Visteon: Turnaround In The Works

Recommendation:

Despite the problems that have plagued auto makers and auto parts maker, Visteon, should continue to see its revenues rise as the global economy recovers and the demand for automobiles picks up.

Analysis:

• Visteon was highlighted today in a Marketwatch article called “Life After Detroit: Commentary; Signs Abound That Parts Makers are Moving On. The story went onto say that Visteon still faced an uphill battle to increase revenues. Its’ link to the Big Three automakers has left many parts companies in poor conditions. Yet, the company just announced earnings that beat expectations on the strong demand the company was seeing from international customers.
• GM and Ford have both remarked how fast they are seeing the move from SUV purchases over to smaller cars. The industry is literally being transformed by new plants and new technologies such as fuel cells and hybrid cars. These new cars will require new and different parts. Visteon should benefit from this demand.
• The Big Three and even the Japanese companies such as Toyota and Nissan can no longer claim the title as having a monopoly over cars. India car company Tata Motors and several Chinese automakers are making a real move to improve their market share. The acquisition of Jaguar and the possible sale of the Hummer brand to a foreign car company are evidence of their growing presence.

The stock is trading at 2.89. Ticker (VC). The PE is NA. Expect it to reach 5 in twelve months (July 31, 2009).

Tetra Tech: Infrastructure Stock Just Getting Started

Recommendation:

The last decade of stocks has seen money move into Technology in the late 1990’s, the Commodities and Real Estate in the early and late 2000’s, and now Infrastructure which will be the next big thing. Tetra Tech, one of the smaller engineering and infrastructure companies, should continue to benefit from this growth.

Analysis:

• In this past week’s Forbes on Fox which aired Sunday morning one of the guests mentioned Mueller Water. She noted the country’s infrastructure was falling apart and that this seem liked a good play. Another guest quickly commented he thought the PE was too high at 60 and noted that municipalities could not afford to finance these infrastructure projects at this time. I see both of their points, but given the fact that safety is an issue these infrastructure projects will have to be completed ie fixing roads and bridges despite the rising cost.
• Tetra Tech has a lot going for it. It just completed 3 small acquistions. Several of its business address environmental issues and it now working with several wind energy players. The stock is up over 17% for the year in a down market.
• In an interview in Fast Company in 1999 titled “All The Right Moves” chess master Bruce Pandolfini put forth the best strategies for winning at chess and life. In noted that in chess many players simple make the first move which looks right. Pandolfini, however, suggests “If you see a good idea, look for a better one.. Good Thinking is a Matter of Making Comparisons.” In this particular case Tetra Tech offers more upside than some of the more traditional engineering/infrastructure firms as it is a smaller and not covered by as many analysts.

Prediction:

The stock is currently trading at 24.71. Ticker (TTEK). The PE is 27.45. Expect it to reach 32 in six months (January 29, 2009)

*** Weekend Edition*** July 26, 2008

Highlight:

TOOLS OF THE TRADE:

Content Analysis

INTRODUCTION:

To the right of the page at the bottom is the category Tools of the Trade. Let us discuss the Content Analysis technique. Content Analysis is used to highlight the most common words in an article, speech, etc.It can also used in a much broader sense that as we see in this article ” How Different is Murdoch’s New Wall Street Journal.”

journalism.org/node/10769.

For our purposes it might be more beneficial at this point to focus on simply the exact words used. If you click on the provided link you will be able to do just that with any website or any article you come across.

EXAMPLE:

You may be already aware of content analysis. Political observers after a major speech tend to go on CNN, MSNBC, or any other cable channel and note ” Did you hear how many times he used the word… (fill in the blank)? Now given the context it is a probably a good chance that the specific candidate used that word consciously so that it will enter the audience’s subconscious viewpoint.

IMPLICATION:

How might this tool be usefull in investing? It can be beneficial the next time you come across an earnings transcript or interview with a CEO of a company you are interested in investing in. Plug in his or her speech into the content analysis link and see which words are the most frequently used. Maybe it is simply the word EARNINGS. Yet, may be it is something that has gone unnoticed in the reading such as DEBT or EXPECT. These words don’t necessarily answer your question as to whether the company is a good investment, but they might force you down new paths of information which might tell you as what shape the company might be in the near future.

Juniper Networks: Game On

Recommendation:

Juniper Networks, once chief rival of Cisco in the pure play of internet routers, now finds itself battling against another rival in Brocade. Brocade is moving to increase its market share with the announced acquisition of Foundry Networks while Cisco goes to pursue other markets.

Analysis:

• Juniper Networks announced after the bell that Kevin Johnson, President of Microsoft’s Platform and Services Divison, will be leading the company. Johnson was one of Microsoft’s top executives and in charge of the leading the bid to take over Yahoo according to the Wall Street Journal. Johnson was with Microsoft since 1992. It it unclear is immediate strategy at the company, but will no doubt bring an impressive resume and broad knowledge of the latest trends in the IT industry.
• The ethernet router market is close to 70% being held by Cisco, according to the Dell Oro research group in an article in SearchStorage.com. on July 23 titled ” Did Brocade Buy The Right Company?” The rest of the market is composed of smaller players such Foundry Networks . Juniper, which has 16% of this market, has however historically always put up a quality product and it is no mistake that some of its founding members were ex-Cisco employees.
• Cisco is moving out of this space. Its acquisition of Scientific Atlanta and the move into the video conferencing market (SEE: “Cisco’s Display of Strength” in the October 30, 1997 of Fortune Magazine) suggest its strategy lies elsewhere.

