Friday, August 9, 2013

Coal Keeps Its Crown... for Now

Thanks to a jump in gas prices over the past year, coal is starting to gain back some of the ground it lost to natural gas in electricity generation. Back in April of 2012, the percentages of power generation from coal and natural gas in the U.S. were both standing very close to 32%. Those power generation figures stand at 40% from coal versus 25% from natural gas as of March 2013. 

Despite the gains as of late, the long-term window for coal in the U.S. doesn't look as promising. Thanks to the large amount of coal facilities to be shut down in the next couple of years and more utility companies looking at other forms of generation, coal companies will need to look for a larger share of revenue coming from outside our borders. In this video, contributor Tyler Crowe looks at some of the trends expected to come from utility companies over the next couple of years and what coal companies are doing to take advantage of the overseas markets. 

Because exports are becoming a much bigger part of the domestic coal landscape, Peabody Energy has deals in place to get its cheaper coal from the Powder River and Illinois basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has authored a special new premium report detailing exactly why Peabody Energy is perhaps most worthy of your consideration. Don't miss out on this invaluable resource – simply click here now to claim your copy today.

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Thursday, August 8, 2013

Can James River Coal Earnings Recover?

James River Coal (NASDAQ: JRCC  ) will release its quarterly report on Friday, and the hard-hit coal producer doesn't look likely to escape the big losses that have plagued it for a long time. With analysts seeing James River Coal earnings stuck in the red for the foreseeable future, investors have to wonder how much longer the company can sustain ongoing losses of this magnitude.

James River Coal shares the same story as many of its coal-mining peers, as low natural gas prices hurt coal demand from utilities at the same time that weaker growth in emerging market nations hurt the metallurgical side of the coal business. Unlike larger companies, though, James River Coal doesn't have as many resources to weather an extended downturn in coal. Let's take an early look at what's been happening with James River Coal over the past quarter and what we're likely to see in its quarterly report.

Stats on James River Coal

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$195.07 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can James River Coal earnings ever improve?
Analysts have actually become slightly less pessimistic in recent months about the prospects for James River Coal earnings, narrowing their loss projections by $0.03 per share for the June quarter and $0.14 for the full 2013 year. But expected losses are still enormous compared to its share price, and the stock has gotten hammered, falling another 25% since early May.

Conditions in the coal market continue to be tough, but many companies are adapting to the difficult situation in the industry. Peabody Energy (NYSE: BTU  ) has benefited from its low-cost coal supplies and has taken advantage of lucrative export markets, where natural gas prices are far less competitive and coal much more popular. Peers Arch Coal (NYSE: ACI  ) and CONSOL Energy (NYSE: CNX  ) have done their best to follow Peabody's lead into the export markets, with Arch signing a deal to give it greater export capacity and CONSOL owning its own terminal in Baltimore. By contrast, James River hasn't really pursued exports as an option, leaving it much more exposed to harsher regulation and plentiful natural gas supplies.

Indeed, at this point, James River is working hard simply to keep itself afloat. In May, the stock soared after the company announced a new financing deal that involved trading out more than $243 million of existing convertible debt for $123 million in new debt. Obviously, the reduction in outstanding principal owed is valuable, but James River had to offer much higher interest rates of 10%, compared to 3.125% and 4.5% on the existing notes, and the prices at which the debt is convertible into stock are also lower. Still, the deal bought James River three extra years on some of the notes before maturity.

The big question is whether James River will see improving conditions in coal prices before its debt comes due. Metallurgical coal prices remained much higher than thermal coal, with Energy Information Administration data showing worldwide met coal export prices of about $119 per ton, compared to thermal-coal prices of just $73 per ton. A boost in steel production could send met-coal prices even higher, potentially giving James River the revenue boost it needs to get closer to profitability.

In the James River Coal earnings report, watch closely to see how the recent debt restructuring affected the company's cash situation. With consistent negative cash flow in the past couple of quarters, cash burn will be an important element in determining how long James River can wait for better future conditions.

Coal might be on the way out in the U.S., but record oil and natural gas production is revolutionizing the United States' energy position. Read the Motley Fool's comprehensive look at three energy companies set to soar during this transformation in the energy industry in our special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Click here to add James River Coal to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Wednesday, August 7, 2013

1 Thing to Watch at Omnicom Group

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Omnicom Group (NYSE: OMC  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Omnicom Group generated $1,023.2 million cash while it booked net income of $998.8 million. That means it turned 7.1% of its revenue into FCF. That sounds OK.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Omnicom Group look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 10.8% of operating cash flow coming from questionable sources, Omnicom Group investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 9.5% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 37.9% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

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We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Omnicom Group to My Watchlist.

These 3 Stocks Are Pushing the Dow to Finish Higher

The stock market is slipping after the Organization for Economic Cooperation and Development cut its outlook for global growth. As of 1:25 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 123 points, or 0.8%, to 15,287. The S&P 500 (SNPINDEX: ^GSPC  ) is down 0.78% to 1,647.

There were no U.S. economic releases today. The OECD now believes global growth will be 3.1% in 2013, down from its earlier forecast of 3.4%. It revised its 2014 growth forecast downward from 4.2% to 4%. The biggest reasons for the drop are the eurozone and Chinese economies. The OECD now expects the eurozone to shrink by 0.6% in 2013, worse than its previous prediction of a 0.1% contraction. In China, the OECD expects the economy to grow just 7.8% this year, down from a previous projection of an 8.5% gain. As many U.S. companies now get nearly 50% of their revenue from abroad, the effects of slower global growth are quickly felt, which is why the stock market is down today.

Today's Dow leader
Today's Dow leader is Hewlett-Packard (NYSE: HPQ  ) , up 1.3% to make it one of just four Dow stocks up for the day. HP and other PC stocks got crushed in April when IDC announced that PC shipments declined year over year by 14%, the worst drop in history for the PC market. Yesterday, IDC announced that it now expects PC sales to decline by only 1.2% next year after a dismal drop of 8% this year. The company expects that sales will slow less as Microsoft makes changes to Windows 8 and stops supporting Windows XP next year, prompting companies to upgrade to Windows 8 and buy new computers at the same time.

Top Stocks To Watch For 2014

HP has been diversifying away from reliance on the PC market under the leadership of Meg Whitman, and its turnaround is slowly beginning to bear fruit: The company reported better-than-expected earnings last week on the strength of its printing and enterprise IT segments. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor detour on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

Second for the Dow today is Bank of America (NYSE: BAC  ) , up 1% after Moody's upgraded the banking system from "negative" to "stable." Later this week Bank of America goes to court over whether or not its $8.5 settlement with 22 institutional investors was reasonable. If the court decides the settlement was not appropriate, the bank could be on the hook for a larger penalty over Countrywide, as well as a long court battle.

Third for the Dow today is Cisco (NASDAQ: CSCO  ) , up almost 1%, making it a top-three Dow stock for the second day in a row. Today Cisco announced that it is acquiring JouleX for $107 million. Cisco is a serial acquirer that has fended off being disrupted by continuously making small acquisitions of promising upstarts. JouleX automates energy management for enterprise customers running large networks in an effort to "reduce energy consumption and realize cost savings." There is lots to like about Cisco, including a low valuation, a 2.9% dividend, and more than $6 per share of net cash.

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Top Safest Companies To Buy For 2014

When I wrote about investor expectations for Michael Kors (NYSE: KORS  ) earnings earlier this week, I kind of thought that simply by my acknowledging the insane strength that the company has shown thus far, it would invariably falter. That turned out to be as far from reality as possible. Kors' earnings yesterday highlighted all of the good that the designer has offered without any of the weakness.

Kors grew revenue, saw a strong spike in comparable sales, and even managed to increase its already high margins. The earnings put a nice cap on a good week for the luxury sector, and Kors investors should be happy. Shares were up more than 3% during the day, and the strength should help the company keep on running for the next fiscal year.

Making the most out of every chance
Kors' success wasn't an accident or a stroke of good weather -- it was pure planning. The earnings started out strong, with comparable sales rising 36.7% on the back of the brand's continued strength. That foot-traffic increase was then buoyed by a rise in operating income, which hit 26% on the quarter. All that trickled down to earnings per share of $0.50, which was a 124% increase from last year's fourth quarter.�

Top Safest Companies To Buy For 2014: Fluor Corporation(FLR)

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

Top Safest Companies To Buy For 2014: Under Armour Inc.(UA)

Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.

Advisors' Opinion:
  • [By Glenn]  

    Current Price: $27.27 12-month target: $37

    I see potential in opportunities for new product adjacencies, and expanding distribution worldwide. Footwear growth will continue to increase. Revenues for these products have increased over 69% in 2009. Adding to this I still see growth in Under Armour’s apparel sales, which are up 8%. Under Armor had yet to even break into the international market, which offers a plethora of new opportunities for this growing brand. I believe sales will rise drastically in 2010 driven by international sales, new women’s clothing line, and expansion within their own footwear line.
  • [By Roger]

    Under Armour (NYSE:UA), a maker and designer of apparel, footwear and accessories that target sports enthusiasts, has more than doubled in one year. But despite the advance, many research firms still have a “strong buy” recommendation on the stock. And S&P recently revised its annual target to $93.

    Technically UA has advanced on a series of stair steps, sometimes called “base moves.”? These are very bullish formations that resemble cups. UA reversed up recently following a signal from our proprietary Collins-Bollinger Reversal (CBR) indicator. If the recent pullback to its 50-day moving average (blue line) holds, then the next move up should break the prior high with a target of $85.

    Traders could take risk positions now with a target of $85 to $90. But be careful and use stop-loss orders to protect against a violent reversal, which could drop prices back to support at $62 where this volatile stock could be bought again.

  • [By Fernandez]

    Under Armour designs, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States and Canada.

    You’ve probably seen the company’s “Protect This House” or “Click-Clack” commercials, and probably seen anyone from the weekend warrior to professional sports teams wearing the company’s moisture-wicking synthetic fabrics, which are designed to keep perspiration away from the skin, and regulate body temperature regardless of weather conditions.

    I must admit for full disclosure that I am an Under Armour nut, and own about 20 pairs of their shorts, shirts and shoes.

    I can attest from personal experience as a natural bodybuilder and athlete that the Under Armour apparel are the best workout clothing I have ever worn, and they look pretty darn cool too.

    Now let me make a clear distinction between a great company, and a great stock.

    Up until recently, Under Armour was the former, but not the latter.

    It has now entered into a zone where the valuation metrics, even in the face of a consumer slowdown, is looking more and more attractive.

    In fact, Under Armour just released earnings Monday.

    They were pretty much in line with analyst’s expectations, and then Under Armour slightly lowered their forward guidance for the remainder of 2008 based on those same consumer headwinds.

    The market liked what it heard sending shares up 20% (of course, the overall market was up 10%, so…). Shares have since rebounded further are now up almost 50% from their lows just last week!

    This leads me to my investment thesis in shares of Under Armour.

    I believe that Under Armour represents one of the quintessential brands of this decade when it comes to sports apparel, the way Under Armour’s fiercest rival Nike (NYSE: NKE) dominated the 90’s.

    Until now the valuation of the company was not commensurate with the! projected profit and growth, which I thought were way too high, and still might be, along with certain inventory related problems that the company now seems to be getting a handle on.

