American Airlines (AMR) Fell 30% on Bankruptcy Concerns; Valuentum’s Subscribers Were Expecting Such a Fall
October 3, 2011
Please click on the link below to read the relevant research piece on AMR, the parent of American Airlines: /20110608
5 Significantly Undervalued Stocks
October 2, 2011
We reveal below five significantly undervalued stocks based on our DCF process, ranked by Price to Fair Value (current stock price divided by the firm’s intrinsic worth). 5 Undervalued Stocks Ancestry.com (ACOM)Ancestry.com is debt-free (read negligible financial bankruptcy risk), and as of the end of its second-quarter, held over $70 million in cash on its balance sheet. At 19x next year’s consensus earnings estimates of about $1.50, it’s trading just north of a market multiple on 30%-40% top-line growth and earnings that are doubling (look at the chart above — we’re not kidding). And with the release of the 1940 census in April 2012 — the biggest catalyst genealogical research has seen in a decade, we fully expect consensus numbers to
Micron Posts Weak Fourth-Quarter Results; We Think Intel is a Better Play
September 30, 2011
Micron (MU), a maker of memory chips, reported weak fourth-quarter results (ending Sept 1) and rounded out a difficult fiscal 2011. The company put up a $0.14 net loss in the fourth quarter and posted significantly lower earnings from the prior year in this fiscal 2011 ($0.17 per share versus $$1.85 per share). Most of the weakness was driven by poor pricing from DRAM (dynamic random access memory), which pushed gross margins down to 15% in its fiscal fourth quarter from 22% in the previous sequential period. Though the firm noted a modest improvement in DRAM pricing the past few weeks, management did state that issues are demand-related versus a “rising oversupply scenario.” Revenue from sales of DRAM fell 12%
Ingersoll Rand’s Earnings Warning Just the Beginning for Industrial Names; Stick With Aerospace
September 30, 2011
On Friday, Ingersoll Rand (IR) cut its third-quarter revenue and earnings-per-share outlook to the range of $3.9 billion to $3.95 billion (was $4.05 billion to $4.15 billion) and $0.77 to $0.80 (was $0.85 to $0.95), respectively. Perhaps unsurprisingly, the cause was due to its consumer-related business (residential HVAC, golf and residential security) and poor commercial security activity. Though it noted that transport, industrial and commercial HVAC revenues remained strong, such strength offers little consolation to investors, given the magnitude of the outlook revision. Further, Ingersoll noted that third-quarter operating income was hurt by the lower volumes and an unfavorable product mix in the residential and security segments. And topping things off, the firm indicated the strengthening of the dollar against
Chinese Stocks Take a Pounding
September 30, 2011
The DOJ is stepping in to investigate accounting irregularities at US-listed Chinese firms. Though we fall short of concluding that any wrongdoing has occurred across our Chinese equity coverage universe, we think such negative news adds a layer of uncertainty to the group that won’t be assuaged anytime soon. The Guardian reported: “There are parts of the Justice Department that are actively engaged in this area,” said Robert Khuzami, director of enforcement at the U.S. Securities and Exchange Commission. “I think that you will see greater (Department of Justice) involvement as time goes on,” said Khuzami, a former federal prosecutor himself, when asked why no criminal charges have yet been filed in the massive Chinese accounting scandal. “Not having proper accounting
AMD Slashes Outlook on Supply Disruptions, Not PC Weakness; Maintaining Our Fair Value
September 30, 2011
Advanced Micro Devices (AMD), on Wednesday, slashed its revenue growth outlook for its third quarter to an increase of 4% to 6% from the range of 8% to 12% previously. The chip maker also cut its expected gross margin for the period to 44% to 45% from 47% before. The company noted some problems regarding yield and manufacturing issues at one of its German foundry partners (Globalfoundries Inc.). Given that most of the issues arose from complexities related to the use of common tools, we’re not sure that we can take such an explanation at face value. It’s likely that this pre-announcement by AMD may be setting up for a further disappointment in the back half of this year, particularly
Sprint: A Bet on Clearwire and Lightsquared as Much as the Actual Company
September 29, 2011
Sprint (S) shareholders have been on an absolute rollercoaster this year. For a brief period of time, a strong first quarter propelled shares to over $6, but the broader market sell-off and a lack of profitability brought shares down to the $3 range where they hover now. There was a small pop when the rumor broke that they would begin carrying Apple’s (AAPL) i-Phone 5 in mid-October, but shares came tumbling back down. Ultimately, Sprint is the smallest of the three major national carriers, both by number of customers and actual service coverage. With the ATT (T) – T-Mobile deal still in limbo, Sprint could end up being the only low-cost provider of nationwide service. Or, they won’t be. Either way,
Walgreens’ Strong Fourth-Quarter Report Overshadowed By Fall Out with Express Scripts
September 28, 2011
Walgreens (WAG) reported strong fiscal fourth-quarter results Tuesday that showed solid revenue and earnings expansion. However, the lack of progress on key contract negotiations with pharmacy benefit manager, Express Scripts (ESRX) left us a bit disappointed overall, to say the least. Nonetheless, our $34 fair value estimate for Walgreens remains unchanged at this time. Walgreens’ fourth-quarter sales advanced 6.5% thanks to a 4.4% increase in comps (stores open for more than a year), while earnings per share increased over 16%, excluding an after-tax gain associated with the sale of its pharmacy benefits management business (adjusted net earnings increased 10.1% during the period). Prescription sales (nearly two thirds of revenue) jumped 5.7% during the quarter, as the number of prescriptions filled
We Stand By Our Call on Ancestry.com
September 27, 2011
This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/295916-in-defense-of-ancestry-coms-stock-price-slide Over the past few weeks, Ancestry.com has continued to take some major hits as short sellers look for confirming evidence of their thesis. We noted the bias of the investment community against the online geneological research provider in one of our previous posts here. Frankly, short sellers often take at face value a small portion of the company’s business metrics, in this case churn, and build up a case against the entire firm. We don’t think this is justified and maintain the firm is worth north of $60 per share. For starters, we outlined our discussion regarding the short thesis in a previous note here, and welcome interested readers to take
The 5 Levels of Leadership: Proven Steps to Maximize Your Potential
September 24, 2011
Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: The 5 Levels of Leadership: Proven Steps to Maximize Your Potential By John C. Maxwell. Center Street, 2011. 304 p. ISBN 978-1-5999-5365-6. Book Release Date: October 4, 2011 Maxwell (leadership expert and New York Times bestselling author) further explores his leadership principles in this latest book. Maxwell’s belief is that leadership is about influence, and that “if people can increase their influence with others, they can lead more effectively.” Taking this into consideration, Maxwell
