Be careful about shorting due to today's market drop. It might very well be a head fake. The economy IS doing well and market reversal might very well take place only next year. If shorts load up today, they really might get squeezed. If the market stays at the lower levels reached today for the next 3 days then we can expect a down trend.
AMD is up slightly on high volume. This one is going up IMHO.
http://stocksharks.blogspot.com
Monday, November 27, 2006
Thursday, November 23, 2006
Nice article on market share
http://news.zdnet.com/2100-9595_22-6130795.html?tag=nl
Great article covering market share.
Remember the one rule of the market. The underdog always deserves a high P/E when it has great products and has tons of marketshare to capture. Remember JNPR vs CSCO. JNPR commanded that P/E in the hey days but then Cisco came in with better products JNPRs price declined. AMD is in a sweet spot right now. Just checkout the gains in the server market.
Great article covering market share.
Remember the one rule of the market. The underdog always deserves a high P/E when it has great products and has tons of marketshare to capture. Remember JNPR vs CSCO. JNPR commanded that P/E in the hey days but then Cisco came in with better products JNPRs price declined. AMD is in a sweet spot right now. Just checkout the gains in the server market.
Time to short Oil and Gas companies?
I never wanted to invest in Oil and Gas companies. Not that I am trying to be a prude but it is a prospect I haven't thought over. I did of course always think about shorting these companies :) Besides shorting is not investing.
This is not the best time to short these companies and may be the best time was some 3 months back. Having said that there are still a few companies where valuation hasn't caught up with the drop in oil price and the drop in growth.
One such company is UPL. It's a oil and gas exploration company with revenues doubling every year from 2003 to 2005. That's where it ends. 2006 growth is expected to be about 20%. Company does oil exploration in Wyoming and China. China growth is about 10%. If you look at the stock price it has gone from $3 to $50 in the last 5 years and is well off it's highs or $70. The stock has a 52 week range of $41 and $70. The P/E is very high for comparable companies at 32.78. The P/S )Price to Sale) is ridiculously high at 12.67 (almost 4 to 8 times higher than the comparable companies). If oil stays at these levels this stock might head down for a while. I see us revisiting 40 some time in the next 2 quarters. Note: The market cap is 7.5 Billion and sales are about 500 Mil in 2005 and about 600 Mil in 2006. Their profit margins are excellent. That is the one catch. If they spend more money in oil exploration that doesn't allow them the fantastic margins they have enjoyed then that is another reason this stock might head down. UPL has the best cost ratio per barrel of oil. That in my opinion will not improve any further.
Countries like Venezuela and Iran will not follow the OPEC cut downs and will produce and sell oil for under the oil price. The cost of a barrel of oil is about $2. Developing countries would not forego the margins they get with oil by cutting down on their production.
Oil might stay at these levels for a while and Oil companies need to factor in the lack of growth.
This is not the best time to short these companies and may be the best time was some 3 months back. Having said that there are still a few companies where valuation hasn't caught up with the drop in oil price and the drop in growth.
One such company is UPL. It's a oil and gas exploration company with revenues doubling every year from 2003 to 2005. That's where it ends. 2006 growth is expected to be about 20%. Company does oil exploration in Wyoming and China. China growth is about 10%. If you look at the stock price it has gone from $3 to $50 in the last 5 years and is well off it's highs or $70. The stock has a 52 week range of $41 and $70. The P/E is very high for comparable companies at 32.78. The P/S )Price to Sale) is ridiculously high at 12.67 (almost 4 to 8 times higher than the comparable companies). If oil stays at these levels this stock might head down for a while. I see us revisiting 40 some time in the next 2 quarters. Note: The market cap is 7.5 Billion and sales are about 500 Mil in 2005 and about 600 Mil in 2006. Their profit margins are excellent. That is the one catch. If they spend more money in oil exploration that doesn't allow them the fantastic margins they have enjoyed then that is another reason this stock might head down. UPL has the best cost ratio per barrel of oil. That in my opinion will not improve any further.
