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$EGT Chart: Buy Alert coming soon.
Seeking Alpha. A growth railroad stock is a rare thing, but we can find an apt example of such a stock in Kansas City Southern (KSU). Earnings visibility till 2015, large growth in revenues expected to come from the cross border intermodal network, a unique network in Mexico, good exposure to oil and gas shale regions, and no exposure to met coal, which has been witnessing a declining demand, gives investors several reasons to buy the stock.
http://seekingalpha.com/article/900671-5-reasons-to-buy-kansas-city-southern
Railroads Industry
Source: AAR
The table shows the WoW (week over week) comparison for the 38th week of the year. The table shows us that coal continues to spoil the carload figure. Grains, with low harvests, have also joined the league.
KSU's Growth Story
KSU is expected to make additional revenues of $470 million through 2015 via four new sources of revenue generation, which have been discussed below. This means a 23% boost compared with the 2012 base level.
Cross Border Intermodal Network
The company believes that the potential addressable market for cross border intermodal will be 2.6 million truckloads per year. This is a 58% rise from the current Southern states that KSU caters to. However, KSU currently owns only 1%-2% of the market. The rise in market share is expected after KSU invests in this segment. KSU's current investment in new intermodal terminals like the Victoria-Rosenburg line sends a positive signal to the market. Estimates show that KSU will be able to achieve 7.5% of the expanded market and additional revenues of $250 million by 2015.
Automotives
There are 10 automotive assembly plants in Mexico, nine of which are being served by KSU and Ferromex. KSU currently owns 40% of the total carloads served between KSU and Ferromex. Firstly, KSU has an order of 140 Automax cars In future. Automax railcar is the largest railcar for hauling motor vehicles. Ferromex owns only 50 such railcars. According to economies of scale, these 140 new railcars will help KSU transport automotives at lesser costs.
Also, new automotive production facilities are being opened or are expected to be opened in Mexico in the next 2-3 years. The opening of a Honda plant in Celaya, a Mazda plant in Salamanaca, a Nissan plant in Aguascalientes, and an Audi plant, will all help boost future carloads. Till 2015, auto production is expected to rise by 41% i.e. one million units in Mexico. Also, current plants are expected to extend their existing operational capacity, which will also lead to a rise in carloads for KSU. The rate of growth of production is expected to be 8% in 2012, 6% in 2013, 11% in 2014, and at least 15% in 2015. An overall additional $68 million is expected from automotives through 2015.
Steel Products
70%-75% of Mexico's steel production is transported through railcars. 2011 figures show that 18.1 million tons of steel was produced in Mexico. With the additional five new facilities, 3.5 million tons is expected to be added in the next 12 months. KSU is expecting 60% of the total steel being transported through railcars. Calculations show that this will bring incremental 16,300 carloads and incremental revenues of $16.3 million, given the current rate of $1,000 per carload of steel.
Crude Oil and Frac Sand
Bakken in North Dakota appears to be the greatest opportunity that KSU can avail since this region lacks a pipeline infrastructure. Also, KSU owns the land where it can benefit by connecting to nearby Gulf pipelines by building the Port Arthur Crude Terminal, in partnership with Savage. Also, demand for crude oil from Canada, which can be transported by KSU from Alberta oil sands, has also begun to rise.
As far as frac sand is concerned, the KSU network is well positioned to haul frac sand from the Midwest states through Kansas City down to shale regions such as Permian and Eagle Ford. Demand for frac sand is expected to rise by 15% per annum for the next couple of years, though it is largely tied to fracking activity in the shale regions already mentioned above. Estimates show that additional revenues of $32 million from crude oil and $35 million from frac sand transportation are expected through 2015.
Conclusion
KSU is an investor darling, given the lack of growth available across the transportation universe. However, bears believe that this has already been priced in the stock, as the stock trades at a sharp premium to the group. KSU's current P/E of 21x are above its five-year historical P/E of 19x.
However, one should not forget that there was a time when KSU traded at a P/E of 55x. Also, the downgrading by UBS has led to an almost 7% price decline to date. This, coupled with healthy margins and a good dividend yield, make the stock a buy.
The Bearish Thesis:
However, bears paint another story, which is as compelling as the bullish version. A slower-than-expected growth in Mexico's GDP, from where KSU generates 50% of its revenues, a large exposure to agricultural products, which are expected to be down due to low harvests, and the valuation multiples at which KSU is trading being higher than other rails (they could compress given the weak stats that carloads are showing this year), all make KSU a sell rather than a buy.
