Century Link (NYSE: CTL), can this stock make you richer?

Since last few weeks this stock is one of the most talked stock in news, specially after Century Link acquired Level 3. If we see the future potential of combined company, it is the third largest in telecom sector now. Level 3 dominates in fiber optics connectivity market. Stock is trading much less than (~ $13.9) its original value (P/B ~ 0.58). Company is consistently paying dividends with yield aprox 15.3 making it one of the highest yield in the sector. Stock is trading almost 50% down its value in one year. It makes it interesting risky bet. Couple of points to note: this company is build on a strategy of acquiring other companies, which it is doing since many many years and successfully integrating bought out companies with parent companies, second, company is rewarding its shareholders with handsome dividends consistently, third it is a global company with presence in more than 60 countries serving thousands of customers worldwide, fourth company has enough assets to cover its short term loan requirements. If we consider many other points other than financial ratios, fundamental analysis, qualitative factors indicate that this is a good stock to own now and there are many good reasons to believe that in coming future (next 1-2 years) this stock may double up.

What is your opinion about buying/holding this stock?

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Brookfield Asset Management reports Q2 profits..

On Friday 7th August, 2015, the Toronto, Canada based company Brookfield Asset Management (NYSE: BAM, TSX: BAM.A, Euronext: BAMA) reported $1.2 billion net income, or 0.62 per share. Net income for the six months increased by 10% to $2.6 billion and on a last twelve months (“LTM”) basis, increased by 15% to $5.4 billion.

Funds from operations (“FFO”) for Brookfield shareholders during the quarter totalled $520 million, or $0.50 per share.

Fee bearing capital increased to approximately $100 billion at quarter end; net inflows totalled $15 billion over the last twelve months, including $5 billion in the current quarter. Fee related earnings grew by 44% to $127 million in the quarter, as fees were earned on a higher capital base with relatively small increases in related costs.

The Board declared a quarterly dividend of US$0.12 per share (representing US$0.48 per annum), payable on September 30, 2015 to shareholders of record as at the close of business on August 31, 2015.

Brookfield Asset Management Inc. is a global alternative asset manager with over $200 billion in assets under management. The company has more than a 100-year history of owning and operating assets with a focus on property, renewable energy, infrastructure and private equity. Brookfield offers a range of public and private investment products and services, and is co-listed on the New York, Toronto and Euronext stock exchanges under the symbol BAM, BAM.A and BAMA, respectively. For more information, please visit our website at www.brookfield.com.

Sources: nasdaq, www.brookfield.com

 

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Amgen Inc. reported positive quarterly results.

Amgen Inc. (NASDAW: AMGN) reported positive Q2 results on June 30, 2015. Total revenue increased by 4% to $5.4 billion and EPS by 8% to 2.57.

The company generated $2.7 billion of free cash flow as compared to $2.1 billion for the same period in 2014.

Adjusted net income grew by aprox. 8% to $1.9 billion as compared to $1.8 billion for same Q2 last year.

Second Quarter 2015 GAAP EPS Increased 7 Percent to $2.15. 2015 Total Revenues and Adjusted EPS Guidance Increased to $21.1-$21.4 Billion and $9.55-$9.80, Respectively

 

Year-over-Year
$Millions, except EPS and percentages Q2 ’15 Q2 ’14 YOY Δ
Total Revenues $ 5,370 $ 5,180 4%
Adjusted Operating Income $ 2,551 $ 2,319 10%
Adjusted Net Income $ 1,977 $ 1,823 8%
Adjusted EPS $   2.57 $   2.37 8%
GAAP Operating Income $ 2,076 $ 1,902 9%
GAAP Net Income $ 1,653 $ 1,547 7%
GAAP EPS $   2.15 $   2.01 7%

 

“Focused execution with our growth products drove record revenues in the second quarter, and expense discipline further leveraged earnings and our ability to invest in new and forthcoming launches,” said Robert A. Bradway, chairman and chief executive officer.

AMGEN Press release

Amgen Inc. (Amgen) is a biotechnology company. The Company is engaged in discovering, developing, manufacturing and delivering human therapeutics.

sources: nasdaq, www.amgen.com

 

 

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Waters Corporation posted positive quarterly results.

Waters corporation (NYSE: WAT) posted increased EPS of 1.27 for Q2 2015 compared to 1.13 for the same quarter last year. Non-GAAP basis EPS reported 8% increase to 1.32 as compared to 1.22 for same quarter last year.

Sales grow by 3% to $495 million as compared to $482 million in Q2 2014. Due to foreign currency fluctations sales numbers were reduced by 7%.

Commenting on the quarter, Douglas A. Berthiaume, Chairman, President, and Chief Executive Officer, said, “Our strong performance in the second quarter and first half of 2015 demonstrates the power of our technology-focused strategy and commitment to customer support. It also showcases our ability to continuously bring new innovations into the market while maintaining strong margins and strong free cash flow.”

