Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
It was a huge move of 40% yesterday and was supported by relatively high volumes. Follow up buying, with even higher volumes, is required to increase the positive momentum. The company has not reported profit on a net basis so far, but has shown improvement over the last few quarters. On a full year basis there was some improvement in revenues and gross profit, and the net loss has declined over the last few quarters. Like most companies at this stage of their life cycle, a lot more work needs to be done to reach break even point. The high profile additions to the strategic advisory boards indicate that the company is attempting to improve its performance, and leverage its expertise in the social media sponsorship space for better financial results. The latest addition to the board, Andy Batkin, has more than 30 years experience in creating innovative integrated marketing, digital media, social TV and promotional campaigns. It had recently appointed Lindsay Gardner, a Senior Advisor in a private equity firm, and also Rich Masterson, the co-founder and Chairman of Audience Partners. All these additions are expected to yield good results over the longer term. The company will be better prepared to handle the dynamic marketplace if the strategic advisers have good experience in the relevant industry. Further the people networking also improves when experienced people come on board. Funds are more easily accessible if the financial metrics show improvement. The company competes directly or indirectly with much bigger companies, and hence needs to bring in new offerings / programs in the market to build and maintain competitive advantage. The company needs to show some improvement in performance over the short term also, so that the outlook improves. A few good quarters can surely help in building positive sentiments for the company.
RBC Capital have recently raised their price target for Omnicom from $65 to $69. The immediate trigger for the stock is the upcoming earnings on July 18. The last earnings were not very robust as the revenues increased by 2.8% and the net income remained nearly flat. The stock has already appreciated significantly over the last few quarters and is trading around all time highs. The recent rise has factored a lot of future positives. The earnings need to be reasonably good so that the momentum can continue. Any slippage may lead to a correction. There has been some sluggishness in the last few quarters, and the margins have fallen on a ttm basis. However, the company has been a consistent performer over the years with growth in revenue and net income. It has paid dividends consistently, and the 5 year average dividend yield is around 2%. The payout ratio is also reasonable at 36%. Growth in revenues is not easy in the competitive environment, especially in view of the new segments and increased competition. There is a need for faster adaptability, to leverage the growth in popular media. Social media is becoming and extremely popular medium for advertising and sub-segments like social media sponsorships are also gaining in importance. IZEA (IZEA) provides a social media sponsorship platform where advertisers can pay celebrities and other influencers to tweet, pin, blog, youtube, instagram etc., about their products. Advertisers are looking for new methods to attract customers online. At present Omnicom is trading at 18 times ttm earnings and 15 times forward earnings. The price to sales is also low at 1.20. Debt seems to be a bit high, and the current ratio is also low. However, the main metric to watch in the earnings will be the margins / bottomline. Any positive surprise on that can lead to strengthening of the uptrend.
There has been improvement in fundamentals over the years, and the stock has moved accordingly. In 2011 & 2012 it reported profits, and there are expectations that it may report an EPS of $0.52 for the full fiscal 2013. The stock has appreciated by more than 75% over the last two years. Last earnings were below analyst estimates, and hence the stock corrected sharply from the 52 week high, but it has stabilized a bit after that. The loss had declined sharply from $22.8 million to $6 million on a yoy basis. Valuations are a bit stretched because the ttm EPS is $0.28, but the forward P/E is 47 (fye. 2014). The PEG ratio is 0.68 which indicates that there are expectations good earnings growth over the next five years. The debt of $2.15 billion is a matter of worry, and the revenue growth is also going to be difficult. There are challenges from companies like Clear Channel Outdoors (CCO), and new forms of media are becoming increasingly popular. Social media is a preferred channel for advertising, and concepts like social media sponsorship are gaining in importance. IZEA (IZEA) is a company in the social media sponsorship space which runs a marketplace wherein advertisers can pay celebrities and other influencers to blog, pin, tweet, YouTube, Instagram, etc. There are other forms of advertising which may yield better results. However, outdoor advertising, especially with digital billboards is likely to remain relevant and will keep growing. Lamar is also increasing the number of the digital billboards to adapt to the change. If Lamar can improve the margins over the next few quarters, then the outlook can become much better. Even the conversion to REIT will be beneficial for shareholders if the profits increase. Slippages will not be taken too kindly as the stock has already appreciated a lot.
Q1'14 was good for Pandora as far as the revenue growth is concerned. The revenues increased from $80 million to around $125 million. The bottom line remained negative, and the losses increased from $20 million to $28 million. This is a little worrying as on a full year basis in 2013, the revenues were $427 million and the net loss was $38 million. The guidance for the current fiscal is for revenue of $615 million - $635 million and the company expects to be around break even on a non-GAAP basis. Obviously, it will remain in the red on a GAAP basis, and is not expected to be profitable in 2014. However, the performance metrics in Q1'14 were encouraging with mobile revenue nearly doubling to $83.9 million, and Pandora One subscribers surpassing 2.5 million (a growth of 114%). Total listener hours and active users increased by 35%. The 80% appreciation in the stock over the last one year has already factored a lot of future positives. The appreciation may even continue for some time, but ultimately, the bottomline will have to show improvement. Furthermore, the growth will slow down after a while due to base effect and increased competition. Existing players like Sirius XM (SIRI) are formidable, and new offerings like the upcoming iTunes radio from Apple (AAPL) may provide competition. Social media / mobile games provide indirect competition with new offerings for engaging the users. Yappn (YPPN) is providing a social media platform which is multi-lingual. People can chat / message in their own language, and the tools will translate it into the users language. This eliminates the barriers, and widens the horizon. If Pandora is able to improve the bottom line, then the growth in the stock may continue. Otherwise, it may start to get a bit tired very soon.
The stock is down 77% over the last two years, and is down about 18% over the last one year. Over the longer term also, it has been a poor performer. Like many similar companies, the revenue growth has been exceptional, but the bottomline has remained negative. Even the revenue growth is slowing down, and in the last quarter revenues fell by about 25%. The accumulated deficit is around $197 million. All this adds to the negative sentiments about the stock. The upward revision of the guidance has led to some buoyancy in the stock, and it is up by about 17% in one month. The company now expects revenues of $9 million in Q2'13, but even that implies a significant decline from Q2'12 when the company recorded revenues of $13 million. Meetme needs to improve the bottomline, and also get its topline growth going very soon, otherwise the short term excitement about the stock may start to decline. However, there are other stocks which trade a strange valuations despite making losses. The bigger players like Facebook (FB) and LinkedIn (LNKD) also have poor operating margins now, but are at least making profits. In any case, they are in a different league altogether due to their size and global brand value. Considering the size of Meetme, it is imperative that it starts to perform better. Competition is likely to increase with smaller, and more specialized players coming to the arena. Concepts like the multi-lingual social media platform of Yappn (YPPN) are likely to be popular. Further, even other forms of media provide direct and indirect competition. Losses remain the main problem, and it is important that the company shows remarkable improvement very soon. Unless that happens, the up moves will face resistance, and will not be sustainable. The volatility will be difficult to negotiate.