Prediction:

The stock closed at 22.89. Ticker (JNPR). The PE is 32.06. Expect it to reach 27 in six months (January 23, 2009)

Hudson City Bancorp: An Anomaly Worth Looking Into

Recommendation:

Hudson City Bancorp reported that second quarter profit rose 52% from the second quarter a year ago according to CBS MarketWatch. The company also announced it would increase its dividend from 11 to 12 cents. The bank should continue to rise as the housing and banking sectors begin to recover.

Analysis:

• Companies such as Williams Inference Service and Inferential Focus like to focus on anomalies. They look for clues and trends of events that run counter to the most other events that are sweeping the market or landscape. Hudson City fits this criteria. Most bank stocks have been caught up in the credit crisis, inclduding investment, national, and regional banks. However, Hudson City is up 26% YTD according to Google Finance. The bank which operates 91 branches in the State of New Jersey, its headquarters, should benefit as well from the favorable demographics of the state.
• Forbes Magazine named Hudson City CEO as one of the country’s top 10 American Bosses for shareholders.
• The stock is up 64% for the past year, 127% over the past 5 years, and 883% for the past 10 years.

Prediction:

The stock is currently trading at 19.03. Ticker (HCBK). The PE is 30.42. Expect it to reach 26 in six months (January 23, 2009).

***Weekend Edition***

Greetings,

To all readers of Profitable Readings thank you for your support. I thought it is good time to update you on the status of this site. To date there are:

• 78 posts
• 50 stocks currently being tracked
• 100 Open Source Links
• NEW Features include: Article of the Week, Best of Intelligence (Articles), and Quotable Experts

In the future the number of posts will obviously increase, but there will probably FEWER stock picks, and MORE in depth analysis of specific picks. I will also be adding new features.

I look forward to your continued support. Feel free to email me regarding ideas, suggestions, comments, and complaints.

Sincerely,

Joe D’Andrea

profitablereadings@gmail.com

EnergyRecovery Inc: I am all for it…….

Recommendation:

EnergyFocus, Inc., whose core products revolve around water desalinization, should continue to see its revenues rise and stock rise as the shift from commodities move from oil to water.

Analysis:

• Desalinization is a process that has been around for years. However, it is an expensive process which has slowed its growth. However, as the world continues to grow and commodities become in greater demand there will be increased pressure to find new sources of water. To be sure not all are convinced the world faces a water shortage. The Economist in its May 2 issue noted that concerns over conflicts starting over water are greatly exaggerated.
• Hurricane Katrina and the Tsunami of 2005 and the floods of 2008 in Iowa illustrate the fact that nature can quickly upend any living condition and put natural resources such as clean water in peril.
• EnergyRecovery makes money unlike many other IPO startups. It has very good year over year 2006;2007 numbers.

Prediction:

The company is trading at 11.11 . Ticker(ERII). The PE is 83.67 . Expect it to reach 14 in six months (January 18, 2009).

EnergySolutions Inc: Energy’s Real Deal

Recommendation:

EnergySolutions Inc., whose core services provide servicing the country’s nuclear operations, should continue to see its revenue rise as the stigma of nuclear power decreases and the industry see increased demand.

Analysis:

• IPO Scoop.com reports that Energy Solutions issued a secondary stock offering. These stock offerings don’t necessarily point to a higher stock price or revenue it may signal that company is looking to raise capital and put it to use in the form of launching new services or in an acquisition.
• Engineering News Record listed EnergySolutions the No. 1 All-Environmental Firm and was listed as No. 7 among all engineering and construction firms that engage in environmental projects. It ranked No. 2 in the category of nuclear waste cleanup, No. 4 in revenues from private customers, No. 4 among environmental firms working abroad, No. 10 by contracts awarded in 2007, and No. 10 in the category of firms in construction/remediation.
• The company has solid year over year earnings. In addition, for the company’s last quarter “Revenues for the quarter ended March 31, 2008 were $502 million, compared to $114 million for the same quarter in 2007″ according to the company’s website.
  

Prediction:

The stock closed today at 21.18. Ticker (ES). The PE is 90.10. Expect it to reach 25 in six months (January 17, 2009)

Market Vectors Africa (AFK): New ETF; New Opportunity

Recommendation:

The New Market Vectors Africa ETF should see gains as investment money around the world follows the booming investment story in Africa.

Analysis:

• Money is moving into Africa from China for oil, the U.S. via Deere and agriculture, and the British with Vodafone and telecom.
• Investment money around the world has exhausted its investments in real estate and technology. It seeks new targets. It finds it in emerging markets. The BRICS( Brazil, Russia, India, China) will continue to see gains, but the next big story is in other emerging markets such as Africa.
• According to IndexUniverse.com this ETF is one of the few ETF’s to enter this space. It is unclear when the next one will be launched. It is best to invest now.

Prediction:

The EFT is currently trading at 40.60. Ticker (AFK). The PE is NA. Expect it to reach 46 in six months (January 16, 2009)

Union Pacific: The Forgotten Rails

Recommendation: Lost in the shuffle in all the talk of high oil prices bringing airlines to the breaking point and talk of bankruptcy among automakers is the fact that railways continue to enjoy a comeback. There utility is moving goods across large spaces of the country should not be estimated and should grow in the coming years

Analysis:

• Competitor CSX announced strong earnings today in increased demand for moving grain and coal. This suggests when Union Pacific reports its next quarterly earnings there is a good chance they cite the same positive trends.
• Ben Bernanke on his speech to Congress today regarding the state of the economy was asked if there were any bright spots. He responded by saying the growing export business of the U.S was certainty one of them. He didn’t mention specifics, but one has to assume this means the U.S.agricultural market.
• The ongoing approval process for the Dakota Minnesota & Eastern Railway to operate out West illustrates the ongoing demand for rail space.

Recommendation:

The stock is trading at 72.06 . Ticker (UNP). The PE is 20. Expect it to reach 75 in six months.( January 15, 2009.)

Prediction: