Wednesday, July 31, 2013

iSoftStone Holdings Beats on Both Top and Bottom Lines

iSoftStone Holdings (NYSE: ISS  ) reported earnings on May 17. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), iSoftStone Holdings beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share contracted. GAAP earnings per share dropped.

Gross margins were steady, operating margins dropped, net margins dropped.

Revenue details
iSoftStone Holdings booked revenue of $95.9 million. The two analysts polled by S&P Capital IQ predicted a top line of $93.9 million on the same basis. GAAP reported sales were 11% higher than the prior-year quarter's $86.3 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 $0.10. The two earnings estimates compiled by S&P Capital IQ predicted $0.09 per share. Non-GAAP EPS of $0.10 for Q1 were 17% lower than the prior-year quarter's $0.12 per share. GAAP EPS of $0.05 for Q1 were 17% lower than the prior-year quarter's $0.06 per share.

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 32.2%, much about the same as the prior-year quarter. Operating margin was 4.7%, 50 basis points worse than the prior-year quarter. Net margin was 3.2%, 60 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $111.8 million. On the bottom line, the average EPS estimate is $0.17.

Next year's average estimate for revenue is $464.7 million. The average EPS estimate is $0.67.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 19 members out of 36 rating the stock outperform, and 17 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), eight give iSoftStone Holdings a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on iSoftStone Holdings is outperform, with an average price target of $10.83.

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Don't Get Too Worked Up Over Francesca's Holdings's Earnings

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 Francesca's Holdings (Nasdaq: FRAN  ) , 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, Francesca's Holdings generated $34.1 million cash while it booked net income of $49.3 million. That means it turned 10.9% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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 Francesca's Holdings 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 questionable cash flows amounting to only -2.2% of operating cash flow, Francesca's Holdings's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 0.3% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 42.8% 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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Is Fracking on the Verge of Drying Up?

There's a fracking research study likely to be unleashed in the next several months on University of Tennessee land about an hour from the main campus in Knoxville.

Several companies, including Pittsburgh-based Atlas Energy (NYSE: ATLS  ) , appear likely to submit proposals to participate in the effort by the August deadline. Atlas has already completed 450 natural gas wells in a four-county area of Tennessee.

Give it some gas
But while the drilling that ultimately occurs in Tennessee will involve fracking, it won't include hydraulic fracturing. That's because, rather than the hundreds of thousands or millions of gallons of water per well normally associated with fracking, the approach in the Chattanooga shale will involve the pumping of nitrogen gas into the rock, a substitution that works especially well in shallow formations.

According to Air Products and Chemicals (NYSE: APD  ) , while the use of nitrogen is about 15% more expensive than hydraulic fracturing, that difference is largely offset by an 11% increase in the estimated ultimate recovery of natural gas. Further, amid spreading drought conditions across much of the U.S., along with increasing requirements that drillers treat, recycle, and reuse flowback water, the use of nitrogen in fracking is surging.

Nitrogen three ways
Air Products notes that the proportion of the nitrogen used depends on a several factors, including the well's depth:

Nitrogen gas fracking is used in shallower formations -- typically less than 5,000 feet deep -- that are water sensitive. Since nitrogen is a poor proppant carrier, it's ideal for use in brittle shale with natural fractures that tend to stay self-propped after they've been hit by pressure pumping. Nitrogen foam uses 53% to 95% nitrogen, with the remainder consisting of water. Given the ability to create this combination, fluid viscosity can be adjusted as need, and the volume of additives used is reduced by the percentage of nitrogen included. The result for operators is both environmental and financial benefits. Nitrogen-energized fracking involves the inclusion of the gas at rates below 53% of the total. Given its increased liquids content, this combination can be used in formations with depths up to 8,000 feet.

The benefits of nitrogenous fracturing in times of increasing water scarcity are hardly inconsequential. For instance, whereas in recent years farmers in some parts of Colorado forked over from $9 to $100 for an acre foot of water to cities with excess supplies, energy companies are now paying $1,200 to $2,900 per acre foot.

In drought-parched Texas, a typical hydraulically fractured well requires about 6 million gallons of water. And with Arkansas, Colorado, New Mexico, Oklahoma, Utah, and Wyoming also low on aqua, Halliburton (NYSE: HAL  ) has unleashed a new technology that makes wastewater available to its customers.

Other fracking goings-on
While water is likely to remain a key consideration for hydraulic fracturing for years to come, there are several other items of importance currently swirling about with regard to unconventional drilling, which has been responsible for a 30% increase in U.S. oil reserves and a 90% incrasee in our gas reserves:

The Environmental Protection Agency continues to move forward with its nationwide study of the potential effects of hydraulic fracturing on groundwater and drinking water. A resulting report is expected to be released in 2014. In the meantime, 31 experts from universities, scientific laboratories, and industry have been appointed to review what promises to be a landmark document. The EPA also has abandoned its interminable and controversial research into whether fracking by Encana (NYSE: ECA  ) fouled the water table in Pavillion, Wyo. The effort was a follow-up to a 2011 study by the agency, which purported to find a connection between Encana's operations and the contamination of an aquifer, has been turned over to Wyoming officials. They plan to release a final report next year. The Obama administration has set forth a proposed rule requiring oil and natural gas companies that drill on federal land to disclose the chemicals used in their hydraulic operations. It also would establish standards for well construction and waste disposal.

A Foolish takeaway
Hydraulic fracturing, it seems, will always be a target for environmental grousing and federal nitpicking. It seems unlikely, however, that it will ever be severely curtailed. On that basis, I'm increasingly becoming a proponent of Chesapeake Energy (NYSE: CHK  ) , especially under its new management.

The company is the nation's second largest natural gas producer, its most active fracker, and the holder of substantial acreage in many of our nation's major shale plays. it's also likely to see its shares propelled higher by what's likely to be an increase in U.S. natural gas demand.

Tuesday, July 30, 2013

Are You Expecting This from KLA-Tencor?

KLA-Tencor (Nasdaq: KLAC  ) is expected to report Q4 earnings around July 26. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict KLA-Tencor's revenues will wither -21.0% and EPS will wane -47.0%.

The average estimate for revenue is $705.2 million. On the bottom line, the average EPS estimate is $0.79.

Revenue details
Last quarter, KLA-Tencor recorded revenue of $729.0 million. GAAP reported sales were 13% lower than the prior-year quarter's $840.5 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $1.01. GAAP EPS of $0.98 for Q3 were 19% lower than the prior-year quarter's $1.21 per share.

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

Recent performance
For the preceding quarter, gross margin was 57.5%, 20 basis points worse than the prior-year quarter. Operating margin was 27.7%, 610 basis points worse than the prior-year quarter. Net margin was 22.8%, 160 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.83 billion. The average EPS estimate is $3.25.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 248 members out of 279 rating the stock outperform, and 31 members rating it underperform. Among 87 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 81 give KLA-Tencor a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on KLA-Tencor is outperform, with an average price target of $59.31.

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Is Microsoft the Missing Link in the 3-D Printing Revolution?

Microsoft (NASDAQ: MSFT  ) made the maker community jump for joy when it announced that the upcoming version of Windows 8.1 due out later this year will feature out-of-the-box 3-D printing support. For the Windows 8.1 end user, setting up a 3-D printer should be a similar experience to setting up a plug-and-play 2-D printer. This certainly will make life easier for a demographic of entrepreneurs and enthusiasts, but will it be the spark that ignites a consumer-driven 3-D printing revolution?

High hopes
As you can imagine, 3-D printing companies are pretty pumped about Mr. Softy's vote of confidence. At Microsoft's annual Build Conference, 3D Systems (NYSE: DDD  ) demoed a Surface Tablet sending instructions to its consumer-oriented $1,299 Cube printer. Rajeev Kulkarni, general manager and vice president of 3D Systems' consumer solutions, believes that having support from Windows 8.1 gets 3-D printing closer to mainstream. "It makes it seamless to get 3-D printing in your home," he added.

Betting the farm
Last month, Stratasys (NASDAQ: SSYS  ) made quite the splash when it acquired leading consumer-enthusiast 3-D printing company MakerBot for $403 million in stock up front and, potentially, another $201 million of stock or cash if the company hits performance incentives through the end of 2014. I don't know about you, but $604 million for a company that's only earned $11.5 million in the first quarter seems like a lot of money.

Not to mention, the "personal" 3-D printing industry was only estimated to be worth about $38.2 million in 2012, and experienced a significant decline in growth from the previous four years. From 2008 to 2011, the personal 3-D printer segment experienced an average growth rate of 346% each year, whereas in 2012, it grew by 46.3% from 2011. For the time being, it could indicate that aggregate demand for personal 3-D printers is beginning to wane, given the lack of material advancements beyond plastic at the consumer level.