The gold mining stocks have done better recently, with nearly 12-15% up moves from the recent lows. This is on the back of 6-7% rise in the price of gold. The bounce may seem like a technical reaction, but if gold moves about 3-4% from here, then it may indicate some level of stability. This will imply that gold moves above $1300, and the stocks move about 5-7% from here. There was an interesting article on seekingalpha last week about the sector as a whole. It indicated that the next few quarters may not be that bad for precious metal sector. The author stated that the large net long positions by banks in both gold and silver indicates that they have a growing interest at these levels. He mentioned that these were the largest net long positions since 4Q 2001 when gold was $270/oz. It was also stated that there has been increased buying which may help support the prices. The cuts in mining capex and production will also lead to a reduction in supplies. Further, the expected increased linking of gold reserves to the RMB, and its impacts may lead to better prospects over the next 6-18 months. The article also mentions some risk factors, which may make these arguments invalid, so it needs to be read in totality. However, it is clear that even other investors like Jim Rogers, George Soros and Jim Grant are relatively optimistic about gold at current levels. The $1150-1200 level will remain extra crucial in the short term. If gold and the stocks show strength, albeit after consolidation, then it may become clear that the huge correction in gold (more than 35% from the highs), may be about to end. If it happen fast, it will improve the outlook for Pershing Gold and the other companies.
In absence of news flow, the stock has remained pretty quiet. The fixing of the Markman hearing has increased optimism about the stock, and it had moved strongly on the announcement. Furthermore, the allowance of the new patent, a continuation to '088, also added to the positivity. The stock had moved with huge volumes on the date of the announcement. The grant of the continuation patent implies that the patent has been examined recently, and the validity has been confirmed. The continuation patent is an expansion of scope of the original patent. Further, fixing of the hearing also indicates that the claims, against the casino companies in the patent infringement lawsuit, have substance. This development will force the defendants to consider the settlement route. It is possible that the defendants may have been waiting for the ruling in this context before deciding the future course of action. Now that the date has been fixed, the stock may remain stable to positive over the next few months, and will move with the news flow. There can be news related to the trial. More information can also come regarding the other ventures taken up recently. Those triggers, related to the fantasy sports business or the mobile gaming business, will also drive the stock. The high profile executives hired at the top for these two businesses have raised expectations. As soon as the marketing for the website for fantasy sports will pick up pace, we will know about the plans. It all depends on how the management succeeds in building the business. Similarly, the prospects related to the mobile gaming business will also become more clear in a few months. Both these ventures hold a lot of promise and are likely to build the company in the long term.
The stock has done well over the past few months. It has appreciated by around 23% from its 52 week low made in April, but has remained extremely volatile. Fundamentally, it has mostly been making losses over the last several years. Like many companies at this stage, it carries a large accumulated deficit which was more than $264 million at the end of last quarter. Recently, there have been some signs of improvement as the losses have reduced. It reported a net loss of $3.14 million compared with a net loss of $13.6 million in the same quarter a year ago. Revenues also went up by around 45% to $46.5 million during the same period. Online games and advertising comprise the main segments of revenues for the company. The nuomi segment has also increased in contribution. However, the consistency is still missing. There have to be many quarters of improvement in the bottom line to be confident that the trend will continue. The signs are definitely there, and the company can do better. The revenue growth has been exponential, over the years but the bottom line has been the drag on the company. It may not be possible for the company to grow at the same pace, but it is surely possible that it starts to report a few good quarters going forward. Slowing of growth may be a result of the base effect and increase in competition in the Chinese market. Renren differs from other companies which have a more global reach. Language acts as a barrier, though technology is helping overcome this. For example, Yappn (YPPN) is about to launch a new platform which will facilitate conversations amongst people speaking different languages, overcoming the barriers. Short term buoyancy in Renren may be a result of buyback etc., but the long term sustainability of the up moves will depend on improvement of the fundamentals.
The stock has delivered good returns to the investors over the past 7-8 months. It is up 230% from the all time low of $2.6 made in November, and is up by 72% year to date. It has recently corrected by ~10% from the 52 week high of $9.43 made earlier this month. Like most internet companies, the revenue growth over the years has been phenomenal, but the bottom line has remained negative. This has led to a large accumulated deficit, and now the growth is also slowing down. Groupon is also at that phase when it is not possible to grow exponentially any more. However, there is a hint that the losses may be coming down now. In the last quarter, the revenues increased by 7.5% and the net loss reduced substantially on a yoy basis. Sequentially, the revenue declined on from $638 million to $601 million, and the net loss reduced from $81 million to $3 million. Even on an annual basis, the losses have reduced in 2011 and 2012. Many more such quarters are required to get confident about the turnaround. The good part is that the company has no debt on books and the cash balance was ~$1.17 billion on March 31. The company is focusing on improving the mobile experience as a significant percentage of customers are likely to use mobile devices. However, the recent movement in stock has factored a lot of future positives. Competition is likely to increase over time, with new concepts being used to inform the customers about deals / discounts. Social media is being increasingly used, and companies like IZEA (IZEA) facilitate that through their social media sponsorship (SMS) programs. Other players like Amazon (AMZN) and new sites provide direct and indirect competition. Thus the pace of growth may slow down a bit, and the turnaround on a full year basis may take a few more quarters. After such a huge run up, it is good to be a bit cautious.
Barry Honig bought 212K shares on July 9..
There have been several downgrades for precious metal companies recently. Coeur has also been downgraded by some analysts including Scotiabank and Deutsche Bank. BMO capital have also downgraded Coeur due to the lower quartile ranking of La Preciosa (CDE's key growth project) and the expected continuation of the downward trend in silver and gold prices. They have also mentioned CDE's high all-in-costs leading to higher valuation. While the negative outlook on the sector continues, the analysts comments reflect that are only extrapolating the existing situation. Some bigger investors, however, have expressed positive opinion about precious metals. Jim Rogers had stated in May that he would be a buyer in Gold at around $1300, and would buy more if it falls to $1200. Marc Faber had stated that gold mining stocks would rebound much more strongly if gold prices rebound. He stated that a 20% rise in gold price could lead to doubling of some select stocks. The valuation of producers is extremely low, and the development stage assets like Pershing Gold (PGLC) are trading at a significant discount to potential. The important part is that one has to be selective at these levels. Some companies have been impacted more by the crash in gold prices as compared to others. Further some balance sheets are stronger, while some have become riskier due to the fall in prices. A recent articles on SA mentioned Coeur as a good bet for investing. Most mining stocks are trading below book value, and Coeur's price to book ratio is around 0.47. Further, the liquidity and leverage are also better than many peers. It is in a cost cutting mode, and may be able to leverage the turnaround in gold / silver prices (whenever that happens) much better than some other players. While the risk remains, usually these times are the best to invest, especially when looked at in hindsight.
The stock has done well recently with about 48% appreciation on a YTD basis. It has appreciated by almost 70% from its 52 week low in November. Over the longer term it is has been bad for investors with a 62% decline in share price since the beginning in December 2011. The fundamental performance has not been good, with continuous losses except for 2010 when it turned in a minor profit. The revenue growth has been exponential, but it is crucial that the turnaround happens quickly. Even the revenue growth seems to be slowing down if one looks at the earnings of recent quarters. The company reported a minor profit in the last quarter, but many more such quarters are required to turn the sentiments around. It has a huge accumulated deficit, negative margins, but still trades at 2.2 times sales. In addition, the competition is also increasing. Players like Crowdstar, DeNA, Electronic Arts (EA), King.com, Social Point, The Walt Disney Company (DIS) etc. are formidable. Further, even bigger players like Facebook (FB), Google (GOOG) and Microsoft (MSFT) may provide competition if they decide to enter the arena. Other players like MGT Capital Investments (MGT) are also entering the mobile gaming space. MGT is also planning to provide options like real money contests which are likely to be extremely popular. So the future growth may not be as fast as it has been so far. The good part is that it has negligible debt and a good amount of cash on books, so at least liquidity is not an issue now. Expectations from the new CEO Don Mattrick are higher than his package. If the next few quarters show some positive indications, the stock can remain buoyant. Otherwise, the fundamentals will remain a drag, and after a while this headwind will not be easy to negotiate.
The stock has performed well over the past one year with a 166% rise from the 52 week low made in September. Even on a 52 week basis it has appreciated by 67%, and has risen by nearly 50% since November 2011. The investors may not be complaining so far, but further sustainability of the up moves may be difficult. This is because the fundamentals of the company have not supported the growth in the stock. The exponential rise in the revenues, has not helped matters because the net losses have also increased consistently. The increase in revenues increased hopes about the prospects of the company, and the stock has moved accordingly. Revenues have increased from $46million in 2009 to $156 million in 2012. However, the net loss has also increased from $12 million to around ~$53 million during the same period. Now that the growth rate is slowing down, and the net losses continue, there are questions marks being raised about the future prospects of the company. Many analysts have even questioned the sustainability of ANGI's business model. The recent 14% decline from the 52 week high seems to be sharp, and has been backed by good volumes. It is obviously not possible for the high growth rates to continue due to base effect, and also due to increased competition. Angie's business faces competition from the players within and outside the segment. Yelp (YELP) and Groupon (GRPN) and offline players provide competition. Segments like social media messaging (SMS) are also becoming a preferred way for advertisers to reach out to customers. Players like IZEA (IZEA) are active in the SMS space, and the prospects of the segment are very good. Other new ideas also emerge from time to time. Angie is now trading at 75 times forward earnings and the price to sales is around 8. With negative operating margins, it is very difficult to sustain appreciation in the stock, unless there is some remarkable improvement very soon.
A recent report from Marketdata has estimated the size of the diet food home delivery services market to be around $869 million in 2012 ($958 million in 2011). The size is likely to be $904 million in 2013, and around $1.08 billion in 2017 (average growth of 5%). The report mentions that NutriSystem and Medifast have 46% share of this niche market. The growth will surely benefit NutriSystem over the years, and revenues are likely to increase over time. However, the main worry is the profitability. There has been some improvements on this front recently as the losses have reduced, but it remains to be seen whether it will be able to turn positive for the full year 2013. Meanwhile, the stock has already appreciated by more than 55% from its lows in April, and has factored a lot of the future positives. It has corrected slightly from the 52 week high made earlier this month, and is looking a little sluggish. In any case, the investors have been rewarded well, and need to get a bit cautious from here on. The next earnings will hold the key to short term performance of the stock. Any negative surprises or indications will surely lead to more correction in the stock. With growth in the market, and expected turnaround in the economy, the competition is also going to increase. Players like Weight Watchers (WTW) have a long standing presence in the market. Medifast (MED) provides competition. There is competition from other segments like the supplements / drugs market. New drugs, like Nicotinamide Riboside from Chromadex Corporation (CDXC), are launched from time to time. This new vitamin derivative is expected to be useful in weight loss and diabetes management. Nutrisystem has succeeded in making positive noises about the sales growth, and if that gets backed by improvement in margins, the stock will be able to regain strength.
The Chairman of the company has started a blog for keeping all posted about the activities. The post mentions that he will provide more details about the pivotal US clinical trials in subsequent posts and also explain the $1 billion opportunity PLCSF is trying to pursue. It will be interesting to see the details mentioned in the future posts. So far the company has been able to build a good portfolio of patents around RenalGuard. It has numerous US patents and one patent from Europe, Canada and Japan covering both core methodology and other aspects of RenalGuard therapy. The product has been appreciated at recent conferences, but the real jump in sales will come only if it gets accepted in US. Success in the trials hold the key for that, and the company needs to move as fast as possible on that front. Further, the margins may perhaps be better if the product is sold in US. At present Europe is the main market, and the sales had increased last year, and in the last quarter on a yoy basis. The product is known to have good potential, but it may take some time for that to translate into higher sales and net profits. In any case, the current valuations factor that. The first post explains the indication or the problem which the product is addressing, namely Acute Kidney Injury (AKI). It explains how the contrast dye used in diagnostic or other procedures can cause damage to the kidney, and how RenalGuard can help address the issue. RenaGuard is being sold outside US already, and thousands of patients have been treated so far. The blog will help remain updated about the activities of the company. The company has also put up an Executive Video on its website where the Chairman reviews the Company's strategy and vision for RenalGuard.
