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Innovations In HIV: Johnson & Johnson, Glaxo Vs. Gilead July 22, 2013

Posted by Ishmael Chibvuri in Latest Articles!!!.
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In the old days, an HIV patient would get through the day by taking as many as 30 tablets. Nowadays a single pill a day, such Gilead’s (GILD) Atripla, will do.

Still, the drug must be taken for life and can cause long-term damage to the liver, pushing drugmakers to look for even safer and less burdensome therapy.

Johnson & Johnson (JNJ) and GlaxoSmithKline (GSK) are now testing a combination injection in people with HIV to see whether it can keep the virus in check for the longer term.

Shots Vs. Pills

Patients usually prefer pills rather than needles. However, HIV patients take their pills for life. Gilead and others have greatly reduced the number of antiviral drugs patients need to swallow every day. Still, many patients would choose injections received once a month or even less frequently.

According to results presented at the International AIDS Society’s meeting in Kuala Lumpur in June, 40 healthy volunteers took a combination of Glaxo’s GSK744 and J&J’s TMC278 and sustained drug levels above a predetermined threshold considered necessary to control HIV, during the trial and for four months after the last shot.

The study suggests that the shots may one day provide a safer, more convenient treatment option compared to daily pills.

A survey has been conducted about the preference. Out of 400 HIV-infected patients, 84 percent said they would probably or definitely try monthly injectable therapy, according to a study published in the journal Nanomedicine in April.

As a vaccine, quarterly shots may also prove useful. Gilead’s Truvada pill has been tested as a vaccine and it was proven that it would reduce the chances of uninfected people getting the virus, however, in real life the inconvenience and side effects of taking a daily medicine may deter many from using it.

The Combination

One constituent of the experimental combination, J&J’s TMC278, also known as Edurant, has been approved in oral form by the FDA since 2011.

The other constituent, GSK744 is being developed by ViiV Healthcare, a joint venture between British giant Glaxo and minority partners Pfizer (PFE) and the Japanese company Shionogi.

The drug is a version of dolutegravir, Glaxo’s upcoming new drug, which is expected to win U.S. regulatory approval by August and could earn Glaxo more than $1 billion in sales by 2018, according to estimates compiled by Bloomberg.

In the trial, healthy participants took GSK744 in tablet form once a day for two weeks, then stopped treatment for a week before receiving one of three different combinations of the injections once a month for four months. A fourth group received two injections three months apart.

GSK and J&J have already continued testing the combo in HIV-infected patients.

China

China is potentially a huge market for HIV treatments.

Officially the population of HIV-infected people in China is numbered in the 800,000s, but many believe that unofficially that number is at least twice as big.

Hangzhou, China-based Ascletis is a biopharma startup, developing a candidate, called TMC310911, as an affordable and superior treatment for Chinese HIV patients.

The company has acquired the compound from Johnson & Johnson. The CEO of Ascletis, Jinzi Wu, had previously been head of HIV drug development at GlaxoSmithKline.

Wu expects the market for HIV treatments in China to grow at 30 percent annually for the next several years, faster than the overall pharma market in China. With the licensing deal from Janssen, Ascletis has the chance to be the first local company to manufacture and sell an HIV protease inhibitor in the growing market.

The Chinese government pays for the majority of HIV treatments in the country, yet most patients have been unable to access some of the latest antivirals because of the cost. Patients are taking first-generation HIV drugs since they cost less than the newer pills.

J&J’s TMC310911 (which Ascletis will rename to ASC-09) offers both a best-in-class HIV protease inhibitor and provides a treatment at a price that fits health budgets in China. Ascletis plans to sell the drug for $4,000 to $5,000 per year.

J&J’s Janssen has already developed TMC310911 through Phase 2, and it stands to gain royalties from Ascletis on sales of the drug in China. Janssen has kept its rights to the drug in all other markets.

Ascletis was launched two years ago with a $100 million venture capital led by Hangzhou Binjiang Investment Holding, an operation of the Chinese real estate magnate Jinxing Qi.

ViiV Healthcare

GSK and Pfizer set up the joint venture ViiV three years ago, with both committing HIV/AIDS assets to the venture and splitting ownership 85 percent to 15 percent.

Last year a major restructuring took place.

Japanese company Shionogi received a stake in the venture in return for giving up its rights to the HIV investigational drug dolutegravir. Under the terms of the agreement, ViiV acquired the exclusive global rights to dolutegravir and other early-stage integrase inhibitor compounds. In return, Shionogi receives a royalty on sales "averaging in the high teens" and became a 10 percent shareholder in ViiV, also getting a seat on the board.

Analysts think that at some point ViiV will be turned into an independent company, offering a direct challenge to Gilead.