Keep dreaming
Although the consumer-oriented 3-D printing market gets a lot of media attention, it represented less than 2% of the $2.2 billion 3-D printing industry last year. Additionally, the fact that 70% of 3-D printing is already done on Windows tells me that this move is more about pleasing existing users than it is to attract new users. If 3-D printing is really going to take off with consumers, the range of materials that can be printed needs to be expanded greatly. Until then, the 3-D printing revolution will continue taking place in the industrial world.

Industrial Revolution 3.0
Like it or not, 3-D printing will continue to play a greater role in the manufacturing process. In fact, The Economist has coined 3-D printing as the third industrial revolution. To help investors make better sense of what this could mean for their portfolios, The Motley Fool has published a special free report, laying out three companies to own for the third industrial revolution. For those investors savvy enough to get in on the ground floor, click here to get started.

Top 10 Medical Stocks To Own For 2014

A broad market sell-off today gave up nearly all of the Dow Jones Industrial Average's (DJINDICES: ^DJI  ) gains from Tuesday, as blue chips took a hit on disappointing earnings. Just four of the Dow's 30 stocks advanced, and the index lost 138 points, or 0.9%, to close at 14,618 Wednesday.

One of those lucky few trading higher today was health0care behemoth Johnson & Johnson (NYSE: JNJ  ) , which added 0.6% after its impressive quarterly report yesterday. The fact that the company could boost sales 8.5% shows the company is executing well and can still find areas of growth a full 127 years after going into business. Medical sales, prescription drugs, and over-the-counter medications all grew at double-digit rates, and when you combine that with a 2.9% annual dividend, the stock looks pretty appealing right now.

Top 10 Medical Stocks To Own For 2014: Fuse Science Inc (DROP)

Fuse Science, Inc. ( Fuse Science), incorporated on September 21, 1988, is a consumer products holding company. The Company maintains the rights to sublingual and transdermal delivery systems for bioactive agents that can effectively encapsulate and charge many varying molecules in order to produce complete product formulations which can be consumed orally, applied topically or delivered otherwise sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The Fuse Science technology is designed to accelerate conveyance of medicines or nutrients relative to traditional pills and liquids and can enhance how consumers receive these products. In December 2012, the Company launched its initial DROP products, PowerFuse, an energy formulation in a concentrated drop and ElectroFuse, an electrolyte formula in a concentrated drop, online, with the expansion into targeted retail distribution channels.

The Company is developing formulations and devices, which are compatible with alternative delivery systems for energy, medicines, vitamins and minerals, among other bioactives. These alternative systems include, but are not limited to, sublingual, transdermal and buccal drug delivery methods. use Science has developed and continues to advance, in conjunction with its scientific team, sublingual and transdermal delivery systems for bioactives that can effectively encapsulate and charge varying molecules in order to produce product formulations which can be consumed orally, applied topically or otherwise delivered sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The delivery technology is consists of encapsulation vesicles and ion exchange permeation enhancers. This technology utilizes a gradient across the mucosa membrane to help deliver the bioactive more efficiently through the mucosa.

The Company�� products consist of EnerJel, PowerFuse and ElectroFuse. Ene! rJel is a topical product leveraging some of its technology, which is designed to address muscle fatigue and soreness, before, during and after physical activity. The product contains a natural anti-inflammatory and energy source which is directly applied to the problem area. PowerFuse contains natural ingredients, causes no sugar crash with zero calories and less than half the caffeine of an eight ounce cup of premium coffee. It is available in a great tasting Berry Blast Flavor. ElectroFuse contains natural ingredients, causes no sugar crash with zero calories, is easily portable and is available in a great tasting Salty-Sweet flavor.

Top 10 Medical Stocks To Own For 2014: Telik Inc (TELK)

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 tolerated. In June 2011, the Company initiated a Phase II clinical ! 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 transfusions, 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 tolerability of the combinations was similar to that expected of each! drug alo! ne.

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, TLK60404, 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 multiple, standard preclinical models of cancer. TLK60596, a potent VG! FR kinase! inhibitor, blocks the formation of new blood vessels in tumors. Oral administration of TLK60596 to animal models of human colon cancer reduced tumor growth.

Top Stocks To Watch For 2014: Navidea Biopharmaceuticals Inc (NAVB.A)

Navidea Biopharmaceuticals, Inc. (Navidea), formerly Neoprobe Corporation, incorporated in 1983, is a biopharmaceutical company focused on the development and commercialization of precision diagnostic agents. As of December 31, 2011, the Company�� radiopharmaceutical development programs included Lymphoseek (Lymphoseek, Kit for the Preparation of Technetium Tc99m for Injection), a radiopharmaceutical agent for lymph node mapping; AZD4694, an imaging agent, and RIGScan, a tumor antigen-specific targeting agent. In January 2012, the Company executed an option agreement with Alseres Pharmaceuticals, Inc. (Alseres) to license [123I]-E-IACFT Injection, also called Altropane, an Iodine-123 radiolabeled imaging agent, being developed as an aid in the diagnosis of Parkinson�� disease, movement disorders and dementia. In August 2011, the Company sold its gamma detection device line of business (the GDS Business) to Devicor Medical Products, Inc.

Lymphoseek

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Navidea�� pipeline includes clinical-stage radiopharmaceutical agents used to identify the presence and status of disease. Lymphoseek (Kit for the Preparation of Technetium Tc99m for Injection) is a lymph node targeting agent intended for use in intraoperative lymphatic mapping (ILM) procedures and lymphoscintigraphy employed in the overall diagnostic assessment of certain solid tumor cancers. The lymph system is a component of the body�� immune system. The key components of the lymph system are lymph nodes-small anatomic structures that contain disease-fighting lymphocytes, filter lymph of bacteria and cancer cells, and signal infection in response to heightened levels of pathogens. In Navidea�� Phase III clinical studies of Lymphoseek, it detected over 99% of positive nodes identified by vital blue dye (VBD). As of December 31, 2011, Navidea, in co-operation with UC, San Diego affiliate (UCSD), completed or initiated five Phase I clinical trials, one multi-c enter Phase II trial and three multi-center Phase II trial! s ! involving Lymphoseek. Two Phase III studies were completed in subjects with breast cancer and melanoma. During the year ended December 31, 2011, data from NEO3-09 were released, which indicated that all primary and secondary endpoints for the study were met. As of December 31, 2011, third Phase III clinical trial for Lymphoseek in subjects with head and neck squamous cell carcinoma (NEO3-06) was in progress.

AZD4694

AZD4694 is a Fluorine-18 labeled precision radiopharmaceutical candidate for use in the imaging and evaluation of patients with signs or symptoms of cognitive impairment such as Alzheimer's disease (AD). It binds to beta-amyloid deposits in the brain that can then be imaged in positron emission tomography (PET) scans. Amyloid plaque pathology is a required feature of AD and the presence of amyloid pathology is a supportive feature for diagnosis of probable AD. Patients who are negative for amyloid pathology do not have AD. AZD4694 has b een studied in several clinical trials. Clinical studies through Phase IIa have included more than 80 patients to date, both suspected AD patients and healthy volunteers. No significant adverse events have been observed. Results suggest that AZD4694 has the ability to image patients quickly and safely with high sensitivity.

RadioImmunoGuided Surgery

As of December 31, 2011, RIGScan had been studied in a number of clinical trials, including Phase III studies. Navidea has conducted two Phase III studies, NEO2-13 and NEO2-14, of RIGScan in patients with primary and metastatic colorectal cancer, respectively. Both studies were multi-institutional involving cancer treatment institutions in the United States, Israel, and the European Union.

The Company competes with Pharmalucence, Eli Lilly, Bayer Schering, General Electric and GE Healthcare.

Top 10 Medical Stocks To Own For 2014: RXi Pharmaceuticals Corp (RXII)

RXi Pharmaceuticals Corporation (RXi), incorporated on September 8, 2011, is a development-stage company. The Company is a biotechnology company focused on discovering, developing and commercializing therapies addressing medical needs using RNA interference (RNAi)-targeted technologies. As of July 12, 2012, RXi was focusing on its internal therapeutic development efforts in fibrosis. RXI-109 is its RNAi product candidate, which is a dermal anti-scarring therapy that targets connective tissue growth factor (CTGF). The Company�� therapeutic platform consists of two main components: RNAi Compounds (rxRNA) and Advanced Delivery Technologies. RNAi compounds include rxRNAori, rxRNAsolo and sd-rxRNA, or self-delivering RNA. On April 26, 2012, it completed the spin-off transaction from Galena Biopharma, Inc. (Galena).

