Caterpillar, Inc. (CAT)
Caterpillar (<a href=http://www.zacks.com/stock/quote/cat>CAT</a>) is a market leader in construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. With its strong brand name, pricing power and global dealer network, we believe Caterpillar is well positioned to take advantage of the growing need for infrastructure development globally. <p> Though the company expects 2009 sales to decline more than 35% year-over-year, it anticipates an improvement in its top-line in 2010. The company forecasts a 10% to 25% increase in sales for 2010, compared to the midpoint of the 2009 outlook range. <p> Asserting its optimistic outlook, the company recently announced plans to increase its machinery prices by 2% effective January 2010. We are upgrading the stock to Outperform.Cost Plus, Inc. (CPWM)
Specialty retailer Cost Plus, Inc. (<a href=http://www.zacks.com/stock/quote/cpwm>CPWM</a>) is closing stores, cutting costs, and trying to preserve cash, but those moves will do little to reverse its weak sales trends and merchandise margins. <p> In addition, management's guidance for the third quarter cautioned investors to prepare for more weakness. Cost Plus expects same-store sales to decrease 6%-11% and a pre-tax loss from continuing operations of $19-$24 million. <p> Cost Plus is scheduled to report third quarter results on December 3. We have an Underperform rating on CPWM shares. Our six-month target price is $0.50.RELM Holdings Inc. Executes a Letter of Intent for the Acquisition of a Full Spectrum Information Technology Services and Support Company
WILMINGTON, DE--(Marketwire - November 30, 2009) - RELM Holdings Inc. (
Green Mountain (GMCR): Fresh-brewed buy
"Comments and a large buy from hedge fund manager Steve Mandal of Lone Pine Capital prompted us to take a new look at Green Mountain Coffee Roasters (NASDAQ: GMCR), and we like what we see," says Geoffrey Seiler.
In BullMarket.com, he adds, "While best suited for more aggressive, growth investors, we're going to step up and add Green Mountain to our buy list."
"Green Mountain is a socio-eco-friendly regional coffee roaster with a stated policy of always donating 5% of pre-tax profits to charity.
"More importantly for investors is that it is the maker of the Keurig one-cup coffee making system. The company sells the brewing systems from around $90 for its base model to as high as $250 for more elaborate models.
"The real money for the company, though, comes from selling K-Cup coffee pods for the Keurig. The company sells over 200 varieties of coffee, tea, and cocoa in K-Cups produced by a variety of roasters. Keurig earns royalty income from K-Cups shipped by its licensed roasters.
"In addition to the home market, the Keurig unit sells machines geared for use in offices, vending areas, and hotels. Those machines sell at prices ranging from $250 to $800.
"The appeal of Keurig’s single-cup systems is that they brew a cup of coffee in less than one minute. All consumers need to do is insert a K-cup and push the start button. T
"he machine automatically controls the temperature, water pressure, and quantity, and is designed to produce a coffee that rivals one from a Starbucks or similar purveyor.
"The company scored a major coup earlier this year when it signed a distribution deal with Wal-Mart in April. Wal-Mart said it would sell Keurig's Elite coffee maker, which has a suggested retail of around $100, and the company's K-Cup portion packs in over 3,000 Wal-Mart stores.
"The company is also penetrating the grocery store market, where about 75% of bulk coffee is sold. K-Cups are now sold in about 8,500 supermarkets, including Safeway, Kroger, Albertson’s, and Jewel. The K-cup has also fully penetrated in the big three warehouse clubs (Costco, Sam's and BJ's).
"Green Mountain has started to scoop up some of the companies with K-cup licenses. Earlier this month, the company announced it was acquiring the wholesale business and Canadian roasting facility of its licensee Timothy's Coffees from private equity firm Sun Capital Partners for $157 million in cash.
"Timothy’s accounts for about 13-15% of system-wide K-cups sales, and gives Green Mountain a presence in the Canadian market. In March, it acquired the wholesale business of another K-cup licensee, Tully's, which is focused on the West coast.
"Meanwhile, in 2010, Green Mountain will be launching co-branded brewers with Cuisinart in the first half of the year and with Mr. Coffee in the second half. The former will appeal to the higher-end crowd, while Mr. Coffee is a top brand in the mass market.
"Looking at valuation, Green Mountain trades at about 25x fiscal year 2011 earnings ending in September 2011 and has near $5 in net cash and short-term investments on its balance sheet.
"he company is expected to grow its bottom line at an annual rate of approximately 30+% over the next 5 years. It's not out of the question that Green Mountain could grow its earnings to over $7 a share over the next 5 years.
"The stock has had a tremendous run this year and isn't in the bargain bin, but it's not overly pricey either given its growth prospects. While best suited for more aggressive, growth investors, we're going to step up and add Green Mountain to the Recommended List.
"Meanwhile, Green Mountain has just swept in with an offer for K-cup licensee Diedrich Coffee, which had previously agreed to be acquired by Peet’s Coffee & Tea.
"reen Mountain going after Diedrich makes a lot of sense. Diedrich accounts for about 10-12% of the total K-cup volume through its Gloria Jeans and Coffee People brands, and Green Mountain would love to continue to consolidate its licensees to have greater control of the K-cup channel.
"This is an interesting battle that is brewing over Diedrich, and we'd like to see Green Mountain come out on top. However, even without Diedrich, Green Mountain is still in the driver seat with a long, clear pathway to growth in front of it. We rate the stock a 'Buy' with an $82 price target."