In a head-to-head study, dolutegravir was compared directly to Gilead’s Atripla, and dolutegravir came out ahead.

Dolutegravir blocked all signs of the virus in 88 percent of the patients after 48 weeks, compared to 81 percent for Gilead’s Atripla, as reported in July 2012,.

The data persuaded JPMorgan (JPM) to raise the chances of regulatory success to a certainty.

Investors’ Summary

Gilead has been the number one player in the AIDs market for years, building a blockbuster HIV franchise primarily with drugs from its own pipeline.

The combo program represents a strategy with which Glaxo and allies are trying to counter Gilead’s weight in the industry by joining forces and developing new branded HIV drugs.

Against Gilead’s HIV franchise in pills today, it appears that Glaxo and J&J own the most advanced long-lasting injected therapy.

In a strategic move, GSK and its minority partner Pfizer both gave up a portion of their equity in Viiv Healthcare to Shionogi in exchange for a controlling interest in dolutegravir that has demonstrated success at barring HIV from penetrating cells. And J&J joined in the creation of the new injected combo.

This development brings a refreshing competition into the HIV marketplace and is good news for both doctors and patients, as it may slow down the never-ending rise in the prices of HIV drugs.

Investors who wish to bet on upcoming HIV therapies have more options, too.

Source: Innovations In HIV: Johnson & Johnson, Glaxo Vs. Gilead

Source : http://seekingalpha.com/article/1560492-innovations-in-hiv-johnson-johnson-glaxo-vs-gilead?source=email_investing_ideas&ifp=0

Buy These Top 10 Technology Stocks For Your 2013-2014 Portfolio July 17, 2013

Posted by Ishmael Chibvuri in Latest Articles!!!.
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If somebody gave you $100,000 to invest in the stock market, what would you invest in? With thousands of stocks available to buy and to short these days, which ones will give you the most bang for your buck? That seems like the million-dollar question that investors are constantly asking themselves.

So what do you do? Well, it really depends on your strategy of course. While some people like to day trade and short stocks, others are content holding stocks long term. Some investors like growth stocks while others like value or the momentum kind. Which one is better? Frankly there’s no right or wrong answer here so long as you are making money.

Today I would like to show you ten stocks that I strongly believe will outperform the market over the next year or so. Whether you have a portfolio set up or are looking to set up a portfolio, these ten technology stocks are definitely worth your time looking over.

Adapting To Life’s Changes

If you have not already noticed by now, much of our lives require regular maintenance. Unfortunately many of us cannot escape many of life’s tasks such as running errands and paying bills. Many of us have regular doctor visits to make sure that we are keeping our bodies fit. As investors we must make sure that our investments are maintained and are working for us as well.

The markets are continually changing and the mix of investments that you put into place will probably change as well. If you let your portfolio roam free for too long, your long-term plan could be in jeopardy. Your future and retirement holdings could become too heavily invested in stocks or bonds, that could potentially increase your losses when the markets go south. So what should investors do?

There are many different answers to this question. First, some experts recommend rebalancing based on an indicator, for instance when a piece of your portfolio drifts outside your desired range. Second, firms say it’s fine to pick a date, stick to it and rebalance it once a year. Lastly, it is interesting to note that Vanguard has found that rebalancing once or twice a year is only necessary when a portfolio has drifted from its goal by at least 5 percent.

If we look back at the history of the markets, we can see that it is important to adjust to the market conditions. Take for instance what took place in the 1940’s. Back then, investors had around 95% of their portfolio in stocks. Crazy right. Now fast forward to the 1980’s and investors showed us how balanced they became with a portfolio consisting of 60% stocks and 40% of bonds, according to Vanguard.

Diversity

The best way to protect yourself against risk in the stock market is to simply not invest at all. But because we’re investors, those are the risks that we take. Nevertheless there is one important thing that investors can do to help limit their risk. That my friends, is being diverse. So what does it mean to be diverse?

The picture above sums up diversification. Diversification is something all investors should take into consideration. By spreading your investments around, investing in companies of different size, geography and economic status, you are limiting the risk and protecting yourself. Combining investments that don’t move in sequence with one another is a great way to reduce risk and limit the bumps along the way. This helps you from being tied to the fate of one market or region that underperforms.

A balanced portfolio involves having a diverse group of stocks and bonds which helps to spread your risk so not all of your eggs are in one basket. Many investors like to invest in different sectors such as (Financial, Consumer Goods, Healthcare, Technology) to get that diversity. However, for this portfolio, I’ll be focusing only on stocks in the technology sector.

The Portfolio

On June 28, 2013 Russell announced the reconstitution of its indices (Russell Global, Russell 1000, 2000, 3000 & Russell Microcap Indexes). Russell, like many other firms and institutions, rebalances the indexes every year to reflect the changing markets and to maintain true representation of those markets, capitalization and style.

