/* Article Data (Server Side) article (o): [object Object] Content (s): Article Not Found. relatedData (o:Array(16)): 0 (o): [object Object] Headline (s): Economic Watch: US Service Sector Increases Momentum, Trade Deficit Up Teaser (s): Economic activity in the nation's service sector increased in April, according to two reports released on Tuesday. The non-manufacturing sector grew in April for the 63rd consecutive month, hitting its highest level since November, based on the Institute for ... Source (s): Truckinginfo DocumentDate (s): 17 minutes ago DocumentDate_raw (n): 1430838000000 Link (s): http://www.truckinginfo.com/news/story/2015/05/economic-watch-u-s-service-sector-increases-momentum-trade-deficit-up.aspx DocumentKey (s): HTTPwww.truckinginfo.com/news/story/2015/05/economic-watch-u-s-service-sector-increases-momentum-trade-deficit-up.aspx DMSourceID (s): Google ContentType (s): Article 1 (o): [object Object] Headline (s): Hedge fund pay down as top 25 managers bank total of $11.62bn Teaser (s): The world's 25 best paid hedge fund managers earned a combined $11.62bn last year even as the industry suffered from largely mediocre investment performance and growing criticism from some of its largest investors. Source (s): Financial Times DocumentDate (s): 17 minutes ago DocumentDate_raw (n): 1430837975000 Link (s): http://www.ft.com/cms/s/0/6a0239e2-f32f-11e4-a979-00144feab7de.html DocumentKey (s): HTTPwww.ft.com/cms/s/0/6a0239e2-f32f-11e4-a979-00144feab7de.html DMSourceID (s): Google ContentType (s): Article 2 (o): [object Object] WSODIssue (s): |106871|27294563 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Is GM losing speed or revving up for a comeback? Link (s): http://folionation.squarespace.com/news/2015/5/5/is-gm-losing-speed-or-revving-up-for-a-comeback.html Thumbnail (s): DocumentDate_raw (n): 1430837640000 DocumentDate (s): May 5, 2015 DocumentDate_smart (s): 10:54 AM DocumentKey (s): 1107-290734296785735331247-575KC1CG8IA989BNPJDTKMNO9C ContentType (s): Article TrackingPixel (s): Teaser (s):

The battered carmaker's earnings disappointed some, but it may not be time to count GM out of the race. 

After peaking at $38.87 in March, shares of General Motors (GM) are pulling back. An April 24th downgrade by an analyst at Buckingham from buy to neutral didn’t help either. The analyst cited transaction pricing, especially in China, along with concerns about GM’s international businesses as reason for the decision. Meanwhile, Greenlight Capital, a Hedge Fund, is starting a new position in the company. Let’s take a look at what about the carmaker disappoints some and excites other.

GM trades at a forward P/E of just 6.95, compared to 10.83 for Fiat Chrysler (FCAU):

The company is also buying back shares to boost shareholder value. The firm said it wants to buy back shares as quickly as it can, but having $20 billion in cash levels is a first priority. Still, it has an initial $5 billion share buyback plan.

GM reported earnings of $0.86 per share on April 23, although this missed consensus estimates of $0.97 per share. Return on invested capital was strong in China, and the company expects capital spending on Cadillac to improve. GM still reported an operating loss in Europe though it fell from $284 million a year ago to $239 million. Additionally, global sales improved by 1.9 percent from a year earlier.

Investors who want greater exposure in the growth of automobile demand in European market may want to consider Fiat Chrysler. In March, car registrations of Fiat Chryslers grew 13.4 percent year-over-year to 97,796 units. 

Fiat is up nearly 40 percent in 2015. If Dodge Ram pickup sales continue to improve, then the stock should move up too.

Fiat Chrysler is a more expensive stock than GM, but chances are good sales will improve in the quarters ahead. GM may have disappointed markets, but its turnaround continues. Difficulty in Russia and the US will pass. Profit margins are improving each quarter and have done so over the last year. New products for Buick, Malibu, and CT6 could also act as a positive catalyst for GM.

Written by Chris Lau

Click on the interactive chart to view data over time. 

 

1. Fiat Chrysler Automobiles N.V. (FCAU, Earnings, Analysts, Financials): Designs, engineers, manufactures, distributes, and sells vehicles and components. Market cap at $19.10B, most recent closing price at $14.80.

 

 

2. General Motors Company (GM, Earnings, Analysts, Financials): Operates as a global automaker. Market cap at $57.02B, most recent closing price at $35.40.