In January 2011, the Company announced research results in collaboration with Generex Biotechnology Corporation, and RXi�� wholly owned subsidiary Antigen Express, Inc., in developing vaccine formulations for immunotherapy. In January 2011, it announced initial results as part of its collaboration with miRagen Therapeutics, Inc. in creating microRNA mimics, or artificial copies of microRNAs, using the Company�� sd-rxRNA technology. In February 2011, it announced the initiation of RXi�� development program for RXI-109.

Top 10 Medical Stocks To Own For 2014: Bio-Reference Laboratories Inc.(BRLI)

Bio-Reference Laboratories, Inc. provides clinical laboratory testing services for the detection, diagnosis, evaluation, monitoring, and treatment of diseases primarily in the greater New York metropolitan area. It offers various chemical diagnostic tests, including blood and urine analysis, blood chemistry, hematology services, serology, radio-immuno analysis, toxicology, pap smears, tissue pathology, and other tissue analysis. The company also operates a clinical knowledge management service unit, which uses customer data from laboratory results, pharmaceutical data, claims data, and other data sources to provide administrative and clinical decision support systems. In addition, it operates a Web-based connectivity portal solution for laboratories and physicians to provide laboratory ordering and results to physician customers. The company provides its services directly to physicians, geneticists, hospitals, clinics, and correctional and other health facilities. Bio-Refe rence Laboratories, Inc. was founded in 1981 and is headquartered in Elmwood Park, New Jersey.

Advisors' Opinion:
  • [By Squeeze Ideas]

    Medical Laboratories & Research Industry. Market cap of $621.05M. Short float at 24.02% (equivalent to 25.29 days of average volume).

    Net Income grew by 19.5% ($8.58M vs. $7.18M y/y), while Operating Cash Flow grew by 21.38% ($9.88M vs. $8.14M y/y) (comparing 3 months ending 2010-10-31 vs. 3 months ending 2009-10-31).

    The stock has a relatively low correlation to the market (beta = 0.71), which may be appealing to risk averse investors.

    Other Highlights: Judging by trailing twelve month (TTM) ratios like Return on Equity (ROE), Return on Assets (ROA) and Return on Invested Capital (ROI), it's clear that the company's management is doing an excellent job. TTM ROE at 20.49%, higher than the industry average at 17.9%, TTM ROA at 12.68% vs. the industry average at 6.71%, and TTM ROI at 16.16%, higher than the industry average at 11.34%. The company also outperformed its industry competitors in terms of the TTM Return on Sales ratio (6.32% vs. the industry average at 4.52%).

Top 10 Medical Stocks To Own For 2014: Spectrum Pharmaceuticals Inc.(SPPI)

Spectrum Pharmaceuticals, Inc., a commercial-stage biotechnology company, primarily focuses on oncology and hematology. The company engages in acquiring, developing, and commercializing a broad and diverse pipeline of late-stage clinical and commercial products. It markets Zevalin, a prescribed form of cancer therapy, radioimmunotherapy; and Fusilev, a novel folate analog formulation and the pharmacologically active isomer of the racemic compound, calcium leucovorin. The company?s drugs in late stage development include Apaziquone, an anti-cancer agent; and Belinostat, a histone deacytelase inhibitor. Its drugs in development also include Ozarelix a luteinizing hormone releasing hormone antagonist, which is in Phase II clinical stage; SPI-1620, a peptide agonist of endothelin B receptors, which is in Phase I clinical stage; and RenaZorb, a lanthanum-based nanoparticle phosphate binding agent, which is in preclinical stage. The company was formerly known as NeoTherapeutics, Inc. and changed its name to Spectrum Pharmaceuticals, Inc. in December 2002. Spectrum Pharmaceuticals, Inc. was founded in 1987 and is based in Henderson, Nevada.

Advisors' Opinion:
  • [By Michael Shulman]

    Spectrum Pharmaceuticals (NASDAQ: SPPI) is a commercial-stage biotechnology company with a primary focus in oncology and hematology The company specializes in rescuing treatments abandoned, in development stages, by other companies.

    It has had a tremendous run based on market introductions and partnerships in the past two years, but now has even greater potential for a blockbuster with a drug called Zevalin for non-Hodgkin’s lymphoma. This drug is currently approved as a salvage and adjunct therapy, and the company is in mid-stage trials for the use of Zevalin as a front-line treatment, which would be a much larger market.

    The risk in this stock is high. It could be cut in half or worse on bad news from one of several clinical trials. However, successful trial results could take this stock from under $7 to $32 in one to three years. SPPI could also become a takeover target.

  • [By Roberto Pedone]

    Another stock that's quickly moving within range of triggering a big time breakout trade isSpectrum Pharmaceuticals (SPPI), which is a commercial stage biotechnology company integrated in commercial and drug development operations, primarily in oncology and hematology. This stock has been destroyed by the short-sellers so far in 2013, with shares off by over 30%.

    If you look at the chart for Spectrum Pharmaceuticals, you'll see that this stock has been trending sideways for the last two months in a consolidation chart pattern, with shares moving between $6.92 on the downside and $7.77 on the upside. This sideways pattern is coming after shares of SPPI gapped down sharply back in March from $12.47 to below $8 a share with heavy downside volume. Shares of SPPI are now quickly moving within range of triggering a major breakout trade above the upper end of its recent sideways chart pattern.

    Market players should now look for long-biased trades in SPPI if it manages to break out above some near-term overhead resistance levels at $7.65 to $7.77 a share and then once it takes out its 50-day at $8 and its gap down day high at $8.26 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.43 million shares. If that breakout hits soon, then SPPI will set up to re-fill some of its previous gap down zone that started at $12.47 a share. Some possible upside targets if SPPI gets into that gap with volume are $9.50 to its 200-day at $10.89 a share.

    Traders can look to buy SPPI off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $7.09 to $7 a share. One can also buy SPPI off strength once it clears those breakout levels with volume and then simply use a stop at around $7 a share.

    This stock is an absolute favorite target of the short-sellers, since the current short interest as a percentage of the float for SPPI is extremely high at 37.4%. This stock has explosive upside potential if it trades into that gap with volume, so make sure to have it on your breakout trading radar.

Top 10 Medical Stocks To Own For 2014: InspireMD Inc (NSPR)

InspireMD, Inc., incorporated on February 29, 2008, is a medical device company. The Company is focusing on the development and commercialization of its stent platform technology, MGuard. MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve over a stent. Its initial products are marketed for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). The Company�� products include MGuard Coronary Plus Bio-Stable Mesh, MGuard Peripheral Plus Bio-Stable Mesh, MGuard Carotid Plus Bio-Stable Mesh and MGuard Coronary Plus Bio-Absorbable Drug-Eluting Mesh. Its initial MGuard Coronary products incorporated a stainless steel stent. The Company subsequently replaced this stainless steel platform with a more advanced cobalt-chromium based platform, which the Company refers to as the MGuard PrimeTM version of its MGuard Coronary. The Company operates in Germany through its wholly owned subsidiary InspireMD GmbH.

The Company focuses on applying its technology to develop additional products used for other vascular procedures, specifically carotid (the arteries that supply blood to the brain) and peripheral (other arteries) procedures. The MGuard stent is an embolic protection device based on a protective sleeve, which is constructed out of an ultra-thin polymer mesh and wrapped around the stent. The protective sleeve is comprised of a micron level fiber-knitted mesh, engineered in an optimal geometric configuration and designed for utmost flexibility while retaining strength characteristics of the fiber material.

MGuard - Coronary Applications

The Company�� MGuard Coronary with a bio-stable mesh and its MGuard Coronary with a drug-eluting mesh focuses on the treatment of coronary arterial disease. The Company�� first MGuard product, the MGuard Coronary with a bio-stable mesh, is comprised of its mesh sleeve wrapped around a! bare-metal stent. The bio-absorbability of MGuard Coronary with a drug eluting bio-absorbable mesh is intended to improve upon the bio-absorbability of other drug-eluting stents, in light of the wide surface area of the mesh and the small diameter of the fiber.

MGuard - Carotid Applications

The Company focuses on marketing its mesh sleeve coupled with a self-expandable stent for use in carotid-applications. Expandable stent is a stent that expands without balloon dilation pressure or need of an inflation balloon. This product is under development, although the Company has temporarily delayed its development until additional funding is secured.