While some investors like having institutions and money managers taking care of their money, some investors like doing it all on their own. While some argue that one way is better than the other the truth is that each of these things have pros and cons.

Because of how popular the internet has become, it’s hard not to see investors bragging about their stock picks and how much money they’ve made on a particular investment. However, where are those same people when they are wrong? Ironically they are nowhere to be found.

Today I would like to show you what I bought if I had an extra $100,000 to invest in. Whether they turn out great or fall flat on their face I will be checking in periodically to talk about my picks and to give updates on them as well. So don’t worry, I won’t be running away from these picks anytime soon. So what does my portfolio include? Well without further ado, here it is.

My Performance

Name Bought Worth Now Gain/Loss % My Target
Priceline (PCLN) $695.76 $920.39 + 32.29% $950.00
Apple (AAPL) $428.91 $426.51 – 0.56% $600.00
Baidu (BIDU) $87.05 $96.85 + 11.26% $125.00
Vipshop (VIPS) $29.85 $31.04 + 3.99% $40.00
Yandex (YNDX) $22.86 $30.75 + 34.51% $35.00
Youku Tudou (YOKU) $16.35 $18.72 + 14.50% $28.00
Pandora (P) $13.67 $18.83 + 37.75% $21.00
NQ Mobile (NQ) $8.65 $9.58 + 10.75% $18.00
Dangdang (DANG) $4.14 $6.95 + 67.87% 10.00
Vringo (VRNG) $3.15 $3.06 – 3.47% $8.00

* Results reflect Friday’s closing prices

Investors should be warned however, that as fast as the prices of these companies can go up, they are able to come down just as fast as well. So to make sure everything is fair and equally weighted, I split the $100,000 and put $10,000 in each of the ten stocks.

As you can see some of these companies are some of the biggest in the world, while others are some of the smallest. Some of them are known throughout the world while others are barely known. So why am I investing in these companies? Here are the reasons why.

Apple

When most people think about Apple they usually think iPhones, iPads and Macs. One of the things that gets often overlooked is the amount of cash that Apple has been hoarding over the years. Last March, Apple had over $137 billion in cash and rising. Then in April, Apple made it public that it will be returning close to $100 billion to shareholders by the end of 2015. Apple said that it will increase its share repurchase program from $10 billion to $60 billion as well as up its dividend 15% to $3.05 per quarter.

Apple has been pounded over the last year or so as it has lost more than 40% of its value. While it’s true that Apple’s margins have been slimming down, investors need to realize that Apple cannot continue to grow 100% every year. Apple is still Apple and millions of people still love their products. Because of this, as well as the amount of cash that Apple is giving back to its stockholders, I feel confident that Apple will return back levels it was seeing before its fall from grace. Apple currently has a forward P/E ratio of 9 which is significantly lower than the market average. I currently have a price target of $600 on Apple.

Baidu

Baidu, often called the Google of China, is one of China’s biggest companies. Baidu currently dominates the Chinese search engine field with a market share of close to 70%.

One of the reasons for the drop in share price over the year is the fact that Baidu is facing stiff competition from Qihoo (QIHU) in the search engine business. Qihoo operates mainly as a mobile security provider but has migrated into the search engine business with its wide user base. Last month, Baidu fired back at Qihoo when it launched its own service called Baidu Antivirus. Baidu has made it known that it is a trusted company and looks to protect user privacy unlike other companies such as Qihoo.

Baidu currently has a forward P/E ratio of 15 which is why I feel the company is undervalued. I feel that Baidu will be able to overcome its recent challenges and with its new products will reward investors who have patience. I have a Buy rating on Baidu with a $125.00 price target.

Priceline

Priceline has been on a tear the last couple of years climbing almost 500% as it’s reached a new 52-week high on Friday ($920.92). Just when I think Priceline’s magnificent run is over, it just keeps climbing higher. Many analysts feel that Priceline will top $1,000 this year.

Priceline, known for its name your own price system, is one of the top travel companies in the entire world with all of its worldwide services. With a forward P/E ratio of 19, I feel that Priceline is still undervalued for the type of growth that it has given investors. I still have a Buy rating on Priceline with a $950.00 price target.

Dangdang

Dangdang is often times called the Amazon of China because of its marketplace program similar to that of Amazon.com (AMZN). Even though Dangdang has similarities of Amazon, it is not a true representation of it.

In May, Dangdang announced the launch of a Flash Sales Channel. So what exactly are flash sales? Flash sales are time-limited sales of products and service, offered by retailers at steep discounts to help offload surplus. Online retail sales in China are expected to more than triple by the year 2015, climbing to around $160 billion.