    Still, with the spike in share price, along with the uncertainty in the market and overall economy, I feel that we will still be able to purchase shares of this great company at a great price in the near future and that we’re seeing a bit of a short squeeze in shares of Under Armour.

    Why I Like the Company: One of the quintessential brands of this decade; Valuation is reaching reasonable to “cheap” levels depending on direction of consumer market and Under Armour’s stock price; Dedicated and fully invested founder with over 77% voting power via class B shares; Improved business fundamentals via better inventory controls and operational structure, and new product offerings; Further expansion available outside the U.S.; Relatively higher margins than competition

Top 5 Growth Stocks To Watch Right Now: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors' Opinion:
  • [By ETF Authority]  

    Current Price: $47.68 12-month target: $80

    PBR plans to invest $174 billion by 2013 to support the largest oil discovery in 30 years. PetroBras has both the backing of the Brazilian government who invested over $30 billion and the Chinese private investors who have pledged over $20 billion to PBR’s discovery. Brazils government proposed to make PBR the only operator of all new offshore pre-salt oil fields yet to be exploited. PetroBras expects oil production to increased from 2.4 million barrels a day to around 5.7 million barrels a day by 2020. PBR has long-term views and have been expanding renewable energy programs such as solar, biofuel, and energy. Biofuel production is expected to increase 18% by 2013.
  • [By Dave Friedman]

    Institutional investors bought 78,663,680 shares and sold 101,125,380 shares, for a net of -22,461,700 shares. This net represents 0.23% of common shares outstanding. The number of shares outstanding is 9,872,826,100. The shares recently traded at $27.61 and the company’s market capitalization is $170,178,700,000.00. About the company: Petroleo Brasileiro S.A. – Petrobras explores for and produces oil and natural gas. The Company refines, markets, and supplies oil products. Petrobras operates oil tankers, distribution pipelines, marine, river and lake terminals, thermal power plants, fertilizer plants, and petrochemical units. The Company operates in South America and elsewhere around the world.

Top Safest Companies To Buy For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Tuesday, August 6, 2013

The Secret Government Project That Makes Disney Stock a Buy

Phil Coulson is back! Clark Gregg's scene-stealing S.H.I.E.L.D. agent headlines a forthcoming TV show called Marvel's Agents of S.H.I.E.L.D. for Walt Disney's (NYSE: DIS  ) ABC television network. Plans have been in the works since the House of Mouse signed creator Joss Whedon to a long-term contract that includes directing 2015's Avengers 2.

Coulson is an important character. He first appeared in Iron Man and remained a constant through several of the Marvel Studios films, right up until his on-screen death in Marvel's The Avengers. Fans have been mourning him ever since, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following interview with the Fool's Erin Miller.

For investors, the key is that Disney is taking the Rule Breaking step of creating a universal continuity that stretches from comic books to films to television. It's an advantage that Sony (NYSE: SNE  ) and News Corp. (NASDAQ: NWSA  ) , despite their interests in Marvel properties Spider-Man, the X-Men, and the Fantastic Four, can't touch. Look to buy shares of Disney stock on weakness, Tim says.

Do you agree? Please watch the video to get Tim's specific take, and then let us know whether you would buy, sell, or short Disney stock at current prices.

Best China Stocks To Watch Right Now

Launch your portfolio into Tomorrowland
From its vast catalog of characters to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.

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The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

DSW to Kick Stock with 2-for-1 Split

Management at footwear retailer DSW (NYSE: DSW  ) raised guidance 5.5% for the full year to $3.60 to $3.80 per share, and said it would split its Class A stock 2-for-1.

If approved by shareholders, DSW will issue one share of Class A stock for each Class A or Class B share outstanding. The split is expected to create a total of approximately 90.2 million shares, comprised of approximately 81.6 million Class A shares, which will continue to hold one vote per share, and 8.6 million Class B shares, which will hold eight votes per share, with the voting control of the Class B shareholders reduced from 65% to approximately 46% post-split.

The split was brought about as a result of second-quarter revenues jumping 9% from the year-ago period to $558 million as same-store sales rose 4.3% year over year with the anticipation they would continue to grow in the low-single-digit range.

In conjunction with the stock split, the board will also seek an amendment to allow DSW to increase the number of authorized Class A shares from 170 million to 250 million.

Headquartered inColumbus, Ohio, DSW operates 377 Designer Shoe Warehouse stores in 42 states, the District of Columbia, and Puerto Rico while also supplying footwear to 351 leased affiliated business group locations. The stock rose less than 1% today, closing at $77.56 per share.

Monday, August 5, 2013

Tesla Motors: Is It Time to Sell My First Double-Bagger?

Tesla Motors (NASDAQ: TSLA  ) reported first-quarter earnings last week, blowing away expectations and sending shares soaring. Less than four months after I first invested in this electric-car company, my shares have doubled. I'm a long-term investor, but a surge like this might be cause for concern. Should I take the Steve Miller Band's advice and "take the money and run"? Or should I listen to the Steve Miller Band and let Tesla shares "keep on a-rockin' me, baby"? Let's take a look.

Go on, take the money and run
Tesla bears have plenty to chew on. Before this quarter, the start-up automaker had never reported a quarterly profit, and many saw Tesla as little more than billionaire founder and CEO Elon Musk's latest pet project. With the connections and finances to get his company started, naysayers believed that this company's full-throttled idealism would soon have it sucking on financial fumes.

Top 5 Undervalued Companies To Watch In Right Now

Even for those investors who believe in the future of the electric car, Tesla is hardly a stable or safe investment. Toyota Motors (NYSE: TM  ) made hybrid history with its Prius model and raked in $225.8 billion in revenue for fiscal 2012. That's 546 times larger  than Tesla's $413 million in sales.

