TripAdvisor Running Away From Buyers

Posted on February 12, 2015 by | Leave a comment

On February 12, 2015, news of Expedia (EXPE) buying Orbitz (OWW) combined with the earnings release by TripAdvisor (TRIP) has resulted in OWW increasing +21.83% while TRIP has increased by +23.76%.  This cannot be good news for Priceline (PCLN) shareholders as the likelihood of the company overpaying for TRIP grows.

Our February 6, 2015 Nasdaq 100 Watch List had the following review of TripAdvisor and Priceline:

A couple of stocks that have caught our eye are Priceline (PCLN) and TripAdvisor (TRIP).  Both stocks are low in price relative to their March 2014 peaks. 

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There has been some recent talk about PCLN absorbing TRIP in a buyout.  Below is the relative price difference between PCLN and TRIP.  In the last year, mid-November 2014 was the best time for PCLN to leverage the stock price to buy TRIP while July 2014 was the worst time to use stock to buy TRIP.

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While PCLN has changed on a relatively small basis over the last year, Ctrip.com (a company that we correctly analyzed on December 2011) has had a tremendous amount of relative price change over TRIP in the last year.

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While TripAdvisor (TRIP) may not be the best investment over Priceline (PCLN) on a fundamental basis, the potential for a buyout of TRIP may make good investment sense due to the need to eliminate a competitor or to take advantage of existing clients, assets or infrastructure.  Things could get worse for the market overall, pushing all of the stocks in the sector down. Barring a general market correction, investors probably have until the middle of December 2015 for a deal to be hammered out if the stock price doesn’t recover from the current levels.

We remain confident that TripAdvisor is the best relative value in the competition elimination game for the sector.  In reality, Ctrip.com acquiring TRIP is very unlikely.  However, we believe that with the recent jump in the price of TRIP, Priceline will feel the burn and get into a rampant bidding war for TRIP.  This could result in TRIP being acquired for well above the most recent 52-week high of $110. 

Below are the downside targets along with the conservative/extreme upside targets for TRIP based on Gould’s Speed Resistance Lines.  Non-members of our site wishing to view the upside/downside targets can send an email to nlo@newlowobserver.com.

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Posted in Edson Gould, speed resistance line, SRL, TRIP

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Analyst Estimates

Posted on February 8, 2015 by | Leave a comment

Below are the price projections based on analyst earnings estimates for the stocks on our recent U.S. Dividend Watch List dated February 6, 2015.  These estimates project the price change for the respective stocks by the end of 2015.  The stocks listed below are only a select group that was not shown on our January 19, 2015 analyst estimates.

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U.S. Dividend Watch List: February 6, 2015

Posted on February 7, 2015 by | Leave a comment

Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from February 7, 2014 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2013 Price 2014 Price % change
MKC McCormick & Company 63.04 74.34 17.9%
CHRW C.H. Robinson Worldwide 52.39 70.51 34.6%
ERIE Erie Indemnity Company 68.43 90.49 32.2%
NWN Northwest Natural Gas 40.54 48.80 20.4%
T AT&T Inc 32.30 34.87 8.0%
      Average 22.6%
         
DJI Dow Jones Industrial 15,794.08 17,824.29 12.9%
SPX S&P 500 1,797.02 2,055.47 14.4%

McCormick (MKC) topped the list and we made a quick commentary about it. We said the following about the stock.

The stock currently yields 2.35% with a payout ratio of 51% and a P/E ratio of 21. Our initial assessment indicates that shares typically trade around a P/E of 17 and with a dividend yield of 2.35%. As such, we see MKC being at, or close to, undervalued level.

Our short assessment turned out to better than expected with the average of the stocks on our watch list outperforming the market.

We also thought that AT&T (T) would be well received for long-term investor with exceptional yield.  The share performance didn’t turn out well but inclusion of dividend of 5.7%, the total return was comparable to the Dow.

U.S. Dividend Watch List: February 6, 2015

Below are 56 companies on our U.S. Dividend Watch List that are currently of interest to us. Continue reading →

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Nasdaq 100 Watch List: February 6, 2015

Posted on February 7, 2015 by | Leave a comment

Performance Review

Below is the performance of the six stocks from the February 21, 2014 Nasdaq 100 watch list compared to the Nasdaq 100 Index gain of +15.46%.

