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Tuesday, May 29, 2018

TransCanada Helps Mexico Turn To Gas

TransCanada Corporation (TRP) is a giant in the North American energy space, with operations in Canada, America, and Mexico. The midstream juggernaut has been aggressively growing its Mexico gas pipeline business to take advantage of shifting market dynamics in the utility space that are stimulating greater demand for natural gas. Let's go over a two-part pipeline project TransCanada Corporation is close to completing.

A two-parter

Mexico��s state-run utility firm Comisi贸n Federal de Electricidad, commonly known as CFE, signed a $1.1 billion agreement with TransCanada back in 2012. That agreement tasked TransCanada with building a gas pipeline that would run from El Encino in Chihuahua state to Topolobampo in Sinaloa state.

Referred to as the El Encino-Mazatl谩n system, this development consists of two pipeline projects. Last year, the 267-mile long Mazatl谩n pipeline was completed for a development cost of $400 million. The pipeline runs from El Oro to Mazatl谩n, both of which are in Sinaloa state. TransCanada has a 25-year agreement with CFE to supply 200 MMcf/d of gas through this portion of the system to be used as a fuel for electricity generation. Investors should note that while the pipeline won��t really be operational until the second pipeline is completed, TransCanada completed its contractual obligations and has been recording and receiving revenue from CFE since mid-2017.

The second project, the Topolobampo pipeline, will run for 348 miles from El Encino in Chihuahua state to various delivery points, including the Mazatl谩n pipeline. This pipeline is crucial as it carries gas supplies in Chihuahua state to other parts of Mexico that are in need of the fuel for electricity generation.

While not explicitly stated, it is possible some of those gas supplies are coming from American sources including upstream operations in the Eagle Ford and Permian Basin. TransCanada signed a 25-year agreement with CFE to supply 670 MMCf/d of natural gas along this portion of the pipeline system.

Sinaloa state has the second highest electricity generation costs in Mexico after Baja California Sur, according to CRE, and gas is part of the solution. The 320 MW Juan de Dios Batiz Paredez power plant and the 616 MW Jose Aceves Pozos power plant were both upgraded to be able to use natural gas as a fuel to cut costs (both were previously using fuel oil, but the switch will only happen once the entire development is completed). As an aside, only 300 MW of the Jose Aceves power plant's generation capacity was converted to also run on natural gas.

Farther out, the 778 MW Topolobampo II and 777 MW Topolobampo III combined-cycle gas-fired plants are expected to be completed in 2019 and 2020, respectively. This will wean Sinaloa state away from its need for more expensive oil-powered electricity generation and towards cleaner, cheaper natural gas.

Delays

Originally, the two-part development was expected to come online in 2016, but that was delayed due to concerns over the route of the system. This increased the cost of the development as its price tag is now roughly $1.4 billion.

Aboriginal Raramuri communities (whose ancestral home resides in Chihuahua state) filed a lawsuit against TransCanada which halted construction in 2015. The disagreement was over the negative impact the pipeline route might have on sensitive lands, so consultations began between TransCanada and the Raramuri community a year later. Both sides came to an agreement by early 2017, and now the project is expected to be completed some time this quarter.

These delays increased the cost of the Topolobampo project from $1 billion to $1.2 billion, but it appears TransCanada will be able to recoup those additional costs as it was recognized as a force majeure event. From TransCanada��s 2017 10-K:

��Under the terms of the TSA, the delay in the 20 km (12 mile) section was recognized as a force majeure event with provisions allowing for the collection of revenue from the original TSA service commencement date of July 2016.��

As the legal disputes have since been settled, it appears there is a good chance TransCanada will soon be collecting revenue for a service it can actually provide (one of the upsides of heavily regulated industries like the gas pipeline space is that the midstream operator is often protected from adverse events in some capacity).

Financial impact

Investors can easily see the favorable impact this growth story is having on TransCanada��s financial statements. From 2015 to 2017, TransCanada��s comparable EBITDA from its Mexico Natural Gas Pipelines division rose from $164 million to $399 million. Its comparable EBIT and segmented earnings (a non-GAAP figure that adjusts for forex movements) rose from $169 million in 2015 to $287 million in 2016 to $426 million in 2017.

