Bluestone Energy Completes Acquisition of Control Solutions
Demand for Energy-Conservation Programs Fueling Growth
Insider targets Target (TGT)
"The CEO of Target (NYSE: TGT) has purchased $4.6 million in shares of the discount retailer, and we're going to follow suit," says trading and investing expert Bill Martin.
In his industry-leading BullMarket.com advisory he explains, "We now think it is time to start getting more bullish on the stock." Here's his review.
"Chief Executive Officer Gregg Steinhafel purchased 150K shares at $30.54 on March 18th.
"On the same day, he also acquired 78K shares at $31.58 for his 401(k) plan in what appears to have been an automated transaction.
"Following the transactions Steinhafel now holds 555.8K shares, exercisable options on 727.7K shares at $34.00 to $58.13, and unexercisable options on 600.9K shares at $48.16 and $58.13.
"The buy is the first open market purchase in at least six years for Steinhafel. Between October 2003 and June 2007, he exercised and sold options on 1 million shares at $52.58 for outflows of $53.2 million and net proceeds of $32.6 million.
"The options generated an average gain of 226% and had, on average, 2.9 years remaining until expiration.
"Coming a day after activist investor William Ackman publicly lost his patience with Target, Steinhafel's buy has the feel of someone trying to send a message to investors, Ackman being the most important one of them for the time being.
"By purchasing $4.6 million in stock and with another $2.5 million in shares going into his 401(k), Steinhafel is sending a strong message, one that suggests he's not going to be pushed around by Ackman.
"Recent economic data has suggested that the consumer economy could have bottomed and is gearing up for a rebound. Nonetheless, it's difficult to tell whether Steinhafel is buying into that idea or simply using his checkbook as ammunition against an activist investor.
"However, we think it is time to start getting more bullish on Target, and we are going to up our rating to 'Buy' and make a second purchase in the name while this news is still largely uncovered."
Tyco (TYC): New life after Kozlowski
"In the eyes of many investors, Tyco (NYSE: TYC) is still tainted by management’s less-than-exemplary behavior nearly ten years ago," observes George Putnam.
In The Turnaround Letter, he suggests, "But in reality, it is now a solid and well-managed company that should weather the downturn well and thrive when conditions improve." Here's his review of the "changed" company.
"Tyco began in the early 1960’s as a high tech company based in Massachusetts. It grew gradually through the 1970’s and 1980’s, largely by acquisition.
"The pace of acquisition accelerated rapidly after Dennis Kozlowski took over as CEO; between 1992 and 2001, revenues grew from $3 billion to $34 billion as Tyco purchased more than 1,000 companies.
"In 2001 Kozlowski came under fire for his lavish spending of company funds, and questions were raised about Tyco’s accounting policies. Kozlowski resigned in mid-2002 and was eventually convicted of misappropriating company funds.
"Under Kozlowski’s successor Edward Breen, Tyco has divested a large number of assets. In 2007, Tyco capped off its restructuring effort by splitting into three separate businesses: Tyco International (the subject of this recommendation), Tyco Electronics and Tyco Healthcare (now called Covidien).
"Tyco is now a much leaner and more focused company. It has five main business segments: security systems under the ADT brand, fire protection services, safety products, flow control products (such as valves and pipes) and specialized electrical and metal products.
"While none of these are particularly sexy, they are solid businesses that generate strong cash flow and have decent growth prospects around the globe. In all of its business segments, Tyco’s units have a strong, often leading, market presence and well known and respected brands.
"All of the businesses are well positioned not only to weather the current worldwide downturn but also to grow nicely when economic conditions improve.
"During the downturn, Tyco should fare better than many industrial companies because more than one-third of its revenues come from ongoing monitoring and servicing activities, as opposed to new sales of products.
"Breen cleaned house in the executive suite shortly after he took over, and eliminated the company’s flamboyant culture. He brought in a team of new managers who run the various businesses with quiet competence.
"The company’s once bloated balance sheet is now lean and solid. Debt is down from $26 billion when Breen took over to about $4 billion at the end of December.
"Cash flow should remain strong, and Tyco is well positioned financially to gain market share at the expense of weaker competitors. It also pays a healthy dividend. We recommend buying Tyco International up to 27."
Overseas Shipholding Group (OSG)
We are maintaining our Sell recommendation on Overseas Shipholding Group, Inc. (<a href=http://www.zacks.com/stock/quote/osg>OSG</a>), and cutting our target price to $21. <p> OSG reported fourth quarter diluted EPS before nonrecurring items of $2.54, well above consensus of $1.67 and our $1.23 estimate, primarily due to stronger than expected revenue growth from higher spot tanker rates and increased revenue days. Despite this, we are slashing our 2009 diluted EPS estimate to $2.10 from $3.75, as we now believe the impact of the global economic slowdown will be more pronounced than previously expected. <p> We have cut our 2009 revenue assumptions due to reduced estimates for spot market rates (roughly 45% of the company's fleet is exposed to the spot market) and fewer revenue days. While OSG recently increased its dividend by 40%, we cannot rule out a dividend cut in the event of a protracted economic downturn.Kinder Morgan Partners (KMP)
While Kinder Morgan Partners' (<a href=http://www.zacks.com/stock/quote/kmp>KMP</a>) fourth-quarter earnings were below the prior-year level, the partnership announced a 14% increase in distribution to the annualized run rate of $4.20 per unit. <p> Our continued favorable view of the partnership reflects its impressive track record of distribution growth, the focus on stable, fee-based, well-diversified assets, and its strong balance sheet, which allows flexibility when raising capital for acquisitions/expansions. <p> We are confident that the partnership can not only sustain distributions, but also increase it, albeit at a lower rate.Woodward Provides Update on Pending HR Textron Acquisition
FORT COLLINS, CO--(Marketwire - March 26, 2009) - Woodward Governor Company (
In addition, based on the current status of financing negotiations, Woodward anticipates it will obtain reasonable long-term financing to fund this acquisition without the need to utilize the previously disclosed bridge commitment. There can be no absolute assurance as to the final amount, type or terms of the long-term financing until closing on such financing occurs.
