Debt: the First 5,000 Years
June 19, 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: Debt: the First 5,000 Years By David Graeber. Melville House Publishing, 2011. 544 p. ISBN 978-1-933633-86-2.Book Release Date: July 12, 2011 Graeber (Reader in the Department of Anthropology at Goldsmiths, University of London) takes a multi-pronged approach to exploring debt, looking at both the moral and economic underpinnings of debt as well as providing anthropological evidence of the long history of debt and credit. He refutes the generally accepted history of money, which posits that barter systems led
Word of Caution: Boeing’s Narrowbody Build Rate Is Unsustainable
June 19, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable Competition in the narrowbody market continues to heat up, and recent events only support our view that the large commercial jet-making duopoly of Boeing (BA) and Airbus will be shattered in coming years. First, last Wednesday, Boeing released plans to increase production of its 737 workhorse to 42 jets per month by the first half of 2014. We view this strictly as a competitive response to clear its massive narrowbody backlog in the face of firming global competition, not as an indication of incremental demand for Boeing’s soon-to-be-legacy 737NG (it will be replaced with either a re-engined model or a brand new build in coming years). Frequent readers were aware
A Serious Blow to Boeing is Looming
June 18, 2011
This article was referenced on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable As competition in the narrowbody market heats up before the Paris Air Show next week, Boeing appears to be losing favor with two of its best customers, Southwest and Ryanair. For those unfamiliar with Southwest’s and Ryanair’s fleets, they are all-Boeing 737 airplanes, and recent actions by these two carriers give us pause, especially as Boeing drags its feet on deciding what to do next with its workhorse 737. As Bloomberg reported some time ago, Southwest’s CEO Gary Kelly is not all that thrilled by Boeing’s delay in responding to Airbus’ A320neo and the CSeries offered by Bombardier–both planes offering cost advantages better than the 737NG in their corresponding seat
Apple Priced for Significantly Slower Growth
June 17, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275395-apple-priced-for-significantly-slower-growth At Valuentum, we often use a discounted cash-flow model as a means to back into the current share price of firms in order to ascertain whether the market is unfairly pricing their stock relative to reasonable long-term growth and profitability assumptions. In Apple’s case, it appears that the market is certainly concerned about future growth rates, almost to the tune of merely expecting inflation-like expansion beginning toward the middle of this decade. Although in the land of technology, competition adapts quickly and a few years from now can be viewed as the distant future, Apple represents a compelling risk-reward opportunity at these levels based on our analysis. Often, evaluating a
Ageing Fleets: Which Airline Has the Highest Costs?
June 9, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273990-aging-fleets-which-airline-has-the-highest-costs With jet fuel once again on the rise and the economic environment becoming even more uncertain, it’s informative for airline stock speculators to know which carriers have the oldest fleets. The age (and model) of an aircraft could have large implications on fuel efficiency and ultimately the airline’s cost structure, which becomes absolutely paramount under poor economic conditions. Let’s evaluate the fleets of the Big Four legacy carriers in the U.S. US Airways (LCC) As of the end of last year, US Airways was flying nearly 60 Boeing 737 Classics and 10 legacy 767s that were on average about 21 years old. These Classics and legacy 767s are roughly 15%-20%
9 Aerospace Suppliers With Attractive PEG Ratios
June 8, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273893-9-aerospace-suppliers-with-attractive-peg-ratios Although there is no substitute for assessing a firm’s valuation on a discounted cash-flow basis, evaluating a firm’s value through its PEG ratio may be the next-best option. Provided in this article is an aerospace supplier cheat sheet that gives a brief description, the market cap, consensus forecasts, long-term growth estimates, and the corresponding PEG ratios for suppliers within the commercial aerospace chain. This list should come in handy as commercial aircraft deliveries soar in coming years. (Click charts to expand) Based on the cheat sheet below, there are nine aerospace suppliers that currently garner a PEG ratio below 1, derived by taking the price-to-earnings ratio based on next year’s
Boeing Faces Challenges in the Narrowbody Market
June 8, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273827-boeing-facing-challenges-in-narrowbody-market Aerospace executives know all too well of the difficulties and complexity of developing brand new planes. Investors have learned that aerospace management is often too optimistic in setting entry-into-service dates. Readers have to look no further than the troubles and serial delays of Boeing’s 787 Dreamliner and Airbus’ A380 to get the gist of what I’m talking about. But have airline customers wised up, too? And, if so, will the perception of pursuing a brand new build to replace its 737 in 2019-2020 actually hurt Boeing and ultimately provide an advantage to Airbus’ A320neo in the 150 to 200 seat category? To the first question: absolutely. Bloomberg reported on Southwest’s (LUV)
Sorting Through the Aerospace Supply Chain
June 6, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273424-sorting-through-the-aerospace-supply-chain As outlined in the previous two editions, The Future of the Narrowbody Market and How to Play the Upswing in Commercial Aerospace, expected deliveries of commercial planes are set to advance considerably in coming years. In this third edition, let’s dig into the valuation and potential upside of Precision Castparts (PCP), one of the best long-term plays on commercial aerospace demand. We’ll also dive into an interesting small-cap play and a compelling micro-cap opportunity in the aerospace supply chain. For new readers to this series of articles and analysis, let’s briefly review the trajectory of large commercial aircraft deliveries during the next several years. Aside from the fundamental drivers (replacement planes,
Troubles Loom for Aviation Stocks
June 6, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273564-troubles-loom-for-aviation-stocks As many followers of airline equities know, rising jet fuel prices and concerns about the global economy can translate into some fairly poor performance for airline shares. Today, perhaps unsurprisingly, the International Air Transport Association (IATA) cut its profit forecast for the airline industry by more than half to just $4 billion in 2011, (down from the $8.6 billion it had estimated in March). For perspective, the industry earned $18 billion last year. This equates to roughly a 0.7% net margin and raises the probability of yet another year of airline losses. The major causes of this revision are well-known and have been in the headlines for weeks — natural
Despite High Short Interest, Ancestry.com Is Ripe for Impressive Growth
June 4, 2011
This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/272898-despite-high-short-interest-ancestry-com-is-ripe-for-impressive-growth After listening to Ancestry.com’s (ACOM) presentation and question-and-answer session at the Bank of America Merrill Lynch Technology conference Wednesday, we are reiterating my $70 fair value estimate on the firm’s shares. The call also reminded us of one of Peter Lynch’s investing principles. During most of the questions, it became readily apparent that the basic assumption is that Wall Street (defined by the moderator as those that attended the conference, or have posed questions to this particular sell-side analyst in the past) doesn’t necessarily mesh well with Ancestry.com’s demographic market and users. To some extent (not all), this may be why the firm is one of the most heavily shorted stocks on the
