Tag Archives: CLF

Top Stocks To Buy For 2017

Ford Motor Company (NYSE:F) is trading around $12.13 with a P/E ratio of 5.5. A major driver for this decline in stock valuation is the fear surrounding the “global auto slowdown”. However, I think that people are erroneous equating the “US auto slowdown” with a “global auto slowdown”, while these are actually very different things.

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Auto Market Slowdown

US auto sales saw a drop in deliveries by 4.2% during the month of August, which is typically one of the busiest months for the auto industry. In fact, Ford saw an 8.8% year-over-year decline in light vehicle sales in the month of August and expects to see further domestic declines over the coming months into 2017.

Top Stocks To Buy For 2017: EPR Properties(EPR)

Advisors’ Opinion:

  • [By Laurie Kulikowski]

    We rate EPR PROPERTIES as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company’s strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results. 

  • [By Laurie Kulikowski]

    EPR’s revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company’s bottom line, improving the earnings per share.

     

  • [By Laurie Kulikowski]

    The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $42.71 million to $50.20 million.

     

  • [By Lawrence Meyers]

    I also jumped on the 9% Preferred Series E of an interesting REIT called EPR Properties (EPR), a $2.38 billion trust that owns 114 megaplex movie theaters; nine entertainment retail centers; seven family entertainment centers where one can bowl, enjoy nightlife, or sit atop observational towers; 13 metro ski parks; three water parks; four golf complexes, and 48 public charter schools.

  • [By Laurie Kulikowski]

    EPR’s investment pipeline should drive about 6-7% earnings growth in 2016, and historically the company’s dividend growth has roughly equated to earnings growth. Starting with an above-average 6.5% yield, we find this compelling for income-oriented investors. 

Top Stocks To Buy For 2017: Endeavour Silver Corporation(EXK)

Advisors’ Opinion:

  • [By Manikandan Raman]

    Citing bullish outlook on silver prices, Peter Bures of Canaccord Genuity has started coverage of four silver producers: Pan American Silver Corp. (USA) (NASDAQ: PAAS), Coeur Mining Inc (NYSE: CDE), Hecla Mining Company (NYSE: HL), and Endeavour Silver Corp (NYSE: EXK). The brokerage also assumed coverage of Fortuna Silver Mines Inc (NYSE: FSM) with a Buy rating.

  • [By Lisa Levin]

    On Monday, basic materials shares surged by 1.1 percent. Top gainers in the sector included Cliffs Natural Resources Inc (NYSE: CLF) and Endeavour Silver Corp (NYSE: EXK).

Top Stocks To Buy For 2017: Superior Energy Services Inc.(SPN)

Advisors’ Opinion:

  • [By Lisa Levin]

    Thursday afternoon, energy shares slipped by just 0.1 percent. Meanwhile, top gainers in the sector included Superior Energy Services, Inc. (NYSE: SPN), and Yanzhou Coal Mining Co Ltd (ADR) (NYSE: YZC).

Top Stocks To Buy For 2017: Caesars Entertainment Corporation(CZR)

Advisors’ Opinion:

  • [By Michael E. Lewitt]

    Back in April, I recommendedCaesars Entertainment Corp.(Nasdaq: CZR) as a buy – but warned you that this was a play that might take some time to mature.

  • [By AlphaStreetResearch]

    Caesars Entertainment Corporation (CZR) is a highly overvalued gaming, hotel, and entertainment company with deteriorating fundamentals on all levels in a highly competitive environment. The company’s stock has seen a massive run to the upside on the coattails of other casino and entertainment companies in the space. A considerable catalyst for the push higher in these stocks is the good news coming out of Macau, but this is an area where Caesars has absolutely no exposure and will be locked out of for the foreseeable future after failing to take appropriate licensing measures. Below is our introduction into the business model, its weaknesses, and the new selling or shorting opportunity that exists for CZR after the recent appreciation in share price. Investors will soon realize that there is little upside value in this company and that there are much better opportunities in this space. The company is now amidst a major struggle from a debt standpoint with major deadlines approaching over the next year and a half. The company is in no position to thrive going forward unless major steps are taken to overhaul the company’s capital structure. Caesars Entertainment has a market cap of $3.19 Billion after the stock has moved up over 225% year to date and reports its next quarter on October 31, 2013. With this in mind, we value CZR at $21.00 by year-end of 2013 and $14.00 by August 1, 2014, a decrease of 40% from current levels. We will later highlight:

Top Stocks To Buy For 2017: Cliffs Natural Resources Inc.(CLF)

Advisors’ Opinion:

  • [By Lisa Levin]

    On Tuesday, basic materials shares climbed by 1.90 percent. Top gainers in the sector included Allegheny Technologies Incorporated (NYSE: ATI) and Cliffs Natural Resources Inc (NYSE: CLF).

  • [By Monica Gerson]

    Benzinga's newsdesk monitors options activity to notice unusual patterns. These large volume (and often out of the money) trades were initially published intraday in Benzinga Professional . These trades were placed during Monday's regular session.

    Twitter Inc (NYSE: TWTR) Jan17 22.0 Calls: 20500 @ ASK $1.20: 22k traded vs 2041 OI: Earnings 7/26 After Close $17.63 Ref Antero Resources Corp (NYSE: AR) Aug16 25.0 Calls: 7500 @ ASK $2.30: 11k traded vs 560 OI: Earnings 8/3 $26.06 Ref Mobileye NV (NYSE: MBLY) Fri 7/22 52.0 Calls (Wkly) Sweep: 1000 @ ASK $0.50: 1003 traded vs 0 OI: Earnings 8/4 $48.50 Ref Cliffs Natural Resources Inc (NYSE: CLF) 7/29 8.0 Calls (Wkly) Sweep: 1000 @ ASK $0.15: 1000 traded vs 1 OI: Earnings 7/28 Before Open $6.83 Ref Integrated Device Technology Inc (NASDAQ: IDTI) Nov16 22.0 Calls Sweep: 1520 @ ASK $1.85: 1520 traded vs 67 OI: Earnings 8/1 $20.64 Ref Fortuna Silver Mines Inc (NYSE: FSM) Aug16 7.5 Calls: 2496 @ ASK $1.65: 2502 traded vs 162 OI: Earnings 8/5 $8.81 Ref Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL) 7/29 13.0 Calls (Wkly): 4300 @ ASK $0.30: 7000 traded vs 10 OI: Earnings 8/4 $12.22 Ref

    Posted-In: Huge Call PurchasesNews Options Markets

  • [By Ben Levisohn]

    Cliffs Natural Resources (CLF) has gained 1.2% to $5.16 after getting upgraded to Outperform from Market Perform at Macquarie.

    Mattress Firm (MFRM) has plunged 14% to $29.00 after missing earning forecasts and lowering its guidance.

Short Sellers Have These 7 Well-Known Stocks In Their Sights

With the market rally showing no signs of cooling off, it has become quite risky to short stocks.

 

Indeed, many hedge fund managers that tend to make a living from short selling have moved to the sidelines, waiting for the market to switch direction before loading up on shorts. It's a wise move to preserve both your capital and your sanity.

Still, not all short sellers have abandoned ship, and some of them are making increasing bold bets. You may not want to follow their lead — just yet — but it's instructive to see which stocks they are targeting. If you own or are thinking of buying one of these stocks, the rising short interest should give you pause.

Here are seven stocks (and funds) seeing big changes in short interest in the two week-period that ended June 28. (Actual data were released on July 10.)

1. Pfizer (NYSE: PFE)
The short interest in this drugmaker surged a hefty 53%, to 336 million shares, making it the most heavily shorted stock on the New York Stock Exchange. Roughly a month ago, I noted that virtually every major drug stocks have rallied sharply in the past year.

But Pfizer was notably absent from the select few drugmakers that seemingly deserved such gains.

At the end of the quarter, short sellers often anticipate an imminent shortfall or weak guidance, though a quick review of the analyst reports following Pfizer reveals no such warning signs. Instead, it may be a concern that rivals are advancing with a key drug that threatens one of Pfizer's top sellers, or that one of Pfizer's own drugs in development is poised to deliver weak clinical results.

 

2. Cliffs Natural Resources (NYSE: CLF)
I've been noticing this iron ore miner appear on a number of recent screens that I have run, as it sports a range of impressive value metrics after falling two-thirds from its 52-week high. Short sellers think this stock has further to fall, as the short interest spiked 13% in just two weeks to 54.8 million shares. That accounts for 36% of the trading float, which is one of the highest percentages of any stock in the S&P 500.

The entire commodities complex is in a massive correction mode, and falling prices are leading to curtailed output. That will set the stage for an eventual upturn in commodities, but we're not there yet, and these short sellers likely think we haven't even hit bottom yet.

 

3. iShares FTSE China 25 Index ETF (NYSE: FXI)
Throughout the first half of 2013, the Chinese economy has shown signs of slowing. 

Whether China's troubles are in fact deepening has become one of the biggest concerns for global investors, which have already been fleeing any emerging markets that have considerable exposure to China.

Short sellers, led by hedge fund manager Jim Chanos, appear to think China is on the cusp of a big economic downturn. The short interest in this exchange-traded fund (ETF) rose 13% sequentially, to 49 million shares, and is likely to rise further until the Chinese economic picture becomes clearer.

 

4. Utilities Select Sector SPDR (NYSE: XLU)
A number of electric utilities have seen a recent rise in their short interest, which is probably due to a recent spike in interest rates that is making the utilities' dividend yields a bit less attractive.

Short sellers are anticipating further rotation out of this group, boosting their short position in this ETF by 30% in just two weeks to 38.5 million shares.

 

5. Six Flags Entertainment (NYSE: SIX)
It's been a hot and muggy summer in the eastern half of the U.S., which has led many people to stay inside and bask in the air conditioning rather than venture outside. Might that be impacting attendance at this amusement park operator?

The short interest more than doubled in just two weeks to 6.4 million shares, which represents five days' worth of trading volume. That makes this a "crowded short" and would lead to a short squeeze if Six Flags delivers decent quarterly results on July 18.

 

6. Intel (Nasdaq: INTC)
Short sellers likely think weak PC sales will lead this chipmaker to miss forecasts when second-quarter results are released July 17. The consensus forecast anticipates profits of 39 cents a share on sales of $12.9 billion, and those numbers have not moved in two months, despite further signs of PC weakness.

If short sellers are right, and Intel misses the forecast, it could have negative ripple effects across the tech sector. Chip equipment makers, for example, are highly reliant on Intel, which remains the largest buyer of semiconductor capital equipment in the world. Intel's short interest rose by 6 million shares (to a hefty 235 million) in the two weeks ended June 28.

 

7. NetApp (Nasdaq: NTAP)
This provider of data storage equipment is also in the crosshairs of short sellers. The short interest spiked 27% sequentially to 43 million shares, which represents 12% of the trading float and seven days' worth of trading volume.

This stock is near 52-week highs, thanks in part to the robust market rally, though signs are emerging that spending on data storage may cool in the second half. Lowered guidance may be the negative catalyst that short sellers are anticipating when quarterly results are released in mid-August.

Risks to Consider: As noted, it's risky to invest on the short side right now as a rising tide is lifting all boats. So do a substantial amount of research on any stock that you do intend to target for a short sale.

Action to Take –> Tracking short interest activity right in front of an earnings season can be quite fruitful as we can learn fairly quickly if short sellers were on the mark. Also, if earnings season proves to be disappointing, you can look to these stocks and funds for trading ideas on the short side.

P.S. — With so much going on in the market, wouldn't it be great to find stocks good enough to buy, forget about and hold "Forever?" My colleague Elliott Gue and his staff recently went looking for the absolute best stocks on the market. After six months and $1.3 milllion worth of research, the team was successful. To learn more about the "Forever" stocks they uncovered — including some names and ticker symbols — click here.

Thursday’s Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines feature a pair of hikes to price target at aerospace parts suppliers B/E Aerospace (NASDAQ: BEAV  ) and Precision Castparts (NYSE: PCP  ) . But the news isn’t all good, so before we address those two, let’s start with why one analyst thinks…

Cliffs could dive
In direct contradiction to the bullish note struck by analysts at BB&T Capital earlier this week (where analysts upgraded Cliffs Natural Resources (NYSE: CLF  ) stock on news of its CEO’s departure) a different banker announced this morning that it’s not nearly so hot on the company’s chances. Disagreeing with BB&T’s analysis (but agreeing with my own), analysts at CIBC cut their rating on Cliffs from sector perform to underperform.

Why might this be the right all, and BB&T’s endorsement of the stock the right one?

For the same reasons I outlined earlier in the week: Cliffs Natural Resources is not a profitable company. It might turn profitable next year (or it might not). But even if it does, the 4% consensus earnings growth projections of the analysts simply aren’t strong enough to support the 10 times forward earnings valuation the share now carry. Not with Cliffs burning through cash at the rate of $500 million a year. Not while it’s laden with $3.4 billion in net debt.

Based on these facts, CIBC is right to turn to be pessimistic.

Now for the good news
Turning now from iron to aluminum, titanium and carbon composites…  in contrast to CIBC’s bearish note on Cliffs, one analyst is taking a decidedly bullish note on the aerospace sector, and on the companies that supply parts to it in particular. In a note released to investors this morning, investment banker Sterne Agee argued that “pure-play aerospace companies should continue to benefit from production rate increases” in the current quarter.

Reviewing seven companies operating in the sector, Sterne highlighted five that it likes — and two that it likes a lot. Those two, from which the analyst says it expects to see “the most upside to our estimates,” are metal aircraft components manufacturer Precision Castparts, and aircraft interiors specialist B/E Aerospace. For each of these firms, Sterne sees “still plenty of runway left in cycle.” Let’s take them one at a time.

Precision Castparts
Sterne notes that Precision Castparts now has “a full quarter” revenues from its Timet acquisition now under its belt, and on its books. “Momentum is just commencing on the $30-$40 million of synergies expected over the next 12+ months,” says the analyst, as this has Sterne predicting the shares will hit $281 within 12 months.

Is such an 18.5% profit on the stock likely? I don’t think so, and I’ll tell you why.

With Timet firmly in hand, most analysts agree that Precision Castparts will grow strongly over the next few years, averaging 14% increases in earnings annually. But while certainly a respectable pace of growth, I don’t think that’s strong enough to justify paying more than 24 times earnings for the stock.

Free cash flow at the firm — rarely anywhere near as good as the “GAAP” earnings it reports, today lags reported income by 20%. As a result, if you’re skeptical (like I am) of this stock’s 24.4 P/E ratio, you’re going to positively hate its price to free cash flow ratio of 31.5.

B/E Aerospace
I’m a bit more optimistic about Sterne’s other aerospace parts play of the day — but only a bit. Here, we’re looking at a stock that costs nearly 28 times earnings. On the other hand, with a 24% projected growth rate, that higher P/E ratio at least has more justification to it. Free cash flow at B/E, as at Precision Castparts, is unimpressive — just $227 million over the past 12 months, versus reported net income of $255 million. As a result, the stock sells for almost precisely the same price to free cash flow ratio as we find at Precision Castparts: 31.7.

The plus side here, of course, is the faster projected growth rate at B/E.

Sterne Agee sees “modest aftermarket growth coupled with integration gains tied to previous acquisitions” boosting the company’s results, and thinks B/E is “well positioned to trade higher from current levels” — perhaps as high as $80.

Me, I disagree. I think a run to $80 is unlikely (or if likely, unjustified). But on the plus side, at least this stock isn’t quite as obviously overvalued as Sterne’s other pick.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Precision Castparts.