A large part of that growth comes from TransCanada recognizing and receiving revenue from the two-part development mentioned above, which started in 2016. Going forward, it will be the Sur de Texas and Villa de Reyes ventures that will keep driving the company forward. TransCanada Corporation noted:

��We expect 2018 earnings from the Topolobampo, Tamazunchale, Guadalajara and Mazatl谩n pipelines to remain consistent with 2017 due to the long-term nature of the underlying revenue contracts. Sur de Texas and Villa de Reyes are expected to be in service in late 2018.��

Final thoughts

Mexico is pivoting away from fuel oil and towards natural gas, an increasing amount of which is being imported from America, and that should free up a good amount of Mexico's domestic oil/petroleum production for export (and those export earnings can be used to fund its natural gas purchases from the US and then some). TransCanada Corporation has been instrumental in making this change possible. As there remains an enormous need for additional gas pipeline networks in Mexico, TransCanada Corporation has plenty of growth opportunities ahead of it. Thanks for reading.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Saturday, May 26, 2018

Is Axon Enterprise a Buy?

Axon Enterprise (NASDAQ:AAXN) has been one of the best stocks on the market so far in 2018, rising 133% in less than five months. There could be an even longer runway of growth for this company because of its efforts in continually improving how law enforcement professionals do their jobs.�

Here's a look at the key metrics behind Axon Enterprise's business and why I think this is a great stock to own over the long term.�

A uniformed officer with body camera interviewing a woman.

Image source: Axon Enterprise.

The booming taser and body camera business

In the last 12 months, Axon Enterprise has sold 117,986 body cameras, up 24% from a year earlier. What's great about the body camera business is that most sales come in the form of multiyear contracts that bundle services like cloud storage with Evidence.com, so this is a recurring source of revenue.�

By the end of the first quarter of 2018, revenue backlog for body cameras and related services totaled $570.0 million, and 93% of the bookings so far in 2018 have been multiyear contracts. This is a product line that will drive Axon Enterprise's growth for years to come.�

Taser weapons continue to perform well, too, with unit sales up 13% in the last 12 months to 163,142. For now, tasers are the biggest moneymaker, with $57.7 million in revenue and $20.2 million in operating income in the first quarter of 2018. Long term, body cameras, which generated $21.6 million in revenue last quarter, will likely grow and overtake tasers in size, but this is a great base product to build from.�

New products could change law enforcement forever

As successful as tasers and body cameras are, they're only the start of Axon Enterprise's plan to become indispensable to law enforcement. Three new products in 2018 will ingrain the company more deeply into an officer's daily routine.�

The first product to be introduced was Axon Fleet, a two-camera system that's installed in squad cars and can automatically upload video to the cloud when the car is in range of an Axon router. List price for the system is $129 per month per vehicle with additional revenue opportunities like a Wi-Fi server ($3,500) and Wi-Fi access point ($18,475). With 1,857 units already sold in 2018, this product is already gaining momentum in the market.�

Axon's Signal Sidearm holster can hold most standard police weapons and turns on body cameras within 30 feet when a weapon is drawn. Image source: Axon Enterprise.

A holster product called Signal Sidearm has also been introduced and sold in limited quantities. The holster automatically turns on any body camera within a 30-foot range when a weapon is drawn, eliminating the need for an officer to manually turn on a camera. Standalone pricing isn't available, but Signal Sidearm is part of a package officers can buy for $109 per month that includes a body camera, taser, and unlimited data uploads to Evidence.com. These package deals are likely what Axon will push as a way to grow revenue per user in the future.��

The third product is a records management system, called Axon Records, and it could change the way law enforcement does their work. Axon President Luke Larson recently called the product a:�

breakthrough record management system built to fully integrate audio and video data and to leverage artificial intelligence to streamline report creation in addition to several game changing enterprise software add-ons.

The audio and video he's referring to is actions like recording interviews with witnesses, which can be done with the body camera. Artificial intelligence features then record data and transcribe a transcript, automatically uploading it to the cloud, reducing paperwork and errors in the field. If it's adopted on a broad level, it could make Axon Enterprise an essential part of each officer's workflow everyday.�

Axon Enterprise is still a great buy

Investors who focus primarily on earnings won't think the stock looks like an attractive value given the fact that Axon is barely returning to profitability. But revenue has doubled in the last three years, and double-digit annual top-line growth seems likely for the foreseeable future. Given its leadership position in tasers, body cameras, and next-generation technology for law enforcement, I think this company is a great buy for investors over the long haul.�

Friday, May 25, 2018

After Russia scandal, Facebook begins labeling political ads

Facebook on Thursday began following a long-held practice of the television and newspaper industry: Labeling political ads.

