2nd quarter results for NETC are coming out July 22nd.
There are not many analysts tracking this company in the US, but expect to see much better numbers then 2Q 2007. Being the leader cable & internet provider in Brazil doesn’t have to mean increases of earnings are on the horizon. Their current plan is short term growth, which if accomplished translates to higher revenues and a broader region of services. The Big TV acquisition won’t have much of an effect in Q2, however their purchase of Vivax in October of 2006 should be gaining maturity. One thing to cheer for are operating and profit margins above 8% as their current deal with Big TV comes with a $200 Million loan at 7.875%.
Ultimately I like this stock because I want to believe NETC will focus on earnings per share once they attain the region and market share desired. Till then expect frustration in stock price.
Excellent post over at Seeking Alpha right now discussing the rapid acceleration of Apple’s iTunes Music Store. They chart the sales growth nicely for you, but the upshot of it is:
first 100 million sales in 2004
broke 1 billion sales in 2006
broke 5 billion sales in 2008
Considering the fact that iTunes began life as a way of driving sales of Apple hardware, this looks like smashing success. Now that Apple has a dominant position in the MP3 player market (they always have 3 or more positions in the top 5 players for sales) and iTunes is a household name, their new initiatives get to launch with enormous steam behind them from day one.
I’m talking about the IPhone primarily, but the AppleTV is also a really interesting device. Both of these are video devices, and video is definitely a growth market. Those of you who know me know that I’m bullish on web video. It seems clear that as the world slowly transitions from traditional television to video on all of their new devices, Apple is going to be there in spades to soak up the growth.
BHP Billiton is a global natural resource giant located in Melbourne, Australia. BHP is a the market leading or almost the market leading supplier of aluminum, energy and metallurgical coal, copper, manganese, iron ore, uranium, nickel, silver and titanium minerals. They also have interests in oil, gas, natural gas and diamonds. If it comes out of the ground and is useful, BHP probably has a hand in it. We originally bought this stock because there were talks of BHP Billiton acquiring rival Rio Tinto (RTP). BHP is already the largest natural resource company in the world and adding Rio Tinto would’ve given them a near monopoly. Unfortunately, the deal never got off the ground as Rio Tinto never seemed willing to be purchased, however, the stock has done well YTD because China and India are rapidly developing their country and requiring a lot of natural resources to do so. While these two countries are in super growth mode, especially considering their vast populations, there should be a very healthy demand for BHP’s inventory of resources and the stock should steadily climb for the next few years.
But seriously, Under Armour was started in 1996 by former University of Maryland football player Kevin Plank. Kevin wanted to design athletic apparel that would improve an athlete’s performance by wicking away the sweat from the body keeping the athlete cooler in hot weather. From that simple plan grew an assortment of product lines such as HeatGear(R), ColdGear(R) and AllSeasonGear(R). Over the last 5 years UA has grown its sales revenue from $50M to $600M as the Under Armour label has grown in popularity among athletes, especially youth consumers. Under Armour is the football uniform of choice for Auburn, Maryland, Hawai’i, South Carolina and Texas Tech, and hopefully that list will grow and tap into other large fan bases. Under Armour has now set its sights on Nike’s athletic shoe dominance. Although, UA has had a line of cleats available, they recently made their debut in cross training footwear on May 3rd, which you might have heard about from their 1st Super Bowl ad in January, and has already become a dominant player in that area. From here they will look to make a splash in a much larger segment, running shoes.
We purchased Starbucks back in August of 2007 at $24.42 per share. At the time SBUX had dropped 30% of its price over the previous 18 months. After a long run up during the early to middle 2000s we saw this drop as a correction. We thought that a 30% was a little excessive and that once SBUX hits a bottom a more stable stock will emerge that will continue its growth at a more realistic and steady pace. Unfortunately SBUX did not hit its bottom in August 2007. In fact, SBUX continued to drop another 30%+ to as low as $16. SBUX has since rested around $18 not knowing which way to go next. This has been one of Ben Hur’s worst performing stocks but it has provided us with good experience. We still believe in Starbucks in the long run and will continue to hold it in our portfolio.
AllianceBernstein LP. provides investment research and services globally as well as managing their own family of mutual funds. In addition, AB is one of the largest global asset management firms in the world with approximately $800M in assets under management. With over 4.1 million clients worldwide, AB has offices in over 47 cities in 25 countries. Although primarily based in the U.S. – Atlanta, Boston, Chicago, Cleveland, Dallas, Denver, Houston, Los Angeles, Miami, Minneapolis, Philadelphia, San Francisco, San Diego, Seattle, Tampa, Washington D.C., West Palm Beach and White Plains – AB also maintains foreign offices in London, Tokyo, Singapore, Shanghai, Mumbai, Cape Town, Sao Paulo, Hong Kong, Madrid and Montreal, making it available to service the needs of investors in virtually any developed areas of the world. AB currently yields a 5-6% dividend which is paid quarterly. Unfortunately, we purchased this stock before the recent financial crisis began, however, the club hopes that once the credit fears and financial bubbles pass, AB will be a big winner as more investors get back into the market.
I did not get a chance to present my stock at the last meeting, but I wanted to provide a brief explanation for my attraction to this company.
With oil prices above $120/bbl and gas prices at $4/gal coupled with a presidential election where candidates will be touting greener energies and a movement away from oil dependency, alternative energies seem like a great place to be invested. The problem is that the industry is flooded with wannabes and only a few of the companies will actually survive. I believe Cypress Semiconductors, yes a semiconductor company, is a safe way to play the alternative energy sector.