There's even speculation as to whether electric cars have already had their heyday. With fuel efficiency at all-time highs, who needs electric when gas goes further? In China, Ford's (NYSE: F  ) 31 mpg Focus is the best-selling vehicle, and April sales up are up 41% compared with the same month last year.

Even if Americans hang on to their hemis, Ford's and General Motors' (NYSE: GM  ) new pickups pack more punch for less petroleum. GM's Chevy Silverado offers the most fuel-efficient V-8 engine to date, offering 23 mpg to would-be gas guzzlers.

Keep on a-rocking me, baby
But Tesla shares are up for a reason, and bulls are revving their investor engines louder than ever before.

If I thought Tesla was a direct competitor with the likes of Toyota or Ford, I'd tuck my tail between my legs and cash out today. The Blue Oval and its Japanese counterpart may be less agile than Tesla, but monster trucks don't need to aim when they crush ants beneath their wheels.

In reality, Toyota is actually a Tesla investor itself, and the two companies have massive consumer credibility to gain from double-teaming the efficiency advantage. Tesla poured 66% of its 2012 sales straight into R&D, paving the way for partnership potential in the years to come.

This quarter specifically, investors were elated to see Tesla turn a profit. At $15 million net profit, or $0.12 adjusted EPS, this growth stock is hardly a balanced book. Nevertheless, seeing green instead of red is always a plus for any serious growth stock. For me, I place more importance on the automakers' seasonally adjusted 83% increase in sales than its positive net income. In the words of Field of Dreams' Shoeless Joe Jackson, "If you build it, they will come."

As a final tip of the hat to Tesla's potential, Consumer Reports released a May 9 statement declaring its Model S the best car -- ever. With a score of 99 out of 100, the publication hinted at the future of vehicles when it stated that the Model S outrated all other vehicles "even though it's an electric car. In fact, it does so because it is electric."

Sell in May? I don't think so.
"Sold too soon" is a common sob story among investors, and I'm not going to let Tesla be one for me. Valuation is nearly impossible for a company with the growth potential of Tesla, and I'm sticking to my long-term investing rules when it comes to this stock. Barring an event of epic proportions (and a good quarter doesn't qualify), I hold on to my investments for a minimum two-year period, for better or for worse.

Tesla's stock may tumble in Q2 -- or it may soar. Regardless, I'm in it to win it and believe that Tesla has what it takes to keep electrifying my own earnings for years to come.

But don't just take my word for it. The Motley Fool has assembled the most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

Hot Tech Stocks To Own For 2014

By and large, the S&P 500 Index (SNPINDEX: ^GSPC  ) was able to shrug off weak earnings from the technology sector and the benchmark index even posted its fourth straight week of gains and finished at an all-time high on Friday. Not bad for a day that saw tens of billions of dollars disappear in a matter of hours from today's three biggest laggards alone. By the end of the day, the S&P had added 2 points, or 0.2%, to end at 1,692. The following three companies, however, lost their proverbial shirts.�

Advanced Micro Devices (NYSE: AMD  ) leads off this ignominious list after plummeting 13.2%. The chip maker reported earnings yesterday, and despite beating analyst expectations for the quarter, the shares were promptly downgraded by two analysts today. That's Wall Street for ya. To be fair, the company did swing to a loss and gross margins fell. Analysts were mostly concerned with AMD's gaming revenues moving forward.

Hot Tech Stocks To Own For 2014: Silicom Ltd(SILC)

Silicom Ltd. engages in the design, manufacture, marketing, and support of connectivity solutions for a range of servers and server based systems in the North America, Europe, and internationally. The company primarily offers high-end server networking cards with and without bypass that are known as server adapters. Its server adapters are used in various applications that include security appliances, wide area network optimization appliances, load balancing and traffic management appliances, network-attached storage, video on demand servers, content delivery servers, Internet service providers/Web hosting, and high end computing. Silicom Ltd. also offers intelligent and programmable cards, such as encryption acceleration cards and redirector cards; intelligent stand alone bypass units; 10 Gbps products with and without bypass; and server to appliance converters. It markets its products through original equipment manufacturers, distributors, and resellers. The company was founded in 1987 and is based in Kfar Sava, Israel.

Hot Tech Stocks To Own For 2014: MEMSIC Inc.(MEMS)

MEMSIC, Inc. provides semiconductor sensor and system solutions based on integrated micro electro-mechanical systems (MEMS) technology and mixed signal circuit design. It offers sensor products, principally accelerometers. The company?s sensors are used for motion, direction, and pressure sensing applications; and accelerometer products are used to measure tilt, shock, vibration, and acceleration, as well as in various applications, such as mobile phones, automotive safety systems, video projectors, global positioning systems, video gaming systems, interactive toys, inclination sensing, earthquake detection, cardiac pacemakers, and image projectors. Its system solution products include wireless sensors that connect the physical environment with enterprise management and information systems to provide monitoring, automation, and control solutions for a range of industries, as well as inertial systems that provide end-users and systems integrators with MEMS-based solutions for the measurement of static and dynamic motion in a various environments, such as avionics, remotely operated vehicles, agricultural and construction vehicles, automotive test, and wind power turbines. The company also engages in the development of multi-sensor and MCU integrated system products at the integrated circuit level for the consumer and mobile market, as well as at the module level for the industrial, automotive, and general aviation markets. It sells its products directly, as well as through systems integrators, resellers, distributors, and sales representatives worldwide. The company was founded in 1999 and is headquartered in Andover, Massachusetts.