MGuard - Peripheral Applications

Peripheral Artery Disease, also known as peripheral vascular disease, is characterized by the accumulation of plaque in arteries in the legs, need for amputation of affected joints or even death, when untreated. Peripheral Artery Disease is treated either by trying to clear the artery of the blockage, or by implanting a stent in the affected area to push the blockage out of the way of normal blood flow.

The Company competes with Abbott Laboratories, Boston Scientific Corporation, Johnson & Johnson, Medtronic, Inc., The Sorin Group, Xtent, Inc., Cinvention AG, OrbusNeich, Biotronik SE & Co. KG, Svelte Medical Systems, Inc., Reva Inc. and Stentys SA.

Advisors' Opinion:
  • [By Roberto Pedone]

    InspiredMD (NSPR) is a medical device company focusing on the development and commercialization of its proprietary stent platform technology, MGuard. This stock is trading up 2.3% to $2.59 in recent trading.

    Today’s Range: $2.44-$2.65

    52-Week Range: $1.88-$10.16

    Volume: 313,000

    Three-Month Average Volume: 99,632

    From a technical perspective, NSPR is trending higher here right off its 50-day moving average at $2.42 with heavy upside volume. This stock has been getting heavy upside volume flows for the last few weeks, which is bullish technical action. Shares of NSPR are now quickly moving within range of triggering a major breakout trade. That trade will hit if NSPR manages to take out some near-term overhead resistance levels at $2.85 to $3 with high volume.

    Traders should now look for long-biased trades in NSPR as long as it’s trending above its 50-day at $2.42 and then once it sustains a move or close above those breakout levels with volume that hits near or above 99,632 shares. If that breakout triggers soon, then NSPR will set up re-test or possibly take out its next major overhead resistance levels at $3.55 to $4.25. This stock could even tag its 200-day at $4.80 if it breaks out soon and catches some momentum buying.

Top 10 Medical Stocks To Own For 2014: Compugen Ltd.(CGEN)

Compugen Ltd. operates as a drug and diagnostic discovery company based on computer-based discovery capabilities to predict and select novel product candidates. Through in silico prediction and selection, the resulting novel molecules are synthesized and validated utilizing traditional in vitro and in vivo experimental procedures. The company provides these validated product candidates to pharmaceutical, biotech, and diagnostic companies under licensing and other commercialization arrangements. Its research and discovery efforts are focused primarily on therapeutic proteins and peptides, and monoclonal antibodies, and primarily in the fields of immunology and oncology. Its therapeutic peptide and protein related platforms include Protein Family Members Discovery Platform, Protein-Protein Interaction Blockers, GPCR Therapeutic Peptide Ligands, Disease-Associated Conformation Blockers, Intracellular Drug Delivery, Viral Peptides, and Splice Variant based Therapeutic Proteins . The company?s monoclonal antibody related platforms comprise Monoclonal Antibody Targets. Its other therapeutic and diagnostic platforms consist of Nucleic-Acid Disease Markers, Protein Disease Markers, Nucleic-Acid Preclinical Toxicity Markers, Non-SNP Drug Response Markers, and New Indications. Its therapeutic peptide and protein product candidates comprise CGEN-15001, a novel protein for the treatment of autoimmune disorders; CGEN-25017, a novel peptide antagonist of the Angiopoietin/Tie-2 pathway; CGEN-855, a peptide agonist of the FPRL1 GPCR receptor; CGEN-856 and CGEN-857, which are MAS GPCR peptide agonists; CGEN-25007, an antagonist of the gp96 protein; and CGEN-25009, a peptide of the LGR7 receptor. The company also offers monoclonal antibody target product candidates, including CGEN-671, a drug for multiple epithelial tumors; CGEN-928, a drug for multiple myeloma; and CGEN-15001T, a novel B7/CD28 family member. Compugen Ltd. was founded in 1993 and is based in Te l Aviv, Israel.

Advisors' Opinion:
  • [By Michael Shulman]

    Compugen Ltd. (NASDAQ: CGEN) is the world’s leading molecular intellectual property company. Based in Israel, the company has revolutionized the early phases of drug development through a highly automated process of exploring and selecting molecules with the greatest promise to serve as the basis for a particular treatment.

    The company licenses its peptides and proteins for a fee to the who’s who of the drug industry, and also receives a back-end cut of any drug that makes it to market using its discoveries.

    Compugen just announced that it entered into an agreement with Baize Investments under which it will receive $5 million in R&D funding. My target for CGEN is $20 in three to five years.

Top 10 Medical 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.

Top 10 Medical Stocks To Own For 2014: Terumo (TRUMY.PK)

TERUMO CORPORATION operates in four business segment. The Hospital Products segment is engaged in the manufacture, purchase and sale of hospital medical equipment, pharmaceuticals, peritoneal dialysis and diabetes related products, and the rental of hospital medical equipment and home medical products. The Cardiac and Vascular Area segment is involved in the manufacture, purchase and sale of catheter systems, artificial heart and lungs, as well as artificial blood vessels, the manufacture and sale of therapeutic coils for cerebral aneurysm, sampling equipment and kits for platelet-rich plasma and concentrated bone-marrow cell, and large-bore sheaths. The Blood System segment is engaged in the manufacture, purchase and sale of blood transfusion-related products. The Healthcare segment manufactures and sells healthcare related products. As of March 31, 2012, the Company had 79 subsidiaries and 2 associated companies. Advisors' Opinion:
  • [By Robert Holmes]

     Analyst Mayo Mita says the Japanese earthquake and tsunami was a setback for the company, Terumo has a more visible growth stage coming.

    "Over the next five years we see clear growth from China, the NOBORI drug eluting stent (DES), the U.S. catheter business, and the blood management business," Mita writes.

    The base-case Mita lays out is for a 26% rise in share price next year, although Mita's most bullish forecast has shares up twice that. On the downside, Mita's most bearish scenario has shares falling 11% in the next 12 months.

    The chart below shows shares of Terumo that trade on the Pink Sheets in the U.S., but Morgan Stanley is recommending buying shares in Tokyo.

Monday, July 29, 2013

6 Reasons Why Activision Blizzard Should Worry

Activision Blizzard (NASDAQ: ATVI  ) shareholders haven't been doing a whole lot of complaining lately. The stock hit a fresh four-year high on Friday, fueled by the leading video game developer's move to buy back most of the shares owned by majority stakeholder Vivendi.

The move won't come cheap for Activision Blizzard, but it does eliminate the uncertainty of what the French conglomerate would do with its 61% stake in the game maker.

The new high comes just as Activision Blizzard is set to report quarterly results on Thursday. If you think that everything is rosy here, think again.

Let's go over a few reasons to worry as Activision Blizzard steps up to report.

Analysts see a brutal quarter with revenue falling 43% and earnings falling even harder. Wall Street's forecasting a profit of $0.06 a share, well off the $0.20 a share it earned a year earlier. World of Warcraft players continue to defect from the massive multiplayer game. The game peaked in popularity with more than 12 million active accounts three years ago. We're now down to 8 million -- and falling. Last year's sleeper hit -- Skylanders: Spyro's Adventures -- will be challenged in a few weeks. Disney's (NYSE: DIS  ) Disney Infinity takes the same model of physical figures that can enter a virtual world when planted on a base. Skylanders was the industry's hottest seller through the first half of 2012, but now we're seeing Activision Blizzard turn to deep discounts to get young gamers hooked before Disney steps in next month. The video game industry has been declining for four years, but diehard gamers feel that November's debut of PS4 and Xbox One will breathe new life into the niche. That may be wishful thinking, and at the very least it will take a couple of years before either platform grows into a substantial base of players. Call of Duty: Ghosts also happens to hit the market in November. This is the franchise that has been Activision Blizzard's saving grace as other once-popular lines fall out of favor. It should set new sales records, but it won't be easy. Gamers saving up for new platforms or those concerned about buying too many games for current generation systems may be more hesitant than usual this time. Take-Two Interactive's (NASDAQ: TTWO  ) Grand Theft Auto IV held the sales record before Activision Blizzard's Call of Duty games took the lead. After more than five years, Grand Theft Auto V hits the market in September. If Call of Duty: Ghosts fails to raise the bar for initial unit sales, don't be surprised if the finger gets pointed at Take-Two's magnetic release hitting the market six weeks earlier. Young gamers aren't made of money, you know.

With all of these potentially negative catalysts in play, Activision Blizzard will be challenged to keep its multi-year highs going.

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Europe and China Settle Solar Dispute -- Who Won?

Europe's long solar trade battle with China appears to be over for the time being, and China got the upper hand once again. Solar import tariffs of 11.8% put in place in June won't be replaced by tariffs that average 47% for most manufacturers, but will instead be replaced by a price floor.  