 

 

 

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3 (o): [object Object] Headline (s): Disney Shares Rise On Earnings Beat And 'Unprecedented' Star Wars Excitement Teaser (s): Life is good in Mickey Mouse land: the Avengers have (re)assembled, the Force is forthcoming and, according to the second quarter earnings report out early Tuesday morning, Disney's profit and revenue are up year-over-year. Source (s): Forbes DocumentDate (s): 39 minutes ago DocumentDate_raw (n): 1430836650000 Link (s): http://www.forbes.com/sites/maggiemcgrath/2015/05/05/disney-shares-rise-on-earnings-beat-and-unprecedented-star-wars-excitement/ DocumentKey (s): HTTPwww.forbes.com/sites/maggiemcgrath/2015/05/05/disney-shares-rise-on-earnings-beat-and-unprecedented-star-wars-excitement/ DMSourceID (s): Google ContentType (s): Article 4 (o): [object Object] Headline (s): Oil tops $60 a barrel for first time in 2015 Teaser (s): Crude oil crested the $60 mark Tuesday for the first time this year. Traders are buzzing about whether its a sign that the era of low gas prices for American drivers is over. Source (s): CNNMoney DocumentDate (s): 39 minutes ago DocumentDate_raw (n): 1430836650000 Link (s): http://money.cnn.com/2015/05/05/investing/oil-above-60-dollars-a-barrel/ DocumentKey (s): HTTPmoney.cnn.com/2015/05/05/investing/oil-above-60-dollars-a-barrel/ DMSourceID (s): Google ContentType (s): Article 5 (o): [object Object] Headline (s): Stocks drift lower in early trading as oil jumps; Disney, Estee Lauder rise on ... Teaser (s): FILE - In this Oct. 2, 2014 file photo, people pass a Wall Street subway stop, in New York's Financial District. Stocks are little changed in early trading Tuesday, May 5, 2015, following two days of gains that brought the market close to a record high. Source (s): Fox Business DocumentDate (s): 1 hour ago DocumentDate_raw (n): 1430834625000 Link (s): http://www.foxbusiness.com/markets/2015/05/05/stocks-drift-lower-in-early-trading-as-oil-jumps-disney-estee-lauder-rise-on/ DocumentKey (s): HTTPwww.foxbusiness.com/markets/2015/05/05/stocks-drift-lower-in-early-trading-as-oil-jumps-disney-estee-lauder-rise-on/ DMSourceID (s): Google ContentType (s): Article 6 (o): [object Object] Headline (s): Panera CEO on push to banish artificial ingredients Teaser (s): NEW YORK - Panera Bread is the latest company to tout the removal of artificial ingredients, adding fuel to the debate over whether that improves food quality or is just a marketing tool. Source (s): Washington Post DocumentDate (s): 1 hour ago DocumentDate_raw (n): 1430834625000 Link (s): http://www.washingtonpost.com/business/panera-ceo-on-push-to-banish-artificial-ingredients/2015/05/05/2d9e01aa-f331-11e4-bca5-21b51bbdf93e_story.html DocumentKey (s): HTTPwww.washingtonpost.com/business/panera-ceo-on-push-to-banish-artificial-ingredients/2015/05/05/2d9e01aa-f331-11e4-bca5-21b51bbdf93e_story.html DMSourceID (s): Google ContentType (s): Article 7 (o): [object Object] Headline (s): Service Industries in U.S. Unexpectedly Expand at Faster Pace Teaser (s): Service industries such as real-estate firms and restaurants unexpectedly grew at a faster pace in April as the biggest part of the U.S. Source (s): Bloomberg DocumentDate (s): 1 hour ago DocumentDate_raw (n): 1430833950000 Link (s): http://www.bloomberg.com/news/articles/2015-05-05/service-industries-in-u-s-unexpectedly-expand-at-faster-pace DocumentKey (s): HTTPwww.bloomberg.com/news/articles/2015-05-05/service-industries-in-u-s-unexpectedly-expand-at-faster-pace DMSourceID (s): Google ContentType (s): Article 8 (o): [object Object] Headline (s): Canada Posts Record Trade Gap in March on Lower Energy Prices Teaser (s): Canada's merchandise trade deficit reached a record in March as energy exports declined and imports of consumer goods increased, one of the starkest signs of an oil shock the central bank says stalled the economy early this year. Source (s): Bloomberg DocumentDate (s): 2 hours ago DocumentDate_raw (n): 1430829934000 Link (s): http://www.bloomberg.com/news/articles/2015-05-05/canada-posts-record-trade-gap-in-march-on-lower-energy-prices DocumentKey (s): HTTPwww.bloomberg.com/news/articles/2015-05-05/canada-posts-record-trade-gap-in-march-on-lower-energy-prices DMSourceID (s): Google ContentType (s): Article 9 (o): [object Object] Headline (s): Freddie Mac Will Pay U.S. $746 Million on First-Quarter Profit Teaser (s): Freddie Mac, the U.S.-owned mortgage financier, will send $746 million to the Treasury Department next month after reporting first-quarter net income of $524 million. Source (s): Bloomberg DocumentDate (s): 2 hours ago DocumentDate_raw (n): 1430829733000 Link (s): http://www.bloomberg.com/news/articles/2015-05-05/freddie-mac-will-pay-u-s-746-million-on-first-quarter-profit DocumentKey (s): HTTPwww.bloomberg.com/news/articles/2015-05-05/freddie-mac-will-pay-u-s-746-million-on-first-quarter-profit DMSourceID (s): Google ContentType (s): Article 10 (o): [object Object] Headline (s): Reserve Bank adds fire-water to the punch bowl Teaser (s): After wrong-footing most market watchers in March and April, the Reserve Bank had little choice but to cut rates this time around. Source (s): Sydney Morning Herald DocumentDate (s): 10 hours ago DocumentDate_raw (n): 1430801550000 Link (s): http://www.smh.com.au/money/borrowing/reserve-bank-adds-firewater-to-the-punch-bowl-20150505-gguf47.html DocumentKey (s): HTTPwww.smh.com.au/money/borrowing/reserve-bank-adds-firewater-to-the-punch-bowl-20150505-gguf47.html DMSourceID (s): Google ContentType (s): Article 11 (o): [object Object] WSODIssue (s): |36276|72887506|205778 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Maybe Microsoft has a bright future after all Link (s): http://folionation.squarespace.com/news/2015/4/28/maybe-microsoft-has-a-bright-future-after-all.html Thumbnail (s): DocumentDate_raw (n): 1430254080000 DocumentDate (s): April 28, 2015 DocumentDate_smart (s): Apr 28, 2015 DocumentKey (s): 1107-290734296785735323225-5EMI5I7KC7NRTDURBR1AGLT5C0 ContentType (s): Article TrackingPixel (s): Teaser (s):