Top 10 Small Cap Companies To Buy For 2014: Marchex Inc.(MCHX)

Marchex, Inc. operates as a call advertising and small business marketing company. The company?s products, services, and technologies enable advertisers to reach consumers across mobile, online, and offline sources. It offers call advertising products and services to national advertisers, advertising agencies, and small advertiser reseller partners, which include pay-for-call through the Marchex Pay-For-Call Exchange and call analytics solutions comprising phone number and call tracking, call mining, keyword-level tracking, click-to-call, Website proxying, and other call-based products that enable customers to utilize mobile, online, and offline advertising. The company also offers small business marketing products that enable reseller partners of small business advertisers, such as Yellow Pages providers and vertical marketing service providers to sell call advertising and/or search marketing products through their existing sales channels, which are fulfilled across the c ompany?s distribution network, such as mobile sources, search engines, and traffic sources. In addition, it offers pay-per-click advertising to online users in response to their keyword search queries or on pages they visit throughout the company?s distribution network of search engines, shopping engines, third party verticals, local Websites, mobile distribution, and publishing network. Further, the company offers publishing network, which includes the company?s owned and operated Websites that help users to make decisions about the availability of local products and services. The Websites in the company?s publishing network include small business listings, as well as expert and user-generated reviews on small businesses. Marchex, Inc., through its products and services distributes advertisements from various advertisers and its reseller partners? advertisers. The company was founded in 2003 and is headquartered in Seattle, Washington.

Advisors' Opinion:
  • [By Paul]  

    ThinkEquity said though it is favorable on the 2011 prospects of a number of companies in the online marketing services ecosystem, it believes that Marchex has a relatively open-ended opportunity as the early leader in the emerging market for call-based advertising.

    "We are particularly favorable on the company's partnership with Skype, by which the company is selling and providing technology to enable advertiser-sponsored Skype Out calling over PCs," analysts said.

Hot Tech Stocks To Own For 2014: Telik Inc (TELK.PH)

Telik, Inc. (Telik), incorporated in 1988, is a clinical-stage drug development company focused on discovering and developing small molecule drugs to treat cancer. The Company discovers its product candidates using the Company�� drug discovery technology, Target-Related Affinity Profiling (TRAP). TELINTRA, its principal drug product candidate in clinical development, is a small molecule glutathione analog inhibitor of the enzyme glutathione S-transferase P1-1 (GST P1-1). TELCYTA, its other product candidate, is a small molecule cancer drug product candidate designed to be activated in cancer cells.

Clinical Product Development

TELINTRA is the Company�� lead small molecule product candidate in clinical development for the treatment of blood disorders, including cancer. It has a mechanism of action and acts by inhibiting GST P1-1, an enzyme that is involved in the control of cellular growth and differentiation. Inhibition of GST P1-1 results in the activation of the signaling molecule Jun kinase, a regulator of the function of blood precursor cells. Preclinical tests show that TELINTRA is capable of causing the death or apoptosis of leukemic or malignant blood cells, while stimulating the growth and development of normal blood precursor cells. TELINTRA has been studied in Myelodysplastic Syndrome (MDS) using two formulations. A liposomal formulation was developed for intravenous administration of TELINTRA and was used in Phase I and Phase II studies in MDS patients. The results from the Phase II intravenous liposomal TELINTRA clinical trials demonstrated that TELINTRA treatment was associated with improvement in all three types of blood cell levels in patients with all types of MDS, including those in intermediate and high-risk groups. An oral dosage formulation (tablet) was subsequently developed and results from a Phase I study with TELINTRA tablets showed clinical activity and the formulation to be well tole rated. In June 2011, the Company initiated a Phase II clini! c! al trial to evaluate TELINTRA tablets. In October 2011, the Company initiated an additional Phase IIb clinical trial to evaluate TELINTRA tablets. '

The activity and safety profile of tablet formulation allowed the Company to complete a Phase II trial of TELINTRA tablets in MDS. The primary objective of the Phase II TELINTRA tablet study was to determine the efficacy of TELINTRA. A multivariate logistic regression analysis was conducted to identify MDS disease prognostic factors associated with erythroid improvement response rates, including prior MDS treatment, age, gender, the international prognostic scoring system (IPSS), risk, Eastern Cooperative Group performance status, years from MDS diagnosis, MDS World Health Organization subtypes, anemia only versus anemia plus other cytopenias, dose schedule and starting dose. Results from this study show that TELINTRA is the first GSTP1-1 enzyme inhibitor shown to cause clinically reductions in red blood cell transf usions, including transfusion independence in low to intermediate-1 risk MDS patients, as well as improvement in platelet count and white blood cell levels in certain patients. TELINTRA, administered orally twice daily, appeared to be convenient and flexible for chronic treatment administration.

TELCYTA is a small molecule drug product candidate that the Company is developed for the treatment of cancer. TELCYTA binds to GST. TELCYTA has been evaluated in multiple Phase II and Phase III clinical trials, including trials using TELCYTA as monotherapy and in combination regimens in ovarian, non-small cell lung, breast and colorectal cancer. Results from these clinical trials indicate that TELCYTA monotherapy was generally well-tolerated, with mostly mild to moderate side effects, particularly when compared to the side effects and toxicities of standard chemotherapeutic drugs. When TELCYTA was evaluated in combination with standard chemotherapeutic drugs, the tolera bility of the combinations was similar to that expected! of e! ac! h drug ! alone.