The move came more than a year after the US intelligence community reported Russia used social media to meddle in the 2016 US presidential election and seven years after Facebook and Google sought exemptions from federal regulators on political ad disclaimers.

In an attempt to prevent foreigners from buying political ads targeted at Americans, Facebook will require advertisers to provide a picture of their government-issued ID, the last four digits of their Social Security number, and a US mailing address.

Ads that mention a political candidate or are about issues including guns, civil rights, and patriotism will be subject to the new rules. An ad will now include a label saying what organization paid for it.

Advertisers will also be responsible for sharing who paid for the ad, Facebook said. The same rules will also apply on Instagram, which is owned by Facebook.

Clicking on the ad label will allow Facebook users to see how many people saw the ad, the company said in a blog post on Thursday. Meanwhile, all political ads will be archived and available to view for up to seven years.

Facebook released an example of what the ad labels will look like on Thursday

Facebook has born the brunt of the criticism from lawmakers about the lack of transparency about political actors and the spread of misinformation on its platform.

In 2016, a Russian government-linked troll group, posing as Americans, ran thousands of fake social media accounts, and spent thousands of dollars on advertising targeting American voters on Facebook, Instagram, YouTube, and Twitter.

Because the extent of Russian interference on social media became more clear through congressional investigations, news reporting, and independent research in 2017, Facebook has released more information publicly about the actions than other tech companies, such as Twitter and Google.

On Thursday, Twitter also announced it would be implementing new rules for political advertisers. Ads will be labeled and organizations buying ads will need to provide their Federal Elections Commission ID. Individuals wanting to buy ads "will have to submit a notarized form," the company said.

However, with primary season in full swing ahead of November's midterm elections, the enforcement of Twitter's new rules will not begin until " later this summer," the company said.

Twitter also said it will launch an "Ad Transparency Center" this summer to provide more details on ads running on the platform.

Google announced earlier this month it now requires political ad-buyers to provide a government-issued ID and "other key information." Similar to Facebook, Google will provide an archive of ads later this summer, the company said.

"We believe that increased transparency will lead to increased accountability and responsibility over time -- not just for Facebook but advertisers as well," Rob Leather, Facebook's Director of Product Management, said in a blog post on Thursday announcing the ad disclaimers.

In 2011, Facebook sought an exemption from political ad disclaimer rules citing space constraints for its "character-limited ads." Facebook lawyers argued the ads were so small that a disclaimer would be impracticable, according to Federal Election Commission records reviewed by CNN.

Google also sought an exemption making a similar argument a year earlier in 2010.

Online advertising has since evolved. During the 2016 campaign political advertisers, and Russian trolls, sometimes ran ads that included pictures, videos, and lengthy written posts �� all without disclaimers mandated by the social media platforms.

The companies hope their new initiatives will prevent a repeat of 2016.

Thursday, May 24, 2018

Amgen (AMGN) Given Consensus Recommendation of “Hold” by Analysts

Shares of Amgen (NASDAQ:AMGN) have earned an average recommendation of “Hold” from the twenty-seven research firms that are presently covering the company, Marketbeat reports. Two investment analysts have rated the stock with a sell rating, fourteen have assigned a hold rating and ten have given a buy rating to the company. The average 1 year target price among brokers that have issued a report on the stock in the last year is $193.19.

A number of equities analysts have recently weighed in on the stock. Argus raised shares of Amgen from a “hold” rating to a “buy” rating and upped their price target for the stock from $192.33 to $220.00 in a research note on Tuesday, January 23rd. JPMorgan Chase & Co. upped their price target on shares of Amgen from $184.00 to $189.00 and gave the stock a “neutral” rating in a research note on Wednesday, January 24th. Royal Bank of Canada reaffirmed a “hold” rating and issued a $189.00 price target on shares of Amgen in a research note on Wednesday, January 24th. Vetr downgraded shares of Amgen from a “hold” rating to a “sell” rating and set a $181.60 price target on the stock. in a research note on Tuesday, March 6th. Finally, Morgan Stanley dropped their price target on shares of Amgen from $204.00 to $196.00 and set an “overweight” rating on the stock in a research note on Friday, February 2nd.

