Brian Nelson

We Take a Deep Dive into the Future Prospects of Best Idea Google

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Before the meteoric rise in the price of Apple (click ticker for report: ), Google (click ticker for report: ) stole most of the tech-stock headlines and, according to some, was pretty much a sure bet to become a $1,000 stock. However, looking under the hood, the company has had some turmoil during the past few years. In addition to bringing back founder Sergey Brin as the CEO, the company has created the world’s most successful mobile operating system to date (Android), a social network with over 100 million users, and failed to purchase Groupon (click ticker for report: ), which at the present seems like it was a blessing. Additionally, the company is working on cars that drive themselves, shuttered Google Wave … Read more

Are Apple’s Fundamentals Deteriorating?

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Given Apple’s (click ticker report: ) recent share price performance during the past 3 months, we’ve heard whispers questioning the strength of the company’s fundamentals. It first started with the Google Maps (click ticker for report: ) debacle when somehow replacing the default maps program on the iPhone with an inferior product was going to sink the entire company. Then fears of the iPad Mini–either not selling or cannibalizing sales of the full-sized iPad and subsequently crippling margins–became the next fear. Apple’s Fundamentals Remain Sound However, there is no evidence of a product slowdown at Apple. The iPad Mini sold out its first run in a short amount of time, and data over the Black Friday weekend showed that the iPad … Read more

Phillips 66 Joins the MLP Boom

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Early Thursday morning, refiner and chemical producer Phillips 66 (click ticker for report: ) announced its capital-spending intention for 2013, which includes $3.7 billion in capital investment—up 6% compared to 2012. The firm also announced ambitions to raise $400 million for a minority stake in a new master limited partnership (MLP) IPO, which it anticipates will include transportation assets like pipelines, rail cars, as well as NGL products for transportation. Phillips 66 described the MLP as an opportunity to capitalize on the “North American oil and gas revolution.” MLPs tend to have favorable tax treatment for oil-transportation business models, and we think the new Phillips 66 MLP will be a unique play on one of the best-performing refiners. The MLP … Read more

Dollar General Blames the Consumer for Weak Guidance

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Tuesday morning, value chain Dollar General (click ticker for report: ) reported stronger than expected results for its third quarter. Revenue rose 10% year-over-year to $4 billion, roughly in-line with consensus expectations. Earnings, adjusted for a one-time expense, jumped 26% year-over-year to $0.63 per share. During the third quarter, same-store sales grew 4% year-over-year, down compared to the second quarter, but still a fairly strong growth rate, in our view. The firm’s gross margin fell 10 basis points to 30.9%, though its operating margin increased 50 basis points to 9.1% due to strong cost containment. While the third quarter was relatively strong, management was cautious about the rest of the year. The company narrowed its earnings-per-share range to $2.82-$2.85 from … Read more

Delta Buys 49% of Virgin Atlantic Airways

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As we touched on last week, Delta Airlines (click ticker for report: ) acquired a 49% stake in Virgin Atlantic Airways from Singapore Airlines for approximately $360 million. The deal seems to make sense for both parties, as it gives Virgin better access on US routes and Delta access to London’s Heathrow airport. The valuation, a haircut from what Singapore paid, doesn’t seem unreasonable, in our view. Given Delta’s semi-decent balance sheet, we doubt the deal will materially impact financial standing. One would think the market really likes the deal, given that shares of Delta are up more than 6%. However, we believe the airline market is rallying on reports that the rumored merger between AMR Corp (American Airlines) and US … Read more

Opportunity Ripens for Entry Point in EDAC Tech

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EDAC Tech (EDAC) has been one of our best performing ideas since the inception of our Best Ideas portfolio. We first added the company to our Best Ideas portfolio when it was trading just above $4 per share, and we now peg its fair value north of $20 per share. The stock has been under pressure as of late, and we wanted to bring one of our very best ideas to light on share weakness. Please click the image below to download the firm’s 16-page equity report.  

Inside AbbVie: A Look at a New Pharmaceutical Giant

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On January 1, medical giant Abbott (click ticker for report: ) will start trading as two firms, Abbott and AbbVie. The companies will form two distinct, publicly-traded businesses, allowing the market to value each company separately and uniquely. Pharmaceuticals will be housed in AbbVie, while medical diagnostics, baby food, and generic drugs will remain a part of Abbott. Let’s first dig into AbbVie. We’ll have a follow up article on the new Abbott in coming days. AbbVie Led by Humira Headlining the new pharmaceuticals business is the blockbuster drug Humira, which had over $7.9 billion in sales in 2011 alone. Though originally approved for rheumatoid arthritis in 2003, the drug has been approved to treat Crohn’s disease, plaque psoriasis, ulcerative … Read more