Clinical activity including objective tumor responses and/or disease stabilization was reported in the TELCYTA Phase II trials; however, TELCYTA did not meet its primary endpoints in the Phase III studies. Positive results from a Phase I-IIa multicenter, dose-ranging study of TELCYTA in combination with carboplatin and paclitaxel as first-line therapy for patients with non-small cell lung cancer, or NSCLC, were published in a peer reviewed publication. Clinical data demonstrated positive results of TELCYTA in combination with carboplatin and paclitaxel in the treatment of first-line lung cancer followed by TELCYTA maintenance therapy. As of December 31, 2011, the Company had an on-going investigator-led study at a single site of TELCYTA in patients with refractory or relapsed mantle cell lymphoma, diffuse B cell lymphoma, and multiple myeloma.

Preclinical Drug Product Development

The Company has a small molecule compound, TLK60 404, in preclinical development that inhibits both Aurora kinase and VEGFR kinase. Aurora kinase is a signaling enzyme whose function is required for cancer cell division, while VEGF plays a key role in tumor blood vessel formation, ensuring an adequate supply of nutrients to support tumor growth. These lead compounds prevented tumor growth in preclinical models of human colon cancer and human leukemia by inhibiting both Aurora kinase and VEGFR kinase. A development drug product candidate, TLK60404, has been selected.

The Company, using its TRAP technology has discovered TLK60357, a novel, potent small molecule inhibitor of cell division. TLK60357 inhibits the formation of microtubules that are necessary for cancer cell growth leading to persistent G2/M cancer cell cycle block and subsequent cell death. This compound demonstrates potent broad-spectrum anticancer activity against a number of human cancer cells. This compound also displays oral efficacy in multipl e, standard preclinical models of cancer. TLK6059! 6, a pote! nt! VGFR kin! ase inhibitor, blocks the formation of new blood vessels in tumors. Oral administration of TLK60596 to animal models of human colon cancer reduced tumor growth.

Hot Tech Stocks To Own For 2014: United States Cellular Corporation(USM)

United States Cellular Corporation operates as a wireless telecommunications service provider in the United States. The company offers wireless voice and data services to retail consumer and business customers. It provides wireless services in postpaid service plans with voice, messaging, and data services; and prepaid service plans with minutes, messaging, and data services for a monthly fee. The company also offers various additional features, including caller ID blocking, call forwarding, voicemail, call waiting, and three-way calling; and data usage features consisting of Web browsing, email services, instant messaging, text messaging, and picture and video messaging. As of December 31, 2010, it provided wireless voice and data services to 6.1 million customers in 26 states. In addition, the company operates retail stores that sell a range of wireless devices, including handsets, modems, and tablets, as well as accessories, such as carrying cases, hands-free devices, b atteries, battery chargers, memory cards, and other items to consumers and small businesses. Further, it sells wireless devices to agents and other third-party distributors for resale; operates service facilities that provide servicing and repair for wireless devices; and enables customers to activate service and purchase wireless devices online. The company?s business customers include small-to-mid-size businesses in various industries, including construction, retail, professional services, and real estate. It offers its products and services through retail sales and service centers, direct sales, and independent agents. The company was founded in 1983 and is based in Chicago, Illinois. United States Cellular Corporation is a subsidiary of Telephone and Data Systems, Inc.

Hot Tech Stocks To Own For 2014: ARIAD Pharmaceuticals Inc.(ARIA)

ARIAD Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. The company?s lead cancer product, ridaforolimus is being studied in multiple clinical trials in patients with various types of cancers, including metastatic sarcomas, breast cancer, endometrial cancer, prostate cancer, and non-small cell lung cancer. Its product pipeline also includes ponatinib, a pan BCR-ABL inhibitor in phase 2 clinical trial for applications in various hematological cancers and solid tumors; and AP26113, an anaplastic lymphoma kinase inhibitor in preclinical studies for the treatment of various cancers, including non-small cell lung cancer, lymphoma, and neuroblastoma. In addition, the company focuses on a drug discovery program centered on small-molecule therapies that are molecularly targeted to cell-signaling pathways implicated in cancer. Further, it licenses its ARGENT cell-sign aling regulation technologies to pharmaceutical and biotechnology companies to develop and commercialize therapeutic products, and to conduct drug discovery research. The company has collaboration and license agreements with Merck & Co., Inc. for the development, manufacture, and commercialization of ridaforolimus; and license agreements with Medinol Ltd. and ICON Medical Corp. to develop and commercialize stents and other medical devices to deliver ridaforolimus to prevent restenosis of injured vessels. ARIAD Pharmaceuticals, Inc. was founded in 1991 and is based in Cambridge, Massachusetts.

Advisors' Opinion:
  • [By Hilary Kramer]

    Ariad Pharmaceuticals (NASDAQ:ARIA) is developing novel cancer treatments, and it has three promising drugs in its pipeline: ridaforolimus (which I expect to get FDA approval shortly), ponatinib (recently reported good Stage I/II results), and AP-26113 (a compound with strong potential that just started clinical testing). The stock is up nearly 50% since the early October lows, and while concerns over the possibility that Ariad will raise money could be a short-term overhang on the stock, I look for share prices to continue to climb as the company’s drugs move through the approval process.

  • [By Peter Leeds]

    Based on percentages coming in from 9 battle ground states, and the number of electoral college votes from each, it appears that Obama would win if the election were held today.  I expect his lead to increase as the campaign enters full swing.

    One company that could benefit from a few more years of a Democratic president would be Ariad Pharmaceuticals (ARIA 0.00%).  It is a pharmaceutical company that earned $13.9 million in the third quarter (10 cents per share), and sits on an impressive $86 million in cash. The Bush administration fought against stem cell research, which is a big part of Ariad's approach, and the company and its shares were hammered. Now, after several years of friendlier policies, and the prospect of another four, Ariad is building momentum and gobbling up market share. I think it could trade up to $16.20.

