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Long Ideas

Fri
04
Dec

Now Is The Right Time To Get Long Natural Gas

It’s no secret the past few months have been a tough ride for energy bulls.  It should have been obvious, with fracking changing the landscape, prices only had one direction to travel. I called out for lower, much lower energy prices over two years ago

OPEC’s decision to “punish” and take marketshare from others only magnified an already volatile situation and the results are in, Natural gas’s (UNG) price is below the marginal cost of production for many producers. This is causing many otherwise suppliers to reevaluate if they want to bring on and/or keep wells pumping. Some have no choice, they must keep pumping and among those, some are happy and some are truly feeling the burn.

Thu
12
Dec

Investors Expect too Much of Salix

Salix logo

Stock Tickers

SLXP ABBV JNJ

It's become cliched to talk about Wall Street's hatred for uncertainty. But that's only when it's convenient. The Street also shamelessly discriminate with what it chooses to fear and/or ignore. In the case of specialty drug company Salix Pharmaceuticals (SLXP), whose stock is up 115% in the trailing twelve months, there's no question the Street cares very little about the risks that still surrounds this company.

While Salix continues to be an incredible growth story, the company is marred in a battle with the Food and Drug Administration over a recent rejection of a subcutaneous form (injection) of key drug Relistor, which is used to treat constipation -- the type caused by pain medicines called opioids. While Salix has filed an appeal to the rejection, a response won't be issued by the FDA until March 2014.

Wed
11
Dec

The Market has Rallied--Now what?

Stock Tickers

Oftentimes, it may seem that the individual/retail investor is often among the last to enter and benefit from a rally. And, according to some experts over at Schwab, that seems to be the case this time. But, they still expect the market to continue its upward trend. Could it be that the market is indeed overvalued or do firms hold enough cash and other assets on their balance sheets to make this expected growth sustainable ?

Operating on the assumption that the market still has a way to climb, how does the late market entrant avoid ending up making speculative investments at these market highs?

Keep Floating Rate Debt on Your Boat’s Radar

Wed
11
Dec

ABB Looks Undervalued, Despite Recent Gains

ABB logo

Stock Tickers

GE HON ABB DOV

As with the product pipeline for big pharma companies and the "billings" metric in big data, investors in big industrial companies, such as General Electric (GE) and Honeywell (HON), that are leveraged to economically sensitive markets such as automotive and energy, understand that order growth is the lifeblood of their operations.

Wed
27
Nov

Peabody Energy Seems Lethargic

Peabody logo

Stock Tickers

ANR CLD BTU

With mixed results already in hand from Alpha Natural Resources (ANR) and Cloud Peak Energy (CLD), the Street wasn't expecting a dominant performance from Peabody Energy (BTU), which has long been considered the "coal standard" within an industry that has been ravaged by poor market conditions.

But with Peabody shares having gained as much as 33% over the past three months, investors have begun to appreciate that, despite all of the doom and gloom that surrounds the industry, there's value in this high-quality coal producer. This has now raised questions as to whether new investors are too late to the party. The way I see it, it's a good thing they were never invited.

Tue
26
Nov

Cloud Peak Energy Is Stuck in a Valley

Cloud Peak logo

Stock Tickers

CLD ACI CNX ANR

If you ever doubted the Street's pessimism towards any sustainable recovery in the coal industry, just take a look at shares of Cloud Peak Energy (CLD). Not only are they down 16% on the year, but last week the stock fell below $16.03, which is the company's last reported book value.

Without getting too technical, what this means is that if Cloud Peak, which is the fourth-largest U.S. coal producer, went out of business today and liquidated its assets, shareholders would be left with pieces of the company that are not currently "carrying their weight" on the balance sheet. Clearly, the Street has no confidence in this business.

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