Peggy Yu Yu, Dangdang’s Executive Chairwoman, talked about the future and direction of the company saying:

"Dangdang’s marketplace enjoys rapid growth momentum and is an important driver to help transition our brand to an integrated online shopping mall. The Flash Sales Channel is our latest initiative in further enhancing Dangdang’s open platform to attract more merchants, especially well-known brands, to our marketplace."

I find Dangdang to be a very attractive stock. The growth in China, as well as Dangdang’s new shopping mall and flash sales, show great promise. It doesn’t hurt that Dangdang’s cash per share stands at $3.20. This means that almost 50% of Dangdang’s stock value can be explained by its cash on hand. I have a Buy rating on Dangdang with a $10.00 price target.

Yandex

Yandex is commonly known by many as the Baidu and Google of Russia. However, unlike some of its peers, Yandex not only serves the local people of Russia but internationally as well with countries such as Turkey and the Ukraine depending on Yandex.

Yandex has a market share of around 62% in Russia, and continues to fight off Google in the search engine field. Shares of Yandex have been on a roll this year as they are up over 30% year to date.

Analysts have predicted a 36% jump in net income for Yandex in 2013 which is higher than most of its internet peers. Erik Lam, director of Asian equity sales likes Yandex saying, "Even though Yandex looks a bit pricey, it’s pretty tough to argue against it if you look at the pace of its latest earnings growth in comparison with global peers." I like Yandex as well, as I currently have a Buy rating with a $35.00 price target on it.

Youku Tudou

Youku Tudou is often known by many as the YouTube of China. Youku is actually China’s leading Internet television company with hundreds of millions of users.

Just last month, Chinese web giants, Youku Tudou and Sina (SINA) teamed up as they agreed on a strategic content-sharing alliance that benefits both parties. In the deal, in exchange for access to Youku Tudou’s video library, Sina will leverage its PC and mobile platform to promote Youku Tudou’s licensed content to its Weibo users. The alliance between the two will also draw even bigger gains in mobile traffic as both companies have hundreds of millions of users.

Dele Liu, President of Youku Tudou talked about the alliance saying:

"Creating and sharing content is at the core of the Internet, and Youku Tudou’s cooperation with social networking sites such as Weibo is a powerful move towards deepening consumers’ online video viewing and sharing experience. We look forward to showcasing our content in new and innovative marketing formats as we work to expand our lead in the online video industry."

Next month will be the one year anniversary celebrating the merger between Youku and Tudou. The merger has helped Youku generate revenue and decrease costs. Analysts expect revenue to surge nearly 50% next year. I have a Buy rating on Youku with a $28.00 price target.

Pandora

Pandora has been on a roller coaster ride over the last year or so as its stock price has bounced from the low $7’s all the way up into the $20’s.

One of the reasons for such a price increase over the last little bit has been because of Pandora’s better-than-expected earnings results. During last quarter’s earnings results, we learned that mobile listening hours and mobile ad revenue reached record highs. Investors have been pleased with the results and the record highs that Pandora continues to set. However, will Pandora be able to keep it up?

A couple of weeks ago Apple unveiled iTunes Radio. Many analysts and investors still have a wait and see approach with iTunes Radio to see what kind of impact it will have on Pandora and other companies. I personally feel that Apple will need some time for customers to jump on board with iTunes Radio. I feel that Pandora won’t feel the heat from Apple until sometime next year. On that note, I have a Buy rating on Pandora with a price target of $21.00.

Vipshop Holdings

Vipshop is China’s leading online discount retailer. Vipshop offers branded products to consumers in China through flash sales on its vipshop.com website. Shares of Vipshop are up 800% over the last year or so and look to continue flying. Who is going to stop them?

Looking over last quarter’s earnings report, we can see that Vipshop net revenues increased over 200% to US$310.7 million from US$101.3 million in the prior year period. For the upcoming quarter, Vipshop expects to see net revenues between US$330 million and US$335 million, representing a year-over-year growth rate of approximately 144% to 148%.

Now who wouldn’t want to buy a company that is growing 100-200% year over year. I like Vipshop a lot as I have a Buy rating on the company with a price target of $40.00.

Vringo

Vringo, together with its subsidiaries, engages in the innovation, development and monetization of its mobile technologies as well as its intellectual property. Most investors know Vringo because of its court case against tech giant Google (GOOG).

On November 6, 2012, a jury unanimously returned a verdict award for Vringo amounting to $30.5 million in respect to past damages by the defendants’ infringements commencing from September 15, 2011. It was also confirmed that Vringo would also be compensated by Google, with a running royalty rate of 3.5% through 2016. Estimates have royalties in the range of $635 million that Vringo would be receiving.