Microsoft may not be the it brand when it comes to computers, but the tech titan is staging a comeback.

Despite reporting lower licensing for Windows and Office, Microsoft (MSFT) is generating strength in other ways through growing sales of its server software and products, smartphones and tablets. The tech company’s stock shot up 10.5 percent on Thursday, April 23, after it released its third-quarter fiscal year 2015 earnings. Chances are good there’s more upside for the stock.

Sales for services and products related to the server market grew by 12 percent in the third-quarter. This increase offset the drop in Windows Original Equipment Manufacturer (OEM) licensing, which dropped 19 percent for the Pro version and 26 percent for the non-Pro Windows.

Hardware sales were strong by unit volume: Microsoft sold 8.6 million Lumia smartphones, which generated $1.4 billion in revenue. Surface tablet revenue grew 44 percent to $713 million.

Office 365, the cloud version of Microsoft Office, saw its subscriptions jump to 12.4 million. In the quarters ahead, investors should anticipate continued subscription revenue growth since the Office app has already reached 100 million in downloads. As users grow accustomed to quality apps like Outlook for email management and more features go up, sign-ups will likely rise

Thanks to the slow post-holiday months, the third quarter was a tough period for hardware sales. Yet, higher Surface sales suggest that Microsoft may win market share from Apple’s (AAPL) iPad. Surface has differentiating features from the rest of the tablets: its pen works very well with Office OneNote, and the tablet doubles as a laptop with a physical keyboard.

By comparison, Google (GOOG) isn’t really addressing the tablet market as effectively as it should. The last Nexus 7 refresh was in 2013, and the Nexus 9 is at the higher end of the consumer budget range. Further, Google Docs doesn’t have as nice a design as Office 365.

For now, Apple investors are showing little concern for competition from Microsoft. Apple’s stock is up over 50 percent in the last year:

Bottom line

Microsoft’s business is diversified. The company is shifting its revenue from software to cloud subscriptions. Hardware sales are growing by unit volume and revenue. The Surface refresh may appeal to a wider user base, which could mean higher sales. If Microsoft’s stock dips on investors’ profit taking (selling when a stock is high), it may be a good time to start buying shares.

