WebMD Cuts Through Our Fair Value Estimate; Falls Almost 30% Today
January 10, 2012
Please click on the link below to view our 16-page equity report on WebMD (WBMD): /20110924_2
Alcoa Posts Weak Fourth-Quarter Results, Will Focus on Preserving Cash Balance in 2012
January 10, 2012
Similar to the third quarter, Alcoa (AA) kicked off fourth-quarter earnings season with a wimper. The aluminum giant posted a fourth-quarter loss on charges associated with cutting high-cost smelting capacity, lower aluminum prices, and general market weakness. We continue to be comfortable with our fair value estimate and do not expect to make any changes to it at this time. Revenue fell 7% sequentially thanks to weakness in Europe and weak alumina and aluminum pricing, but increased 6% from the same period a year ago. Revenues in packaging, industrial products, and building and construction each fell at a mid-to high-teens pace on a sequential basis, with only the aerospace and industrial gas turbine markets revealing continued growth. On a year-over-year
Despite Market Uncertainty, Our Best Ideas Portfolio Continues to Widen Outperformance
January 9, 2012
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Stick to the Smoothies, Not the Stock with Jamba
January 9, 2012
Jamba (JMBA) is one of the largest smoothie and healthy fast-serve chains in the United States. However, the company, better known as Jamba Juice, could quite possibly be worthless. Though we see the company’s operations slowly improving, we don’t think the company makes a compelling investment at this time. Massive growth potential Undoubtedly, US consumers seem to be turning towards more health-conscious offerings and lifestyles, as evident from the big booms in running and yoga (NKE, LULU), as well as superior performance from healthy fast-food chains like Panera (PNRA) and Chipotle (CMG). Even McDonald’s (MCD) has stepped up to the plate with better tasting salads and brand-new smoothie offerings. We think Jamba could stand to benefit from these new trends.
Macy’s Hits Multi-Year High; Continues to Converge to Our $42 Fair Value Estimate
January 6, 2012
Please click the link below to view our 16-page equity initiation report on Macy’s (M): /20111011_1
Alcoa Cuts Smelter Capacity on Reduced Aluminum Prices
January 6, 2012
On Friday, aluminum-giant Alcoa (AA) announced that it would reduce system capacity by 12% to lower its cost structure in the wake of lower aluminum prices. We’re not surprised by the news as the firm’s third-quarter performance (click here), released in October, was among the worst reports during earnings season. Our fair value estimate remains unchanged for Alcoa. Specifically, Alcoa will curtail roughly 531,000 metric tons of global smelting capacity via permanent closure of its smelter in Alcoa, Tennessee, and two of its idled potlines in Rockdale, Texas. In additional to these closures (which account for about 291,000 metric tons), the firm will curtail an additional 240,000 metric tons in the “near future.” Aluminum prices have dropped almost 30% since
A Name for Your Radar: Collector’s Universe (CLCT)
January 4, 2012
At Valuentum, we continue to search for undervalued, technically-attractive companies with safe and growing dividend yields. We use the Valuentum Dividend Cushion as a way to determine how safe a firm’s dividend is, using forward-looking forecasts rather than backward looking metrics, and we employ our Valuentum Buying Index to pinpoint the best entry and exit points on a stock. We stumbled across Collector’s Universe (CLCT) in the past and decided to revisit the name today due to its compelling dividend yield. The stock currently trades at roughly $15 per share, with a dividend yield of nearly 9%. When you consider the relatively mediocre performance of most markets across the globe, a 9% yield seems tempting. However tempting the yield seems,
Sears Converges to Our $36 Fair Value Estimate; Shares Off Nearly 25% Today
December 27, 2011
Sears announced Tuesday that it would close between 100 and 200 stores (both of the Sears and Kmart variety) in an effort to shore up its finances as it struggles to compete with big-box retailers like Lowes (LOW), Home Depot (HD), Wal-Mart (WMT), and Target (TGT). The troubled retailer also said that comparable same-store-sales continue to fall and that its earnings for the fourth-quarter would come in at less than half of last-year’s levels. Valuentum subscribers were well aware of Sears’ overvaluation as the firm now trades in-line with our $36 fair value estimate, after falling by roughly half since we initiated coverage of the retailer in early October. Please click on the link below to view our initiation equity report on Sears Holdings (SHLD): << Our 16-page Report
Yahoo Mulls Asian Asset Swap; Risk Remains to the Downside
December 23, 2011
Yahoo (YHOO), beleaguered with poor performance from its domestic operations, is reportedly looking to shed some of its Asian assets in order to help prop up its stock in the midst of a massive price slide in the past few years (the firm had been trading north of $30 per share in 2007 and now is in the mid-teens). Though the news of an Asian-asset sale/spin-off continues to make headlines, we remain unimpressed by Yahoo’s core competitive position relative to Google (GOOG) and Facebook and think the proposed complex transaction related to its Asian assets is but a temporary, short-term cash boost and not a permanent fix to the firm’s structural problems. We are sticking with our long-term fair value
Oracle Issues Poor Fiscal Second-Quarter Results; Customers Delay Purchases
December 21, 2011
Oracle (ORCL) posted disappointing fiscal second-quarter results that sent the shares tumbling today. The news follows Red Hat’s (RHT) lower-than-expected outlook earlier this week and casts a shadow over the strength of the software space during the calendar fourth quarter and into next year. Though we will be revisiting our $38 per share fair value estimate for Oracle based on management’s poor outlook, we don’t expect a material change it. Oracle’s revenue jumped 2% as growth in software license sales and software license updates/product support revenues offset nearly a 14% decline in hardware systems products revenues, the latter caused by a transition to T4 processor-based products. The company noted that new software license revenue was impacted by “additional approvals required