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In other Amgen news, EVP Sean E. Harper sold 1,525 shares of the stock in a transaction on Friday, March 16th. The shares were sold at an average price of $189.75, for a total transaction of $289,368.75. The transaction was disclosed in a filing with the SEC, which is available through this hyperlink. Insiders have sold 4,575 shares of company stock worth $818,208 over the last three months. Company insiders own 0.27% of the company’s stock.

Institutional investors have recently bought and sold shares of the business. Barrow Hanley Mewhinney & Strauss LLC increased its position in Amgen by 110.7% during the fourth quarter. Barrow Hanley Mewhinney & Strauss LLC now owns 647 shares of the medical research company’s stock worth $113,000 after buying an additional 340 shares during the last quarter. Braun Bostich & Associates Inc. bought a new stake in Amgen during the first quarter valued at about $113,000. Taylor Hoffman Wealth Management bought a new stake in Amgen during the fourth quarter valued at about $127,000. Cornerstone Advisors Inc. boosted its holdings in Amgen by 76.5% during the first quarter. Cornerstone Advisors Inc. now owns 729 shares of the medical research company’s stock valued at $124,000 after acquiring an additional 316 shares during the period. Finally, Horan Capital Advisors LLC. bought a new stake in Amgen during the third quarter valued at about $150,000. 78.43% of the stock is currently owned by hedge funds and other institutional investors.

Shares of AMGN traded up $1.58 during mid-day trading on Friday, reaching $179.94. The company’s stock had a trading volume of 2,241,956 shares, compared to its average volume of 4,497,541. The firm has a market capitalization of $116.77 billion, a P/E ratio of 14.30, a PEG ratio of 2.18 and a beta of 1.36. Amgen has a 1 year low of $153.56 and a 1 year high of $201.23. The company has a quick ratio of 3.60, a current ratio of 3.88 and a debt-to-equity ratio of 2.14.

Amgen (NASDAQ:AMGN) last released its earnings results on Tuesday, April 24th. The medical research company reported $3.47 earnings per share (EPS) for the quarter, beating the Zacks’ consensus estimate of $3.24 by $0.23. The company had revenue of $5.55 billion during the quarter, compared to analyst estimates of $5.44 billion. Amgen had a return on equity of 35.80% and a net margin of 9.67%. The company’s revenue for the quarter was up 1.6% on a year-over-year basis. During the same quarter in the prior year, the company earned $3.15 earnings per share. analysts expect that Amgen will post 13.72 earnings per share for the current fiscal year.

The firm also recently announced a quarterly dividend, which will be paid on Friday, June 8th. Shareholders of record on Thursday, May 17th will be given a dividend of $1.32 per share. This represents a $5.28 annualized dividend and a yield of 2.93%. The ex-dividend date of this dividend is Wednesday, May 16th. Amgen’s payout ratio is 41.97%.

Amgen declared that its board has approved a stock buyback program on Thursday, February 1st that allows the company to buyback $10.00 billion in outstanding shares. This buyback authorization allows the medical research company to repurchase shares of its stock through open market purchases. Shares buyback programs are typically a sign that the company’s board of directors believes its stock is undervalued.

Amgen Company Profile

Amgen Inc discovers, develops, manufactures, and delivers human therapeutics worldwide. It offers products for the treatment of oncology/hematology, cardiovascular, inflammation, bone health, nephrology, and neuroscience. The company's products include Evenity to treat osteoporosis in postmenopausal women; Prolia to treat postmenopausal women with osteoporosis; Xgeva for skeletal-related events prevention; Repatha to treat coronary diseases; Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Parsabiv to treat secondary hyperparathyroidism (sHPT); and Aimovig for the prevention of migraine.

Analyst Recommendations for Amgen (NASDAQ:AMGN)

Wednesday, May 23, 2018

U.S. stocks set up for more losses as geopolitical worries persist

U.S. stock futures fell on Wednesday as geopolitical and trade concerns continued to nag at investors, taking the wind out of a rally seen at the start of the week.

Earnings from Target Corp. and then later the release of minutes from the latest Federal Open Market Committee meeting are among the highlights of the session ahead.

What are markets doing?

Dow Jones Industrial Average futures YMM8, -0.54% slipped 54 points, or 0.2%, to 24,792, while S&P 500 futures ESM8, -0.47% lost 5.6 points, or 0.2%, to 2,720.50. Nasdaq-100 futures NQM8, -0.74% fell 29.75 points, or 0.4%, to 6,879.75.

