I’ve narrowed down my list of stocks that conform with certain growth and fundamental attributes that I favor.
Thus far, I am impressed with AMBA (they own the hi-def market for cameras) and ELLI, mixed on ULTI and ALXN.
Have a listen to the ELLI call and see for yourself. Housing is back and these guys are killing it.
Back to listening to calls.
On deck: BCEI, NCT, ECL, ERII, FLT, MWIV, RTEC, SNTS and SWI.
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HDSN – refrigerant recycling.
How are you not bullish on FB? They are going to be the one stop shop for all marketing and advertising for the WORLD
I own it
Look at $WY – leverage to late cycle housing as stronger lumber prices transition to sawlog price improvement (~18 month lag) and ultimately timberland values.
Their home builder company, WRECO is a top 20 builder and has a long land position which could allow them to gain share as other builders fight for a dwindling supply of lots. WRECO also has the lowest incremental working capital requirements (~5%) vs home builders (20-25%).
WY was up 50% in 2012 but still significantly lagged home builders (+100%) and other housing derivatives (SHW, LPX, etc. +90%). Secular tailwinds (reduced Canadian harvest, Asian exports, etc.) will benefit the company’s timber segment as we get to mid-decade but cyclical lumber trends (low dealer inventories and not enough qualified truckers/loggers) should benefit the company in the near-term (12 months). Given WY’s lumber capacity, I estimate a 5% change in lumber prices could add ~$0.10 in EPS (~6%) and would note lumber prices are still accelerating with December prices +40% Y/Y. Also for WY pulp business, the pulp down cycle may not be as bad as feared with two huge mills ramping up in 2013 given recent mill conversions and closures.
The street is neutral to negative on the name but this is bred out of laziness and confusion on how to value WY. Their timberlands biz is REIT like and pays no taxes while there three other businesses are taxable REIT subsidiaries. This coupled with their cyclical nature makes valuation a rather arbitrary task. I value each segment separately based on its closest publicly traded peers multiple. I used forward ebitda multiples for lumber and pulp businesses while utilizing a normalized earnings multiple for WRECO given its low capital intensity and subsequently small depreciation expense. I utilize an FFO multiple for the timberland biz (based on US REIT trading average) and adjust for net debt and unfunded pension liability to derive WY’s EV. I believe the stock is worth ~$26 in a slow growth environment, ~$40 if we can get above 950k starts in 2013 and potentially $50+ if we can 1mm+ starts and flattish pulp prices in 2013.
Also note the company recently raised its dividend 13% and they could feasibly increase it another 20-30% in both 2013 and 2014, depending on the strength of the housing market.
FD: I advice and consult with clients about investments and subsequently can’t trade my own account, so have no positions or plan to open any.
Don’t forget about EXK.
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Good to have you back, Senator. The edge of the site has gone a weird soft. Post Sandy possibly? Maybe the east can not handle a little storm. Whatever it is it is.
Christmas season is busy… things will ramp again.
Last bastion of freedom type stuff…
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How about Chinese Lotto?
I just wanna see that pic again.