Energy Companies: Money coming out of the Wazoo

Money coming out of the Wazoo – Al Sabawi

For the past few days my Quantopix Analyzer has been popping out  recommendations for Oil and Gas companies more than any other sector which tells me a rotation is afoot.   These companies appear to have amazing balance sheets and cash flow coming out of the wazoo.  Look the remarkably low EBIDTA multiples, PE ratio, and Revenue/EV which is almost at parity. These companies remind me of Blue Star Airline in the movie Wall Street. If these companies were liquidated for cash  they will still make you tons of money.  However, I look for EPS growth as my main criteria and filter my findings through Quantopix propitiatory momentum detector  which I am proud to say I wrote myself. Here are my latest findings:

PIONEER NATURAL RESOURCES CO (PXD): Company Fundamentals as of 2011-07-15

Float
Common Outstanding Shares: 116 M
Common Outstanding Share for Diluted Earning: 116 M
Valuation
Market Capitalization:$11868.6 M
Enterprise Value/EBITDA: 8.7148
Enterprise Value/Revenue: 5.5816
Price/Earning: 7.92
PEG Ratio: 0.0711
Earning Yield: 5.8477%
Earnings
Net Income: $348.594 M
Last Quarter Reported EPS: 3.0001
Next Quarter EPS Estimate: 0.842
Cash and Dividends
Free Cash Flow: $514.43 M
Cash in Hand: $520.651 M
Dividend per Share: $0
Dividend Yield: 0%
Sales
Total Sales: $496.3002 M
Sales per Share: $4.27845
Sales Turnover: $497.13 M
Assets & Liabilities
Current Assets: $1235.59 M
Current Liabilities: $695.864 M
Assets/Liabilities: 1.44788
Book Value per Share: $39.1032
Long Term Debt: $2562.69 M
Company Management
Stock Buyback: 35.345 M
Operating Profit Margin (TTM): 42.3026%
Wall Street Sentiment
Short Interest: 6.6714% of Outstanding Shares
Insiders Sold this Quarter: 9440 Shares
Insiders Bought this Quarter: 1500 Shares
Insiders Sold/Bought Ratio 6.29


 

 

 

 

 

 

 

 

CHEVRON CORPORATION (CVX): Company Fundamentals as of 2011-07-15

Float
Common Outstanding Shares: 2010 M
Common Outstanding Share for Diluted Earning: 2007 M
Valuation
Market Capitalization:$215781 M
Enterprise Value/EBITDA: 4.3252
Enterprise Value/Revenue: 0.9696
Price/Earning: 8.59
PEG Ratio: 0.1854
Earning Yield: 9.5823%
Earnings
Net Income: $6211 M
Last Quarter Reported EPS: 3.08963
Next Quarter EPS Estimate: 3.47
Cash and Dividends
Free Cash Flow: $5169 M
Cash in Hand: $16874 M
Dividend per Share: $0.71
Dividend Yield: 2.69%
Sales
Total Sales: $56270.352 M
Sales per Share: $27.9952
Sales Turnover: $56278 M
Assets & Liabilities
Current Assets: $50851 M
Current Liabilities: $33313 M
Assets/Liabilities: 1.61969
Book Value per Share: $55.2193
Long Term Debt: $9758 M
Company Management
Stock Buyback: 58 M
Operating Profit Margin (TTM): 16.3651%
Wall Street Sentiment
Short Interest: 1.1517% of Outstanding Shares
Insiders Sold this Quarter: 44035 Shares
Insiders Bought this Quarter: 10000 Shares
Insiders Sold/Bought Ratio 4.4


 

 

 

 

 

 

 

 