Written by Chris Lau

Click on the interactive chart to view data over time. 

1. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $772.65B, most recent closing price at $132.65.

 

2. Google Inc. (GOOG, Earnings, Analysts, Financials): Builds products and provides services to organize information. Market cap at $189.20B, most recent closing price at $555.37.

 

 

3. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $388.54B, most recent closing price at $48.03.

 

 

 

(Monthly return data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

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Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

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12 (o): [object Object] WSODIssue (s): |45563793|68572657|73703934 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Is Wall Street done liking Facebook? Link (s): http://folionation.squarespace.com/news/2015/4/27/is-wall-street-done-liking-facebook.html Thumbnail (s): DocumentDate_raw (n): 1430156520000 DocumentDate (s): April 27, 2015 DocumentDate_smart (s): Apr 27, 2015 DocumentKey (s): 1107-290734296785735321471-47PDEKNJQTMUU54RL8RJT9S1BE ContentType (s): Article TrackingPixel (s): Teaser (s):

Facebook's earnings were pretty solid, but the stock has been falling since Thursday—what gives?

Facebook (FB) reported first-quarter earnings last week, and the social networking giant didn’t disappoint. User activity rose during the period, helping the company boost revenue by 41.6 percent year-over-year. So why have shares dipped since April 23?

During the first three months of the year, Facebook earned $0.42 per share on revenue of $3.54 billion. Revenue from mobile grew to 73 percent of ad revenue. Activity from mobile users also grew. Mobile MAUs was up 24 percent to 1.25 billion. 

Despite the growth, shares fell after Facebook released its earnings, probably due to investors' profit-taking (selling their Facebook shares to take advantage of the run-up). The stock is still pretty expensive, though, with a forward P/E of 31.17, which is higher than the S&P 500’s 18.50 and Weibo’s (WB) 27.26 but less than Twitter’s (TWTR) 63.29.

Investors might find Facebook's $228.9 billion valuation justified if they believe the company’s revenue and growth figures will keep up their pace in the next year and beyond.

Meanwhile, stock compensation was still high and GAAP (generally accepted accounting principles) earnings of $0.18 per share were down 28 percent from last year. GAAP income also fell to $933 million compared to $1.075 billion last year. After excluding share-based compensation and amortization of intangibles, non-GAAP income was higher in Q1 year-over-year.

Higher costs pose another risk for investors. In Q1, costs rose 57 percent to $1.7 billion. Much of the costs were due to stock compensation though higher marketing costs also contributed.

Facebook’s stock has performed very well for a while, but it may be time to exercise caution. Though purchases in Instagram and WhatsApp are proving successful due to strong usage, investments in virtual reality have yet to play out. Facebook remains a solid growth play, but investors who do not hold shares may want to wait for a drop before starting a position.

Written by Chris Lau

Click on the interactive chart to view data over time. 

1. Facebook Inc. (FB, Earnings, Analysts, Financials): Operates as a social networking company worldwide. Market cap at $228.96B, most recent closing price at $81.53.

 

 

2. Twitter Inc. (TWTR, Earnings, Analysts, Financials): Operates as a global platform for public self-expression and conversation in real time. Market cap at $33.26B, most recent closing price at $50.82.

 

 

3. Weibo Corporation (WB, Earnings, Analysts, Financials): Operates a social media platform for people to create, distribute, and discover Chinese-language content. Market cap at $3.49B, most recent closing price at $17.20.

 

 

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Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

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13 (o): [object Object] WSODIssue (s): |4038937|36080611|197606|227524|231744 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Chipotle axes GMO ingredients from its menu Link (s): http://folionation.squarespace.com/news/2015/4/27/chipotle-axes-gmo-ingredients-from-its-menu.html Thumbnail (s): DocumentDate_raw (n): 1430156340000 DocumentDate (s): April 27, 2015 DocumentDate_smart (s): Apr 27, 2015 DocumentKey (s): 1107-290734296785735321466-5DISUQ37HUF77TN900GBG64QIR ContentType (s): Article TrackingPixel (s): Teaser (s):

GMOs are no longer available at Chipotle. But that's not the only healthy-ish shift happening in food today.

In a move that will make Food Babe happy and probably garner an eyeroll from Neil deGrasse TysonChipotle (CMG) announced Monday that it has removed all genetically modified ingredients from its menu. As The Wall Street Journal reports, this makes Chipotle the first major restaurant chain in the US to adopt a strict non-GMO stance. 