RBC Capital upgraded Pinnacle to outperform and increased the price target significantly to $24. Nomura recently downgraded it to neutral and lowered the PT from $23 to $21. Credit Agricole downgraded it to a sell while Barclays Capital have an overweight rating with a PT of $22 (up from $16). Consensus rating for the stock is hold and price target is $20. Thus, the analyst opinion is mixed and does not provide any clear guidance. The stock has done well for the investors and has more than doubled over the last one year. The acquisition of Ameristar Casinos (ASCA) is likely to be positive for the top line of the company as it would double the revenues and increase its market share significantly. Ameristar is a profit making company, but the impact of the interest costs due to increased leverage will need to be seen. Pinnacle has been incurring losses since the last few years. There was some reduction in losses, but the losses have again increased in the last two quarters. The existing leverage is high and is likely to increase substantially due to the $2.8 billion acquisition. Most big companies in the industry are highly leveraged and have been incurring losses. In addition, Caesars (CZR), Penn National Gaming (PENN) and MGM Resorts (MGM) are also facing a $4.5 billion dollar patent infringement lawsuit filed by MGT Capital Investments (MGT) for which Markman hearing has been fixed recently. Improvement in the economy will increase discretionary spending, and may lead to growth in revenues, but margins remain the main worry. Pinnacle has to show visible improvement on that soon so that it remains in favor of the analysts. This is specially important if one considers the excellent rise in the price of the stock over the last one year. Slippages will not be welcome and may put pressure on the stock.
The earnings led to a bit of sell off and the stock corrected by around 14% from the 52 week high of $3.21. It has been stable around current levels for two weeks now, and is trading in a narrow range. The earnings were on expected lines, and the guidance was confirmed. Sales in fiscal 2014 are expected to be between $24.9 billion and $25.3 billion and adjusted EBITDA is expected to be between $1.090 billion and $1.175 billion. The net income is expected to be between $22.0 million and $162.0 million. In the last quarter, the revenues declined again on a yoy basis, but the company managed to report a profit compared to a loss. Sequentially, there was a decline in both revenue and net income. The recent debt restructuring may help the company improve the bottom line by around $85 million annually, and the company is most likely going to be meet the guidance and be net positive on a full year basis. Two consecutive years of net profit will be good for improving the sentiments. However, the margins are still low as compared with the peers like Walgreen (WAG) and CVS Caremark (CVS) and debt remains a worry. So the positives and negatives are balanced. The decline in sales need to be arrested as soon as possible. In the last quarter, the decline in revenues of 2.7% was attributed to the impact of lower cost generics on pharmacy same store sales. That pressure may continue, and the company may need to focus on new products / segments. A high potential molecule, Nicotinamide Riboside, has been launched by Chromadex (CDXC) and the molecule has already attracted a lot of interest. Other products launched in the market, which may suit RAD's focus segments, may be looked at closely. Sales growth and margins, both need to improve from here on.
The stock has rebounded from recent lows by around 10%. Most other precious metal stocks have behaved in a similar manner after the sharp fall in June. Streaming companies may have been affected to a lesser extent by the crash in precious metal prices, but the impact cannot be totally ignored. The low risk model helps build some support amongst the analysts at these levels. Silver Wheaton has also increased its exposure to gold to balance its business model recently. The overall outlook for the sector is gloomy, and the break of previous lows has dampened the sentiments. The current bounce needs to hold for many days, and stocks like Silver Wheaton have to rise by another 10% to improve the sentiments. The good part is that the levels are so low that many astute investors are getting more positive on the sector. Respected names like George Soros, Jim Rogers and Jim Grant are getting more positive. Jim Rogers had stated in an interview in May that he would by gold if it touches $1300, and buy more if it touches $1200. Marc Faber had stated that a bounce in gold prices would lead to a stronger bounce in the mining stocks. Further, the prices have already corrected a lot over the past several months, and are below the cost of mining now. This may lead to some adjustments in the supply-demand balance. The valuations are extremely cheap with most companies trading below book value and development stage assets like Pershing Gold (PGLC) trading at a discount to potential. No one can pick the bottom, but it is possible that that is not far from here. Stocks like Silver Wheaton are likely to be preferred in case of a rebound. However, the prices need to stabilize asap to avoid further damage to sentiments.
The stock has appreciated by around 30% from the lows made in July last year. Over the longer term, the performance has not been as smooth as many of its peers, but it has not been bad either. It has appreciated significantly from March 2009 when it was below $12. The fundamentals have improved over time, but the growth in revenues has not been very robust. The net income has improved substantially since 2009, barring 2011 when it took a major impairment related to the patient care business. In the last quarter, the revenues had declined by 5%, but the net income had increased by ~5%. Growth in revenues can be bolstered by introducing new products and enhancing existing products. Innovation is the key to success in the sector, with CONMED's competitors like Covidien (COV), Boston Scientific (BSX) etc. being known for innovation. Even smaller medical device companies like PLC Systems (PLCSF) are building strong patent portfolios around their proprietary technologies. PLC Systems has received several patents for its device / system RenalGuard recently. In addition, CONMED also needs to expand into new geographies to increase sales. Currently, US & Canada contribute around 60% of the revenues, and there is lot of scope for expansion in the other countries, especially the Asia Pacific rim / emerging markets. Further, cost rationalization is required to improve the net margins. The debt is also relatively high at around $225 million. The valuations are reasonable with a forward P/E of 15 (ttm P/E of ~22). The PEG is also reasonable at 1.31 indicating expectations of reasonable growth in the future. The recently announced dividend translates into a yield of 1.8% at current market price. If the pace of growth can be increased and the margins improved, the stock can continue to grow at a decent rate over time.
With several additions to the board of directors, there are indications that the company may get a little more assertive in the marketplace with new strategies and offerings. Lindsay Gardner, is a Senior Advisor in a PE firm with billions under management. He has experience at senior positions in Fox Networks and has good knowledge in the tech and media space. IZEA had recently also entered into a partnership with Handpicked media in UK, whereby brands will be able to access both IZEA's influencers and Handpicked Media's local publisher-base. These steps are part of the strategy mentioned in the last annual report. The company had indicated that they would bolster sales force and location, develop strategic partnerships, product innovation and seek complementary acquisitions. Like most companies at this stage of their lives, the revenue growth for IZEA has been good, but it has been negative on a net basis. In 2012, the revenue and gross profit had increased by 14% and 17% respectively, and the gross margins had expanded from 55% to 57%. However, the company continued to report a net loss. It is crucial that it turns positive on a net basis soon so that it may become easier for it to fund its future growth. It is promoted as a pioneer in native advertising and marketing, powering sponsorships in platforms like Tumblr, twitter, Facebook, YouTube etc. It has 750K registered social influencers and 94K advertisers with 3.2 million complete transactions since 2006. The social medial sponsorship space, however, has numerous players, several of which provide direct / indirect competition to IZEA. These include names like Facebook, Glam Media, Federated Media, Groupon etc. Further, the space is dynamic and the company needs to respond to the challenges continuously. The additions to the board will hopefully, help the company in getting more funds to grow and develop, and develop new strategies to become more cost efficient. Some signs may be visible soon.