Countries like Venezuela and Iran will not follow the OPEC cut downs and will produce and sell oil for under the oil price. The cost of a barrel of oil is about $2. Developing countries would not forego the margins they get with oil by cutting down on their production.
Oil might stay at these levels for a while and Oil companies need to factor in the lack of growth.
Could AMD be a good buy at these levels?
AMD has done exceptionally for the last couple of years. The stock seemed to have peaked in March of this year. Not unexpected as revenue for this year will be lower than last (due to Spansion spinoff) and Intel had the worst fourth quarter in 2005. Intel is kind of back and AMD will need to keep up this level of innovation and ramp production at the same time. Last year AMD gained at Intel's expense, got great margins and most importantly broke into Dell.
If you remember buying a laptop / desktop some 4 /5 years back, you would not consider buying an AMD. There has been a major shift in consumers where people realize that AMDs have great CPUs.
Intel now has low power consumption chips. Intel is also ahead in the race for lower nanometer production and has come up with the first quad core (2 dual cores together). Intel seems to be competing better but the biggest advantage that AMD has in my opinion is the traction they already have on Opteron and the fact that consumers are now open to buying AMDs a lot more that they were a few years back.
Vista will drive PC sales. AMD's market cap is lower than Nvidia. ATI acquisition was a smart move in many ways. They used debt since their stock had already taken a hit and that was a smart move.
I think the stock is very down (21.77) and is currently trying to fight through resisitance levels. Short term downward risk is about a dollar but upward move can easily be about 3 to 4 bucks in the next 15 days or so. AMD has set themselves low fourth quarter targets. I think they have an excellent chance of beating these numbers. I think they will be an excellent competitior for Intel over the next few years.
http://stocksharks.blogspot.com
If you remember buying a laptop / desktop some 4 /5 years back, you would not consider buying an AMD. There has been a major shift in consumers where people realize that AMDs have great CPUs.
Intel now has low power consumption chips. Intel is also ahead in the race for lower nanometer production and has come up with the first quad core (2 dual cores together). Intel seems to be competing better but the biggest advantage that AMD has in my opinion is the traction they already have on Opteron and the fact that consumers are now open to buying AMDs a lot more that they were a few years back.
Vista will drive PC sales. AMD's market cap is lower than Nvidia. ATI acquisition was a smart move in many ways. They used debt since their stock had already taken a hit and that was a smart move.
I think the stock is very down (21.77) and is currently trying to fight through resisitance levels. Short term downward risk is about a dollar but upward move can easily be about 3 to 4 bucks in the next 15 days or so. AMD has set themselves low fourth quarter targets. I think they have an excellent chance of beating these numbers. I think they will be an excellent competitior for Intel over the next few years.
http://stocksharks.blogspot.com
Sunday, November 19, 2006
Wednesday, November 15, 2006
Nov 15th Market action recap
I think I will try to do a daily recap henceforth.
Market really seems to be over bought at this point. The market might take a breather tomorrow as some earnings have been disappointing after hours. Also, tomorrow the CPI numbers come out. Fed meeting minutes that came out today had a clear message. If the Fed smells inflation, they will raise the interest rates. Raising Interest rates will surely be a killer. Market has been going up since PPI inflation data was well under control. On the other hand if the CPI data tomorrow gives us a shock (unlikely) then the market is definitely heading down.
Stocks are moving up purely on momentum. Take a look at the RIMM's move - Research in Motion (Blackberry maker). Market cap is 23.6 Billion. Compare that with Motorola 53 Billion. So you have a company with 1/10th the sales of Motorola at just half Motorola's market cap. Expectations are high due to the BlackBerry Pearl for personal use. Pearl has some bad reviews on Amazon and does not have the QWERT keyboard. Add to that competition from the likes of Motorola that just bought GOOD Technologies (Mobile email space). This sucker is going down. RIMM is a short in my opinion.