Cypress Semiconductors specializes in Programmable System-on-Chips (PSoC). These little suckers are what make your mouse’s “click wheel” work so smoothly. After several years of averaging right at $800M in revenues, they broke out in 2006 with over $1B and in 2007 then increased that 50% to $1.5B including nearly $400B in net income.
More importantly though, Cypress Semiconductors spun off SunPower Corp. (SPWR), a solar subsidiary, two years ago but they retained over 50% ownership. SunPower makes photovoltaic cells and it’s stock has soared over the last year or so, although it’s currently down about 40% YTD do to it’s meteoric rise last year. SunPower Corp. brought in $775M in revenue last year, up from $78M two years ago and has become profitable the last two years. They recently gave sales guidance for 2008 of $1.3B, so they are definitely a growth stock in the solar industry. As of the close of day on June 4, 2008 (as I write) SPWR is priced at $78.52 a share which gives it a $6.65B market cap.
Now remember that Cypress owns over 50% of SunPower which means that if Cypress’s semiconductor business unit was worth $0.00, it would still have a market cap of $3.325M based on it’s ownership of SunPower shares. Cypress currently has a $4.18B market cap, which means that it’s semiconductor business is being valued at $800M. Hard to imagine that a company bringing in over $1B in sales per year is only worth $800M!! I think this is a good stock to own as it allows you to have exposure to two sectors and you have a very solid floor to limit your downside risk.
Gramercy Capital Corp. is a REIT that has holdings in commercial properties. Over 50% of those are held by the like of BOA and Wachovia. Both are strong banks that are not going anywhere anytime soon.
GKK has a 14.68% Dividend Yeild.
That means if we buy $1000 in it they will pay us close to $150/year in dividends which is pretty much guaranteed and likely to increase not decrease.
On top of that we have any gains that it may achieve on the appreciation of its stock price. A year ago this stock was at $32 so it has room to grow
Over the last year GKK is down 45%, which makes it very cheap today.
It has a High sales growth rate and margin, which means its good at making money.
Published by Charles on June 3, 2008
under hot stock
Notes below:
Internet Brands, Inc. is an Internet media company that builds, acquires, and enhances branded Websites. Its Websites are focused on facilitating the research of high-value or specialty products, enabling it to sells targeted advertising. Now own over 69 web sites that bring in over 100,000 visitors/month and attract more than 32 million visitors per month across their properties
Strong Acquisition Pipeline
- spending about 25 million per quarter
- Acquire Websites at Great Rates
- On a tear. Buying properties constantly.
- In fact, with the soft environment, sellers may be more motivated to do deals
Loss of some revenues
- mortgage and auto vertical related
- Replaced with other revenues
Concerned about costs rising with revenues
- Cost attributed to Acquisitions
- But that doesn’t seem to be the case
- Cost is mainly due to personnel both selling and technical
- hopefully Cost Efficiencies
Conclusion
- hold for now. Watch for cost efficiencies
Links – Documents read in preparation for this video:
Orbital Sciences (NYSE: ORB) is a space contractor founded in 1982 with a focus on building smaller and more affordable satellites and launch vehicles, with projects in communications, defense systems, scientific research. All of these market segments are trending upwards.
This is a growth stock. Orbital is aiming for 10% growth rate for the next 3-5 years. The company is maintaining its focus on the smaller, growing niches which are underserved by the major aerospace companies. Orbital seeks to continue providing highly-reliable space systems on fast schedules at affordable prices.
Orbital is an R&D stock, at its core. A strong R&D stock with some age will show a gradient of segments, ranging from mature segments which make steady money at a nice margin to fledgling segments which are just emerging with low profit margins but excellent long-term growth. Orbital looks to have legs on this point. Let’s examine their segments:
3 Core Segments
Launch Vehicles
These are literally the rockets that get various systems into space, whether it’s a satellite or a missile. This is the original business Orbital was set up for in the early 1980s, and over 500 launch vehicles have been produced to date. About 177 more of them are under contract, currently. Launch systems represent the mature segment of Orbital’s resources, where they hold a majority share of the market with profit margins at 10%+ and an expected growth of about 10% per year through 2010.
Satellites
Orbital has a strong share of the satellite market, with 145 satellites delivered since ‘82, and 28 more currently contracted. Despite Orbital’s strong position here, the satellite market is not as lucrative, with revenue growth projected at 5-7% and profit margins in the 8-9% range. However, Orbital is the dominant player in the small communications satellite market, with 55% of the segment.
Advanced Space Programs
This is the bleeding edge of R&D for Orbital. In the past 10 years, they have worked on “8 Major Advanced Space Products” which are adjacent to the core offerings. Just last year this segment was spun out into its own group, and with good reason. Its margins are currently only around 6%, but the growth potential looks to be something like 20-25% per year through 2010, and I see no reason why it would stop there.
Some Financial Info
Orbital maintains a high revenue visibility due to a $3.4B contract backlog, which is already 60% of revenue coverage between 2008 and 2010!
Orbital was recently awarded a DoD contract for $100M over the next 10 years, and they also announced earlier this month that they would be manufacturing the Koreasat 6 Communications Satellite for KT Corporation in the Republic of Korea.
Most of the information in this post is derived from the ORB presentation at FBR given on May 28th.