Symbol

Name

 2014 2015 change
SYMC Symantec Corporation $20.53 $24.77 20.65%
MAT Mattel, Inc. $35.55 $28.22 -20.62%
CHRW CH Robinson Worldwide $54.12 $70.51 30.28%
FAST Fastenal Company $45.61 $42.33 -7.19%
SPLS Staples, Inc. $13.09 $16.57 26.59%
CSCO Cisco Systems, Inc. $22.13 $27.24 23.09%

The average gain for all of the stocks was +12.13%.  Symantec (SYMC) was the stock of interest at the time.  Our thoughts on SYMC were, “…we don’t see why the stock couldn’t decline a bit further until April or May.” In fact, SYMC declined as low as $17.95, a drop of –12.57%.  However, the final low occurred in late March instead of the April/May projection.

At the time of the posting from last year, we outlined the analyst estimated price change for six stocks on our watch list.  The projections were as follows:

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The actual performance after one year is displayed below.

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On the whole, it appears that the analysts were correct about the overall trend for the stocks on our watch list.  two of three were (MAT, CHRW and FAST) were expected to be a mixed bag while three of three (CSCO, SYMC and SPLS) were expected to have price increases.

February 6, 2015 Watch List

Below are the 14 Nasdaq 100 companies that are on our radar.  As readers know, we have recently  taken a sizable position in one of the stocks on this list.

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Posted in CHRW, CSCO, FAST, MAT, Nasdaq 100 Watch List, SPLS, SYMC

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A Technical Review of Mattel

Posted on February 3, 2015 by | Leave a comment

Mattel (MAT) has many fundamental attributes that are well worth considering which we’ve previously outlined.  However, the technical side of the stock offers substantial food for thought.  Below we cover aspects to Mattel that, although not popular, may offer additional insight to the stock price going forward.

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A Fundamental Case for Toy Maker, Mattel (MAT)

Posted on February 2, 2015 by | Leave a comment

It hasn’t been fun and games for the leading toy maker, Mattel (MAT). Last week, the struggling company announced that the CEO, Bryan Stockton resigned. The preliminary result from the holiday season was dismal with profits falling -59% from a year earlier. The stock was one of the worst performing in S&P 500 over the last year. Shares fell -34% in 2014 and are already down as much as -14% in 2015. Continue reading →

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Gold Stock Indicator: January 30, 2015

Posted on January 31, 2015 by | Leave a comment

Gold was essentially unchanged this past week while gold stocks were up nearly +4%.  So far the trend is pointing to higher gold as the November 2014 low remains in place.

 

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Qualcomm Chokes and Other Thoughts

Posted on January 29, 2015 by | Leave a comment

On January 29, 2015, Qualcomm (QCOM) announced that a “…key customer passed on new chip…”  On the news, QCOM stock fell as much as –12%.

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Royal Gold: SRL Update

Posted on January 28, 2015 by | Leave a comment

On October 12, 2012, we posted the following SRL for Royal Gold:

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We said the following of the above chart:

“The SRL for Royal Gold at $44.62 doesn’t seem outlandish given what has already occurred in the previous declines from prior peaks.  The X marks the first decline after a “minor” parabolic move that was later exceeded on a larger scale to point A1, B1 and C1.  Additionally, the  X reflects the minimum retracement from the top and has provided consistent support for the price for RGLD.

“We’d consider buying RGLD if it declines to either of the support levels of X3 or C2.  The movement of RGLD has been consistent with the price of gold (GLD) which is in stark contrast with gold stocks as represented by the Philadelphia Gold and Silver Stock Index (^XAU)....”

On July 12, 2013, we said the following of RGLD:

“RGLD has fulfilled almost all of our expectations for downside risk since October 2012.  Although we’d much rather see this stock reach the extreme downside target of $33.28, we feel that purchases at the current level and below would be consistent with asset accumulation and wealth building, in contrast to those who were considering the stock at or near the October 2012 levels.”

So far, Royal Gold has adhered to the SRL outlined on October 12, 2012 and July 12, 2013 as displayed in the chart below.

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Royal Gold has a mid-range upside target of $100.39 and an extreme upside target of $133.85 based on Gould’s Speed Resistance Line.  However, the upside targets are somewhat immaterial when considered from the context of buying based on values.

