TAT Technologies: Free Cash Flow for Cheap
August 3, 2009 by
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TAT Technologies (NASDAQ: TATTF) is a tiny maker of specialized parts for military and civilian airplanes. The business has been consistently earning good returns on capital, growing and throwing off free cash flow but its value has recently been masked by a flurry of “corporate actions” which produced complex financials and may have scared off investors.
As a result, the business is now selling for what I believe is a bargain price of about 1.1x the last twelve month’s EBIT and 46% of its book value. Over the next year, TAT should be able to produce much simpler financials that will make the value more apparent.
Oil Is Still the Key to U.S. Economic Future
August 3, 2009 by
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Michael Fitzsimmons submits:
Recently there has been a plethora of articles in the financial press, including SeekingAlpha, intimating the weakness of large integrated oil companies based on the last couple quarterly earnings reports. Most of the authors of such articles have a very short memory and obviously need a reality check. I’m happy to oblige.
Naturally companies like ExxonMobil (XOM), British Petroleum (BP), ConocoPhilips (COP), and Chevron (CVX) reported lower earnings. After all, oil had dropped from $145/barrel to around $40/barrel and the price of natural gas has plummeted. Did anyone not expect earnings to be significantly lower? However, the question is not what earnings are today, but what will the oil company earnings be in future quarters next year and the year after?
Buy Forward Industries at 33% Off
August 3, 2009 by
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Researching Forward Industries is more than a little frustrating because its ticker symbol (FORD) is often confused by the search engines with the automobile manufacturer Ford Motor Co (F).
With the recession biting, you have probably read about the sales of cell phones and consumer electronics slowing:
AMAG Pharmaceuticals’ Feraheme: The Next Billion Dollar Drug
August 3, 2009 by
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On June 30, 2009, the FDA approved Feraheme for the treatment of anemia in chronic kidney disease (CKD), both in pre-dialysis patients and those undergoing dialysis. Feraheme, sold by AMAG Pharmaceuticals (AMAG), received a clean label without any black box warnings. Now that Feraheme has been approved, the key question for investors is what the market opportunity is and how quickly it will be achieved.
Background on Feraheme
With a Small Pullback Behind Us, Precious Metals Are Ready to Shine Now
August 3, 2009 by
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Przemyslaw Radomski submits:
This essay is based on the Premium Update posted August 1st, 2009
In the previous essay, I mentioned that a brief consolidation is in the cards and is likely to take place immediately, or after additional few more days of rising gold, silver and PM stock prices, and a small dip in the USD Index. I stated that:
Becton Dickinson: All the Attributes of a Dividend Aristocrat
August 3, 2009 by
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Dividends4Life submits:
Linked here is a detailed quantitative analysis of Becton Dickinson & Co. (BDX). Below are some highlights from the above linked analysis:
Company Description: Becton, Dickinson and Co. provides a wide range of medical devices and diagnostic products used in hospitals, doctors’ offices, research labs, and other settings.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
12 Potential Dividend Growth Plays
August 3, 2009 by
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Dobromir Stoyanov submits:
This week’s distribution increases were mainly focused on two of the energy majors and several master limited partnerships. In one occasion with master limited partnerships, both the general and the limited partners received distribution increases, while in another only the general partners received a raise in quarterly distributions.
Dividend increases typically reflect management’s confidence in companies’ financial performance and their ability to meet shareholders’ expectations. The companies which met these goals include:
Access Pharma Provides an Update on ProLindac Development
August 3, 2009 by
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Mike Havrilla submits:
On 8/3/09, Access Pharma (ACCP.OB) provided an update on its clinical development strategy for ProLindac, a novel DACH platinum drug that has shown to be active in many solid tumors in human clinical studies. Access has commenced a new clinical study of ProLindac in France. The study will examine dose levels and regimens of ProLindac mono-therapy in cancer patients, provide additional data to support design of combination studies, and extend the safety database for the drug. Two ovarian cancer patients have been enrolled in the study to date, and the Company expects to enroll 6-12 patients this year before beginning to enroll patients in clinical trials evaluating ProLindac in combination with other chemotherapies (likely to involve ProLindac plus paclitaxel–Taxol and/or gemcitabine–Gemzar).
Access recently announced data from a recurrent ovarian cancer trial that showed that ProLindac was more active than currently available platinum drugs in that patient population, and that the drug was very well tolerated. ProLindac is a novel DACH platinum drug that has shown to be active in many solid tumors in human clinical studies. Platinum drugs are one of the most clinically and commercially successful class of chemotherapies and generated more than $3 billion in revenue globally in 2008. Access believes that ProLindac, as a well-tolerated and active DACH platinum, represents a important improvement in the design and tolerability of platinum chemotherapies. Later this month, an Access management and clinical development team is meeting with Access’ partner, Aosaikang Medicinal Group (Ask-Pharm) and several key oncology opinion leaders to finalize plans for ProLindac development in China. In addition, Access is meeting with its Korean partner, JCOM of Seoul, South Korea to finalize development plans in that territory. Access believes that three ProLindac combination trials will start shortly upon regulatory approvals of protocols in both China and Korea. Further, Access has reported receipt of additional milestone payments from its Far East partners in the ordinary course under their collaborative agreements.
Thomson: Debt Deal to Resuscitate Equity Value
August 3, 2009 by
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On 24 July 2009, Thomson SA (TMS), the French media technology group, said it had signed a balance sheet restructuring agreement with the majority of its creditors. The agreement stipulates 1) a 45% cut in its gross senior debt (from EUR 2.83bn to EUR 2.55bn) by converting it to equity using a EUR 350m rights issue, EUR 528m notes redeemable in shares (’NRSs’) and Disposable Proceeds Notes (’DPNs’); 2) the renegotiation of terms of the remaining gross debt with the longer payment maturities and conditions are becoming more compatible with its repayment capacities (the first significant EUR 1050m maturity doesn’t come before 2016 as where before a EUR 1444m maturity was approaching in 2012); and 3) redemption of all the super subordinated debt securities for a maximum of EUR 25m. With the agreement currently approved by a majority of creditors, the restructuring has eliminated the risk of bankruptcy and will bring Thomson’s net gearing around 2x. This allows Thomson breathing space for the short and mid term work on its position as world leader on several of its activity segments (DVD, set-up boxes).
Although there has been lot of analyst focus on the massive extent to which shareholders will be diluted, we believe that even in a pessimistic case of dilution, it is attractive to go long Thomson under €0.70 a share. Assuming full dilution of existing shareholders and applying a discount of 20% to its peers trading at 1.0x EV/Sales 2010 -stemming from doubts about the sustainability of its business model (eg structural downtrend of DVDs), we achieve a price of €0.7, with further upside to come from 1) Thomson achieving better than expected prices for its divested businesses (more than €300 for businesses which generated €1.1bn turnover in 2008); 2) narrowing of Thomson’s peer valuation discount; 3) renewed top-line growth from trough revenues; 4) Thomson’s decision to redeem a portion of up to 34% of its NRSs; 5) participation of current shareholders in 100% of the €300m rights issue and €75m in the issue of the NRS.
Barrick Gold Has a Bright Future
August 3, 2009 by
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I don’t believe in the health of the stock market at large. It has further to fall in my opinion.
Nationally it seems we are being fed the idea that the worst is behind us in terms of this financial crisis, and that reassuring message seems to have gotten people back into the stock market. It’s a classic suckers rally that is only going to end badly for investors. Paradoxically, the modern investment mantra of "stocks for the long haul" and using diversity as a means of protection is just going to guarantee that the average investor will feel the full weight of this next leg downward.