The company announced that it has signed an initial agreement with TSI Sports to begin support of online communications programs for up to 5,000 organized youth sports teams, representing over 280,000 players. As per the agreement, TSI and Yappn will jointly develop a number of online communications programs for youth sports programs. This will lead to revenues from the league programs and sponsorships by premium partners. Every team will have their own Yappn page where the players and their families can interact with the league to share real time league information, video training, pictures, updates and coaching programs. Importantly, this can be done in almost any language which increases the scope and scale of the possibilities. TSI is into providing sports leagues tools and technologies for sports and leisure administration. Yappn's multiple language concept will help it reach out to various sponsor markets. The sports / sponsorship market is a focus area for Yappn and this deal will help increase the exposure for the platform. It will help it gain access to the various stakeholders including the manufacturers and the sponsors. Growth in the sports sponsorship market is likely to remain robust and it represents a significant part of the total sponsorship market in North America. Youth sports teams have a far greater outreach as families are more involved at this stage of the life of a sportsman. The interactions on the social networking platform are, therefore, much more. Agreements like these will help increase the awareness about the upcoming launch of Yappn's multi-lingual platform, which may have several positive effects. This has good potential of helping the company in the initial phase of the launch, and will also be indicative of other possibilities in the market for the multi-lingual platform.
Chromadex announced a three year marketing deal with Thorne Research Inc. for NR. The deal is worth at least $3.5 million and grants marketing rights to Thorne for NR for use in nutritional supplements exclusively for the direct to healthcare-practitioner channel in US & Canada. Chromadex will receive a royalty on sales from Thorne. There will also be collaboration on human clinical research on NR between the two companies. Thorne research plans to have several first to market products containing NR. So Chromadex has the first channel partner for NR in the form of Thorne. The company will benefit from the stream of royalty revenue in the future, but the structure of the deal, amount of upfront payment etc. have not been announced. Hopefully, more details on that will emerge soon. Details about the structure will indicate the exact impact of the deal on the financials of the company. The initial payments / benefits will help improve the liquidity position of the company in the short to medium term. The recent research collaboration with the Scripps Research Institute, and this particular deal does indicate that the molecule has a lot of potential. The CEO had also indicated that there have been many inquiries about the molecule from various companies. HPN had recently launched its product containing NR recently to support neuroprotection in contact sports. If the products containing NR succeed in delivering the promised benefits like weight loss, increased muscle endurance, protection of nerve cells from injury etc., it will have a significant positive effect on the company. Ultimately efficacy is what will matter, but deals like these have the effect of making the company financially stronger, and reduce dependence on external funding.
The losses over the years have led to a large accumulated deficit of $60 million. It is important that the company turns profitable on a net basis fast. At present the liquidity position is good with zero debt and about $95 million in cash, but this may change if the profits do not come over the next few quarters. Even the Qype acquisition was funded majorly through equity and no debt was taken. In absence of profits, getting more funds may get relatively difficult in future. The revenue growth has been excellent with a manifold rise over the last few years. The online advertising market is expected to grow in importance, and a strong brand like Yelp can take advantage by good marketing strategies, new offerings, expansion into new markets etc. The site ranks 186 in the world and 45 in US for internet traffic. However, competition is also going to increase. Even the existing players like Google (GOOG), Yahoo (YHOO) and Bing provide services which compete with Yelp. Importantly, Yelp depends on these search engines for traffic. This makes it a bit vulnerable. Further, there are smaller players in same or other segments like IZEA (IZEA) which are likely to provide direct / indirect competition. Some analysts consider Angie's List (ANGI) as a better bet than Yelp. All this may lead to lower pace of growth for Yelp, but the growth will continue. At present 79% of its revenues come from local advertising and brand advertising contributes about 15%. Further, US is the main market with almost all its revenues coming from here. International markets provide a lot of scope for growth for the company. In any case, growth has not been a problem so far, and what is required is profitability. Any sign of improvement on that front will provide a strong boost to the stock.
Over the last 5 years the stock has fallen by more than 45%. However, it has delivered great returns for the investors over the last one year. The stock has doubled, and is making new 52 week highs. In the last quarter there were declines of nearly 12% and 20% in revenue and net income, but the good part was that the company managed to report a profit after two quarters of losses. Over the years also, the performance has been inconsistent with losses and profits from time to time. The last two years, it has reported profits, but the margins are very low. This is partly attributed to high cost of production / development of games. Further, the revenues declined in the last fiscal, and have also fallen in the last quarter. The prospects of growth are good as the market for good games will always increase. Further, segments like mobile and online gaming will be the drivers of growth in the near future. Electronic Arts can also leverage this to bring in consistent growth in revenues. But the competition is also likely to increase with the growth in market. Existing players like Activision (ATVI) and Zynga (ZNGA) are likely to get more active, and new players like MGT Capital Investments (MGT) will enter the field from time to time. The key to success will be building better and more innovative games. Better production platforms will lead to lower costs, and the company can attempt to improve margins over the next few quarters. It is important that the company reports profits in the next few quarters so that the valuations become better. The stock is now trading at 77 times ttm earnings. However, the forward P/E is 17 indicates that the market expects better performance in the next few quarters. The liquidity position is also good, and the leverage is reasonable.
It is looking good enough to reach recent highs, but the volumes over the last few days are not indicating a runaway move. That worry apart, the stock is strong and has crossed hurdles with ease. It has done better than the overall market with an 85% rise over the last 52 weeks. Investors are surely happy, and the analysts are positive about the future prospects. Facebook (FB) has lost favor, and there are concerns about its users shifting to other sites like Tumblr and Pinterest. Multi-lingual platforms, like the one being launched by Yappn (YPPN), are likely to provide an alternative. So it may be difficult to maintain the users level. LinkedIn, is a strong favorite with analysts, as it has a much stronger footing in the professional networking space where there is less competition anyway. The loyalty of the users is more, and can be strengthened over time with better user experience. The Linkedin application for mobile and other interfaces are being improved all the time. It has no debt and the cash of $830 million can be used for developing its interface further and improving the mobile experience. Future acquisitions can also be funded without taking on any debt. However, the valuations are surely a matter of concern, and the forward P/E of 90 does not indicate that the stock will be reasonably valued any time soon. The trailing P/E of 737 indicates that the fundamentals have a lot of work to do to meet the future expectations. Price to sales is almost 19 and it is trading at 21 times book value. The operating margin is low (6.3%) which makes the valuations a little difficult to explain. Thus, one has to keep this at the back of the mind. Enjoy while the party lasts, but it is better to be a little careful. Watch the volumes.