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Posted in Edson Gould, RGLD, SRL

Clean Harbors Update

Posted on January 28, 2015 by | Leave a comment

On February 9, 2012, we posted Edson Gould’s Speed Resistance Lines (SRL) for Clean Harbors (CLH) with the downside risk for the stock.  At the time, the downside targets were:

  • $43.53 (conservative downside target)
  • $31.00 (mid range)
  • $22.53 (extreme downside target)

Since that time, we’ve revised the downside targets to reflect the following minor changes.

  • $43.97 (conservative downside target)
  • $33.70 (mid range)
  • $23.43 (extreme downside target)

A visual of the downside targets reveals the value of Gould’s SRL.

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So far, CLH has adhered to the SRL that was initially outlined in 2012.  If we consider the period of 2007 to 2009, when the stock fell as low as $20.54 and extend that same decline to the current period, then CLH could decline as low as $41.40.  This assumption is predicated on the stock market not experiencing a precipitous decline from the current level.  A broad market decline would easily bring CLH to the ascending $23.43 level in the SRL. 

While the fundamentals are not glowing for CLH as it goes through the process of spinning off its oil and gas services unit, which could “…take more than a year for the spinoff to be completed…”, there are expectations that the current actions will refocus the company.

Speculators, those willing to accept the downside risk of –36%, could purchase CLH with 25% of intended funds at $45.10 and $41.40.  The final purchase would be at $31.00 or below.  Investors, those willing to hold for 5 years or more, would want to re-assess CLH at $34 and below.

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Posted in CLH, Edson Gould, speed resistance line

Nasdaq 100 Watch List: January 23, 2015

Posted on January 25, 2015 by | Leave a comment

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U.S. Dividend Watch List: January 23, 2015

Posted on January 24, 2015 by | Leave a comment

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from January 24, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2013 Price 2014 Price % change
PM Philip Morris International 81.50 82.82 1.6%
TGT Target Corp. 57.72 75.29 30.4%
T AT&T Inc 33.42 33.37 -0.1%
MCD McDonald's Corp. 94.43 89.56 -5.2%
WRB W.R. Berkley Corporation 40.18 49.90 24.2%
      Average 10.2%
         
DJI Dow Jones Industrial 15,879.11 17,672.60 11.3%
SPX S&P 500 1,790.29 2,051.82 14.6%

Watch List Review

Our top five kept pace with the Dow but lagged the S&P 500 by 4%. The best performer was Target (TGT). The stock was under tremendous pressure a year ago after the data breach but our team believed that it was a one-time event and took a sizable position. Expectations for Target were so low at the time that we believed all the bad news was priced into the stock.

The worst performer was McDonald (MCD) seemingly due to a drop in earnings by -8% in 2014. However, analyst estimate that net income will rise by +10% going forward, from $4.82 to $5.32. That places a forward P/E at 17x 2015 earnings.

An insurance company, W.R. Berkley (WRB), did well with a gain of +24%. Net income rose +21.5% for the year but what may have propelled the stock higher was the special dividend paid out at the end of 2014.

U.S. Dividend Watch List: January 16,2015

Although a volatile week, it turned out to be a great one for the bulls. The market had a solid gain of +3%. Despite the move higher, there are virtually the same number of companies on our watch list as last week. Pockets of weakness can be seen in several sectors on our list. Below are 27 companies on our watch list. Continue reading →

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Gold Stock Indicator: January 23, 2015

Posted on January 24, 2015 by | Leave a comment

Gold, as represented by the SPDR Gold Shares (GLD), increased +1.89% this week while the Philadelphia Gold and Silver Stock Index (XAU) declined by-0.18%.  On a closing basis, each index made new highs this week.  However, some ground was given up on Friday.

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2014 Performance Review

Posted on January 20, 2015 by | Leave a comment

Below is a chart of how our investment portfolio performed against the S&P 500 index and the 30-year Treasury based on the January 2, 2014 rate (found here).

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Analyst Estimates: U.S. Dividend Watch List

Posted on January 19, 2015 by | Leave a comment

Below are the price projections based on analyst earnings estimates for the stocks on our recent U.S. Dividend Watch List dated January 16, 2015.  These estimates project the price change for the respective stocks by the end of 2015.

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