Ormat Technologies - Geothermal Play Poised To Show Gains

Ormat Technologies (ORA) is the world's largest pure play geothermal technology solutions provider and also owns and operates a number of geothermal plants. Geothermal energy has not really taken off like its other renewable energy siblings such as solar and wind energy. Geothermal energy has suffered as building geothermal plants is a risky proposition and also takes a long time. Most of the geothermal energy developers are also small and weakly capitalized, which makes it difficult for them to develop long gestation projects. The company has a long history and has operations both in Israel and USA. The company earlier used to be a pure equipment provider before it expanded into owning and operating geothermal plants. The company also makes equipment for generating electricity from waste energy emitted by industries. Ormat is currently trading at historically low valuation multiple as the sentiment towards green stocks remain adverse. I think that the company's current stock price does not adequately reflect prices in the company's technology and power plant assets. I would look to build a small position in the stock and look to add on stock pullbacks.

What I like about Ormat

Geothermal Technology Leader - Ormat is the world's only vertically integrated geothermal energy company that designs, builds and installs the geothermal energy equipment. The company's Ormat Energy Convertor (OEC) is used in a large number of geothermal energy plants. The OEC is based on the company's pioneering Organic Rankine Cycle Technology which was developed by Ormat Industry's founder. The company owns a large number of patents in geothermal technology and has got deep expertise and experience in this technology. The company's product segment account for 40% of its total revenues and it has got a backlog of $224 million, which is around 1 year worth of revenues.500 MW plus of geothermal plant capacity and 41 new prospects - Ormat gets almost 60% of its overall annual revenues of $500 million from its g! eothermal energy plants. Electricity revenues from its plants provide an operating margin between 10-15%. The company also has a number of exploration projects for building new geothermal plants. The company has around 200 MW of geothermal plants in various stages of construction. Most of these plants are located in USA with others located in South America, Asia and Africa.Valuation is not imposing - Ormat Technology's valuation has become much more reasonable compared to 2008 and 2009, when green companies were trading at bubble valuations. Renewable energy companies have seen their stock prices going up after a horrible 3-4 years when stock prices crashed by more than 80-90%. Some of the biggest green energy companies such as Q-Cells and Solyndra have become bankrupt, while other clean technology leaders such as Suzlon are near bankruptcy as well. Though the forward P/E at 39x might look high, the company is recovering from losses made during the last couple of years and this year's profits are expected to be smaller than its historical average.Geothermal technology has a lot of potential - Geothermal energy's total global installed capacity is quite small at ~11 GW. Most of the plants have been built in high potential areas in California, Nevada, Indonesia etc. New geothermal technology EGS is expected to raise the potential to more than a 100 GW. However, the EGS technology is still in the infancy stage and it will take some time before it can be fully developed. The biggest advantage of geothermal energy over other forms of green energy is its high load factor and 24/7 availability.Expansion into solar projects business - Ormat has decided to expand its green energy generation portfolio into solar energy plants as well. The company is building a 10 MW solar plant near its Heber complex in California and has already signed a 20 year PPA with IID. Solar energy is growing at a 50% CAGR in the USA, as the sharp decrease in solar panel prices have made it much more competitive with other forms of energy! .Green Pl! ay - Ormat is a technology and energy leader in the green industry which has been going through a rough patch. However, I think that the green stocks have seen a bottom and are starting to see their valuations increase. Ormat is not only a renewable energy generator but also a provider of energy efficiency solutions through Recovered Energy Power Generation. As energy prices increase and pressure increases on corporations to improve their environment friendliness, demand for Ormat's equipment should increase.

Ormat Risks

1. Revenues and Margin volatility - Ormat's revenues and margins are quite volatile as both the company's segments show variability due to numerous factors. The electricity segment revenues vary due to the natural gas prices, while the product segment also sees lumpiness due to the product mix. The company operates in a volatile environment where a high degree of luck is needed from transforming a prospect into an actual geothermal energy plant. The geothermal energy business is also localized in only few areas in the world currently unlike the global nature of the wind and solar energy businesses. Though the revenues have shown a lot of volatility, the overall trend has been one of decent growth.

ORA Revenue Quarterly Chart

ORA Revenue Quarterly data by YCharts

2. Capex Heavy Business - Ormat Technologies has to invest heavily in prospecting for new geothermal sites as well as construction of new plants. This stresses the balance sheet of a company with a market capitalization of just $1 billion. In general, capex heavy sectors have lower returns than pure technology sectors and also place the smaller companies at a disadvantage, as they do not have a strong balance sheet. The risk of a small company is that it might run out of cash before the projects start to generate cash flow. However, Ormat management says that it has adequate resources to! fund its! capex needs.

We plan to invest a total of $173 million, $124 million expected to be invested in projects that are fully released for construction including, Mammoth and the Heber enhancement and an additional $49 million for development of new projects, exploration, maintenance CapEx and enhancement to the production facility.

5 Best Heal Care Stocks To Invest In Right Now

Source - Seeking Alpha

3. High Debt - Ormat Technology is both a utility and a technology company. I think it would be better for the company to demerge these two parts of its business and allow for greater shareholder value. The company has a high debt equity ratio of 1.4x which seems abnormal for a technology company. However, such D/E ratios are common for a utility operating in stable cash flow business. The $1 billion in debt means that the company does not have too much flexibility and cannot afford to miss on execution.

Stock Performance

Ormat's stock has shown a number of peaks and troughs in its nearly 10 years of listing history in the USA stock markets. The company peaked at $57 during the green stock euphoria during 2008 when the investors were highly optimistic that a global warming deal would be reached to restrict GHG emissions. The stock touched an all time low of ~$14 in 2011 after it suffered from losses. The company has shown an upwards trend from that point and is currently trading nearly its 52 week high of $25.76.