On Wednesday, the Dow Jones Industrial Average DJIA, -0.72% dropped 178.88 points, or 0.7%, to reach 24,834.41. The S&P 500 SPX, -0.31% lost 0.3% to end at 2,724.44, while the Nasdaq Composite Index COMP, -0.21% shed 15.58 points, or 0.2%, to close at 7,378.46.

Read: Why the end is coming soon for the biggest tech bubble we��ve ever seen

What��s driving the market?

Trade and geopolitical concerns continued to overshadow markets on Wednesday. President Donald Trump told reporters he wasn��t really happy with the progress of U.S.-China trade talks, and hinted that his summit with North Korean leader Kim Jong Un may not go ahead as planned.

Fiscal stimulus may swing back into focus after Trump said Tuesday evening that his administration will be ��submitting additional tax cuts sometime before November. It��s going to be something very special.��

What��s on the economic docket?

Markit��s May purchasing managers�� indexes for both manufacturing and services are scheduled for release at 9:45 a.m. Eastern Time. New-home sales for April are due at 10 a.m. Eastern.

At 2 p.m. Eastern, the minutes of the May meeting of Federal Reserve policy makers will be released.

Check out: Fed may float new ideas to market in the minutes

Which stocks are in focus?

Lowe��s Companies Inc. LOW, -1.88% �, Target Corp. TGT, -1.82% �, Tiffany & Co. TIF, -0.97% � and Ralph Lauren Corp. RL, -0.40% � are expected to report earnings ahead of the open, with the financial update from L. Brand Inc. LB, -0.18% �due after the close.

Read: Target earnings preview �� shoppers are showing up for the exclusive brands

Banks could be in focus after the House on Tuesday voted for a plan to roll back parts of the 2010 Dodd-Frank financial law. The move would ease rules placed on small and midsize banks during the financial crisis.

Wynn Resorts Ltd. WYNN, -0.15% �shares could be active after shareholders voted against the company��s executive compensation plan.

What did other markets do?

Asian markets had a rough session, with the Nikkei NIK, -1.18% �dropping more than 1% on yen strength. European stocks SXXP, -0.70% SXXP, -0.70% are set to open lower.

The ICE Dollar Index was steady, but the greenback is also lower against the pound GBPUSD, -0.4095% �. The 10-year U.S. Treasury note yield TMUBMUSD10Y, -1.38% �dipped to 3.05%.

A pullback for U.S. oil futures CLM8, -0.21% continued to pull lower. Gold futures GCM8, -0.02% were steady at $1,291.60 an ounce.

Read: Here��s what an ��oil shock�� would mean for the global economy

Economic preview: Rising rates, higher gas have failed to kill the economic expansion

Related Topics U.S. Stocks Markets NY Stock Exchange NASDAQ Quote References YMM8 -134.00 -0.54% ESM8 -12.75 -0.47% NQM8 -51.25 -0.74% DJIA -178.88 -0.72% SPX -8.57 -0.31% COMP -15.58 -0.21% LOW -1.64 -1.88% TGT -1.40 -1.82% TIF -1.00 -0.97% RL -0.47 -0.40% LB -0.06 -0.18% WYNN -0.30 -0.15% NIK -270.60 -1.18% SXXP -2.79 -0.70% GBPUSD -0.0055 -0.4095% TMUBMUSD10Y -0.04 -1.38% CLM8 -0.15 -0.21% GCM8 -0.30 -0.02% Show all references MarketWatch Partner Center Most Popular

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Barbara Kollmeyer

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

Barbara Kollmeyer

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements. Advanced Search Stocks Columns Authors Topics No results found E-Mini Dow Jun 2018 U.S.: CBOT: YMM8 $24,711.00 -134.00 (-0.54%)

Volume	24556
Open	$24,836
High	$24,845
Low	$24,686
P/E Ratio	0
Div Yield	0
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E-Mini S&P 500 Future Jun 2018 U.S.: CME: ESM8 2,713.25 -12.75 (-0.47%)

Volume	78181
Open	2,725
High	2,726
Low	2,711
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Div Yield	0
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E-Mini Nasdaq 100 Index Jun 2018 U.S.: CME: NQM8 6,858.00 -51.25 (-0.74%)

Volume	33557
Open	6,906
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Dow Jones Industrial Average DJ-Index: DJIA 24,834.41 -178.88 (-0.72%)

Tuesday, May 22, 2018

Royal wedding guests are selling their goody bags online for as much as $10,000

The guests at Saturday's wedding of Prince Harry and Meghan Markle got to witness royal history in the making -- and now they can make some cash from it too.