Vringo and Google are both awaiting Judge Jackson’s post trial ruling as Vringo has asked the judge to award it an enhanced royalty rate between 5-7% because of Google’s ongoing infringement. If such an award is indeed granted, Vringo would collect over one billion in royalties. Not bad for a small company that Wall Street currently values at two hundred and fifty million.

Over the last couple of months, a number of positive developments have taken place for Vringo. First, it was able to come to a licensing and settlement agreement with Microsoft (MSFT), as well as being added to the Russell indexes. Investors are also looking forward to the ZTE case, which begins in October. It doesn’t hurt either that insiders are buying shares, signaling their belief in the company. Remember there is only one reason for insiders to buy shares. That is to make money. Investors in the stock market must remember that insiders have access to every bit of company information that you could ever want. Based on this insight, it would be tough to bet against the company. I have a Buy rating on Vringo with a price target of $8.00.

Conclusion

Since starting my portfolio on April 1, 2013 (the start of the second quarter), it has grown to over 20%. Not bad for a three month span. So what technology stocks do you like for 2013-2014? Do you have a top 10 list? If so, I would love to hear what your technology portfolio would look like over the next year or so.

Disclaimer: I’m currently long Vringo, and look to add more of the companies mentioned in this article. Investors are always reminded that before making any investment, you should do your own proper diligence on any stock mentioned in this article and to make sure you are comfortable with your investment strategy. Have a great day and as always, I look forward to hearing your thoughts or questions that you might have.

Source: http://seekingalpha.com/article/1551862-buy-these-top-10-technology-stocks-for-your-2013-2014-portfolio?source=email_investing_ideas&ifp=0

Why BlackBerry Urgently Needs A Buyer Or Partner July 17, 2013

Posted by Ishmael Chibvuri in Latest Articles!!!.
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I have repeatedly written on how BlackBerry (BBRY) needs to find a strong financial partner to market its world class technology and products. The company has managed to rise like a phoenix over the last year through the introduction of a new operating system and smartphones. Though the technology is good, the company’s pricing strategy and marketing have left a lot to be desired. I don’t think that the company spent enough money in marketing the Z10 and Q10 in order to conserve cash.

The recent results have been quite bad in terms of BB10 smartphone shipments. The company’s new management has recognized this problem and will increase its marketing spend, which will lead to losses over the coming year. Supporting a global distribution and marketing network is a very expensive proposition, especially as you have to go against giants such as Samsung (SSNLF.PK) and Apple (AAPL). Nokia manages to barely get through, as the costs are subsidized by its huge feature phone segment. BBRY does not have this luxury, and to remain a global player it needs to find a partner fast. CEO Thorsten Heins hinted that he is now more open to this possibility. However, the company needs to move faster as its assets are deteriorating with each day. Its standing and reputation are also falling due to the bad results. I remain positive on the BBRY stock as I think that the stock price undervalues BBRY assets.

The Smartphone industry is becoming fragmented and hyper competitive

The smartphone industry is becoming increasingly fragmented and more competitive each day. All the major smartphone stocks such as Apple, Samsung, Nokia (NOK) are trading at single digit P/E multiples. The stock prices have fell YTD for most of the smartphone stocks and have underperformed both the technology sector and the overall market. The reason is not hard to understand as competition from the low cost Asian companies has been increasing. Not only have the Asian technology heavyweights such as Lenovo, Huawei, ZTE, Panasonic, LG etc. increased their smartphone investments, but pure play smartphone upstarts such as Coolpad, Micromax, Karbonn, Xiaomi etc. have also become formidable rivals. The growth in the high end smartphone segment has been saturated and is now coming from the lower end smartphone segments. These small companies are very strong in the low end segment and are now penetrating the middle segment as well. Apple does not have a product for the low end segment, while BBRY has 2-3 year old models. Only Samsung and Nokia are fighting effectively in the low and mid range segments.

BBRY’s assets are deteriorating

BlackBerry has some excellent smartphone assets which help the company differentiate itself from the competition. It offers excellent security, enterprise integration, a popular chat messenger and a world class operating system. However without a strong financial partner, it cannot hope to effectively cover more than a hundred countries. The company’s assets are deteriorating, and unless it leverages them, the asset value will keep going down.

  1. BBRY subscribers are showing an alarming decrease – BBRY’s strong subscriber base of 80 million has decreased by almost 10% in the past year. This will put strong pressure on its highly profitable service line which has been the company’s savior during the tough times. BBRY is being forced to lower its service fees as rivals start offering a lot of these services for free or at a low price.
  2. BBM is being overtaken – BBRY’s BBM service used to be one of the most popular mobile chat services, being a major driver of its handset sales. However, Wechat, Line, Whatsapp etc. have overtaken BBM in popularity and subscribers. BBRY’s decision to port BBM to Google’s Android and Apple’s iOS is probably too late.
  3. BES is taking knocks – Blackberry offers the most secure services in the world of increasing espionage and snooping. But the company’s security advantage has taken some hard knocks, with US being able to spy on BBRY messages and BBRY being forced to share data with different governments. BBRY still is the best in security, but it needs to advertise and market this fact, otherwise Apple will eat its lunch.

