00:28 Small-cap picks and pans mentioned in Technology Trader - Barron's
The following names are mentioned positively in Technology Trader: Superior Essex (SPSX), Belden (BDC), Trimble Navigation (TRMB), Powerwave Technologies (PWAV) and Stratex Networks (STXN). Names mantioned negatively include OmniVision Technologies (OVTI), Carrier Access (CACS) and Trident Microsystems (TRID).
00:27 SVI Services Acquisition mentioned positively in The Trader - Barron's (9.90 )
Barron's reports risk averse investors might want to give a careful look to Services Acquisition (SVI), a one-time blank-check vehicle that is acquiring Jamba Juice. With 500 stores that have pre-tax returns of 40% within a couple of years of opening, the co is targeting 20% annual growth in locations. Jaison Blair of Rochdale Research, the only analyst covering SVI, sees operating margins rising to 10% from 5% in a few years. Earnings are slim, just 9 cents a share last year, rising to perhaps 13 cents in 2006. When it agreed to merge the special-purpose acquisition co with Jamba Juice in a $265 mln deal, SVI raised $200 mln in a private financing with hedge funds, priced at $7.50 a share. There are also exchange-listed warrants that create a dilution overhang. And the bear case is that the Jamba concept won't travel well, or can be easily knocked off. The warrants and outstanding shares bring total capitalization to around $750 mln. With $200 mln in cash, the $550 mln capitalization comes to 1.8 times 2006 revenue, not too unreasonable if the growth materializes. The segment concludes by noting that some of the venture-capital investors who sold Jamba to SVI rolled their after-tax profits into SVI shares.
00:24 DRAM stocks mentioned positively in Barron's
Barron's reports prices of DRAMs are firming up and may start jumping early next year when Microsoft (MSFT) rolls out Vista. This could benefit the memory division of Infineon (IFX) and Micron Technology (MU). Capital spending on DRAM plants grew 12% last year, after a 71% rise in '04 - and is expected to decline this year and next. Meanwhile demand has been strong. Bit growth, a measure of market volume, is on track to jump 49% this year. With the advent of Vista, a huge opportunity exists for upgrades. Tom Trill of Samsung Semiconductor estimates on an installed base of 200 mln PCs, memory upgrades could total $17 bln. At least half of that, or $8.5 bln, will be DRAM, Trill figures -- an amount equal to about one-third of last year's industrywide sales. That's why the stocks of some DRAM makers may be ready to jump. Germany's Infineon grabbed the No. 2 spot in the global DRAM market with $1.16 bln of sales in the year's first three months, up nearly 50% from the previous quarter's level. Analysts figure that the co is worth at least 11.50 euros a share, over 30% higher than the recent share price. Infineon plans to take the Qimonda memory unit public by the end of 2006. Additionally, last Morgan Stanley raised its rating on Taiwanese DRAM manufacturers to Attractive. Top picks of the firm include Inotera Memories and Nanya Technology.
00:21 NEM Newmont Mining mentioned positively in Barron's (52.93 )
Barron's reports Newmont Mining's (NEM) failure of late to outperform as it has in the past may spell opportunity. For unless the bottom falls out of the gold market, as Newmont begins this year to bring major new production onstream -- three large, low-cost mines -- margins, which recently have been squeezed, will expand briskly and the stock should follow suit. On that score, in 12 to 18 months, Newmont shares could easily be fetching $75-$80. Newmont President Pierre Lassonde, who has been sharp in forecasting the price of gold, asserts that it will soon begin to climb again. For all of 2006, he sees the metal averaging over $600 an ounce, and he expects it to test its all-time high of $850 within 18 months. Everything -- from the supply-demand picture to this country's soaring trade imbalance -- tells Lassonde that we are at the beginning of a major bull market in gold. He likens the situation to oil and gas stocks a couple of years ago. What has hurt Newmont's shares, as it has gold stocks in general, is soaring costs. Though the price of gold has been rising, until recently, Newmont's costs to mine an ounce of it -- including labor, diesel and electricity outlays -- have been surging even faster. Chief executive Wayne Murdy anticipates that expenses per ounce will increase modestly next year. And, by 2008, when low-cost production from five major new projects kicks in, they will begin to shrink. He also says global supply won't grow in any meaningul way for years even if demand rises. The startup of a 200-megawatt coal-fired power plant that Newmont is building in Nevada. The facility will generate electricity for about three cents per kilowatt hour, Murdy reckons, less than a third the 10 cents Newmont pays now -- which would slice the high cost of mining gold in Nevada by $20-$25 an ounce. Analysts who expect more for gold also expect more for Newmont. Stephen Walker of RBC Capital Markets, for example, pegs the metal at $620 this year and Newmont's earnings at $2.10. Based on 1.8 times net asset value and 17 times expected cash flow, his target for the stock is $76. John Hill of Citigroup looks for $632 gold, puts Newmont's '06 net at $2.11 and expects shares to sell at $75. Finally, investors seem to be ignoring Newmont Capital, with its portfolio of gold, oil, gas and iron ore. The co's stake in the Canadian Oil Sands Trust essentially hedged their need for about three mln barrels of oil at $27/barrel for 50 years. While it never flowed through the income statement, Newmont's stake in the Canadian Oil Sands Trust appreciated $410 mln last year, or 91 cents a share. Those unrealized capital gains amounted to as much as Newmont earned in '05. And its value grew another $200 mln-plus, or 48 cents a share, in Q106.
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