HPTX. Hyperion Therapeutics to Report Results of HALT-HE Study at AASLD Plenary Session
http://finance.yahoo.com/news/hyperion-therapeutics-report-results-halt-225621921.html
ALGN. Align Technology to Announce Third Quarter Fiscal 2012 Results on October 17, 2012
http://finance.yahoo.com/news/align-technology-announce-third-quarter-231030885.html
RSMD. Resmed Announces Conference Call And Webcast To Discuss First Quarter 2013 Results
http://finance.yahoo.com/news/resmed-announces-conference-call-webcast-230000417.html
TSRO. TESARO Announces Clearance of Investigational New Drug Application for TSR-011
Company Plans to Proceed With a Phase 1/2 Clinical Study of the Anaplastic Lymphoma Kinase (ALK) Inhibitor TSR-011
http://finance.yahoo.com/news/tesaro-announces-clearance-investigational-drug-203000058.html
CMGO Announces Q2 #'s of $6.1M in Revs
CMG Holdings Group, Inc. Announces its 2nd Quarter June 30, 2012 Financial Results Reports $6.1 Million in Revenues.
Link: http://ih.advfn.com/p.php?pid=nmona&article=54359449&symbol=CMGO
Daily Chart
CMG Holdings Group, Inc. Announces its 2nd Quarter June 30, 2012 Financial Results Reports $6.1 Million in Revenues. Reports 31% increase in Revenues and 48% increase in Operating Income and Provides Corporate Update of Business Operations.
PR Newswire
MIAMI, Oct. 1, 2012
MIAMI, Oct. 1, 2012 /PRNewswire/ -- CMG Holdings Group, Inc. (CMGO) (CMGO.PK) www.cmgholdingsinc.com, a full service marketing communications holding company operating across the sectors of digital media, alternative advertising, social media, experiential marketing and commercial rights, is providing the following updates regarding the company's 2nd Quarter 2012 financial results, the company's corporate spin-off of AudioEye, Inc., the elimination of the company's senior corporate debt and the corporate update of business operations and the retirement of Chairman and CEO Alan Morell, with Jim Ennis chosen has new Chief Executive Officer.
On September 28, 2012, CMG Holdings Group, Inc. filed its 10-Q regarding their 2nd Quarter June 30, 2012.
Financial Highlight Summary from June 30, 2012 Quarter Report
•Revenues increased to $6,159,910, growth of 31.0%, for 3 months ending June 30, 2012 compared to $4,700,528 for 3 months ending June 30, 2011.
•Revenues increased to $7,143,059, growth of 32.3%, for 6 months year to date ending June 30, 2012 compared to $5,400,369 for 6 months year to date ending June 30, 2011.
•Operating income growth increased to $788,589, growth of 48.2%, for 3 months ending June 30, 2012 compared to $532,136 for 3 months ending June 30, 2011.
•Operating income increased to $176,596, growth of 70.9%, for 6 months year to date ending June 30, 2012 compared to $103,339 for 6 month year to date ending June 30, 2011.
"The first 6 months of 2012 has been a transformative period for CMG Holdings Group, Inc.," said Jim Ennis, Chief Executive Officer. "Through the execution of organic growth initiatives, our revenues for 3 months ending June 30, 2012 increased by $1,459,382 or 31.0% compared to the same reporting period for prior year. Our revenues for 6 months year to date ending June 30, 2012 increased by $1,742,690 or 32.3% compared to the same reporting period for prior year. Our consolidated operating income for 3 months ending June 30, 2012 increased by $256,453 or 48.2% compared to the same reporting period for prior year. Our consolidated operating income increased by $73,257 or 70.9% for 6 months year to date ending June 30, 2012 compared to the same reporting period for prior year."
Corporate spin-off AudioEye, Inc. and elimination of Senior Corporate Debt:
"Our focus throughout this year has been to improve our balance sheet through the reduction of our liabilities and to improve our consolidated working capital position," said Jim Ennis. "On August 17, 2012, CMGO, AudioEye Acquisition Corporation (AEAC) completed our Share Exchange pursuant to our Amended Master Agreement of April 5, 2012 regarding the spinout of AudioEye, Inc. (AudioEye). The completion of our Share Exchange and payoff by AEAC caused the release of our Senior Secured Convertible Extendable Notes and their security interests. As a result, approximately $3.67 million or 48.9% in liabilities will be removed from our consolidated balance sheet, $2.6 million related to the spinoff of AudioEye, Inc. and $1.07 million related to senior debt. This total reduction of liabilities is forecasted to be reflective in our September 30, 2012 and December 31, 2012 balance sheets. We are also continuing to work to reduce other liabilities from our balance sheet over the next several quarters. Also, as a result of completion of the Share Exchange, our assets and working capital position are forecasted to increase, due to the approximate 4.5 million shares of AudioEye that CMGO will own, once their registration process is completed."