Launching new BB 7 Smartphones does not make sense

BBRY has done a great job in its turnaround, and a missed quarter does not turn it into a villain. The company is fighting strong headwinds and cannot afford to miss a single trick. I was perplexed by their announcement of a new BB 7 smartphone. I am not sure whether the tech savvy customers would want to buy old technology. BBRY has limited resources and needs to speed up its BB 10 offerings. I am not sure if it can afford to divert its energy into an older OS with its attendant expenses. Nokia abandoned Symbian to go with Windows 8 leading to a large savings in OS development.

Who are the Suitors

Blackberry should be attractive to a lot of companies, given its tremendous assets and beaten up valuation. Lenovo has expressed interest in the past and I think a number of enterprise technology players would love to buy BBRY. The Canadian government is an implicit barrier, but I don’t think the Canadian lawmakers are stupid. I think they would allow BBRY to go out of Canadian hands, given appropriate safeguards on jobs and facilities. Microsoft (MSFT), IBM (IBM), Cisco (CSCO), Huawei, ZTE etc. are all potential suitors. These companies have huge revenue bases and buying BBRY at the current price won’t stretch their balance sheets. BBRY will be able to effectively leverage the distribution and marketing networks to sell its products.

BBRY recent stock decline has a silver lining

BBRY’s stock has declined sharply after the recent results and has stayed at the same $9 level, which is half of the $18 peak level reached in 2013. The stock remains undervalued with a P/B of only 0.5x and offers great value to a buyer in my view. BBRY management has also become more receptive to partnerships compared to earlier times when they wanted to go alone.

Summary

Blackberry is a great company with good assets, but the company’s management needs to be super agile. The smartphone industry has become the toughest technology segment to compete, despite its huge size and growth. The company has adroitly navigated the last year under a new management. But the company cannot miss a single trick, as the competition remains extreme. My first BBRY article on SA advocated that BBRY should find a partner or sell itself. The hype around BB10 launches had temporarily clouded the facts. However, BBRY’s top management seems to be realizing the same thing after the recent quarterly results deflated a lot of the hype. BBRY products are pretty amazing and offer an alternative in the Android/iOS dominated world. I think a strong marketing partner/buyer could largely increase BBRY’s marketshare. I remain positive on BBRY stock currently, as I think that the asset value of the company is not being properly priced in.

Source: http://seekingalpha.com/article/1550712-why-blackberry-urgently-needs-a-buyer-or-partner?source=email_investing_ideas&ifp=0

Facebook: Analysts Get Bullish July 10, 2013

Posted by Ishmael Chibvuri in Latest Articles!!!.
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Social Media is now connecting millions of people all over the world. Personal news that would have taken hours, or even days to share via snail mail, phone conversations and email, can now be sent to hundreds of friends and contacts in seconds. And within minutes there are comments, likes and dislikes for everyone else to see. Facebook (FB) is working very hard to make it even easier to connect via a new tool called Graph Search which became available to millions of FB users on Monday:

Get ready for your Facebook search bar to start looking a little different. Starting Monday, Facebook will begin rolling out the advanced search feature it announced earlier this year to all users in the United States. Called Graph Search, the tool allows users to conduct more advanced searches — like "Restaurants in New York City my friends like" or "photos of my friends before 1996" — and get detailed results.

The only problem is that investors have not been as receptive. Last summer, shares of Facebook plummeted when the P/E ratio was around 72, and millions of additional shares were scheduled to be added to the float. Now the P/E ratio is over 500 which would give most investors a very valid reason to run away. However the current forward ratio is a much healthier 31.69. Analysts are suddenly bullish on the stock. According to Craig Smith, there are now 1.11 billion users on Facebook. And Instagram has over 130 million users. FOXBusiness recently reported that UBS is very bullish on the stock because of new ads that will begin appearing on Instagram:

The bullishness reflects new ad potential for Facebook, with UBS analyst Eric Sheridan projecting video ads would begin showing up through Instagram later this year…

"Our estimates assume that Facebook will be able to monetize daily video ad slots in the seven-figure range," he said, predicting that ads will begin appearing on Instagram during the second half of 2013.