Chipotle's decision comes at a time when anti-GMO sentiment is spreading faster than Monsanto (MON) seeds. In 1999, according to a Gallup poll, only 27 percent of Americans thought genetically modified food was dangerous; as of 2014, 48 percent believed genetically modified foods "pose a serious health hazard."

Unlike the US, the EU heavily regulates genetically modified crops, though the European Commission ended a year-long block on imports last week when it authorized the import of 10 crops and two types of cut flowers. That's not to say that the EU is suddenly gung ho on GMO: Monsanto's maize MON810 is the only genetically modified crop being cultivated in the bloc. 

Chipotle's GMO-free menu isn't the only major shakeup happeining in the food space. McDonald's (MCD) is removing unfamiliar ingredients, including maltodextrin—a form of powdered starch—and sodium phosphates, from its grilled chicken sandwiches. Dunkin' Donuts (DNKN) is also trimming its list of ingredients and eliminating whitening agent titanium dioxide from its powdered doughnuts.

Pepsi (PEP) is ditching aspartame, an artificial sweetener, for sucralose aka Splenda, another artificial sweetener. And Panera Bread (PNRA) will be rid of artificial flavors, colors, preservatives and sweeteners by 2016.

McDonald's and Pepsi are revamping their menus in an attempt to fight declining sales. Dunkin' Donuts said its investors influenced the company's decision to stop using the whitener. And while Panera Bread has a history of voluntary changes—the Christian Science Monitor points out that the company posted calories on menu before it was mandatory—the latest move coincides with a growing conscientiousness when it comes to food quality.

Will these shifts help these companies boost sales? 

Click on the interactive chart to view data over time. 

1. Chipotle Mexican Grill Inc. (CMG, Earnings, Analysts, Financials): Develops and operates fast-casual, fresh Mexican food restaurants in the United States. Market cap at $19.79B, most recent closing price at $637.50.

Sales growth past 5 years at 22.00%.

Sales growth quarter over quarter at 20.40%.

 

2. Dunkin' Brands Group Inc. (DNKN, Earnings, Analysts, Financials): Operates, and franchises quick service restaurants worldwide. Market cap at $5.23B, most recent closing price at $54.03.

Sales growth past 5 years at 6.80%.

Sales growth quarter over quarter at 8.10%.

 

3. McDonald's Corp. (MCD, Earnings, Analysts, Financials): Operates as a foodservice retailer worldwide. Market cap at $94.70B, most recent closing price at $98.74.

Sales growth past 5 years at 3.80%.

Sales growth quarter over quarter at -11.10%.

 

 

4. Pepsico Inc. (PEP, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap at $140.48B, most recent closing price at $95.17.

Sales growth past 5 years at 9.10%.

Sales growth quarter over quarter at -3.20%.

 

5. Panera Bread Company (PNRA, Earnings, Analysts, Financials): Operates, and franchises retail bakery-cafes in the United States and Canada. Market cap at $4.93B, most recent closing price at $184.36.

Sales growth past 5 years at 13.30%.

Sales growth quarter over quarter at 1.60%.

 

 (List compiled by Mary-Lynn Cesar. Monthly return data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

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Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

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14 (o): [object Object] WSODIssue (s): |4038937|83889|227524 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Repent! Avocado-geddon may be upon us Link (s): http://folionation.squarespace.com/news/2015/4/23/repent-avocado-geddon-may-be-upon-us.html Thumbnail (s): DocumentDate_raw (n): 1429818780000 DocumentDate (s): April 23, 2015 DocumentDate_smart (s): Apr 23, 2015 DocumentKey (s): 1107-290734296785735317565-1BJ2LPS96O3E9UF0R2OLC7EARU ContentType (s): Article TrackingPixel (s): Teaser (s):

Sorry, guys, the avocado—your favorite berry-you-didn't-know-was-a-berry—may be about to make itself scarce.

There are a lot of fun facts you could rattle off about avocados, both botanical and etymological. For example, it's a berry. Who knew. Its Nahuatl name, ahuacatl, means "testicle," since it grows in pairs. Post-Cortés, that word was mangled in a long game of Spanish telephone until it became the considerably less raunchy abogado, "lawyer"—although you're more likely to hear aguacate or palta, depending on where you happen to be. 

Then there are some not-so-fun facts. For one, 80 percent of the avocados in the US come from California, and California is pushing Dust Bowl status. And while it's no beef, which requires about 106 gallons of water per ounce to produce, the avocado is a thirsty foodstuff, requiring 9 gallons per ounce. 