Income trio: Neil George’s ‘fabulous finds’
"A few stocks have really grabbed my attention; they have core assets that generate lots of cash, and serve their investors a good cut of the profits with regular streams of big dividends," says income specialist Neil George.
In his Stocks that Pay You, the advisor reviews three income oppotunities -- a holding company, an investment firm, and a medical center REIT -- that he calls, "fabulous finds".
"I'll start with a company, Compass Diversified Holdings (NASDAQ: CODI), that as its name implies - holds stuff.
"Specifically, it holds ownership in small set of operating companies in varied but basically solid businesses.
"They include a temporary and contract worker company, a medical device manufacturer, a research equipment purveyor and a couple other similarly boring but steady businesses.
"And the holding company only buys into businesses without the need for heavy leverage, and in sectors where the businesses have control of their individual markets.
"The outcome is steady cashflows and a very low level of debt - and lots of cash and cash-like assets on the books. Return on capital is running at over 13% -- over 17% on the common equity.
"And from those returns, investors get a nice fat cut - quarter after quarter, even during the past two years of economic and market hell. In fact dividend growth is running up over 50% in the past three years. Trading around 10.50 a share, it pays a yield of over 12.9%.
"Next is AllianceBernstein Holding LP (NYSE: AB), which runs a number of investment funds including two of my favorite bond funds: the AllianceBernstein Global High Income Fund and the AllianceBernstein National Municipal Income Fund.
"But while both of these funds are solid buys, I'm also suggesting that you might want to share in the success of the managers of these funds by getting a piece of AllianceBernstein itself.
"Because the more these and their affiliated funds perform and grow - the bigger the revenue flows will continue to be for the management company.
"AllianceBernstein is structured as a publicly traded partnership which in turn owns the shares of the operating fund company.
"This is a great means for individual investors to gain access to ready and rising cashflows while taking advantage of tax rules for partnerships that avoid the double-taxation of regular corporations.
"The dividend flows vary by quarter as the funds pay their fees to the LP - but what counts is how they add up over the entire year and keep piling up year after year.
"Right now that means you're buying into a dividend yield of over 10% -- with more coming as AB's funds continue to perform and grow.
"Last up in this eclectic garage sale is a real estate company. But I'm not writing about a commercial or residential deal that has to rely on some sort of economic upturn to make it work. Instead, this company is structured as another tax-advantaged investment in the form of a REIT -- focused on medical facilities.
"And not just general hospitals but very targeted cost-saving surgical procedure centers and specialized care facilities. These are the sorts that will stay in demand with or without more government control of the medical markets.
"And in fact, the argument might well be made that these are the sorts of operations that are working to streamline healthcare services, thus trimming costs to insurers -- be they private or Uncle Sam.
"Medical Properties Trust (NYSE: MDT) has seen its shares down last year with the move by the entire market to discount property companies.
"But since then, the realities of its holdings and its cashflows have been bringing it back strongly. Dividend flows are ample and high at over 9%. Just the medicine your portfolio needs."
Thomson Reuters Invests in Environmental, Social Responsibility and Governance Content Through the Acquisition of ASSET4
NEW YORK, NY and ZUG, SWITZERLAND--(Marketwire - November 30, 2009) - Thomson Reuters today announced that it has acquired the business of ASSET4 AG, a Swiss-based, leading provider of Environmental, Social Responsibility and Governance (ESG) information and tools for professional investors and corporate executives. This deal represents a step forward in the integration of ESG data into mainstream financial analysis and underscores Thomson Reuters commitment to meet the evolving needs of the global financial community.
Red Branch Technologies Announces LOI With Green Power Technologies, Inc.
Company to Purchase Minority Stake in an Emerging Company Focused on the Multi-Billion Dollar Wireless Sensor Market
Insiders target Zoran (ZRAN)
Recent corporate insider buying at tech company Zoran (NASDAQ: ZRAN) has attracted the attention of Paul McWilliams. Here's the "inside story" from his Next Inning service.
For the most part, there's not been that much activity in the overall technology sector. However, I noticed that the CEO at Zoran had stepped up to the plate recently with a $98K buy.
"And, when looking more closely, I noticed that two directors have also been recent buyers, one for $43K and the other for $68K.
"While the aggregate dollar amount here isn't huge, for a company the size of ZRAN and when considering there were three different buyers, it shows at the very least confidence.
" In addition to this, CEO Levy Gerzberg has shown good timing in his insider activity going back to 2005. In looking at his record we can see that sells were made in 2005, 2006 and 2007 at prices ranging from $20.19 to $27.31.
"Between these, a large buy was executed in 2006 at $12.36. More recently we saw him as a buyer in 2008 at $8.28 and $8.30 and then again last week at $9.80.
"With comfortably more than $7 in balance sheet value, I think the downside for ZRAN is reasonably cushioned.
"Zoran is involved in digital entertainment and digital imaging products. I think ZRAN's exposure to the flat panel TV market via its Supra TV processor is being underestimated by Wall Street.
"Therefore, I think there is some reasonable room for a near-term upside to the rather dismal expectations listed from the 11 covering analysts.
"Based on this thinking and the vote of confidence implied by three insider buyers, I think there is room to speculate here for a price in the mid-teens during the coming year."