 

Waters Corporation, founded in 1958 by James L. Waters and headquartered in Milford, Massachusetts, U.S.A., is the world’s leading supplier of ultra performance liquid chromatography, high performance liquid chromatography, mass spectrometry, thermal analysis and rheology instrumentation and consumables. Around the world, Waters products are used by pharmaceutical, biotechnology, industrial, university, and government research & development, quality assurance, and environmental testing laboratories. For these customers, we provide technology that gives scientists fundamental data on the composition of natural products and synthetic chemical mixtures and the physical properties of materials.

 

Sources: nasdaq, waters.com – corporate website.

 

 

 

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Yelp poor quarterly reports plunged its stock to yearly lowest…

On Tuesday, July 28, 2015 Yelp Inc. (Nasdaq: YELP) reported negative EPS of (0.02) with a quarterly loss of $1.3 million. The company declared profit of $2.3 million with EPS of 0.09 last year for same quarter.

YELP stock touched 53 weeks low on Wednesday morning trading session.

Company reported roughly 3% declination in unique visitors as compared to same quarter last year. Total revenue reported was $133 million as compared to $88.8 million for same quarter last year.

sources: nasdaq, yelp.com/(investors relations)

 

 

 

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Electronics for Imaging ( EFI ) posts record Q2 earnings…

Electronics for Imaging (NASDAQ: EFII), a provider of customer focused digital printing solutions, posted record earnings for quarter ended on July 20, 2015.

The company reported second quarter record revenue of $207 million up by 5% compared to previous quarter with 0.32 EPS which is 0.01 higher than previous quarter.

Non-GAAP net income was $22.9 million and GAAP net income was $7.7 million.

For six months ended in June 2015, company reported 4% year-over-year record revenue of $397.3 million as compared to $381 million for the same time in 2014.

Cash flow from operating activities was reported to be $25 million for the quarter.

46% revenu came from inkjet business, 16% from software and 38% comes from Fiery business segments. America region contributed 54% towards totoal revenue, 32% came from EMEA, and 14% came from APAC.

Company reported a loss of (0.03) NON-GAAP EPS due to currency fluctations.

sources:
nasdaq, efi.com

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NuStar Energy Q2 Earnings fall below the analyst expectations

On July 24, NuStar Energy, a St. Antonio based company reported weaker earnings of $570.5 million below the last year earnings of $749.8 million.

The company reported EPS 0.54 which is 4 cents lower than last year’s EPS of 0.58.

 

 

Sources: Nasdaq.

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Recommendations – June 2016

EQUITIES

  1. TSX: CM (CIBC, Canadian Imperial Bank of Commerce)
  2. NASDAQ: AAPL (Apple Inc.)
  3. NASDAQ: ATVI (Activision Blizzard Inc.)
  4. NYSE: AXP (American Express)
  5. NYSE: MA (Master Card Inc.)
  6. NASDAQ: SNPS (Synopsys)
  7. TSX: VSN (Veresen Inc.)
  8. HKG: 0215 (Hutchison Telecommunications HK Hld Ltd.)
  9. HKG:0043 (C. P. Pokphand Co. Ltd.) – BUY/HOLD
  10. HKG:1288 (Agricultural Bank of China Ltd.)

FOREX

  1. CHF (Swiss Frank) – Buy
  2. USD (US Dollar) – Buy
  3. EURO (Euro) – Buy

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Booming Toronto’s Real Estate – is it a signal before storm or still long way to go?

What do you think?

Since last 5 years Toronto’s real estate is booming to its new heights. Average house cost crossed a million dollar mark!! Not everyone can afford to buy it. What is means? Is Toronto going taking the similar direction as New York took is 2008 and suffered a distarious storm of property market burst?

What do you think?

There are couple of points worth thinking about the biggest city in Canada, Toronto is that it is the home to many immigrants from all over the world and consistently attracted people from across the globe to make this beautiful city their home since over a decade. Toronto is ranked in top five cities in the world to live in as well. Generous Chienes money keep flowing in this sity. Many Chinese immigrants came here invested in million in properties which is one the reason that property market went too up. And year by year demand of luxurius homes is increasing. Many surveys done by different agencies says this fact. But till when Chinese money will flow in?

Right now government policies are such that many Chinese want to leave china and they look for better place to immigrate. Canada comes first better choice. Canada has long history of Chinese immigrants as well. Not only that many of Chinese origin people have significently contributed to Canadian economy, started companies (for example one of big company ATI technologies, acquired by AMD in 2003), provided jobs to many people. THis is all a good sign. However the original question remains the same – till when Chinese money will flow?

I guess, it depends on Chinese government policies. If Chinese government loosen up and provide worth reasons to stay in China. If quality of life improves and people get or fell almost smililar way of living as they get in Canada, I gess that would be the tipping point for Chinese flow. But when? I think it is very hard to say while I am sitting here in Toronto and do not know much about what is currently happening in China. But based on my insight, I may say that, it might take a very long time.

However the scenaios may change a bit – instead of investing in high cost houses, chinese buyers may want to invest in condominiums or alternative mode of investments. This will impact housing prices and prices may drop down.

Nevertheless condos have their own problems and houses have their own. It depends how people think. If we see the housing market in Hong-King for example, the onebedroom condo which was about 100K ten years ago, now it is worth over one million!

Similar things might happen in Toronto too. Another thing to think about that the supply of condos is more that its current demand in Toronto area which says as per economic theory that prices will drop.

What do you think?

Please leave your comments and engage in discussions.

Have a cheerful day!

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Oil prices, what is happening…

Since many weeks, oil prices are falling. Everyone is eagerly watching market and some are in panic for these events specially in countries where economy is based on natural resources e.g. Canada. In Canada this year so far many have lost their job and specially Alberta has suffered a lot due to dip in oil prices. But, there is an interesting question what may be the bottom of oil price?

Some people believe that it has reached bottom but some do not and believe that it might hit $12! In my opinion, oil might go down as there are political disturbance in European region specially Russia, Iran and Middle East. These countries have power to change the oil prices and one of the major reason why oil went down too much low because of excess supply of crude oil from these countries at lower prices.

Crude oil has been declined more than 50% in last one year with very sharp decline in last 8 months. What it means? Is it an indication for global economy slowdown? There are many such questions arises.

We need to consider what drives the oil prices beyond supply and demand. Let’s see who are major producers of oil – Saudi, Iran, Russia, and Canada. USA was mainly consumer and was importing oil but in recently it is becoming oil producer as well. So in general it can be think of that one of the biggest buyer is turning into a seller. What is gonna happen to commodity? simple, less demand and more supply driving prices lower. But it does not mean that it is indication of global slowdown. However, it needs to consider a major impact for global economy due to oil/energy.

Second point is that demand in China for energy increasing but is that significant increase to cover up demand due to USA? It is difficult to say at this point. However if demand for energy keep soaring in China and other Asian countries, it may lead oil prices to new heights in coming future. Various economic sources say that Chinese economy is slowing down. Keeping this fact in mind, one should not be very optimistic for oil prices to boost up in near future.

One also need to watch out political changes happening which indirectly may affect oil production in Saudi Arabia which is world’s largest oil producer with the capacity to pump more than 12 million barrels of crude oil if needed.

China, Japan and South Korea are world’s huge importers of oil. If there is even slight drop in their import e.g. 1%, it will save billions of dollars on their balance sheet. Japan is struggling with their trade deficit already.

From an academic view, market is solving demand and supply equation in new ways. There is more oil coming into the market then its demand due to oil production in USA, coming back of Libyan oil production after Quaddfi turmoil.

In simple terms, global political disturbances have significant power to change oil demand and supply equation which is one of the major point in oil market ups and down.

What do you think?

– hr

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What is happening with Oi telecom (NYSE: OIBR)

There is so much going on with this stock and recently this company is in picture with very high volume and too much volatility concerned with its future. We are actively watching this stock and recent news related to this company since many months now. Here are some thoughts:

First of all we need to understand the telecom market in Brazil. Oi is the third largest telecom company in Brazil and south America. Oi was formed when government decided to merge state owned smaller telecom companies during privatization of Brazil telecommunications system. Oi brands include: Oi Fixo (fixed telephone landline services), Oi Movil (mobile services), Oi Velox (ADSL 3G), Oi Internet (ISP), Oi Wi-Fi, Oi TV, Oi VOIP. Oi acquired Portugal telecom in 2013 and as it turn out that it was not a very good deal financially. Not every company is successful in mergers and acquisitions specially when the sold out company does not clearly discloses it’s liabilities. Similar things happened with this merger. Portugal telecom lost in billions due to its bad bet to acquire another company. This fact was it came in news was hidden from Oi officers and they did not take this into account when making offer. The result is company had to suffer financially. Second, there were political disturbances in Brazil which increased pain for the company. As it happens people take panic and start selling. The end result was that stock fall down beyond expectations.

However, we believe that Oi is survivor. As it is indicated by company management in recent months that they are aggressively looking to gain more market share and attempting to acquire other companies. For some reason their deal to acquire assets of Italian telecom company did not go well. That’s all right. Some other opportunity will come along. It does not mean that people start taking panic and loose trust in company. As we know that company is taking all necessary steps including reorganization to make sure that they want to be on profitable track again. We believe in Oi! Its just time and very soon we hope that stock will hit back to its peaks.