CONOCOPHILLIPS (COP): Company Fundamentals as of 2011-07-15

Float
Common Outstanding Shares: 1414 M
Common Outstanding Share for Diluted Earning: 1491 M
Valuation
Market Capitalization:$114172 M
Enterprise Value/EBITDA: 3.7706
Enterprise Value/Revenue: 0.6109
Price/Earning: 8.92
PEG Ratio: 0.081
Earning Yield: 10.4057%
Earnings
Net Income: $3028 M
Last Quarter Reported EPS: 2.14219
Next Quarter EPS Estimate: 2.23
Cash and Dividends
Free Cash Flow: $850 M
Cash in Hand: $8403 M
Dividend per Share: $0.67
Dividend Yield: 3.49%
Sales
Total Sales: $53166.5414 M
Sales per Share: $37.6001
Sales Turnover: $53148 M
Assets & Liabilities
Current Assets: $35613 M
Current Liabilities: $29218 M
Assets/Liabilities: 1.22771
Book Value per Share: $49.3275
Long Term Debt: $26739 M
Company Management
Stock Buyback: 1561 M
Operating Profit Margin (TTM): 11.8163%
Wall Street Sentiment
Short Interest: 0.8722% of Outstanding Shares
Insiders Sold this Quarter: 63400 Shares
Insiders Bought this Quarter: 205 Shares
Insiders Sold/Bought Ratio 309.27

 

 

 

 

 

 

 

 

 

Happy Investing

Al

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Are there bargains in the slaughter house??

I’ve been watching mobile technology and tablets “derivative” stocks.  Please avoid the top names mobile and tablet makers for now (especially Apple), they already had their run and they need a couple of super positive surprises just to maintain their stock prices.  However, I think there are gems in the derivatives which include components makers, accessories manufacturers, and specialized tooling companies.  I have been talking about ZAGG for a while and despite today sellout, ZAGG is up yet another +10%.  I could not help it!! I sold ZAGG today with +30% return.  Not too shabby for 3 month investment!  But all the while I was asking myself what is next?

Well, I really could not find a similar opportunity so far so I decided to look at my old list of companies and do some bargain analysis.  Here are the 3 stocks I think will bounce: CRUS, OVTI, and GLW.  Those three are plays on AAPL, RIMM, MMI and and others in the space. They should benefit from the rise in sales of mobiles and tablets no matter which platform makes it to the top.  In this grim market, we don’t have a lot to choose from, so these may be the best I can find so far. Cash is not an option!! I still like MSFT and added DELL today to my buy list.

 

Al Sabawi

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Get a Glass of this ..

So Dow Corning (GLW) came out today with Q1 financial results.  Despite the impact caused by the tragedy in Japan and the negative press their supply chain received, Corning reported that sales grew 17 percent, to $1.58 billion in the first quarter.  Their adjusted net income, which excludes these tax benefits, rose 2 percent in the quarter. This is certainly a positive indicator for watchers of GLW.  I have blogged on April 7th that GLW is an undervalued stock on the fundamentals alone.

GLW Chart May 10, 2011

GLW Positive Indicators

Technically, the company is trading below its 1 year regression-to-mean line on a recovery trend and their MACD is oscillating up (see chart).  That is all good for the casual observer. However, what really interests me is their rising market share in the Touch-Screen mobile and tablet markets.  Don’t forget the expanding Touch-Monitor market for PCs and even Touch-Screens for TVs (Oh .. you don’t have one of those yet! ) that are slowly but surely entering the main stream computing market.

Another factor for helping GLW growth this year is the aggressive effort by the Japanese Tech manufactures to boost their production and sales as part of their recovery.

GLW is now trading below $21 and I think it should get a $24 handle within 4-6 months.

 

 

 

 

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ZAGG is Back

I blogged about ZAGG back in February this year as a relatively unknown company with phenomenal growth potential and trail blazing penetration in the mobile phones and tablets market. Well, since then ZAGG posted their amazing earnings and expanding costumer base. On March 25 they reported 157% revenue year-over-year increase and 46% sales increase.  Their adjusted EBITDA for the fourth quarter was $6.6 million or $0.27 per share versus $1.7 million or $0.07 per share for Q4 2009, an increase of 281%.   These are great numbers for a relatively new comer. Prior to their earning announcement, I loaded up on the stock when it had a $7 handle and never looked back.  I was waiting for wall street to notice this stock!  The stock has been on a steady rise since then, recently it broke through $9 and it appears to pick up momentum.  My target price on the stock remains, as I commented before, $13+.  Keep a watch on it.