Another potential short is CROX (crocs shoes).
Having said that both RIMM and CROX seem to have a lot of momentum. Look for a confirmed reversal if you want to play it safe. If RIMM goes higher then look to buy Puts for Jan although they are expensive.
Salesforce.com (CRM) reported after hours. One time expenses ate all their profits. The company is valued at 4.76 Billion and sales are increasing about 10% quarter over quarter. CRM is another short IMHO.
Guess what's back in play. OVTI - excellent value for money. Earnings on Nov 30th and stock has begun to move. If you decide to dip in then please sell before Nov 30th earnings. Last earnings had lower margins. The company is excellent value for money. 980 mil market cal, 380 mil in cash, 100 mil cash flow every year and 30 - 40% growth. It's a dream buyout.
Market really seems to be over bought at this point. The market might take a breather tomorrow as some earnings have been disappointing after hours. Also, tomorrow the CPI numbers come out. Fed meeting minutes that came out today had a clear message. If the Fed smells inflation, they will raise the interest rates. Raising Interest rates will surely be a killer. Market has been going up since PPI inflation data was well under control. On the other hand if the CPI data tomorrow gives us a shock (unlikely) then the market is definitely heading down.
Stocks are moving up purely on momentum. Take a look at the RIMM's move - Research in Motion (Blackberry maker). Market cap is 23.6 Billion. Compare that with Motorola 53 Billion. So you have a company with 1/10th the sales of Motorola at just half Motorola's market cap. Expectations are high due to the BlackBerry Pearl for personal use. Pearl has some bad reviews on Amazon and does not have the QWERT keyboard. Add to that competition from the likes of Motorola that just bought GOOD Technologies (Mobile email space). This sucker is going down. RIMM is a short in my opinion.
Another potential short is CROX (crocs shoes).
Having said that both RIMM and CROX seem to have a lot of momentum. Look for a confirmed reversal if you want to play it safe. If RIMM goes higher then look to buy Puts for Jan although they are expensive.
Salesforce.com (CRM) reported after hours. One time expenses ate all their profits. The company is valued at 4.76 Billion and sales are increasing about 10% quarter over quarter. CRM is another short IMHO.
Guess what's back in play. OVTI - excellent value for money. Earnings on Nov 30th and stock has begun to move. If you decide to dip in then please sell before Nov 30th earnings. Last earnings had lower margins. The company is excellent value for money. 980 mil market cal, 380 mil in cash, 100 mil cash flow every year and 30 - 40% growth. It's a dream buyout.
Tuesday, November 07, 2006
Buy March 07 puts for CROX
This stock is very over bought. Market cap is huge for it's revenues. Worse still, company guidance for the next quarter actually shows negative growth which is unbelievable considering the company grew almost 100% quarter over quarter.
You can't short the stock as it's not available to short. What you are seeing is a typical short covering rally. Take a long term short stance and I think this is a winner.
You can't short the stock as it's not available to short. What you are seeing is a typical short covering rally. Take a long term short stance and I think this is a winner.
Saturday, November 04, 2006
Digital Angel rescheduling 3rd quarter earnings call
Digital Angel is rescheduling the earnings conference call. Key words to note here are "Strategic Alternatives".
Digital Angel Corp. (DOC.A: Quote, Profile, Research) on Friday said it is rescheduling the release of its third-quarter results to update shareholders on strategic alternatives for the company.
If you revisit their recent history they just got a patent on glucose sensing microchip on diabetes. Before that stocks was at a 52 Week low. My feeling is that they are announcing a strategic alliance or may be a buy out. They might have the patent but they can't do it alone cause they don't have the money for it. They are small in market cap and their revenues aren't bad for a company in this industry group at this point in the company's evolution.
I could be completely wrong and "Strategic Alternatives" may mean the company is figuring out how to get more funding also. They have enough cash though so I doubt that but you get the point. Could be anything but most likely it's good news.