Dozens of official goody bags from the wedding have been popping up on eBay since Saturday. By Tuesday, several of the bags had sold, fetching up to 拢7,900 ($10,600), Bidding on others was still active, with the top bid surpassing 拢27,000 ($36,260).

The simple canvas tote bags were given to the carefully selected group of members of public who were invited to the grounds of Windsor Castle on Saturday to see the wedding up close.

The brown and blue bags contained the wedding program, a box of shortbread cookies, a large chocolate coin, a fridge magnet, a bottle of water and a 20% discount voucher for the Windsor Castle gift shop.

Kensington Palace declined to comment for this story.

More than 2,600 members of the public were invited into the grounds of the castle on the wedding day.

Kensington Palace said the guests were a mixture of people representing charities the royal couple supports, pupils from local schools, Windsor community members, the royal household staff, as well as members of public who have shown strong leadership and have served their communities.

They were invited to stand outside St. George's Chapel during the ceremony, witnessing the arrivals of the couple and their guests, as well as the first kiss of the newly wedded Duke and Duchess of Sussex.

Monday, May 21, 2018

Magic Software Enterprises (MGIC) Given a $10.00 Price Target at HC Wainwright

HC Wainwright set a $10.00 target price on Magic Software Enterprises (NASDAQ:MGIC) in a research note released on Thursday morning. The firm currently has a buy rating on the software maker’s stock.

Other equities analysts have also recently issued reports about the company. BidaskClub cut Magic Software Enterprises from a hold rating to a sell rating in a report on Tuesday, May 8th. Zacks Investment Research cut Magic Software Enterprises from a hold rating to a sell rating in a report on Saturday, February 10th. Finally, ValuEngine cut Magic Software Enterprises from a buy rating to a hold rating in a report on Monday, May 7th. One analyst has rated the stock with a sell rating, two have given a hold rating and two have issued a buy rating to the stock. The company has an average rating of Hold and an average price target of $9.75.

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Shares of Magic Software Enterprises opened at $8.50 on Thursday, according to MarketBeat. Magic Software Enterprises has a 12-month low of $7.60 and a 12-month high of $9.50. The company has a current ratio of 3.04, a quick ratio of 3.07 and a debt-to-equity ratio of 0.13. The firm has a market capitalization of $378.16 million, a P/E ratio of 18.48 and a beta of 0.75.

Magic Software Enterprises (NASDAQ:MGIC) last issued its earnings results on Wednesday, May 16th. The software maker reported $0.14 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.13 by $0.01. Magic Software Enterprises had a return on equity of 10.41% and a net margin of 5.90%. The company had revenue of $69.73 million for the quarter, compared to analysts’ expectations of $66.55 million. sell-side analysts forecast that Magic Software Enterprises will post 0.57 earnings per share for the current fiscal year.

Several institutional investors and hedge funds have recently modified their holdings of the stock. Clal Insurance Enterprises Holdings Ltd lifted its holdings in shares of Magic Software Enterprises by 9.9% in the 4th quarter. Clal Insurance Enterprises Holdings Ltd now owns 1,315,872 shares of the software maker’s stock worth $11,024,000 after purchasing an additional 118,890 shares in the last quarter. Delek Group Ltd. purchased a new stake in Magic Software Enterprises in the 4th quarter valued at $6,150,000. Meitav Dash Investments Ltd. purchased a new stake in Magic Software Enterprises in the 4th quarter valued at $5,201,000. Renaissance Technologies LLC raised its position in Magic Software Enterprises by 9.3% in the 4th quarter. Renaissance Technologies LLC now owns 428,651 shares of the software maker’s stock valued at $3,591,000 after buying an additional 36,599 shares during the last quarter. Finally, Unterberg Capital LLC raised its position in Magic Software Enterprises by 354.5% in the 1st quarter. Unterberg Capital LLC now owns 170,876 shares of the software maker’s stock valued at $1,452,000 after buying an additional 133,276 shares during the last quarter. Institutional investors own 12.82% of the company’s stock.

About Magic Software Enterprises

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, and vertical software solutions and related professional services in Israel and internationally. The company's Software Solutions segment develops, markets, sells, and supports a proprietary and none proprietary application platform, software applications, and business and process integration solutions and related services.