The last quarter earnings and guidance for the second quarter indicated that there may be some slowdown in growth of Valueclick. The company reported 13% growth in revenues in the last quarter, and the net income went up by around 22%. However, this was below what the analysts had expected, and the guidance for the next quarter is also not very robust. This has led to a fall in the stock, and it has now corrected by around 10% over the last three months. It has fallen by around 20% from its 52 week high made a month ago. Last few days have shown some recovery, but the confidence is still not there. Despite this, last 12 months have been good for the investors as the stock has appreciated by more than 52%, and is more than 66% above its 52 week low made in August. As mentioned in an article on insidermonkey, the slow growth in the economy may affect the revenues and the net income. Further, the competition in online advertising is immense and increasing. New concepts are emerging and smaller companies like IZEA (IZEA) are bringing innovative ideas to attract advertisers. However, though the growth may be slow, the awareness about the power of online advertising is increasing. More and more companies are allocating additional budget to advertising on the internet. Social media platforms are being preferred for their impact. So the future for Valueclick will depend upon how well it is able to leverage the future growth in the market. The stock can perform well because it scores on the valuations front also. It is trading at 18 times ttm earnings and 12 times forward earnings. The debt is reasonable at $80 million, and the cash of $129 million indicates good liquidity position. The next earnings will be crucial in determining the short term performance of the stock.
The earnings in the last quarter gave a boost to the stock. It has appreciated by nearly 70% after that. On a 52 week basis the stock is up by ~85%. In the last quarter it had reported an EPS of $0.26 which was a 160% growth on a yoy basis. Even the revenues increased by 34% on a yoy basis to $47.64 million. This was much above the analyst estimates of $0.16 for EPS and $46.80 million for revenues. Currently Wells Fargo & Co. has put a market perform rating on the stock. Zacks downgraded it to neutral but has a price target of $18.00. The stock has a consensus buy rating with a price target of $16.88. Even over the years, the fundamentals have improved. Compared with 2011, the revenues increased by 21% to $161 million and the net income also increased by 57% to $8.91 million. The recent rise can be partly attributed to the impact of the acquisition of Riviera Black Hawk Casino in Colorado. The acquisition has tremendous potential for expansion, and can also be converted into a full fledged resort. The valuations are attractive with forward P/E of around 16 and low price to book of 1.84. Debt is a little high at around $71 million and the cash is around $20 million as on March 31. Debt has increased recently mainly due to the acquisition of the Colorado property. Relative to the larger casino companies, MCRI is still better on debt-equity ratio, and has better growth prospects. It has been making profits unlike many bigger companies which are incurring losses. Specifically, Caesars (CZR), Penn National Gaming (PENN), MGM Resorts (MGM) and Scientific Games (SGMS) have the risk of the $4.5 billion patent infringement lawsuit filed by MGT Capital Investments (MGT). A recent article on Seekingalpha is extremely positive on MCRI.
The earnings are scheduled for July 24, and that will be the main trigger in the short term. The sentiments for the stock are not very bullish, so that may be a risky event. Some analysts have increased the price target for the stock, but other analysts have been bearish about its prospects. Valuations are not being discussed at this stage, and only future prospects are being put forward. Few reports say the younger crowd may be leaving Facebook for other platforms like Tumblr, Pintrest etc. Other concepts, like multi-lingual discussion environment being launched by Yappn (YPPN), are also coming up. Yahoo (YHOO) and Google (GOOG) are getting stronger with acquisitions and better focus. So it may be difficult to maintain their user base. It will surely be tough to grow the users from here on. That being the main strength of Facebook, the prospects do not look so bright. No one can totally ignore the power of the brand, but sometimes things fade and people become less addicted. Since the start was at $100 billion, the fundamentals will always be catching up. That, actually is the main reason for the pressure on the stock. Had the initial price been realistic, then this would have been a better story. Price discovery does happen, and in the long term fundamentals prevail so the stock is struggling. The company is not going to go away, and will continue to struggle due to the burden of the initial pricing. To grow, it has to do something great soon so that the worries become less. Currently, the opinions are becoming more and more bearish. After its listing it has never crossed $33 with any conviction, and now even the $28 level seems difficult. So the CEO has to do something special very soon to improve the outlook from here on.
Most stocks in the precious metal sector have rebounded sharply after the recent declines. The rebound can be technical, but it is also possible that the rally may last longer. Seabridge had fallen by more than 30% in one month, and has recovered by 12% in the last few sessions. The volatility is high, and several positive days are required for some stability to emerge. The recent lows need to hold, if tested. In May, the previous lows had held. There was some stability and it seemed that the stocks would become range bound. Now those levels will provide resistance. Seabridge needs to appreciate by 10% from current levels, and spend time there so that the confidence increases. The development stage assets were hit more severely in the recent leg of the fall. Now the big gold producers are available at a discount to book value, and development stage assets like Pershing Gold (PGLC) are available at much below potential values. While volatility and uncertainty may continue, it is possible that the bottom may be around. Jim Rogers had stated that he would start buying gold at $1300, and buy more at $1200. Marc Faber expects a strong rebound in the gold stocks if the gold price increases. It is a fact that gold has corrected significantly from the highs and the mining cost in several mines is below the current price of gold. This situation cannot continue for long and there will be adjustments in prices. The miners will get more conscious of the mining costs and attempt to rationalize. However, it is becoming increasingly important for the gold price to show strength and stability. The reversal has to happen quickly so that the sentiments do not deteriorate. The next few weeks will be crucial in determining the medium term trend.
The impairment losses over the last two years have put additional pressure on the stock in a challenging environment. There has been some rebound in gold stocks over the last few sessions with good volumes. Even Kinross has bounced by more than 10% from the recent low of around $4.5. Many more such positive days are required to improve the sentiments. Till that happens, people will consider the rebound as technical reaction to oversold conditions. Kinross needs to appreciate and stabilize around 10% above the current levels to indicate some positivity. The price target for Kinross and even the gold price forecast have been reduced by several analysts. The revised forecast by Barclays is $1393/ounce which is 6% below the previous outlook of $1483. On the other hand the lows of $4.5 for Kinross need to hold if tested again. $1200 remains a crucial level for gold. Considering the sharp correction in gold over the last couple of years, it is possible that the bottom may be around. Now the gold prices are below the cost of mining in many of the mines. So the supply-demand dynamics may help the sector make some adjustments. Further, the cost of mining may be controlled by gold companies more strictly now. The practice of mining lower, and for lower grades will obviously become even more unviable. So the overall cost of mining may become better. Some investors like Jim Rogers and Marc Faber have relatively more positive views now. Jim Rogers who had predicted this correction several quarters ago, recently stated that he would buy gold if the price reaches $1300 / $1200. Marc Faber had stated that there could be a much stronger rebound in gold mining stocks if gold prices rebound. Kinross is now trading around 56% of book value which is lower than many peers. Hopefully positive sentiments will prevails.
Gold stocks still look weak, but hopefully the heavy bout of selling is over. The last few sessions have seen a rebound with good volumes. Goldcorp has also rebounded sharply by 11%. Technical reasons could be responsible for this, but one can not totally rule out the possibility that the bottom may be near. The reaction indicates that the recent lows could be difficult to breach. Many big investors have become relatively more positive on the prospects of gold. Jim Rogers had stated that he would buy gold around $1300 / $1200. Even George Soros is much more aggressive. The stocks of gold producing companies are trading much below book value. The development stage companies like Pershing Gold (PGLC) and junior miners are trading way below potential values. Marc Faber had stated that a 20% rebound in gold prices could lead to doubling of some specific stocks. On the other hand, Goldman Sachs and the like have lowered their price targets for precious metals. Even those price targets are not much lower than the current prices. One cannot ignore that Gold has corrected significantly over the last couple of years, and at least the price correction could end soon. Time-wise correction may take some more time to be over, so there could be grinding and consolidation even after the price stabilizes. Further, the price of gold is below the mining cost in many mines. This can also provide support due to adjustments based on supply-demand dynamics. The companies are surely trying to lower costs, and if the price increases, the situation may improve faster than expected. The high cost of mining is partly attributable to mining deeper (for lower grades) by the companies when the price of gold was at its peak. Next few weeks will be crucial in determining the short term trend.
The decline in revenue and net income over the last few years has led to some worries in the minds of the investors. The performance in the recent quarters has also been not very encouraging. In the last quarter, the revenues & net income had declined by 2.5% and 26.5% respectively. Over the years, the stock has done well with modest capital appreciation combined with good dividend payments. The dividend yields are extremely high. However, the falling net income has increased the payout ratios consistently. The recent decline in the stock price can be partly attributed to the concerns expressed by many investors. It has fallen by around 6% from its 52 week high of $54. If the market mood improves, surely the stock can get a little boost, but the long term growth will depend on increase in revenues and net income. It has become important that the company reverts on the growth path soon, otherwise it may fall out of favor with some investors. It has promised to deliver on the growth front and is also focusing on cost control. The good pipeline of products at various stages of development / filing provides confidence that the company may be able to deliver on growth. New products are important for the pharmaceutical industry and even smaller companies like PLC Systems (PLCSF) depend on building an IPR portfolio around the innovative new technologies they have created. If it is able to get the growth story going again, then the stock will surely deliver robust capital appreciation to the investors. The dividends will remain an additional reason for owning the stock. The valuations have become even more attractive after the fall as the forward P/E is below 12. High debt is the norm of the industry, but it would be great if it could do something to reduce pressure from that front.
The litigation with Pfizer has been a hangover on the stock for a long time. Now that the settlement has been announced, that pressure may be reduced on the stock. The impairments over the years have affected the net income continuously. Though the revenues have grown from ~$14 billion in 2010 to above $20 billion in 2012, the net income has fallen from $3.33 billion to below $2 billion during the same period. Consequently, the stock has also fallen by nearly 40% from April 2010. The company reported decline in revenues and net income in the last quarter on a yoy basis. The debt is another worry. On March 31 it was at $12.66 billion, while the cash was at $1.39 billion. The low current ratio of around 1.17 also points to tight liquidity position. Now the stock trades at 19 times trailing earnings and 7 times forward earnings (fye 2014). This indicates that the pressure of impairments on net income may reduce over the next few quarters, and there may be expectations of growth. It is important that the revenues and net income increase over the next few quarters. The company has a strategy for growth which is focused on R&D for the generic drug segment and the specialty drug segment. Generic drugs is a major contributor (51% of the revenues), while specialty segment contributes around 40%. Innovation is important in both the segments as it helps in bringing the products faster to the market. Even smaller companies like PLC Systems (PLCSF) survive on innovative products which help them build an IPR portfolio. Focus on new markets is also likely to increase over the next few years. US remains the main market with 51% of the sales coming from there. Europe comes next with 28% contribution. The rest of the world, especially the emerging markets are expected to grow faster, and the company intends to increase presence there.
The performance in the last quarter was nothing special with slight decline in revenues and minor improvement in net income. Over the years also, the revenues and net income have not shown any substantial growth. Consequently, the growth in the stock has also been moderate and it has appreciated by less than 20% on a 52 week basis. It has corrected by 7% from its recent high of around $82. The dividends have not been consistent, and the yield is also around 1% only. Valuations remain reasonably attractive with a trailing P/E of around 17 and a forward P/E of around 12. The debt has shown some declines in last quarter. As on March 31, the debt was around $1.7 billion and cash was around $1.2 billion which indicates reasonably good liquidity position (current ratio of around 4.5). The key to success is good growth with expansion of margins. For this, the company has to bring out innovative products from time to time and also explore new markets. This is the key to success in pharmaceutical / medical devices companies, and even smaller companies like PLC Systems (PLCSF) have been building patents around their innovative proprietary technologies to improve future growth possibilities. Currently Zimmer's main market is US & Europe (82% of the revenues) while Asia Pacific contributes the rest. However, over the years emerging markets may grow faster and expand to increase their contribution to the sales. Many companies are concentrating on specific countries in the emerging markets for bolstering growth. As per a recent SA article, the medical device industry is expected to grow by 6.1% CAGR over the next few years ($302 billion in 2017). If Zimmer can take advantage of that, then it can shake of the sluggishness and improve future growth prospects. Innovative products will remain the key.