Cheers,
Ahu
Digital Angel Corp. (DOC.A: Quote, Profile, Research) on Friday said it is rescheduling the release of its third-quarter results to update shareholders on strategic alternatives for the company.
If you revisit their recent history they just got a patent on glucose sensing microchip on diabetes. Before that stocks was at a 52 Week low. My feeling is that they are announcing a strategic alliance or may be a buy out. They might have the patent but they can't do it alone cause they don't have the money for it. They are small in market cap and their revenues aren't bad for a company in this industry group at this point in the company's evolution.
I could be completely wrong and "Strategic Alternatives" may mean the company is figuring out how to get more funding also. They have enough cash though so I doubt that but you get the point. Could be anything but most likely it's good news.
Cheers,
Ahu
Thursday, November 02, 2006
Could this be the perfect trade?
CVS bought CMX today. CVS will give CMX 1.67 shares of CVS in an all stock transaction today.
CVS is at 28.73 and CMX is at 47.3. Simple calculation would suggest that CMX buy out would be at 28.73 * 1.67 = 47.98. We therefore see a CMX cheaper by 68 cents at current prices.
Is this normal? Yes - You usually see a 30 to 40 cent discrepancy before the buyout actually takes place and the gap gets lesser as the buyout date comes closer. There is a huge difference here though.
1. CMX is at a 52 week low although earnings have been great (Walmart competition is the biggest reason).
2. CVS is also quite low but they have had good earnings as well.
3. "Could this be the perfect trade": Forget points 2 and 3 and think about this trade. Short CVS and buy CMX. This way if CVS goes down you make money on the short and lose money on the long on CMX. If CVS moves up then you have the opposite reaction. Either way you still stand to make your 68 cents.
If you were to chose to go in any one direction, choose CMX buy. Reasons: Deal might not go thorugh as some analysts think the offer is quite low. This might require CVS make a higher offer. The important thing to note here is that as per points 1 and 2, if the deal is canceled some how both stocks will still go up over the long run considering the levels they are at from a 52 week chart and earnings perspective.
Point 3 is the safe trade. Buying only CMX is the riskier one but could give greater yields. Let me know what you guys think.
CVS is at 28.73 and CMX is at 47.3. Simple calculation would suggest that CMX buy out would be at 28.73 * 1.67 = 47.98. We therefore see a CMX cheaper by 68 cents at current prices.
Is this normal? Yes - You usually see a 30 to 40 cent discrepancy before the buyout actually takes place and the gap gets lesser as the buyout date comes closer. There is a huge difference here though.
1. CMX is at a 52 week low although earnings have been great (Walmart competition is the biggest reason).
2. CVS is also quite low but they have had good earnings as well.
3. "Could this be the perfect trade": Forget points 2 and 3 and think about this trade. Short CVS and buy CMX. This way if CVS goes down you make money on the short and lose money on the long on CMX. If CVS moves up then you have the opposite reaction. Either way you still stand to make your 68 cents.
If you were to chose to go in any one direction, choose CMX buy. Reasons: Deal might not go thorugh as some analysts think the offer is quite low. This might require CVS make a higher offer. The important thing to note here is that as per points 1 and 2, if the deal is canceled some how both stocks will still go up over the long run considering the levels they are at from a 52 week chart and earnings perspective.
Point 3 is the safe trade. Buying only CMX is the riskier one but could give greater yields. Let me know what you guys think.
CVS and CMX merger
CVS is buying CMX for 1.67 shares per CMX shares. If this deal goes through you have a company that can leverage some 400 Mil a year in cost savings. 2006 revenues will be upwards of 75 Billion USD. Big step in the Pharma industry. Check out all the news articles on it today. Both stocks were sold off yesterday. I would say the stocks are a buy and certainly CMX today since they might come back with a sweeter offer as currently there is no premium.
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