Not that Latin America is picking up any of the slack. Peru's palta harvest, predicted to be a bumper crop, will be smaller than expected, and hail in Mexico means their aguacate haul might be meager too. 

For now, guacamole is still just an extra at Chipotle (CMG), but you've been warned. Frito-Lay higher-ups might be wringing their hands a bit, because no one wants a chip without guac anymore, but a loss to the division of PepsiCo (PEP) is unlikely to move the needle from an investor's perspective. Calavo Growers (CVGW), on the other hand, had better watch out. The company, which markets and distributes avocados, is up nearly 60 percent for the year, but clear, cloudless, rainless skies loom.

 

Click on the interactive chart to view data over time. 

1. Chipotle Mexican Grill Inc. (CMG, Earnings, Analysts, Financials): 1. Chipotle Mexican Grill Inc. (CMG): Develops and operates fast-casual, fresh Mexican food restaurants in the United States. Market cap at $19.91B, most recent closing price at $641.23.

 

 

2. Calavo Growers Inc. (CVGW, Earnings, Analysts, Financials): 2. Calavo Growers Inc. (CVGW): Calavo Growers, Inc. procures and markets avocados and other perishable commodities, and prepares and distributes processed avocado products in the United States and internationally. Market cap at $860.68M, most recent closing price at $49.75.

 

 

3. Pepsico Inc. (PEP, Earnings, Analysts, Financials): 3. Pepsico Inc. (PEP): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap at $144.20B, most recent closing price at $97.28.

 

 

(List compiled by David Floyd. Monthly returns data sourced from Zacks Investment Research. All other data sourced from FINVIZ.) 

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© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

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The company behind Siri has struggled with low profitability. At low valuations, is it a compelling play or a trap?

Nuance Communications (NUAN) was once the rising star in the smart phone world. The speech recognition software firm supplied the engine that powered Apple’s (AAPL) Siri. But when shareholders realized the low profitability from its dealings from Apple, the stock responded. Nuance fell steadily from the $20 to $28 level and last closed at $14.26. Do shareholders have any hope?

Decent quarterly results

On February 5, Nuance announced first quarter earnings of $0.25 per share on revenue of $489 million. Both figures beat consensus estimates. Unfortunately, the firm did not demonstrate any meaningful growth nor did it supply a solid outlook.  In its prepared remarks, Nuance provided the following guidance:

·       Second-quarter revenue of $459 million to $475 million

·       Earnings of $0.22 to $0.26 per share

Both figures are below consensus, although not by much. Analysts had expected revenue of around $499.5 million on $0.27 per share.

For the fiscal year ending September 2015, Nuance thinks it will earn up to $1.18 per share.

New product

On April 13, Nuance announced PowerMic Mobile, making the firm a smartwatch app and health care software play.

Analysis

Nuance traded at $13.87 recently, which implies a forward P/E of just 11.75. This is inexpensive. The operational challenges Nuance facing are not insurmountable. If management progresses in improving performance, the stock could rebound.

At the current valuation, Nuance may attract a buyer, too. That the stock is down around 14 percent in the past year will not go unnoticed by a potential suitor. A company as big as Apple might show interest:

It’s also possible that a private equity firm will look at shaking up Nuance to boost the firm’s intrinsic value. Given that other firms in the mobile space like Microsoft (MSFT), OmniVision (OVTI) and Synaptics (SYNA) trade at much higher multiples, Nuance may eventually trade up to its potential, too.

It is not clear if Nuance is a value play or a trap. Until the firm executes more effectively, the stock is unlikely to move up.

Written by Chris Lau.

Click on the interactive chart to view data over time. 

1. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $749.18B, most recent closing price at $128.62.

 

2. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $352.64B, most recent closing price at $42.99.

 

 

3. Nuance Communications Inc. (NUAN, Earnings, Analysts, Financials): Provides voice and language solutions for businesses and consumers worldwide. Market cap at $4.64B, most recent closing price at $14.26.

 

 

4. OmniVision Technologies Inc. (OVTI, Earnings, Analysts, Financials): Designs, develops, and markets semiconductor image-sensor devices. Market cap at $1.56B, most recent closing price at $26.82.

 

 

5. Synaptics Inc. (SYNA, Earnings, Analysts, Financials): Develops and supplies custom-designed human interface solutions that enable people to interact with various mobile computing, communications, entertainment, and other electronic devices. Market cap at $3.29B, most recent closing price at $89.54.

 

 

(List compiled by Chris Lau. Monthly returns sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

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