According to early reports, 90 of China's 140 exporters will be covered under an agreement to set a price floor of $0.74 per watt for solar panels. Other manufacturers will face the old tariff deal, but they don't appear to represent a significant percentage of the supply. Also, the price is not significantly higher than modules are already going for in Europe. Chinese modules are selling for around $0.65 per watt both in the U.S. and Europe, so it's an increase but not a back breaker.  

The effect on Chinese solar stocks
To put the price floor into perspective, Yingli Green Energy (NYSE: YGE  ) had an average selling price of $0.67 per watt in the first quarter. The price increase would amount to about 11% under the new plan.  

The good news for Yingli and other manufacturers is that this will likely widen their margins a bit in Europe. The company had a gross margin of just 4.1% last quarter, so the price floor could increase that to about 14% in Europe. Trina Solar (NYSE: TSL  ) also gets a large percentage of revenue from Europe, and will see an increase in its 1.7% gross margin when the new rules go into effect.

The bad news is that European and non-Chinese manufacturers will now be more cost effective. Even a few cents is important in solar these days, so now things like efficiency and quality will come into play more than they did when Chinese manufacturers were competing just on cost.

Who wins?
It's important to remember that the only change from two months ago is that Chinese panels will have a higher price. So, companies such as LDK Solar (NYSE: LDK  ) , who were trying to compete on price alone, will likely be left in the dust. Investors should focus on higher-quality manufacturers like Yingli Green Energy, Trina Solar, and Canadian Solar (NASDAQ: CSIQ  ) as potential winners from the negotiated solar deal.

The question is whether or not this will help bring these companies to a profit? For Canadian Solar and Trina solar, it just might, when combined with high margins in Japan. Earlier this month I calculated that Trina needs to generate a 9.9 cent gross margin on each panel and Canadian Solar needs an 8.9 cent gross margin just to break even. They may be able to get close to those margins if they can cut costs as the year goes on. Yingli, however, needs a 17.3 cent gross margin to break even because of its high debt load, which is still too much to overcome.

Foolish bottom line
There are pluses and minuses to the negotiated solar deal for Chinese suppliers. Volume to Europe will likely go down but margins will go up -- if China, Japan, and the U.S. can fill the volume gap, then it may become a net positive. We'll learn more when companies give third-quarter projections, so stay tuned for the financial ramifications. For now, the highest-quality, highest-efficiency manufacturers will likely become winners by taking share from their lower-quality neighbors. 

The U.S. energy industry is going through a major transformation, led by solar and natural gas. To find out which three companies are spreading their wings, check out the 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. 

Why Eagle Materials Has Soared to New Highs

Tomorrow, Eagle Materials (NYSE: EXP  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Eagle Materials makes a variety of products used in construction, including cement and concrete, wallboard, and aggregates like crushed stone and sand. With the housing industry starting to recover strongly, Eagle's stock has jumped to levels not seen since the housing boom of the mid-2000s. Let's take an early look at what's been happening with Eagle Materials over the past quarter and what we're likely to see in its quarterly report.

Stats on Eagle Materials

Analyst EPS Estimate

$0.40

Change From Year-Ago EPS

100%

Revenue Estimate

$171.44 million

Change From Year-Ago Revenue

47%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Can Eagle Materials build up its earnings this quarter?
Analysts have had mixed views about Eagle Materials and its earnings in recent months, reducing their profit estimates for the just-ended quarter by $0.02 per share but adding $0.07 per share to their fiscal 2014 consensus. There's been nothing ambiguous about the stock's performance, though, with shares having risen almost 9% since early February.

The long downturn in the housing industry really hurt Eagle Materials and its peers, as they largely languished for years after the rest of the market turned around and rose sharply. With housing moving in fits and starts, only last year did a real recovery seem to take hold. Investors bid up shares of the entire industry, hoping to beat the rush to invest in long-anticipated growth.

Even now, though, it's far from clear whether the recent rebound has staying power. Earlier this month, peer Vulcan Materials (NYSE: VMC  ) reported 5% lower shipments of aggregates, although rising prices helped offset the impact, and the company noted double-digit-percentage increases in shipments to hot housing areas including Arizona, California, and Florida. Similarly, Cemex (NYSE: CX  ) posted a substantial loss for its March quarter on with 5% lower revenue, but the Mexican company pointed to strength in the U.S. and Asian markets as offsetting weakness in Mexico, Europe, and Latin America.

Still, most companies in the space have high expectations for the future. Martin Marietta Materials (NYSE: MLM  ) said in its first-quarter report that it expects rising shipments for its aggregates, pointing to better housing starts, employment figures in the construction industry, and the need to upgrade highways as justifying greater sales.

In Eagle Materials' quarterly report, watch for the company to give its game plan for how to distinguish itself from its fellow construction-materials peers. Moreover, if it appears that non-residential construction is starting to follow the housing market higher, it could point to another leg up for Eagle Materials' growth.

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

Sunday, July 28, 2013

Here's How FleetCor Technologies Is Making You So Much Cash

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 FleetCor Technologies (NYSE: FLT  ) , 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, FleetCor Technologies generated $215.4 million cash while it booked net income of $238.8 million. That means it turned 28.5% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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 FleetCor Technologies 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 16.9% of operating cash flow coming from questionable sources, FleetCor Technologies investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 8.3% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 33.8% 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.

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Mortgage Rates Bounce Back

Freddie Mac released its weekly update on national mortgage rates this morning, revealing a quick bounce-back in interest rates nearly across the board.

Thirty-year fixed-rate mortgages (FRM) rose seven basis points in comparison to last week, returning to 3.42% -- about where they were back in late January. Shorter-term 15-year FRMs gained back five b.p. to return to the levels of two weeks ago -- 2.61%. 5/1 adjustable-rate mortgages gained two b.p., rising to 2.58%.

Only one-year ARMs continued to fall, declining three basis points to 2.53%.

Commenting on the numbers, Freddie Mac Vice President and Chief Economist Frank Nothaft credited "a solid employment report" in April for the bounce-back. "The economy gained 165,000 new jobs on net last month, more than the market consensus forecast and the largest monthly increase this year. On top of that, revisions added 114,000 more jobs to February and March as well. All of these factors allowed the unemployment rate to fall to 7.5 percent in April, the lowest since December 2008."

With a stronger job market meaning more money in homebuyers' wallets, a rise in the rates banks would charge them was only to be expected.

link

This FDA Approval Is Exciting News for Hepatitis-C Patients

People with hepatitis-C and those who carry the virus without even realizing it -- you have a reason to celebrate this weekend.

Hepatitis-C is a contagious virus that attacks the liver and can be found in acute or chronic forms. In nearly all instances, acute cases of hepatitis-C lead to a chronic form of the condition, which can cause cirrhosis of the liver and possibly even liver cancer. According to the Centers for Disease Control and Prevention, nearly 3.2 million people in the U.S. (about 1% of the population) are estimated to have a chronic version of the hepatitis-C virus, which is known as one of the silent killers because many of its symptoms go undetected. To put things mildly, it's a serious disease currently commanding a lot of attention from researchers.

That attention manifested itself into the approval by the Food and Drug Administration of Abbott Laboratories' (NYSE: ABT  ) first-ever hepatitis-C genotyping test on Thursday. Known as the Realtime HCV Genotype II, this fully automated test is capable of examining patients' blood to determine which specific genotype of the HCV virus is present out of the 11 known subtypes. Since different medications work better on certain genotypes, Abbott's Realtime HCV Genotype II test is going to revolutionize the speed of, and personalization, of hepatitis-C care.

Source: Department for Business, Innovation, and Skills; Flickr.

Abbott's perfect timing
This approval from Abbott also comes on the heels of some fantastic new opportunities with regard to how hepatitis-C patients are treated.

The current standard of treatment approved by the FDA is Vertex Pharmaceuticals' (NASDAQ: VRTX  ) Incivek, which is administered through an IV with interferon. While relatively effective, interferon can cause lingering flu-like symptoms in patients for up to 48 weeks, which can make the side-effects of the medication as unpleasant as the chronic HCV disease is itself. However, new drugs are currently in the works which could change all that.

Gilead Sciences (NASDAQ: GILD  ) and AbbVie (NYSE: ABBV  ) have the two most-advanced all oral hepatitis-C medications, which could revolutionize patient care.

I've been stating for months that Gilead's sofosbuvir has blockbuster potential written all over it. In its four late-stage clinical trials, sofosbuvir performed considerably better than the placebo in every instance. Delivering an impressive sustained viral response (SVR) of 90% in genotype 1 patients, the drug, when combined with a ribavirin, was also very effective at knocking out detectable levels of the virus in genotype 2 and 3 patients after a 12-week treatment course. Currently under review by the FDA, sofosbuvir may find dual success as a stand-alone compound and as a combination therapy.

AbbVie's hepatitis-C drug combination could be as equally exciting, with the combo producing a 97% SVR in mid-stage trials, and with it receiving the relatively new breakthrough therapy designation from the FDA in May. If AbbVie's success continues over to phase 3 trials, then, with the breakthrough therapy designation already attached, it should sail right through to an expected approval.

However, not all drugmakers have been so lucky. Bristol-Myers Squibb (NYSE: BMY  ) , for example, shelled out $2.5 billion to purchase Inhibitex early last year, only to have its lead hepatitis-C candidate, later renamed BMS-986094, cause the death of a patient in trials and get completely scrapped, resulting in a $1.8 billion writedown.

This is a reason to celebrate
Overall, though, those with hepatitis-C and those who carry the highly mutable virus and who aren't aware of it could be on the precipice of a big shift in the quality and type of care they receive. With Abbott's test now approved, we have the personalization required to treat hepatitis-C patients; it should be only a matter of months before we have two potential blockbusters from Gilead and AbbVie dueling it out to improve patient quality of life.

Changes on the way
Obamacare will undoubtedly have far-reaching effects on the health-care industry. The Motley Fool's new free report "Everything You Need to Know About Obamacare" lets you know how your health insurance, your taxes, and your portfolio could be impacted. Click here to read more. 

Top 5 Casino Companies To Invest In Right Now

Las Vegas Sands (NYSE: LVS  ) is now in the market for a new auditor following its admission that PricewaterhouseCoopers will no longer fill that role. In a filing submitted to the Securities and Exchange Commission, Las Vegas Sands revealed that the accountancy firm has "declined to stand for re-election" in that capacity. The cooperation between the two companies will terminate immediately after the casino operator's latest set of quarterly financial statements is finalized.

Las Vegas Sands did not provide the reason for PricewaterhouseCoopers' resignation. The two companies had had a 25-year relationship, with the latter reaping around $5.5 million in fees from its client in 2011.

More Expert Advice from The Motley Fool
For many companies, successfully capitalizing on a booming Chinese economy is like winning the jackpot. That's literally the case for gaming company Las Vegas Sands, which made a big bet on Macau gaming about a decade ago that's paid off in spades. The company is now looking to spread it's empire further, but will it be able to replicate its prior successes? Learn about all these opportunities, and the risks they pose, in our brand new premium report on Las Vegas Sands. We're providing a full year of analyst updates to go with it, so make sure to claim your copy today by clicking here.

Top 5 Casino Companies To Invest In Right Now: Wynn Resorts Limited(WYNN)

Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Carlson]

    Wynn Resorts(WYNN) saw its second-quarter profit more than double, but most of that strength came from casino wins, and investors were unimpressed.

    During the quarter, the casino operator earned $52. 4 million, or 52 cents a share, on revenue of $1.03 billion, higher than forecasts of 42 cents on revenue of $992.3 million. This compares with a profit of $25.5 million, or 21 cents, on revenue of $723.3 million, in the year-ago period.

    Wynn had already pre-announced disappointing results for its Las Vegas properties, citing higher costs, including employee health care and benefits, and marketing expenses. Its operating loss for its Wynn Las Vegas and Encore widened to $17.2 million from $8.3 million last year. Revenue rose 1.7% to $318 million.

    Occupancy at the Wynn Las Vegas jumped to 92.6% from 86.6% a year earlier, but revenue per available room fell 3.2%.

    Still, management indicated that there is a slight improvement on the Strip, with an increase in forward group bookings and some bright spots for the ability to yield rates. But management tempered enthusiasm by saying there are some struggles and uncertainty in the marketplace.

    "We hope for continued improvement in Las Vegas or -- let me put it different, we hope that we'll get smarter in Las Vegas in dealing with the peculiarities of this market --and this very, very mercurial, national economic market we're living with," said Steve Wynn, chief executive, in a conference call. "The national economy and the political environment in the country as we head up to the elections [is] very, very touchy. And it is impacting all businesses."

    The biggest boost, of course, came from Macau, where revenue surged 74% to $714.4 million from $410.4 million last year.

    The company opened its Encore Macau in the spring, boosting its market share to about 16% from about 13%, Sterne Agee analyst David Bain wrote in a note.

    Wynn is in the process of working on a new development on the Cotai st! rip, which should spike investors' interest as more details are revealed in the coming quarters.

    Still, investors are concerned that as comparisons get harder in Macau, and second-quarter results are adjusted for hold (how much the casino won), Wynn may not be able to outperform. But Bain reassures, "this has been discussed as nauseam by investors, sell-side analysts, the press -- and even dinner-table relatives -- for some time. We believe the Street is underestimating the summer months in Macua, which may help to produce a new leg up for Macau stories, with Wynn being the most profitable on a per position basis."

  • [By Jeanine Poggi]

    Wynn Resorts'(WYNN) run up of more than 55% this year has caused Wall Street to question its valuation.

    Currently, eight analysts have a buy rating on Wynn, 16 say hold, two rate it underperform rating and one says to sell the stock.

    "With little on the growth horizon in the intermediate term, new competition from Cotai coming in 2011 and 2012 ... and the unclear timing of a true recovery in Las Vegas, we see few catalysts not yet priced-in to pull valuation higher than current levels," Bain wrote in a note following its third-quarter earnings report.

    During the quarter, Wynn lost $33.5 million, or 27 cents a share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. The loss was attributed to charges related to servicing its debt. On an adjusted basis, Wynn actually earned 39 cents, matching Wall Street's outlook.

    Total Revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.

    In Macau, Wynn reported a 50% surge in revenue to $671.4 million, while EBITDA was $198 million, up 54.5% from $128.2 million in the third quarter of 2009. Earlier in the year the company opened its $600 million Wynn Encore Macau, which added 414 rooms to the market.

    Looking ahead, Wynn expects to break ground on its Cotai development in early 2011. The $2 billion to $3 billion project is slated to open in 2015, and management said it would provide additional details following its fourth-quarter earnings report.

    In Las Vegas, CEO Steve Wynn says the Strip is on the road to recovery. "I believe we have seen the bottom in Las Vegas," he said during the company's third-quarter conference call. "I don't know how fast it is going to get better but it isn't going to get any worse."

    Las Vegas revenue inched up 3.1% to $334.5 million during the three-month period, and EBITDA grew 9.3% to $76.5 million.

    Wynn also issued a cash dividend of $8 a share payable on Dec. 7 to sharehold! ers of record on Nov. 23.

Top 5 Casino Companies To Invest In Right Now: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Sherry Jim]

    Pinnacle Entertainment(PNK) swung to a loss in its second quarter, as costs rose.

    During the quarter, the regional casino operator lost $49.3 million, or 81 cents a share, compared with a profit of $4.7 million, or 8 cents, in the year-ago period for Pinnacle.

    Excluding items, Pinnacle actually lost 14 cents a share, 10 cents worse than analysts' estimates of a 4-cent loss.

    Pinnacle's revenue rose 8.5% to $273.6 million from $252.3 million, but also fell short of Wall Street's forecast of $284.4 million.

    Even though revenue was weaker, margins rebounded at all but one of Pinnacle's properties. "Margins are the story for Pinnacle ahead of any longer-term potential true rebound in the economy, and we continue to believe there are multiple opportunities for near-term operational improvements across the Pinnacle portfolio," Bain wrote in a note.

    At a time when most casino operators are striving to reduce costs to offset the decline in consumer spending, Pinnacle saw expenses rise 21% to $289.3 million. But Bain said Pinnacle is still in the early stages of cost-refining. "Given what we view as several areas of potential improvements in this regard, we believe Pinnacle is less dependent on an economic recovery than some of its regional peers," he wrote.

    J.P. Morgan analyst Joseph Greff also reaffirms his overweight rating on the stock, viewing Pinnacle as a transition story. "We continue to believe that new CEO Anthony Sanfilippo and team will drive increased operating efficiencies and allocate capital prudently," he wrote in a note.

    Greff praises Sanfilippo for shelving the Sugarcane Bay project and instead focusing on Baton Rouge.

    Pinnacle's liquidity remains strong, with $200 million in cash and $375 million of availability under its revolver

  • [By Jeanine Poggi]

    Pinnacle Entertainment(PNK) was the great transition story of 2010, with shares spiking about 45% this year.

    The regional casino operator's most impressive story has been in its gross margins, as management, under the leadership of new CEO Anthony Sanfilippo, is in the process of increasing the company's operating efficiencies and prudently allocating capital. Analysts believe Pinnacle is in the early stages of this process, and will continue to drive revenue growth.

    In its third quarter, Pinnacle reported a surprise profit of 10 cents a share on an adjusted basis, better than consensus estimates of a loss of 7 cents. Revenue grew 15% to $287.8 million, while property-level margins reached 23.4%, also ahead of forecasts.

    Last month, Pinnacle purchased Cincinnati's River Downs Racetrack for $45 million. The deal includes 155 acres, 35 of which are still undeveloped. The transaction is expected to close by the end of the first quarter of 2011.

    This deal could generate significant returns in the event that Ohio decides to legalize video lottery terminals at racetracks, Santarelli said.

    Pinnacle is also in the process of looking for a buyer of its oceanfront land in Atlantic City, where it originally intended to build a $1.5 billion casino, before squelching plans. The casino operator bought the land in 2006 for $270 million from groups affiliated with Carl Icahn and later added another piece of land for $70 million.

    While the land's currently value is $38 million, Pinnacle insists it will not sell it on the cheap, holding out for the best deal.

    Pinnacle currently has $228 million in cash and $375 million of availability under its revolver.

Best Casino Stocks To Watch For 2014: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:
  • [By Quickel]

    Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.

    But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.

    Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.

    During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.

    Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.

    Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.

    The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.

Top 5 Casino Companies To Invest In Right Now: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.

Top 5 Casino Companies To Invest In Right Now: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Hawkinvest]

    MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sen se to sell now and buy on dips later this year.

    Here are some key points for MGM:

    Current share price: $14.18

    The 52 week range is $7.40 to $16.05

    Earnings estimates for 2011: a loss of 53 cents per share

    Earnings estimates for 2012: a loss of 39 cents per share

    Annual dividend: none

Saturday, July 27, 2013

Top 10 Oil Companies To Invest In 2014

With second-quarter earnings season picking up stream, Valero Energy (NYSE: VLO  ) posted a tumultuous drop in year-over-year net income, but the refiner still beat analyst estimates with normalized earnings of $0.96 per share. With the United States' WTI crude benchmark closing the gap with the international Brent crude price, U.S. refiners are looking for new competitive advantages, and Valero is starting to make solid inroads. Check out the video below for more information on Valero's second quarter and see which direction the company is moving.

With WTI benchmarked crude trading over $100 once again, investors need to follow the money to find the most intriguing energy plays. To gear you in this direction, The Motley Fool has a limited time free report titled, "3 Stocks for $100 Oil." For FREE access to this special report, simply�click here now.

Top 10 Oil Companies To Invest In 2014: Caiterra International Energy Corp (CTI)

CaiTerra International Energy Corporation (Caiterra), formerly Cyterra Capital Corp., is a Canada-based company is engaged in the exploration and development of oil and gas properties. The Company�� project includes Faust, Amadou and Lac La Biche. On March 9, 2012, the Company completed its qualifying transaction with West Pacific Petroleum Inc. (WPP), pursuant to which the Company acquired all of WPP�� working interests in certain petroleum and natural gas leases and an oil sand lease in the Lac La Biche and Amadou Projects located in Alberta, Canada and certain other assets (the QT Oil and Gas Properties) from West Pacific Petroleum Inc. (WPP). On December 17, 2012 the Company acquired the Faust Property located just north of the Swan Hills oil field and south of the Town of Slave Lake.

Top 10 Oil Companies To Invest In 2014: Talisman Energy Inc.(TLM)

Talisman Energy Inc., an upstream oil and gas company, engages in the exploration, development, production, transportation, and marketing of crude oil, natural gas, and natural gas liquids. It primarily operates in North America, the North Sea, and southeast Asia. The company was founded in 1925 and is headquartered in Calgary, Canada.

10 Best Stocks To Watch For 2014: Magellan Midstream Partners L.P.(MMP)

Magellan Midstream Partners, L.P., together with its subsidiaries, engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. Its pipeline system transports petroleum products and liquefied petroleum gases from the Gulf Coast refining region of Texas through the Midwest to Colorado, North Dakota, Minnesota, Wisconsin, and Illinois. The company owns and operates marine terminals, which store and distribute refined petroleum products, blendstocks, crude oils, heavy oils, and feedstocks, as well as inland terminals that consist of storage tanks connected to third-party interstate pipeline systems to deliver refined petroleum products. Its ammonia pipeline system transports ammonia from production facilities in Texas and Oklahoma to terminals in the Midwest. The company also stores, blends, and distributes biofuels, such as ethanol and biodiesel. As of March 31, 2011, it operated approximately 9, 600 miles of petr oleum products pipeline system and 51 terminals; 6 marine petroleum terminals located along the United States Gulf and East Coasts; a crude oil storage in Cushing, Oklahoma; 27 petroleum products inland terminals located principally in the southeastern United States; and a 1,100-mile ammonia pipeline system and 6 associated terminals. The company also provides ancillary services, such as heating, blending, and mixing of stored petroleum products and additive injection services. Its customers comprise independent and integrated oil companies, wholesalers, retailers, railroads, airlines, and regional farm co-operatives. The company serves various markets, including retail gasoline stations, truck stops, farm co-operatives, railroad fueling depots, and military and commercial jet fuel users. Magellan GP, LLC serves as the general partner of the company. The company was founded in 2000 and is based in Tulsa, Oklahoma.

Advisors' Opinion:
  • [By Louis Navellier]

    Magellan Midstream Partners (NYSE:MMP) is involved with the transportation, storage and distribution of refined petroleum products. MMP is another oil stock that has gained nearly 20% since January.

Top 10 Oil Companies To Invest In 2014: EXCO Resources NL(XCO)

EXCO Resources, Inc., an independent oil and natural gas company, engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties with a focus on shale resource plays. The company holds interests in various projects located in East Texas, North Louisiana, Appalachia, and the Permian Basin in west Texas. As of December 31, 2010, it had proved reserves of approximately 1.5 trillion cubic feet equivalent; and operated 7,276 wells. The company was founded in 1955 and is based in Dallas, Texas.

Advisors' Opinion:
  • [By Quickel]

    Exco Resources, Inc. (XCO) is trading around $10.70. Exco is an onshore North American oil and natural gas company, and is based in New York. These shares have traded in a range between $9.33 to $21.04 in th e last 52 weeks. XCO is estimated to earn about 78 cents per share in 2011. XCO pays a dividend of 16 cents per share which is equivalent to a 1.5% yield. The book value is stated at $7.69. In 2011, Barclays Capital set a price target of $23 per share for XCO.

Top 10 Oil Companies To Invest In 2014: Chesapeake Energy Corporation(CHK)

Chesapeake Energy Corporation engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States. It also provides marketing and other midstream services. The company?s properties are located in Alabama, Arkansas, Colorado, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. As of December 31, 2010, it had interests in approximately 45,800 gross productive wells. The company?s proved reserves include 17.096 trillion cubic feet of natural gas equivalent. Chesapeake Energy Corporation was founded in 1989 and is based in Oklahoma City, Oklahoma.

Advisors' Opinion:
  • [By Sam Collins]

    Chesapeake Energy (NYSE: CHK) is one of the largest independent exploration and production companies in the United States. It focuses on U.S. onshore natural gas production east of the Rocky Mountains.?

    On Jan. 30, the company said that Cnooc Ltd. (NYSE: CEO) would pay $1.3 billion for access to acreage held by Chesapeake Energy. CHK has also developed a dominant natural gas shale position, and S&P “expects its expertise in unconventional drilling to carry over to liquids development.”?

    Technically, the close above $28 represents a major breakout from a three-year consolidation. The target for CHK is $39.

Top 10 Oil Companies To Invest In 2014: Occidental Petroleum Corporation(OXY)

Occidental Petroleum Corporation, together with its subsidiaries, operates as an oil and gas exploration and production company primarily in the United States. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing, and Other. The Oil and Gas segment explores for, develops, produces, and markets crude oil, natural gas liquids, and condensate and natural gas. Its domestic oil and gas operations are located in Texas, New Mexico, California, Kansas, Oklahoma, Utah, Colorado, North Dakota, and West Virginia; and international oil and gas operations are located in Bahrain, Bolivia, Colombia, Iraq, Libya, Oman, Qatar, the United Arab Emirates, and Yemen. As of December 31, 2010, this segment had proved reserves of approximately 3,363 million barrels of oil equivalent. The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, and ethylene dichloride products; vinyls, such as vinyl chloride monomer and polyvinyl chloride; and other chemicals comprising chlorinated isocyanurates, resorcinol, sodium silicates, and calcium chloride products. The Midstream, Marketing, and Other segment gathers, treats, processes, transports, stores, purchases, and markets crude oil that includes natural gas liquids and condensate, as well as natural gas and carbon dioxide. This segment also involves in the power generation; and trades around its assets comprising pipelines and storage capacity, as well as oil and gas, other commodities, and commodity-related securities. Occidental Petroleum Corporation was founded in 1920 and is based in Los Angeles, California.