In the last two months four analysts have upgraded Facebook from Hold to (3) Strong Buy and (1) Buy:

Recommendation Trends For Facebook Stock

Current Month Last Month Two Months Ago Three Months Ago
Strong Buy 12 10 9 8
Buy 13 11 12 13
Hold 10 13 14 13
Underperform 1 1 1 1
Sell 1 1 1 1

Data provided by Thomson/First Call

According to NASDAQ, the short interest has declined dramatically since last November when over 95 million shares were sold short. And the daily volume has gone up over the last year, changing the days to cover from five down to one. A large decline in short interest can be another very bullish signal:

Facebook Short Interest

Settlement Date Short Interest Avg Daily Share Volume Days To Cover
6/14/2013 35,998,845 37,023,355 1.000000
5/31/2013 33,867,105 44,027,711 1.000000
5/15/2013 27,897,240 44,975,686 1.000000
4/30/2013 29,629,840 27,120,485 1.092526
4/15/2013 35,338,011 39,788,688 1.000000
3/28/2013 38,990,404 31,685,412 1.230547
3/15/2013 32,235,485 39,993,643 1.000000
2/28/2013 28,492,068 46,292,214 1.000000
2/15/2013 25,392,181 53,251,976 1.000000
1/31/2013 20,540,598 70,742,962 1.000000
1/15/2013 25,470,575 89,690,457 1.000000
12/31/2012 26,392,950 49,138,849 1.000000
12/14/2012 55,158,535 69,448,320 1.000000
11/30/2012 56,892,233 82,315,962 1.000000
11/15/2012 95,301,361 62,105,481 1.534508
10/31/2012 87,988,874 74,059,902 1.188077
10/15/2012 73,385,252 32,630,000 2.249012
9/28/2012 77,992,874 53,146,893 1.467496
9/14/2012 87,560,446 58,118,623 1.506582
8/31/2012 85,350,481 59,995,689 1.422610
8/15/2012 87,984,040 38,986,997 2.256753
7/31/2012 61,325,822 34,175,438 1.794441
7/13/2012 56,718,300 12,078,975 4.695622

The range in target price reflects the company’s past mistakes, combined with its new bullishness. The low is $21 a share, versus an optimistic $40, which would give a very healthy upside to the current price of $24.71 at Monday’s close.

Facebook Price Target Summary

Mean Target: 32.80
Median Target: 33.00
High Target: 40.00
Low Target: 21.00
No. of Brokers: 31

Conclusion

I am usually not willing to recommend a stock that has such undesirable fundamentals. However, there are many other things involved in judging a company. This new bullish turnaround by analysts can not be ignored. That does not mean that they will be right. Each and every stock is a gamble one way or the other. But Facebook looks like a very attractive investment right now before earnings are announced in two weeks:

Facebook announced that the company’s second quarter 2013 financial results will be released after market close on Wednesday, July 24, 2013. Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET the same day.

Earnings are expected to be 14 cents a share, up two cents compared to last year. And revenue is projected to be up over 36%. That could be enough to really move the shares upward. Again, this is pure speculation at this point, so don’t bet the rent money.

Source: http://seekingalpha.com/article/1540622-facebook-analysts-get-bullish?source=email_investing_ideas&ifp=0

Which Oil Company Is The Cheapest? July 10, 2013

Posted by Ishmael Chibvuri in Latest Articles!!!.
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The oil industry tends to be one of the most popular industries to invest in. It’s very rare to meet an investor who doesn’t have at least one oil company in his or her portfolio. Interestingly enough, these companies have underperformed the market in the 2013 version of "the Fed rally."

Year-to-date, the Dow Jones Index is up by 16.5% and S&P 500 Index is up by 14.9%. During the same period, Exxon Mobil (XOM) is up by 6.5%, BP (BP) is down by 0.9%, Chevron (CVX) is up by 12.2%, Total (TOT) is down by 5.8%, Royal Dutch Shell (RDS.A)(RDS.B) is down by 7.4%, Statoil (STO) is down by 17.1%, Phillips 66 (PSX) is up by 10.6%, Valero (VLO) is up by 1.2%, Marathon Petroleum (MPC) is up by 10.2%, Petrobras (PBR) is down by 37.7%, and ConocoPhillips (COP) is up by 8.3%. Pretty much every major oil company has been beaten by the market. One would think that oil price must have been down, but we don’t see that happening either. Since the beginning of the year, average oil price has been around $95, which is well-above the historical averages.

Not only have oil companies been underperforming the market, but they continue to have low valuations compared to the market. Most major oil companies currently trade for single-digit P/Es (more on that later), whereas the average P/E in S&P 500 index is 15.49.

When evaluating value of companies, there are several metrics one could look at. Some of the most important metrics are: price to sales, price to trailing and forward earnings (including and excluding cash), price to book value, dividend yield and price to cash flow ratio. Having said that, it is important to look at these companies beyond these numbers though. For example, one company might have very strong fundamentals but it might be in the middle of a lawsuit that has the potential of draining all or most of its cash reserves (hello BP?).