The last quarter earnings showed a decline in revenues and increase in net income. On a sequential basis the net income had declined by 22%. However, the guidance was increased, and that perhaps led to positive movement in the stock. The revenue growth is expected to be between 1 to 3%, and the margins are likely to expand from the existing 17% (ttm) to around 20%. The EPS is likely to be in the range of $2.11 to 2.21. Over the years, the stock has shown good growth and has doubled over the past four years. Even in the last one year it is up by 55% from its 52 week low. At present US sales comprises 78% of the total revenue. Further, the Procedural Systems segment (infection prevention, medical specialties and specialty disposables) contributes 36% to the revenues and Medical Systems (dispensing technologies, infusion systems and respiratory technologies) contributes 64%. The future growth in revenues is dependent on how it is able to bring new innovative products / solutions to the market. A smaller medical device company PLC Systems (PLCSF) has got several patents for its innovative product RenalGuard which is used for prevention of contrast induced nephropathy. Carefusion has products in the pipeline, and is also planning to expand in the other markets outside US. Innovation is nothing new for the company, and it is likely to deliver on this front. Growth in the stock is dependent on the fundamental performance. However, the stock is trading at 22 times ttm earnings and 16 times forward earnings. This indicates a little high valuations, but also indicates growth prospects. The debt is reasonable when compared with the overall liquidity position of the company. Debt has increased over the years to $1.45 billion, but the cash is also high at $1.9 billion. If it can speed up growth and expand margins as per plan, the stock can still reward investors with good appreciation over the next few years.
The HPN launch recently is perhaps the first in the series of several such launches over the next few quarters / years. The CEO had indicated that more such launches will happen by the end of the year. What is important is that the product should be able to provide the expected benefits. Once it is widely accepted in a particular indication, it will lead to more research / use in other conditions. NR has potential uses in numerous indications. The other indications / conditions for which NR is being promoted include its use as a nutritional supplement to improve patient condition in metabolic and age-related disorders characterized by defective mitochondrial function. In preliminary studies (mice) it has been found to be useful in prevention of obesity, increased muscle performance, improve energy expenditure and prevention of diabetes. In another study NR was found to reduce the presence of certain Alzheimer's associated toxins in the brain. Increasing NAD+ is known to reduce the muscular degradation associated with Muscular Dystrophy in zebrafish and the therapy can also be beneficial in the treatment of Multiple Sclerosis. NR is considered as the only NAD+ precursor capable of providing NAD+ directly to neurons. Increasing the production of NAD+ can provide protection against axon degeneration caused by mechanical or neurological injury. The HPN product containing NR will be promoted for this purpose. Its collaboration with the Scripps Research Institute will help in further research on the molecule. ChromaDex got $225K small business technology transfer grant from National Science foundation for a joint research with Rensselaer Polytechnic Institute on microbial technique to produce catechins for commercial use, including dietary supplements, food and beverages, and cosmetic products. The project is titled “STTR Phase I: Microbial Production of Catechins”. Catechins form the basis for several antioxidant compounds, and may find place in the company's portfolio in the future.
There is no news on the fantasy sports business after the appointment of the high profile executives. It will be good to have an update on that from time to time. That business has great potential and can change the game for the company if the management does the right things, and fast. The competition in the daily version of fantasy sports will increase very soon, and MGT has to get moving quickly to get into an advantageous position. Exponential growth prospects are attracting big and small players, and the initial movers will have competitive advantage. Surely it must be moving on that front, but regular information will be welcome. The recent news related to the patent infringement lawsuit against casino gaming companies has been extremely positive with fixing of the hearing date. The one related to the allowance of another patent is also extremely important. As stated by many others, patent application number 13/569,837 is a continuation of the application number 12/930,712, filed in Jan 2011, which is a continuation of US patent application number 09/982,437 (the one which resulted in '088 being issued), filed Oct. 18, 2001 (MGT Gaming is the original assignee). So the '088 patent continuation will be granted after MGT completes the formalities with USPTO. This is a positive for MGT because it indicates that the USPTO has reviewed prior art, and hence confirmed the validity of the original patent and expanded the scope. This does help in making its claims in the lawsuit more strong, and also adds to the probability of the defendants becoming more open to the settlement option. These factors should keep the stock active over the next few weeks and months. Let us see how the things progress over the next few months. News flow will drive the stock.
Many analysts have downgraded the stock recently. The consensus rating is hold, and the consensus price target is around $63. It has corrected by 5 odd percent from the highs of $76 a few weeks ago. It had gone through another corrective phase recently, but held crucial levels. The last results helped the stock gain some momentum on the upside, and hence it has remained reasonably strong after that. The revenues had grown by nearly 10%, and the net income had grown by around 30% on a yoy basis. On sequential basis, the performance has not been that good as the revenue growth has slowed down, and the net income is also not growing consistently. Over the longer term the stock performance is decent, with the real appreciation in the stock coming over the last 6-7 months. It has appreciated from ~$31 to ~$76 between December 2012 and June 2013. Even after this rise, the valuations remain okay with a trailing P/E of 14.89 and forward P/E of 12.18. A PEG ratio of 0.75 indicates that there are expectations of good growth from the stock in the medium to long term. The price to sales ratio is 1.48, which is also reasonable. The good part is that it does not have any debt on books, and had about $70 million cash on March 30. Considering this, it looks attractive if looked in isolation. But the key to success is faster growth in revenues and improvement in margins. After such a big rise in the stock, it is important that the financial performance catches up fast. For this, new segments / products need to be explored and molecules researched by other companies need to be kept in mind. Chromadex (CDXC) recently launched Nicotinamide Riboside a new vitamin derivative which is thought to have a lot of potential. USNA should attempt to get new products to bolster growth so that the stock remains strong.
Thanks a lot. I agree with what you say..
The strength in the stock has been exceptional. It has moved strongly over the last one month, when many stocks have corrected with the market. It is now about 70% up from its 52 week low of $4.97. The good results in the last quarter and the expectations of a turnaround are helping the stock to gain momentum. The price already has factored a lot of the positives related to the turnaround, and may need a stronger positive surprise in the next quarter to keep going. However, it is still strong, and thus the trend can be followed. As a matter of caution, one can follow it with a trailing stop loss. The main trigger will be the earnings in a month from now. That will decide the short term future of the stock. If it is able to beat the guidance or post a quarter of profit or improve its performance, it may be able to move to the next zone pretty quickly. The fact that it does not have any debt makes things better. Negative surprises will have a harsher effect so one needs to decide how to play it. In a run up to the event, the stock may remain in a tight range if the overall market does not weaken significantly. For growth it is more dependent on the performance of third party products as they contribute 75% to the revenues. So some new, high growth potential, better margin products from these parties would surely help. Chromadex (CDXC) recently launched Nicotinamide Riboside (NR) which is a vitamin molecule with a lot of potential for its use in numerous indications. Other small and big companies are also launching numerous innovative products in the market which are likely to help in improving growth and margins. Vitacost can select the product from a company which is more in line with its own segment focus / strategy. Next earnings will be extra crucial.