Additional highlights regarding the Share Exchange and Amended Master Agreement:
•CMGO retains 15% of capital stock of AudioEye subject to transfer restrictions in accordance with provisions of the Master Agreement.
•CMGO will distribute to its shareholders, in the form of a dividend, 5% of capital stock of AudioEye in accordance with provisions of the Master Agreement.
•CMGO declared October 26, 2012 as the dividend date, that the dividend will be paid to CMGO shareholders of record as of close of business and will be distributed when AudioEye completes its registration process.
•AudioEye finalized its Royalty Agreement that pays CMGO 10% of cash received from income earned, settlements or judgments directly resulting from the AudioEye patent enforcement and licensing strategy as fully described in the Master Agreement.
•AudioEye finalized its Consulting Agreement where CMGO will receive commissions not less than 7.5% of revenues from business, clients, sources procured by CMGO directed to AudioEye and 10% of net revenues obtained from a third party described in the agreement as fully described in the Master Agreement.
Corporate Update post the Share Exchange Agreement
"During the remainder of 2012 and moving into 2013, we plan to further expand our digital media offering. The benefits from this expansion strategy should become more evident over the next several quarters," said Jim Ennis. "As our digital media platform gains further traction, we anticipate moving forward with more traditional capital sources and investment partners in order to capitalize on experiential marketing organic growth of XA, The Experiential Agency, Inc. (XA) www.experientialagency.com. We anticipate this will potentially increase XA's growing revenues and market share of proportional digital media budgets from corporate clients that will enhance their expansion and operating profit margins."
"Earlier this year, CMGO announced plans to further align its business around the high growth categories of digital media and marketing solutions. We are moving forward in working with more traditional investment partners and acquisitions plans in order to capitalize on digital media marketing sector growth," said Jim Ennis. "In digital media, our company plans to expand its content solutions, enabling customers to create, distribute and monetize digital content. In digital and mobile marketing, our company intends increase its presence in the multi-billion-dollar media sector which is poised to grow at an incredible pace over the next decade as technological advances make digital media practical and affordable platforms for small businesses. CMGO previously announced their digital media expansion with their UsaveCT and UsaveNJ platforms, providing digital savings solutions connecting clients and customers with small businesses through interactive media videos. Operating across Connecticut, New Jersey, and New York to offer small businesses digital solutions to increase their customer interaction through interactive media videos to build and strengthen relationships with their clients. Customers, after watching the interactive video commercials within Usave digital network site, will receive digital, mobile or printable coupon offers for immediate savings and incentives from small businesses."
"Our digital media platform will assist small businesses to effectively sell their products and services directly to their consumers using mobile and social media," said Jim Ennis. "It will also provide the social network to connect directly from small businesses across Connecticut, New Jersey and New York using social media expertise via our public relations specialists, XA Social, www.xasocial.com, our marketing firm, XA, The Experiential Agency, Inc. (XA), www.experientialagency.com and via our mobile marketing specialists, Audioeye, Inc. www.audioeye.com. Over the past year, we have been in discussions with Connecticut's Department of Economic and Community Development www.decd.org and with New Jersey Business Action Center www.state.nj.us/njbusiness/bac/index.shtml to be a contributing factor as part of their statewide initiative to create jobs and economic growth for small businesses in Connecticut and New Jersey," said Jim Ennis. "We believe our Usave platform will expand and help small businesses prosper, improve job creation and provide significant savings for residents across Connecticut, New Jersey and New York. This will allow us to hire sales and digital media professionals potentially capitalizing on the digital media tax credit platforms from Connecticut's Department of Economic and Community Development's Office of Film, Television and Digital Media http://www.ct.gov/ecd/cwp/view.asp?a=3880&q=454824 and The New York State Office for Motion Picture and Television Development http://www.nylovesfilm.org/index.asp.
Retirement of Chairman and Chief Executive Officer
Alan Morell, Chief Executive Officer and Chairman of the Board of Directors, announced his planned retirement and announced the company's next top executive. Mr. Morell announced his retirement as of September 27, 2012 and Jim Ennis, Chief Operating Officer, has been appointed Chief Executive Officer.
"I am honored to have worked with so many talented people at CMG Holdings Group, Inc. through the years. Jim Ennis, our Chief Operating Officer, has been with the company since CMGO became a public company in 2008," said Alan Morell. "I am honored by the trust that the board and Alan have placed in me, and I look forward to taking my industry experience to move CMGO forward. Alan was the visionary to our company's roadmap," Jim Ennis said.