Current Valuations

In the table below, you’ll find the current valuations of each major oil company. When we look at trailing price to earnings, we see that BP, Valero, Marathon and Statoil are exceptionally cheap. ConocoPhillips, Total and Exxon Mobil look like they are more expensive than their peers, even though these companies are still cheaper than the market by a large margin (remember that the average P/E in the S&P 500 index is above 15).

If we look at price to book ratios, we see that Petrobras is insanely cheap. After Petrobras, we see Valero, Total and Statoil. For reference, the average price to book ratio in the overall market is 2.3. All major oil companies with the exception of Exxon Mobil have price to book ratio that is below the market’s average.

When we look at price to sales ratio, we also see similar trends. Compared to the S&P 500 average of 1.5, all oil companies are undervalued. When we compare the price to sales and price to earnings ratios, we see that the oil business has low margins across the board, even when oil price is near $100 per barrel. This is because companies tend to invest a lot of their earnings for oil exploration and development. In other words, most of the current earnings in the oil industry are being spent to ensure the future earnings.

Our next metric is price to cash flow, and Petrobras, Statoil, Valero and Marathon strike me as the cheapest companies in this category. Exxon Mobil is on the higher side of things due to expensive investments made by the company; however, even this company falls far below the market average of 9.9 (the industry average is 5.5 for oil companies).

Finally, when we look at the dividend yields, BP, Statoil and ConocoPhillips appear to be winners. Keep in mind that Norway will withhold taxes from Statoil’s dividend. Also, keep in mind that Statoil’s dividend payments are not as stable as other oil companies, even though the company is strongly committed to returning value to shareholders consistently. The company’s dividend yield will range moderately from year to year. Companies like Exxon Mobil have lower yields, but they have stable payments with consistent growth over years.

Company Price to Earnings Price to Book Price to Sales Price to Cash Flow Dividend Yield
Exxon Mobil 9.3 2.4 0.9 8.3 2.6%
BP 5.8 1.0 0.3 6.3 5.1%
Chevron 9.0 1.7 1.0 6.5 3.1%
Total 9.9 1.1 0.5 4.1 5.2%
Statoil 6.6 1.2 0.6 3.3 4.3%
Royal Dutch Shell 7.6 1.1 0.4 4.5 4.7%
Phillips 66 7.4 1.7 0.2 5.3 1.9%
Valero 6.0 1.0 0.1 3.6 2.2%
Marathon 6.6 1.9 0.3 3.7 2.0%
ConocoPhillips 10.6 1.6 1.3 5.3 4.2%
Petrobras 8.4 0.2 0.5 2.9 N/A

Forward Valuations

When we look at future valuations, which should matter more for investors, since investment is future oriented, we see Valero, Statoil and Petrobras as the best valuation plays.

Company Forward P/E PEG Ratio PEG Payback
Exxon Mobil 10.4 2.9 8.0
BP 15.4 17.5 13.5
Chevron 9.2 0.0
Total 6.5 10.3 5.4
Statoil 6.9 0.0
Royal Dutch Shell 11.3 4.5 9.1
Phillips 66 7.4 10.5 6.2
Valero 5.4 0.3 3.2
Marathon 6.0 0.9 4.2
ConocoPhillips 9.9 2.1 7.3
Petrobras 3.9 1.4 2.8

Basically, across many metrics, Valero, Petrobras and Statoil look like the best-valued oil companies. We will have to look beyond the numbers to see a better picture though.

Looking Beyond Numbers

While it enjoys strong valuation, Statoil has been dealing with some issues lately. Apparently, the company failed to report a leak on the seafloor, it has to deal with high operating costs in Norway and hopes that the government of Norway will not raise the already-high oil taxes further in the country, and the company is also being sued for price-fixing along with a couple other major oil companies. Petrobras has its own share of issues to worry about. Brazil’s economy is weakening and its currency is losing value as the inflation hits the country hard. Also, the fact that Brazil’s government has been interfering with the company’s business is not helping either. Many investors are worried that the government will end up nationalizing the oil company, effectively wiping out the investors. Valero seems to have a lower risk profile compared to Petrobras and Statoil.

Having said that, I currently own shares of Statoil. In the past, I used to own shares of Exxon Mobil, BP, Chevron, Total, and Royal Dutch Shell. The data I presented could be interpreted in more than one way, and different investors may reach different conclusions. It looks like the oil industry is very cheap as a whole and it’s been underperforming a market that’s been rallying relentlessly. At this point, it may be a good idea to buy shares of some oil companies

Source: http://seekingalpha.com/article/1540582-which-oil-company-is-the-cheapest?source=email_investing_ideas&ifp=0

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