still undervalued.

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Thompson Creek Not Yet Past The Point Of Hard Decisions

Seeking Alpha: Alaska Air Continues To Hold Its Own

Airlines are making the most of an atypical outbreak of sane, responsible management across the industry, and Alaska Air Group (NYSE:ALK) has certainly been among the beneficiaries. While the company has done pretty well for itself (and its shareholders) over the last few years, the stock has been a relative underperformer more recently on worries that Delta Air Lines' (NYSE:DAL) aggressive expansion into Seattle will start to impact the company's performance. Trading below industry-average multiples and doing better than the bears predicted, Alaska Air still appears to offer some upside but readers may want to note that the airline rally could be getting a little long in the tooth.

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Alaska Air Continues To Hold Its Own

Seeking Alpha: GenMark Diagnostics Hoping To Make Its Mark In Clinical MDx

Molecular diagnostics is still a relatively new opportunity in the clinical diagnostics space - about $4 billion/year if Roche's (OTCQX:RHHBY) estimates of its market share are accurate. It remains a good growth opportunity, though, as molecular diagnostic technologies can in many cases offer faster and more accurate results for healthcare providers. GenMark Diagnostics (NASDAQ:GNMK) is looking to emerge as a leader in hospital/lab-based multiplex molecular diagnostics with a new system (ePlex) designed to deliver fast and accurate results with good throughput.

GenMark's existing business isn't going to take the business very far, so a great deal is riding on that new system. The performance specs look very competitive, but rivals aren't going to back it in and give up. This remains an exceptionally speculative story, but one with worthwhile upside from here if the 2015 launch goes well. While the stock has been weak since my last article (along with many other riskier med-tech stories), I think the name is still worth consideration.

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GenMark Diagnostics Hoping To Make Its Mark In Clinical MDx

Seeking Alpha: Quebecor Has A Big Decision To Make In Wireless

These are interesting days for Quebecor (OTCPK:QBCRF) (QBR-B.TO). The Canadian government has made it clear that they'd like a fourth national wireless service provider, but Quebecor has been cagey about how it will approach this opportunity - leaving a lot of speculation and concern in the market as to the company's plans. In the meantime, the newly restructured media assets business seem to be doing better, while the company's Videostron operation is trying to balance weak subs with better margins.

I liked Qubecor in early February, thinking that the market was underestimating what the company could do with its margins and applying too much of a discount to the wireless operations. The shares are up more than 15% since then, beating the S&P 500 and keeping pace with the TSX. Quebecor has also done quite a bit better than BCE (NYSE:BCE) and Telus (NYSE:TU) over that stretch. I still think there's double-digit potential in these shares, but readers considering them should recognize that greater clarity on the company's wireless plans may be a key in getting more value into the stock price.

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Quebecor Has A Big Decision To Make In Wireless

Seeking Alpha: With An Iffy Non-Oncology Pipeline, Roche Pays Up For InterMune

Roche (OTCQX:RHHBY) does a lot of things well. It is one of the largest players in oncology and markets three of the top ten best-selling drugs in the world. It also has a strong diagnostics business and a deep immuno-oncology platform. What Roche has not done so well, though, is develop new drugs outside of oncology, with notable recent failures in cardiology, diabetes, and CNS disease. Given those failures, and perhaps seeing an opportunity to leverage existing efforts in pulmonary/respiratory disease, Roche has stepped up with an expensive bid for InterMune (NASDAQ:ITMN).

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With An Iffy Non-Oncology Pipeline, Roche Pays Up For InterMune

Seeking Alpha: Synergy Resources Offers Strong Production Growth And Drilling Upside

Wattenberg operators have done pretty well this year, and results from the Niobrara and Codell formations continue to support solid IRRs on these wells. Since I wrote about Synergy Resources (NYSEMKT:SYRG) in late January, the shares are up about 44% - a little better than Bonanza Creek (NYSE:BCEI) and about double the return of PDC Energy (NASDAQ:PDCE) over that period. Synergy's quarterly production numbers have come in a little soft relative to expectations, but the company's drilling results have offset this with solid IP rates and good well cost controls. The shares do not look cheap on the basis of peer-level EBITDA multiples, but I would argue that Synergy's triple-digit oil growth deserves a premium and the company's core Wattenberg drilling inventory supports a mid-teens fair value.

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Synergy Resources Offers Strong Production Growth And Drilling Upside

Seeking Alpha: Bukit Asam's Production And Delivery Growth Offset Weak Pricing

The coal market has been lousy for most of the major U.S. and international producers, but PT Tambang Batubara Bukit Asam ("Bukit Asam") (OTCPK:TBNGY) has been a notable exception. Between organic production growth, strong domestic prices, and good cost control, Bukit Asam shares have jumped 50% since I wrote about the company in January, handily beating China Shenhua (OTCPK:CSUAY), Peabody (NYSE:BTU), and U.S. producers like Cloud Peak and Arch Coal (NYSE:ACI). I do see some long-term upside from the company's aggressive production growth plans and an eventual seaborne thermal coal price recovery, but I don't see as much near-term value in the shares right now.