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National Semi isn’t the only one so undervalued

Taxes Instrument’s takeover of National Semi was a wonderful surprise and a great move for TI long-term. What took everyone by surprise was the premium paid, about 72% over the market price. Whether it was worth it or not, that’s something for the future to decide, but what mattered was that NSM was severely undervalued by this inefficient market. The tech market especially was so occupied by startup hypes, cool Internet sites, and fancy gadgets that it ignored a rock solid base technology that is fundamental to life as we know it. Luckily someone was watching! Great for TI and investors who were doing their homework ;)

Now what is next? Well, there are a couple of dogs that have been grooming themselves and were not being noticed:

EMC, MSFT, and GLW. I will post my research later on these, but if you have to pick one from the three, then I think GLW is the most severely undervalued. EMC and MSFT were just caught into a downdraft and have not recovered yet.

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ORCL and RIMM Numbers today

Oracle (ORCL) and Research in Motion (RIMM) are reporting earnings today after the close.  The EPS expectations are little high for Oracle. I think Oracle will be helped by Larry Ellison’s acquisition of MySQL so they may meet the expectations. It was one of Larry’s smart moves IMHO.   On RIMM however, I am not sure.  I think they are in a tough spot with Apple and the crowded mobile suppliers eating their cake.  So I would not be surprised if they miss. 

Al Sabawi

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Software is King!

By Al Sabawi

Red Hat came out with their 4th quarter numbers today and they were eye popping!.  Their  “fourth-quarter net income rose to $33.5 million, or 17 cents a share, compared to $23.4 million, or 12 cents a share in the same period a year earlier. They said total revenue for the period ended Feb. 28 rose 25% to $244.8 million. On an adjusted basis, Red Hat said earnings for the quarter were 26 cents a share”.  This was much better than the analyst consensus of $236 million on Thomson Reuters. EPS was $0.26, vs. expectations of $0.22 per share.

Although I am impressed with this result, I am not in the least surprised!  Why? For a couple of reasons that I always believed in:

  • Computer Operating systems and the software tools that are built around them are the heart and soul of all of our technologies.  Operating Systems are in every computerized piece of equipment you have ever used. They run the stock market exchanges all over the world, the web servers that servers you this page, and the new fancy car you are thinking about buying.  Microsoft started this revolution and now Linux suppliers like Red Hat took it over and built a new open source business model that made it accessible to everyone who wants to innovate.  When this business model started in the late 90’s, every business leader out there from Bill Gates to Louis Gerstner questioned the validity of building a company around code then giving it for free over the internet. These leaders may have been visionaries in their time, but certainly have not envisioned the power of open platforms in shaping the industry. They missed seeing that independent developers can organize and communicate with the help of the exploding internet. And that those developers can supply brilliant system designs to the business community that is hungry for efficiency.  They missed that when businesses are building the most critical of systems don’t have to buy their hardware from IBM and their operating systems from Microsoft or some other proprietary supplier only to go back to hire these same companies to service and maintain these systems.
  • The other belief I have is that software remains the greatest business out there in this new technology driven world.  The need for good developers will keep increasing and if established businesses don’t seek them to expand and improve; developers will cut their own path with new innovations to startups that will be the envy of all the heavy weight companies.   

Red Hat is the new Microsoft to the software industry with a major modification to the pick up line:  “You own the code running on your servers, not Red Hat, change it as you wish.  We bet that you will come to us and hire us to set it all up and maintain it for you.  However, you don’t have to”

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Seeking fear world

BBC: nuclear distraction Have people gotten so negative that they are ready to accept any calamity as ‘World Ending’ sign? We are all very sorry for what happened in Japan.but people .. This is far from Chernobyl which the world survived very quickly.

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You win some you lose some Mr. Paulson!

John Paulson underperformed the market!!  Frankly I always thought his investing prowess was a bit overstated.  
http://www.businessinsider.com/legendary-investor-john-paulson-likes-these-stocks-2011-3

John Paulson has too many companies in his portfolio.  If diversity is what he is looking for, he should stick with the sp500


Al Sabawi

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Mobile computing is set to explode

iPad is only the tip of the iceberg. There are hundreds of invisible component makers and suppliers, hardware and software companies, who will see amazing growth in the next 2 to 4 years.

I like the chart in this article Here

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