Sunday, May 20, 2018

Mackay Shields LLC Invests $1.91 Million in K12 (LRN)

Mackay Shields LLC bought a new position in shares of K12 (NYSE:LRN) during the first quarter, HoldingsChannel reports. The fund bought 134,753 shares of the company’s stock, valued at approximately $1,911,000.

Several other large investors have also recently modified their holdings of LRN. BlackRock Inc. raised its position in shares of K12 by 6.3% during the fourth quarter. BlackRock Inc. now owns 2,573,649 shares of the company’s stock worth $40,921,000 after purchasing an additional 152,056 shares during the period. Renaissance Technologies LLC grew its holdings in K12 by 13.8% during the fourth quarter. Renaissance Technologies LLC now owns 1,020,700 shares of the company’s stock worth $16,229,000 after buying an additional 123,600 shares in the last quarter. Thrivent Financial For Lutherans bought a new stake in K12 during the fourth quarter worth $1,817,000. Arrowstreet Capital Limited Partnership grew its holdings in K12 by 112.9% during the fourth quarter. Arrowstreet Capital Limited Partnership now owns 215,313 shares of the company’s stock worth $3,423,000 after buying an additional 114,193 shares in the last quarter. Finally, Royce & Associates LP grew its holdings in K12 by 26.0% during the fourth quarter. Royce & Associates LP now owns 550,728 shares of the company’s stock worth $8,757,000 after buying an additional 113,617 shares in the last quarter. 82.28% of the stock is currently owned by institutional investors.

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Several equities research analysts recently issued reports on the company. Zacks Investment Research upgraded K12 from a “hold” rating to a “buy” rating and set a $17.00 price target for the company in a report on Friday, April 27th. BMO Capital Markets decreased their price target on K12 from $20.00 to $19.00 and set an “outperform” rating for the company in a report on Wednesday, April 25th. Barrington Research reiterated a “buy” rating and set a $22.00 price target on shares of K12 in a report on Thursday, April 12th. Finally, ValuEngine downgraded K12 from a “sell” rating to a “strong sell” rating in a report on Wednesday, May 2nd. Two analysts have rated the stock with a sell rating, one has issued a hold rating and two have issued a buy rating to the company. K12 presently has an average rating of “Hold” and a consensus price target of $19.33.

Shares of K12 opened at $15.99 on Friday, Marketbeat Ratings reports. K12 has a 12-month low of $12.72 and a 12-month high of $19.92. The firm has a market cap of $659.99 million, a P/E ratio of 35.53, a P/E/G ratio of 1.78 and a beta of 0.01. The company has a quick ratio of 3.77, a current ratio of 3.92 and a debt-to-equity ratio of 0.02.

K12 (NYSE:LRN) last announced its quarterly earnings results on Tuesday, April 24th. The company reported $0.32 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate of $0.34 by ($0.02). K12 had a return on equity of 3.75% and a net margin of 1.32%. The company had revenue of $232.90 million for the quarter, compared to the consensus estimate of $227.30 million. During the same quarter last year, the company posted $0.42 EPS. The company’s quarterly revenue was up 4.7% compared to the same quarter last year. equities analysts anticipate that K12 will post 0.6 EPS for the current year.

In other K12 news, insider Kevin Chavous sold 3,491 shares of the company’s stock in a transaction on Monday, May 7th. The stock was sold at an average price of $15.20, for a total value of $53,063.20. Following the completion of the transaction, the insider now owns 60,424 shares in the company, valued at approximately $918,444.80. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. 18.34% of the stock is owned by corporate insiders.

K12 Profile

K12 Inc, a technology-based education company, together with its subsidiaries, provides online curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade in the United States and internationally. It manages virtual and blended public schools.

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Institutional Ownership by Quarter for K12 (NYSE:LRN)

Saturday, May 19, 2018

Could This Be The Turning Point For FutureFuel Corp?

Clayton, Missouri-based FutureFuel Corporation (FF), through its subsidiaries, manufactures and sells various chemical products, bio-based products (including bio-based specialty chemical products) in the United States. The business operates in two segments: Chemicals and Biofuels. The chemicals segment includes custom chemicals, agro chemicals, additives for detergents, biocides agents, specialist polymers, dyes, stabilizers, and chemicals agents (which are the chemicals used in cosmetics and personal care products), and specialist products used in the fuels industry.

