Recommendation:
AeroVironment, a company which supplies unmanned small spacecraft, should benefit from increased orders from the government in the months and years to come.
Analysis:
- Company was founded in 1971 by Dr. Paul McCready. Time Magazine has called him ” one of the greatest minds of the 20th Century.” The company as one analyst notes continues to put out cutting edge research products as evidenced by a recent contract award by the government’s DARPA (Defense Advanced Research Project Agency.) Unlike, other DARPA recipients AeroVironment is profitable and has a commercial business as well as a military one.
- The U.S. Air Force will continue to play an important role as part of the United States Military. While largely sidelined in Iraq it has had a number of highly successful operations in targeting terrorist facilities and individuals through the use of its Predator Drone. Secretary of Defense, Robert Gates, recently chided the Air Force for not doing enough however. They will be under pressure to develop and deploy new weapons.
- Space is truly the last frontier. Helicopters sales have picked up recently as has the use of smaller aircraft such as Warrren Buffett’s NetJets. There is a certain unassailable advantage to move quickly and go largely unnoticed something both AeroVironment’s planes and commuter planes have in common.
Prediction:
The stock currently trades at 26.33. Ticker (AVAV). It has a PE of 26.07. Expect it to reach 34 by May 30, 2009.
Categories: Uncategorized
Recommendation:
Pt Indosak TBK released some impressive numbers on revenue growth the other day. Net profit grew by 28% The company will most certainly continue to benefit from the growing Indonesian economy.
Analysis:
- A recent Bloomberg article titled” Time for Goldman to add Indonesia to the BRIC’s” highlighted the growing Indonesian economy. The article went onto say that investors seem to be trying to pick the next emerging market but have overlooked Indonesia. A Lehman Brothers analyst is quoted as saying he is surprised that Indonesia has not been receiving the coverage it deserves.
- Just yesterday Indonesia pulled out of OPEC according to the USA Today. On face value this may be perceived as a bad thing as Indonesia noted that it finds it difficult and costly to remain in the cartel as sometimes it imports as well as exports oil. However, OPEC’s power is waning as more oil is obtained from outside the cartel’s members. Pulling put will allow Indonesia to focus on stablilizing its own energy interests.
- In February 2008, Peter Schwartz of the Global Business Network published an article called ” Anticipating Strategic Surprises.” In it he drew up several possible international scenarios. One of the scenarios saw the breakup of Indonesia coming on the backdrop of the Tsunami of 2004, a bird flu, Islamic fundamentalists trying to undermine the secular government, and the head of the Suharto government. However, it is in spite of these events the Indonesian economy continues to grow. These events should be seen as part of Indonesia’s past and not its future.
Prediction:
PT Indosak TBK (ADR) currently trades at 31.00. Ticker (IIT). It has a PE of 15.38. Expect it to reach 38.00 by November 29, 2008.
Categories: Uncategorized
Recommendation:
There was a story that ran on May 26, 2008 in Investment News citing American Capital Strategies. The article made a compelling case for a lightly covered financial services company.
Analysis:
- According to the article the company’s AUM went from 21 billion from 155 million since its IPO in 1997. It also ” has delivered average compounded annual returns of 18% to shareholders, including an average dividend yield of almost 10%.”
- CEO Malon Wilkus attributes his personal success and thus the company he founded success on the lessons he learned growing up in a commune. It is an unlikely source of traditional business acumen, but not if you consider the April 3 Bloomberg article entitled “Skilling, O’Neal, Gerstner Form Puzzle of Harvard MBA.” The article goes on to question the Harvard pedigree in light of several financial scandals or simple poor underperforming companies. The Ivy’s have had a lock on what it means to be educated. Perhaps, we have reached a new era where meritocracy counts. Smarts counts just as much only it doesn’t have to come from one of the traditional sources of education.
- The company is the largest private equity firm in the S&P 500, pays a solid dividend, and has had investment in some solid companies such as Gibson Guitar and Riddell Sports. The Private Equity market took a big hit with the Sub Prime Crisis. Yet , make no mistake about it the best private equity players today (Blackstone, FIG, American Capital Strategies, will become new financial services companies tomorrow.
Prediction :
The stock closed today 31.52. Ticker (ACAS). It has a forward PE of 13. Expect it to reach 38 by November 28, 2008.
Categories: Uncategorized
Recommendation:
John Deere was highlighted today in the WSJ regarding agricultural potential in the African continent. Not only in Africa, but around the globe will Deere benefit as this global manufacturing company benefits from the need to increase food production and lower food price
Analysis:
- Deere officials in the WSJ story “Agriculture’s Last Frontier” cite the fact that Africa is the only continentant where there is declining food production.
- Africa will benefit from continued investment allowing it to increase its spending on manufactured farm equipment. In his article “China’s New Activism in Africa” appearing in the Defense Intelligence Journal’s Number 2007 Edition author Dr. Walter Barrow points out that bilateral trade between China and Africa has increased tenfold from 2000 to 50 billion in 2006. In the same article he mentions World Bank’s Harry Broadman’s book titled Africa’s Silk Road: China and India’s New Economic Frontier which cites several compellling statistics as to why India and China’s direct investment is inevitable and will grow extremely rapidly.
- Deere’s latest earnings on May 14, 2008 fell short of expectations largely due to high material costs such as steel. However, it is interesting to note that it is truly a global player for it expects ” agricultural sales in the U.S. and Canada may rise 20 percent industrywide this year, while South America may grow 30 percent. Deere previously expected growth of 15 percent to 20 percent in North America and at least 15 percent in South America.” according to Bloomberg. The company is also seeing a pickup in equipment sales in Brazil for ethanol production and it talking about building a new factory in Russia
Prediction:
As of today Deere trades at 79.84. Ticker (DE). It has a PE of 14.09. Over the last year it is up 39.58%. Over the next six months expect the stock to reach 92 by November 27, 2008.-JDA
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Latest earnings released today. Company very confidant going forward. Hewitt is a excellent provider of outsourced HR services as I can attest having used them at MS. It is currently trading at 38.66. Like 52 by 12/31/2008.-JDA
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Rackable Systems just filed the S-1. Great IT company in a growing IT space. Got to like GS as the underwriter. Get in on this early. It is will definetely be a long term play.-JDA 5/1/2008
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