ORA Total Return Price Chart

ORA Total Return Price data by YCharts

Valuation is at a historical Low.

Ormat's valuation is not expensive with a P/S of ~2x and a P/B of 1.5x. The company has traded at very high valuation multiples in the past, but given the current sentiment towards green stocks. The valuation is quite low at presen! t. The st! ock is currently trading near its lower limit of its historical P/S range.

ORA Forward Price / Sales Ratio Chart

ORA Forward Price / Sales Ratio data by YCharts


Ormat is a good investment for the long term investors in green energy. The renewable energy sector has been beaten down very badly due to massive industry losses and lack of a global warming deal. However, the sector has shown some strength in the last 3-4 months with stocks going up by 50-400% from their all time lows. Ormat is the only vertically integrated geothermal energy company in the world and is the leading provider of equipments to geothermal energy plants. The company also has a thriving electricity business in which it builds power plants and sells electricity. The company is currently making a turnaround after taking a big $230 million one time loss, as a power plant failed to meet its capacity expectations. The stock is currently trading at a historically low valuation and provides a good entry point for investors. I would look to build a small position in the stock and to add on pullbacks.

Source: Ormat Technologies - Geothermal Play Poised To Show Gains

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Sunday, August 4, 2013

FelCor Names Its New CFO

Irving, Texas-based FelCor Lodging Trust (NYSE: FCH  ) will soon have a new chief financial officer.

On Monday, the real estate investment trust announced that CFO Andrew J. Welch intends to retire from the company at the end of this year. He will resign his post on July 1 but remain with the company a few months longer to facilitate the transition to a new CFO. Said new CFO will be Michael C. Hughes, the current company treasurer and senior vice president for finance, who will be promoted to CFO on July 1.

In a filing with the SEC that accompanied news of the management change, FelCor noted that Hughes will be paid an annual base salary of $275,000 upon taking office as CFO. He will also receive an annual cash bonus of anywhere from 20% to 80% of base salary and, beginning next year, will begin receiving an as-yet unspecified amount of additional equity compensation.

As for Welch, in the same filing detailing the new CFO's compensation, FelCor outlined the severance benefits that will be paid to the outgoing CFO:

Approximately $1.05 million in cash for salary-based severance and bonus. Accelerated vesting of outstanding restricted stock, restricted cash, and restricted stock units. $70,295, payable in lieu of company-paid COBRA premiums after leaving the company. 

Triangle Petroleum Misses on Both Revenue and Earnings

Triangle Petroleum (AMEX: TPLM) reported earnings on May 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 31 (Q4), Triangle Petroleum missed estimates on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. GAAP loss per share contracted.

Gross margins contracted, operating margins grew, net margins expanded.

Revenue details
Triangle Petroleum booked revenue of $22.0 million. The six analysts polled by S&P Capital IQ looked for a top line of $24.4 million on the same basis. GAAP reported sales were much higher than the prior-year quarter's $3.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at -$0.20. The 11 earnings estimates compiled by S&P Capital IQ predicted $0.00 per share. GAAP EPS were -$0.20 for Q4 compared to -$0.34 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 60.6%, much worse than the prior-year quarter. Operating margin was -11.8%, much better than the prior-year quarter. Net margin was -37.7%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $33.1 million. On the bottom line, the average EPS estimate is $0.07.

Next year's average estimate for revenue is $212.8 million. The average EPS estimate is $0.64.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 87 members out of 90 rating the stock outperform, and three members rating it underperform. Among 11 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 10 give Triangle Petroleum a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Triangle Petroleum is outperform, with an average price target of $9.33.

Is Triangle Petroleum the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

Add Triangle Petroleum to My Watchlist.

3 Stocks That Blew the Market Away

Don't settle for ordinary quarterly reports.

Every week, I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.

Let's take a look at a few companies that humbled the pros over the past few trading days.

We can start with Infinera (NASDAQ: INFN  ) . The provider of digital optical networking systems posted an adjusted net loss of $0.06 a share on $124.6 million in revenue. Analysts were holding out for a deficit of $0.07 a share on $119.7 million in revenue.

Infinera's strong quarter inspired Needham & Co. to upgrade its rating on the stock to "buy" with a $12 price target. It wasn't just Needham & Co. that was impressed, as Infinera stock was one of the market's biggest winners with a 31% pop last week.

Cliffs Natural Resources (NYSE: CLF  ) was another topper. It's been a rough year for the iron-ore miner heading into last week's quarterly report, and last month's announcement that it was halting production at a Canadian iron-ore pellet plant triggered a wave of analysts hosing down their forecasts on the company.

On the surface, it wasn't a good report out of Cliffs. Revenue declined 6%, and adjusted earnings fell even harder. However, the profit of $0.60 a share that Cliffs did ring up was nearly double the $0.32 a share that analysts were projecting.

The stock moved 14% higher on the week.

Finally, we have Level 3 Communications (NYSE: LVLT  ) besting the pros on the bottom line. Despite posting revenue that dipped slightly sequentially and year over year, the provider of Web-based communications services posted an adjusted loss of just $0.13 a share.

Analysts were banking on $0.17 a share in red ink. Level 3 had actually come up short against Wall Street's marks in recent quarters, so the beat was a welcome surprise.

Moving in the right direction
It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.

Top 10 Value Stocks To Buy For 2014

Cliffs Natural Resources has grown from a domestic iron ore producer into an international player in both the iron ore and metallurgical coal markets. It has also underwhelmed investors lately, especially after its dramatic 76% dividend cut in February. However, it could now be looked at as a possible value play due to several factors that are likely to remain advantageous for Cliffs' management. For details on these advantages and more, click here now to check out The Motley Fool's premium research report on the company.