Companies or individuals that are interested in learning more about CMG Holdings Group, Inc., our subsidiaries or CMGO's investment in AudioEye, Inc., should please contact Mr. Jim Ennis at Jennis@CreativeManagementGroup.com or visit the following websites: www.cmgholdingsinc.com, www.experientialagency.com, www.xasocial.com, www.audioeye.com.
About CMG Holdings Group, Inc. (CMGO):
CMG Holdings Group, Inc. is a full service marketing and communications holding company. CMGO's mission is to build a national platform of exceptional companies that deliver solutions in the areas of alternative advertising, social media marketing services, event management and commercial rights. CMGO is seeking to expand its national presence via its acquired companies, capitalizing on their intellectual properties, patents, sales and marketing, new product development and continued operations via economic recovery. CMGO owns and operates wholly-owned subsidiaries, XA, The Experiential Agency, Inc. and has a minority investment in Audio Eye, Inc.
For more information, please visit: www.cmgholdingsinc.com
About XA, The Experiential Agency, Inc. (XA):
XA, The Experiential Agency, Inc. is a wholly-owned subsidiary of CMG Holdings Group, Inc. and has offices in Chicago and New York from which it provides corporations and highly visible brands with comprehensive event marketing, design, public relations and production services. The XA brand has a 20 year history and its team has been the creative force behind prestigious, national projects for such prior and current clients including USA Networks, The Bravo Channel, NBC Universal, Bloomberg, Guinness, HBO, Disney, Microsoft, Sony, Harrah's Entertainment, United Nations, Conde Nast, Vanity Fair, Vimeo, Michael Kors, Puma, and Ritz Carlton.
For more information please visit: www.experientialagency.com
About XA Social:
XA Social is part of the XA consolidated platform and excels in social media strategy; from a social media 101 seminar, to advising and monitoring, overall management and ROI. XA Social believes social media is not a fad, but rather an extension of good public relations that is here to stay. XA Social creates lasting connections between consumers and brands in order to engage in two way communication. XA Social helps clients build their brands through innovative and authentic social media tactics and aids in creating environments of conversation and engaging relevant consumers with brands through personal interactions.
For more information please visit: www.xasocial.com
About CMGO's Investment in AudioEye, Inc. (AudioEye):
AudioEye, Inc., founded in 2003, is a wholly-owned subsidiary of CMG Holdings Group, Inc. with offices in Tucson and Chicago. AudioEye has developed patented, Internet content publication and distribution software enabling conversion of any media into accessible formats and allowing for real time distribution to end users on any Internet connected device. Audio Eye is focused on creating better and more comprehensive access to Internet, print, broadcast and other media to all people regardless of their network connection, device, location, or any disabilities or disadvantages an individual may have. Audio Eye solutions include comprehensive E-Learning and E-Commerce systems as well as a variety of Internet publishing products and services that enable customers to create and deliver accessible, highly scalable web-based applications.
For more information please visit: www.audioeye.com
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may contain forward-looking statements which include, but are not limited to, statements concerning expectations as to our revenues, expenses, and net income, our growth strategies and plans, the status of evolving technologies and their growth potential, the adoption of future industry standards, expectations as to financing and liquidity requirements and arrangements, need for additional capital, and other matters that are not historical facts. These forward-looking statements are based on our current expectations, estimates, and projections about our industry, management's beliefs, and certain assumptions made by it. Words such as "forecasted", "forecasts", "anticipates", "appears", "expects", "intends", "plans", "believes, "seeks", "estimates", "may", "will" and variations of these words or similar expressions are intended to identify forward-looking statements. In particular, when used in the preceding discussions, similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from those results expressed in any forward-looking statements, as a result of various factors. Readers are cautioned not to place undue reliance on forward-looking statements, which are based only upon information available as of the date of this report. We undertake no obligation to revise or update publicly revise any forward-looking statements for any reason Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements that involve a number of risks and uncertainties. It is possible that the assumptions made by management are not necessarily the most likely and may not materialize. In addition, other important factors that could cause actual results to differ materially include the following: business conditions and the amount of growth in the company's industry and general economy; competitive factors; ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Forms 10-Q; and any reports on Form 8-K. CMG Holdings Group, Inc. (CMGO.PK) (CMGO.PK) takes no obligation to update or correct forward-looking statements and also takes no obligation to update or correct information prepared by third parties that is not paid for by the Company.
Contact:
Jim EnnisCMG Holdings Group Inc.5601 Biscayne Boulevard Miami, FL 33137305-751-0588 Jennis@CreativeManagementGroup.com
$CMGO
FONR. FONAR Reports Record Profits From Operations for Fiscal 2012; Net Income Doubles From Fiscal 2011; Revenues Increase 19% to $39.4 Million
http://finance.yahoo.com/news/fonar-reports-record-profits-operations-110000649.html
DDD has corrected. I'll update my DueDiligence sheet
as soon as it turns back up.
YahooFinance. Wall Street Week Ahead: Stock bulls eye Spain, Bernanke and jobs
http://finance.yahoo.com/news/wall-street-week-ahead-stock-081737397.html
NEW YORK (Reuters) - Wall Street will open October with a busy week, highlighted by low expectations for global manufacturing data and the U.S. jobs report, but that could set the stage for positive surprises that help lift the market.
The S&P 500 (^INX)(^GSPC) finished its third positive quarter in the last four on Friday, despite suffering its largest weekly percentage decline since June. For the past three months, the S&P 500 gained 5.9 percent - its best third quarter since 2010. In contrast, the index was down 1.3 percent for the week.
The benchmark S&P 500 earlier this month reached its highest level since late 2007. Yet uncertainty remains over whether stocks can hold their gains against the headwinds of a struggling economy. That explains, in part, the retreat over the last several days.
The S&P 500 hit a high of 1,474.51 in mid-September before pulling back by a bit more than 2 percent. A run at 1,500 seems possible, but the flurry of economic and world events ahead probably will prevent a major advance in the coming week.
Bulls are betting this week's Spanish budget proposals will be a preamble to a bailout request by Mariano Rajoy's government. The move would be seen as a first step to get the finances of the euro zone's fourth-largest economy in order and would clear some of the market uncertainty regarding the euro zone crisis.
Monetary policy is also on the list of market catalysts next week. Federal Reserve Chairman Ben Bernanke is scheduled to speak on Monday and the minutes of the latest FOMC meeting are set for release later in the week. The week's agenda includes meetings of the European Central Bank, the Bank of England and the Bank of Japan.
"I think we could see a rebound next week if we get some of the stars aligning and have Spain ask for a bailout, the ECB announcing favorable terms for that bailout, and if we see the Bank of Japan announce further monetary intervention," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
"If Spain and the ECB don't deliver, we could set ourselves up for a further lateral move in the markets. A negative would be if Rajoy flat-out denies that they need a bailout."
The ECB and BOJ are set to meet on Thursday, with the Bank of Japan's meeting extending until Friday.
FACTORIES, JOBS AND THE DEBATES
Chinese factory and business conditions data will kick off a numbers-heavy calendar for markets. Manufacturing PMI, due on Monday, is expected to show a second straight month of contraction.
A snapshot of U.S. manufacturing activity will be provided on Monday when the Institute for Supply Management releases its September index. The September ISM reading is expected to show another month of contraction, but at a slightly slower pace than in August. On Wednesday, the ISM will release its U.S. services-sector Purchasing Managers' Index, which could show a slight deceleration in the pace of growth in the non-manufacturing sector.
"We have Chinese economic data over the weekend, and we'll see how markets react on Monday," said Wasif Latif, vice president of equity investments at San Antonio, Texas-based USAA Investment Management.
"It seems like the market is bracing for bad numbers, meaning if they're not as bad, it could be market-positive," Latif said.
Non-farm payrolls for September, due on Friday, are seen up 115,000, while the U.S. unemployment rate is seen ticking up 0.1 percent from August to 8.2 percent in September.
The jobs data will come on the heels of the first of three U.S. presidential debates, scheduled for Wednesday night. Recent poll numbers point to a strengthening lead by President Barack Obama, but a weak payrolls reading could give some hope to Republican challenger Mitt Romney.
"If Romney doesn't turn the ship with a very strong (debate)performance, the president is going to win," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
He said the trend in the polls has taken away some of the market uncertainty regarding the presidential election. He added that an ECB- or Spain-related headline out of Europe on Thursday could overcome almost anything that would happen Wednesday night during the debate.
"I think the market is coming to terms with the fact the president is ahead, and unless something significant changes, (he) will prevail."
ARIA. ARIAD Presents Initial Clinical Proof-of-Concept of AP26113 in Patients with Non-Small Cell Lung Cancer at ESMO 2012 Congress
~ First evidence of clinical anti-tumor activity in patients resistant to ALK or EGFR inhibitor therapy
http://finance.yahoo.com/news/ariad-presents-initial-clinical-proof-091500610.html
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