Freedom Consulting Group Acquires Part of Concentia Digital
COLUMBIA, MD--(Marketwire - March 26, 2009) - Freedom Consulting Group acquired the government services operations of Concentia Digital. The acquisition strengthens Freedom's existing technical support services it provides to the federal government. Freedom has had a successful track record even as the economy has struggled and has growth from recent wins with federal and local governments.
"We are excited with this opportunity to support new customers and to expand our organization through Merger and Acquisitions. With this success we look forward to new opportunities to acquire small companies doing work in the federal space," said Dana Gift, CEO and CFO of Freedom Consulting Group.
Phoenix Interests, Inc. Announces Binding Letter of Intent to Acquire Stonewall Networks With Definitive Purchase Agreement Anticipated by April 1st
LUDLOW, KY--(Marketwire - March 26, 2009) - Phoenix Interests, Inc. (
Stonewall Networks has developed a proprietary software solution for mobile network security, including an innovative security policy management product for enterprise customers. The Stonewall Networks acquisition is part of a larger Phoenix Interests strategy to create a comprehensive and global mobile computing technology business. Products from Stonewall Networks would provide a security backbone for this mobile solutions strategy.
Altria (MO): Income and value
"Selling at just 7 times trailing earnings, Altria Group (NYSE: MO) is cheap, and due for a rally" says Mark Skousen.
In his specialty income-oriented service, High Income Alert, he adds, "And we stand to collect a lot of income in the meantime." Here's his review of the tobacco company.
"Altria is the parent company of Philip Morris, U.S. Smokeless Tobacco, John Middleton, Ste. Michelle Wine Estates and Philip Morris Capital.
"Its primary moneymaker is tobacco, including such well-known brands as Marlboro, Copenhagen, Skoal and Black & Mild.
"Why buy Altria now? Tobacco is largely recession-proof. Sales are still booming, especially in the world’s emerging markets.
"The company has plenty of cash and ample cash flow, so it is hardly affected by the credit crunch. (It’s currently sitting on $16 billion.)
"A strong dollar, of course, is not a positive for Altria because the company generates so much revenue overseas.
"But the government’s massive stimulus plan will ultimately prove inflationary. That will undermine the dollar, driving Altria’s profits higher.
"And then there is that dividend: 7.6%. Will it be maintained? I believe so. Revenue is still growing at a 3.5% annual rate. And Altria enjoys operating margins of 32%.
"Also, it's important to note that Congress is considering a bill that would regulate tobacco and make it difficult for new tobacco companies to enter the market.
"In short, it will lock in Altria's dominant position in the market. The bill was co-sponsored by Barrack Obama when he was a senator, so it may well pass."
Amazon (AMZN): ‘Clear winner in online retailing’
"Only the strong survive in the dog-eat-dog retail world where customers vote with their dollars all day; a recession will sort out the weak players and leave the survivors in a stronger position for the inevitable recovery," notes Dave Dyer.
In his Dave Dyer's Newsletter, he suggests, "And Amazon.com (NASDAQ: AMZN) is the clear winner in online retailing."
"A basic business strategy is that in the good times, you go for profit and in bad times, you go for market share.
"You know that you are gaining market share when you hear the sound of your competitor’s body hitting the pavement.
"Amazon.com has been hearing a lot of thuds recently. Circuit City died off in the consumer electronics retail space, leaving more market share for AMZN. And EBay announced that they are going to retreat from online retailing of new goods to focus on their core business.
"How did Amazon know to send me an email recommending the new book by P. J. O’Rourke? Probably because I bought all his others over the past 10 years that I have been an AMZN customer.
"I don’t get any emails from them for books about children, dogs, or golf because they know their customer. They know that I like fat history books, and the occasional stock market or economics book.
"When I needed to buy a web cam for my video blog, AMZN made it very easy by having lots of reviews from real people to help me make my decision.
"I also love the way they have incorporated the used book market into their site; AMZN has them all available for me in one place and ranked by price.
"It is brilliant marketing; they turned potential competitors into a revenue source by providing them access to a larger market, Amazon.com branding, and a customer who is usually at the point of placing an order.
"Since the used book stores have all the expenses of holding the inventory, AMZN gets a slice of the sale without much investment other than the cost to maintain their website.
"You can bet that it is a high margin transaction for AMZN when some cheapskate like me orders a used book through their site.
"When new technology comes along, the big winner is not usually the company who pioneered the technology, it is the company who benefits from the new technology by using it creatively to change the way an industry works. That is exactly what AMZN has done.
"Further, the Kindle, their E-book reader, is just now out in its second edition. This device hopes to do for books what the I-Pod has done for music. It has not been such an instant success, but habits change slowly.
"Also, no review of Amazon would be complete without mentioning its founder, Jeff Bezos. It is very rare for the original founder (1994) to stay with the company and actually have the talent to grow and run a large operation. His enthusiasm and dedication suggest that he is a real positive for the company.
"With a market cap of almost $30 billion, AMZN is one of the real success stories from the boom times of the ‘90s. Management still owns 25% of the stock, always a good sign. They continue to report double-digit revenue growth combined with growing profitability every quarter.
"They also have a minimal amount of debt and a very nice ROE of 33%. While the recession hampered consumers, AMZN reported its 'best ever' holiday shopping season. That is what happens when you have been doing a lot of things right for a long time."