Now, lets see what consumers say. We have done some research and found that their customer service is excellent which is a good factor to attract more and more consumers and they also have very competitive rates for their services. The Brazilian and Portuguese operations continued to add total subscribers with approximate 75 million in Brazil and 13.1 million in Portugal till to date of writing. There may be some competition from GVT now specially when it acquired assets of Italian company Telefonica. However this is not to be take too much to worry as Oi has deeper market penetration and user support. It will take more time to get GVT complete. The only worry for Oi is its liabilities. Oi management is doing all their best to Oi’s debt. Due to bad financial deal of PT telecom, Oi seem to be struggling for now in terms of finances. WE also have to look another factor that there may be some possibility that other telecom company may buy PT assets and repay back PT’s debt. If that happens then who knows within days Oi stock bumps up to its highest. Think about it!

Now let’s see at financials of the company. Oi’s current market cap is about 5B USD, EBTID margin 27.94, ROE 11.9. There can be upward trend found in total revenue in last 3 years. The profit margin is on declining trend. That is because of company is buying other companies and some bad debts. Net income growth is last 3 years is about 14% and on upward trend. Total equity is almost unchanged since last three years. Since there are long term debts which can be a risk. Company’s debt to asset ratio is about 50 percent which is a sign of worry. However as we said earlier some bad decision company had taken recently which is penalizing balance sheet. Nevertheless Pt deal was not that bad either. It added more customers to company’s existing customers base. And sooner or later company will benefit financially because of more subscribers. Company’s cash flow is in good conditions for next 3 years and by that time it will accumulate more revenue to pay back its long term debts.

oibr-chart-balancesheet oibr-chart-cashflow oibr-chart-income

(charts courtesy google finance)

In Brazil, Oi now has more that 18 million lines in service making it the largest fixed line provider in Brazil. Its wireless operation, Oi movil has more than 50 million subscriber and continues adding more customers and Oi is the fourth largest cellular provider with 18% market share.

A final note, since company has a very large base, any company who wants to strengthen their presence in Brazil and South America with money on hand may be very much interested in buying out Oi telecom if Oi is not able to pay back it’s liabilities, for example Amêrica Môvil.

We recommend to buy this stock (NYSE: OIBR) and hold it!!

Hope you have enjoyed our two cents. Do not forget to leave your comments 🙂

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American Apparel Inc. (NYSEMKT: APP) stock future outlook?

Since last few weeks American Apparel Inc. (NYSEMKT: APP) is in news and one can see average trading volume is in the range of ~5 million!!

There is a lot going on behind the scene. One can see  -20% to +20 fluctuations in stock price just because of some market news. Last week board of APP fired its founder and CEO. There is certainly much going on in this company. Let’s see what it means from stock perspective.

In Dec 2007, APP stock was at its peak trading at ~ US $15. Since Jan 2008, it started declining and never got a chance to cross even $5 mark. APP went into loss and to keep running the company company had to take debt. Some long term debts are going to mature very soon and in fact one lender Lion’s capital gave a kind of hard notice to repay back. Due to its brand and good will, APP attracted some foreign investors who trusted in APP brand and invested their capital in the company. Personally I think, APP brand is unique and I find APP has a quality as compared to its competitors. I like the designer cloths by APP and most importantly APP supports “no sweat shop”. Ethically APP is doing right. What is the point to support the system where workers are exploited whether it is in America or other pat of the world. Just think about it? Just wear the shoe of a worker who even does not get 50 cents a day? Is it ethical?

However many clothing companies which include very large corporations do not think this way. I think they are promoting the system where wealthy individuals exploit cheap labor in Asian countries. Also, one can see the quality of cloths manufactured in those sweat shops. These cloths do not have any quality!  these cloths are like use and throw. On one wash, their color fades away, cloths looks too dirty and old that its hard to wear.

But lets focus our attention to future outlook of APP. There had been some mistakes done by APP’s ex-CEO in past which lead company into nearly bankruptcy territoriality. However its nothing to worry about it now. We believe that new management will work on to strengthen APP’s balance sheet. In last quarter, APP made significant profit with a revenue of aprox. 139 million and sales growth of ~2.5%. We think this trend will keep going forward for APP. APP has significant high beta but need to consider that in the hands of new management there are better chance that APP financial condition will improve.

APP ex-CEO has a very eye for design but he may not be good in terms of finances. But new management will focus on financial management. We think APP stock is a long term bet. There are short term bullish kind of behavior of APP stock but one needs to be patient enough and have faith in APP brand.

(P.S. image courtesy from yahoo finance)

Let’s know what do you think. Your comments are most welcome!

Have a cheerful day!

-hr

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