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Bukit Asam's Production And Delivery Growth Offset Weak Pricing

Seeking Alpha: Mount Gibson Iron Still Needs To Buy Its Future

I wasn't overly fond of Mount Gibson Iron (OTC:MTGRF) back in January of this year, as I wasn't enamored of the company's production outlook, its corporate governance, or the need to redeploy cash on the balance sheet to improve its mining assets. The shares have underperformed Fortescue Metals (OTCQX:FSUGY) since then (by around 10%), and while I do think Mount Gibson could better withstand further weakness in iron ore prices (and deploy its capital to add reserves/resources), I'm not as bullish on the shares.

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Mount Gibson Iron Still Needs To Buy Its Future

Seeking Alpha: Wilshire Bancorp Lagging Despite Strong Loan Originations

With a few exceptions like U.S. Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC), this hasn't been a stellar year for commercial banks. The KBW Regional Banking ETF (NYSEARCA:KRE) is down about 4% year-to-date and Wilshire Bancorp (NASDAQ:WIBC) has lagged that by another 8%, performing a little worse than other California-based banks like CVB Financial (NASDAQ:CVBF) and PacWest (NASDAQ:PACW). Wilshire continues to post good loan origination numbers, but operating expenses have been running high and it may take higher rates to get investors interested in banks like Wilshire again.

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Wilshire Bancorp Lagging Despite Strong Loan Originations

Seeking Alpha: Conatus Pharmaceuticals Down On Low Enthusiasm For High Risk

Conatus Pharmaceuticals (NASDAQ:CNAT) has been a lousy pick. Since I last wrote on the company, the shares have dropped more than 40% as investors have fled higher-risk biotech stories. That fellow liver disease specialist Intercept Pharmaceuticals (NASDAQ:ICPT) was down just about as much before an encouraging mid-August trial update is cold comfort, and the company's recent habit of pushing back expected trial data read-outs doesn't help what is already a challenging situation.

Early-stage biotechs are volatile (that goes with the territory) and I'm still bullish on the company's prospects. The company will be announcing data from multiple studies later in 2014 through early/mid-2015 and those announcements could bring momentum back into the shares if the data look strong. I've lowered my expectations a bit (due to longer timelines), but Conatus still looks like it could double from here.

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Conatus Pharmaceuticals Down On Low Enthusiasm For High Risk

Seeking Alpha: PAX Global Technology - Exceptional Growth And Exceptional Performance

I liked PAX Global Technology (OTC:PXGYF) back in January, but I'm not going to pretend that I saw an 80% gain (for the Hong Kong shares) in the subsequent seven months as the expected outcome. Management has ramped up its distribution capabilities faster than I expected and is continuing to make the most of strong growth in the adoption of credit and debit cards in China and other emerging markets. With a significant focus on internal R&D and a stated goal of buying its way further into payment services and software, I believe investors can expect a long run of double digit free cash flow and good long-term stock performance.

Readers should note that buying these shares will take a little extra work. For liquidity reasons, I would encourage readers to buy the Hong Kong-listed shares (0327.HK) - most major U.S. brokerages now allow trading on major foreign markets and the commissions are not bad (though buying shares for a retirement account may not be allowed). I would be surprised if the company didn't ultimately pursue a sponsored ADR, but that may not happen for some time.

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PAX Global Technology - Exceptional Growth And Exceptional Performance

Seeking Alpha: KMG Chemicals Really Needs That New Leg Of Growth Now

I had mixed feelings about KMG Chemicals (NYSE:KMG) back in January and the shares have chopped around quite a bit since then, though they're up about 8% from that January starting point. Seven months later, I still can't get all that bullish (or bearish) about these shares.

I know many sell-side analysts are cooling on the semiconductor space (and the company generates about 60% of segment profits from high-purity chemicals) and I am concerned about the likely shrinkage in the wood treatment business. On the other hand, the company seems to be producing pretty good synergies from the UPC acquisition (which it acquired from OM Group (NYSE:OMG)) and I think management will be able to harvest cash from the wood treatment business for some time yet. The real key for me, then, is what the company does to augment its revenue - management has talked about adding a third business for some time now and I don't think there should be a shortage of opportunities. KMG Chemicals looks undervalued already and with the right deal, maybe more of that value makes it into the share price.

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KMG Chemicals Really Needs That New Leg Of Growth Now

Seeking Alpha: Mocon Has An Interesting Energy Angle, But Watch The Margins

Micro-cap measurement and analytical tools company Mocon (NASDAQ:MOCO) hasn't done all that well since I wrote about the company in January of this year. It's always hard to know what moves trading on illiquid stocks that are not followed by analysts (seriously, no sell-side analyst follows Mocon), but relative to my own model the company has been disappointing with respect to sales growth, gross margin, and operating margin.

I'm still bullish on this company. The company has been communicating more clearly about its opportunities in energy and other "industrial" markets like water and air quality, and food contamination issues have stayed in the news. It takes patience and a larger appetite for risk to hold stocks like Mocon, but between its standalone prospects and potential appeal to an acquirer I think this is still a company worth a reader's time and due diligence.

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Mocon Has An Interesting Energy Angle, But Watch The Margins