What initially caught my attention on this particular stock is the way in which it has performed over the past couple of days, with significant price spikes backed by strong volume. What is more intriguing is the fact that this recent movement has come after the Q1 earnings announcement last Thursday, when the stock actually moved down on selling the news (May 10th):

May 09th: Closed at $11.82 on volume of 38.5k

May 10th: Closed at $11.48 on volume of 84.5k

May 11th: Closed at $11.55 on volume of 42.2k

May 14th: Closed at $11.90 on volume of 144.9k

May 15th: Closed at $12.70 on volume of 140.0k

FutureFuel Chart (Source: FinViz)

Post earnings last Thursday, the stock dropped down to around $11.44 with a small spike in volume. At the time, in my view (although impossible to confirm), this was most likely down to large hands buying up shares from the post-earnings sellers expecting further dips.

It is the following 2-3 days of price and volume activity in this stock, which provides the strongest evidence that large hands have been actively moving into this stock. The average volume in this stock over the past 90 days sits at around 65k/day. The last two days have seen relative volume multiples hit 2.15 times and 2.22 times the average. This is strong accumulation, which is always an initial prompt for me to at least look into this company.

At the current price, the stock still has plenty of room to grow, and I am expecting this one to at least hit the first strong resistance at 13.50, purely ion a technical basis (backed by recent strong volume accumulation) before consolidating and moving higher. The chart above also shows what is potentially a bottom, with multiple supports at around 11.50 since April.

From last Thursday's Q1 report, revenues were $55.7 million, up 3.0% from $54.1 million; excluding the impact of the blenders�� tax credit (��BTC��), revenues were $69.3 million, up 28.1%. Adjusted EBITDA was $37.6 million, up from $5.6 million; excluding the benefit of the BTC, adjusted EBITDA was $8.7 million, up 55.4%. Bottom line, the net income increased to $40.4 million, or $0.92 per diluted share, from $3.4 million, or $0.08 per diluted share, significantly benefited by the BTC.

The BTC, or Blenders Tax Credit, is a biodiesel blender that is registered with the IRS, eligible for a tax incentive of $1/gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. FutureFuel qualifies for this, and it adds a sustainable $1 per gallon tax credit to the bottom line. This is likely to continue for the foreseeable future. If established (as it is likely to do so) over a longer term, the company valuation remains presently discounted.

However, what matters beyond the transient politics of the BTC are the increased production and sales volumes within both the chemical and biofuel segments, reflected in top line revenues and gross profit growth.

Beyond the mainstream numbers, the company has the following key metrics in its favor:

Cash and Equivalents of $232.57m represent a large proportion (42%) of market cap ($555.52m). Cash and Equivalents of $232.57m represent a large proportion (42%) of enterprise value ($322.95m). The company has zero debt on its balance sheet (Total Debt reported last quarter). All other credentials pass within our screener, notably: Operating Income to Enterprise Value is 12.69% (meets minimum 4%) Free Cash Flow to Enterprise Value is 6.59% (meets minimum 4%) Debt to Equity is Zero (meets maximum 50%) Debt to Capital is Zero (meets maximum 50%)

(Source: S&P/CapitalIQ)

With fundamentals intact there is not a lot of negative counterbalance to report on FF at present - suffice it to say, price and volume activity from the recent bottom of around $11.50 seem to be pointing to strong accumulation, backed by both price and strong multiple relative-volume activity.

My thesis is largely based on strong accumulation which is continuing this week. The volumes traded in the stock are above average. FF stock was purchased by a variety of institutional investors in the last quarter, including Dimensional Fund Advisors LP, Millennium Management LLC, Matarin Capital Management LLC, BlackRock Inc., GSA Capital Partners LLP, Personal Resources Investment & Strategic Management Inc., Element Capital Management LLC and Citadel Advisors LLC. Company insiders that have bought FutureFuel stock in the last two years include Donald C Bedell, Keith Neumeyer and Samir Devendra Patel. (Source: MarketBeat).

FutureFuel is a diversified company with many sub-divisions servicing distinct markets under the one umbrella of chemicals and biofuels. It is still small (and nimble), in a potential growth sector through more diversification, especially within the chemicals segment, for which FF enjoys more established markets. The company has had a turnaround in demonstrating one of the strongest FCF/EV yields I have seen in some time. This is in my opinion, a significantly undervalued, speculative (higher-risk-capital) bet.

Disclosure: I am/we are long FF.