Advisors' Opinion:
  • [By Paul]

    Occidental Petroleum (OXY-N75.722.463.36%) is an integrated oil-and-gas company, with operations in the U.S.

    The Los Angeles-based company has strong operating momentum, having grown 12-month sales 27 per cent and net income 76 per cent. Its stock has been a top performer over a three-year span, having gained 12 per cent a year, on average. Occidental has a market capitalization of $78-billion. It receives positive rankings from 84 per cent of researchers. It is scheduled to report fourth-quarter results on Jan. 26. Analysts forecast a 17 per cent year-over-year rise in adjusted earnings and a 7.6 per cent gain in sales. Occidental has an average earnings surprise rate of 6.6 per cent. It beat the consensus expectation by 8.2 per cent last quarter.

    Like Chevron and El Paso, what is most attractive about Occidental is its relative value amid strong secular growth. Its stock sells for a forward earnings multiple of 13 and a book value multiple of 2.5, 28 per cent and 43 per cent peer discounts. Its PEG ratio, the stock's P/E divided by researcher's long-term growth forecast, of 0.3 represents a 70 per cent discount to estimated fair value, a compelling bargain. Occidental pays a quarterly dividend of 38 cents, converting to an annual yield of 1.6 per cent. It has grown the payout 16 per cent and 18 per cent annually, on average, respectively, over three- and five-year spans. JPMorgan, optimistic about Occidental's long-term trajectory, is skeptical of the recent rally.

    Bullish Scenario: Goldman Sachs has a target of $111, suggesting a 13 per cent advance.

    Bearish Scenario: JPMorgan has a target of $90, implying that the stock will drop 8 per cent.

  • [By Gordon Wilcox]

    Occidental Petroleum (NYSE: OXY) Occidental, the fourth-largest U.S. oil company by market value, announced earlier this year it would reduce its Bakken Shale footprint due to high operating costs. However, the California-based company emphasized Bakken is still part of its long-term plans. Additionally, it should be noted Occidental said it would shift resources out of the Bakken to other U.S. shale plays, such as the Monterey Shale and the Permian Basin in West Texas and New Mexico.

    As is the case with most oil equities, there are risks that must be acknowledged with Occidental. First, while the company does not drill offshore, it does operate in some politically volatile places, including Libya. Second, the company is the dominant producer in the Monterey Shale, but California has been slow to approve new drilling permits there. That could weight on Occidental’s output numbers over the medium-term.

    On the bright side, Occidental does compensate investors for their patience. The dividend has more than quadrupled since 2003.

  • [By Steven Goldberg]

    Occidental Petroleum (OXY, $86.66, 3.0%) finds most of its oil and gas in Texas and California, largely through cost-effective techniques of drilling in proven oilfields. The company, which also operates abroad, has a strong balance sheet that lets it take advantage of distressed properties. Unlike many major oil and gas companies, Oxy Pete isn't burdened by a low-profit refining and marketing business (that is, gasoline stations). The stock changes hands at 12 times estimated earnings for the next 12 months. Oxy says it will probably buy back shares in the near future.

Top 10 Oil Companies To Invest In 2014: Energy XXI(Bermuda)

Energy XXI (Bermuda) Limited, together with its subsidiaries, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. The company operates or has interest in 419 gross producing wells in 41 producing fields on 254,891 net developed acres. As of June 30, 2011, its net proved reserves were 116.6 million barrels of oil equivalent. The company was founded in 2005 and is based in Hamilton, Bermuda.

Top 10 Oil Companies To Invest In 2014: Tesoro Petroleum Corporation(TSO)

Tesoro Corporation, together with its subsidiaries, engages in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. The Refining segment refines crude oil and other feed stocks into transportation fuels, such as gasoline, gasoline blendstocks, jet fuel, and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke, and asphalt. This segment also sells refined products in the wholesale market primarily through independent unbranded distributors; and in the bulk market primarily to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines and marine, and industrial end-users. It owns and operates 7 refineries with a combined crude oil capacity of 665 thousand barrels per day. The Retail segment sells gasoline, diesel fuel, and convenience store items through company-operated retail stations, and third-party branded dea lers and distributors in the western United States. As of December 31, 2011, this segment had 1,175 branded retail stations under the Tesoro, Shell, and USA Gasoline brands. The company was formerly known as Tesoro Petroleum Corporation and changed its name to Tesoro Corporation in November 2004. Tesoro Corporation was founded in 1939 and is headquartered in San Antonio, Texas.

Top 10 Oil Companies To Invest In 2014: ATP Oil And Gas Corp (ATPO.MU)

ATP Oil & Gas Corporation, incorporated in 1991, is engaged in the acquisition, development and production of oil and natural gas properties. As of December 31, 2011, the Company had estimated net proved reserves of 118.9 Million barrels of crude oil equivalent (MMBoe), of which approximately 75.9 MMboe (64%) were in the Gulf of Mexico and 42.9 MMBoe (36%) were in the North Sea. The reserves consisted of 78.6 Million barrels (MMBbls) of oil (66%) and 241.5 billion cubic feet (Bcf) of natural gas (34%). Its proved reserves in the deepwater area of the Gulf of Mexico account for 62% of the Company�� total proved reserves and its proved reserves on the Gulf of Mexico Outer Continental Shelf account for 2% of its total proved reserves. During the year ended December 31, 2011, the Company acquired three licenses in the Mediterranean Sea covering potential natural gas resources in the deepwater off the coast of Israel (East Mediterranean). On August 17, 2012, ATP Oil And Ga s Corp filed for Chapter 11 bankruptcy protection.

The Company�� natural gas reserves are split between the Gulf of Mexico (57%) and the North Sea (43%). Of its total proved reserves, 8.3 MMBoe (7%) were producing, 19.0 MMBoe (16%) were developed and not producing and 91.6 MMBoe (77%) were undeveloped. The Company�� average working interest in its properties at December 31, 2011, was approximately 81%. The Company operates 92% of its platforms. At December 31, 2011, in the Gulf of Mexico, it owned leasehold and other interests in 38 offshore blocks and 49 wells, including 23 subsea wells. The Company operates 43 (88%) of these wells, including 100% of the subsea wells. In the North Sea, it also had interests in 13 blocks and two Company-operated subsea wells. As of March 15, 2011, the Company owned an interest in 13 platforms, including two floating production facilities in the Gulf of Mexico, the ATP Titan at its Telemark Hub and the ATP Innovator at its G omez Hub. It operates the ATP Innovator and the ATP Titan.!

Top 10 Oil Companies To Invest In 2014: Precision Drilling Corp (PDS)

Precision Drilling Corporation (Precision) is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and production companies in Canada and the United States. The Company operates in two segments: Contract Drilling Services, and Completion and Production Services. In Canada, the Contract Drilling Services segment includes land drilling services, directional drilling services, procurement and distribution of oilfield supplies and the manufacture and refurbishment of drilling and service rig equipment, and the Completion and Production Services segment includes service rigs for well completion and workover services, snubbing services, camp and catering services, wastewater treatment services and the rental of oilfield surface equipment, tubulars, well control equipment and wellsite accommodations. Advisors' Opinion:
  • [By Louis Navellier]

    Dahlman Rose, an investment bank specializing in natural resources, upgraded the oil services industry in November 2012; one of the prime recipients of this upgrade was Precision Drilling, Canada's largest oilfield services company. Dahlman Rose expects North American exploration and production to increase by 11% in 2013 to $334 billion, led by a big increase from natural gas. The investment banker believes land drillers like Precision are selling at a historically low multiple of 1.1 times tangible book value compared to the historical norm of two times tangible book value. Heading into 2013, Precision's stock's dropped a significant amount and sits at one of its lowest levels in the past two years. Despite reduced demand for its services in 2012, CEO Kevin Neveu pointed out in October that, "PDS is seeing increased long-term contracts for upgraded and new rigs." Rising natural gas prices should increase the industry's rig utilization rate to around 85%, naturally increasing Precision's revenues and profits. This could be an easy double in 2013.