Tag Archives: Alex Planes

Business, Finance, Occupation & Industry

Analysts Debate: Is Starbucks Still a Top Stock?

Leave a comment

By Sean Williams, Travis Hoium, and Alex Planes, The Motley Fool

Filed under:

The Motley Fool has been making successful stock picks for many years, but we don’t always agree on what a great stock looks like. That’s what makes us “motley,” and it’s one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.

In that spirit, we three Fools have banded together to find the market‘s best and worst stocks, which we’ll rate on The Motley Fool’s CAPS system as outperformers or underperformers. We’ll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we’ll be discussing Starbucks , the world’s largest coffee-shop chain.

Starbucks by the numbers
Here’s a quick snapshot of the company’s most important numbers:

Statistic

Result (TTM or Most Recent Available)

Market cap

$44.3 billion

Price/book

8.5

Price/sales

3.2

Forward P/E

22.6

Cash/debt

$2.46 billion / $0.55 billion

Total stores

18,278

Revenue breakdown (mrq)

Americas: $2.84 billion
Channel Development: $0.38 billion
Europe/Middle East/Africa: $0.31 billion
China/Asia Pacific: $0.21 billion

Competitors

Dunkin’ Brands
Green Mountain Coffee Roasters

Sources: Yahoo! Finance, Starbucks 10-Q. mrq = most recent quarter.

Source: Wikimedia commons. 

Sean’s take
There’s not much to say about Starbucks that its first-quarter earnings report in January didn’t already spell out for investors. China is a hot spot of growth, with the China/Asia Pacific region delivering 28% revenue growth, while global same-store sales throughout the remainder of the company remain strong — up 6%, thanks to incredible branding, increase traffic, solid pricing power, and a knack for staying ahead of the innovative curve.

Earlier this week, I broke down Starbucks’ outperformance into three rudimentary building blocks. I saw the company first as an innovator that remodeled and refreshed its stores to make them more inviting and reworked its food line to appeal to healthier eaters.

Next, I envisioned Starbucks as an emulator that saw a concept from another vendor and ran with it. This is what prompted Starbucks to develop its own single-serve brewing and espresso machine known as the Verismo to take on Green Mountain‘s dominant Keurig system, and this is also what drove it to emulate Whole Foods Market by striking deals with local and organic growers to bring more nutritious food choices and drinks into its stores.

Finally, I saw the collaborative side of Starbucks that keeps its friends close and its enemies closer. When Dunkin’ Brands formed a strategic partnership with Green Mountain in February 2011, Starbucks followed suit just weeks later with a partnership of its own with Green Mountain.

Click here if you’d like to read a more thorough analysis of my thoughts on Starbucks, but the simple answer is that yes, it’s a buy, even now. Starbucks is a dominant force in coffee that refuses to be stopped, and there is plenty of room for

From: http://www.dailyfinance.com/2013/04/13/analysts-debate-is-starbucks-still-a-top-stock/

Business, Finance, Occupation & Industry

This Is the Real Danger of the Irrational Exuberance Surrounding Bitcoins

Leave a comment

By Sean Williams, The Motley Fool

Tom Coburn Official GOP senator would broaden gun checks

Filed under:

If you’re anything of a long-term investor, someone who’s studied economics, or simply a fan of finance, you’ve probably looked on with disdain as the electronic currency known as Bitcoins has exploded from just $20 per fictitious token to a high of $266 in less than two months.

Source: Casascius, wikimedia.commons 

The currency, if it can even be called that, was described in good detail by my colleague Alex Planes earlier this week. Its value is derived not from any sort of monetary backing — no government or monetary body recognizes a Bitcoin as an acceptable form of currency — but from the acceptance of other retailers and individuals who are willing to assign a monetary value to a Bitcoin and use that figure to exchange goods and services. Its value is also derived from its designed scarcity — there are only a fixed amount of bitcoins to go around.

As you might have assumed, as someone with a penchant for thinking long-term and having studied economics in college, I think there’s a clear and present danger investing in something that essentially doesn’t exist beyond cyberspace. However, the truly scary part of Bitcoins isn’t that they aren’t backed by a government entity, but is ingrained in the fact that it’s spawning a new generation of emotional and irrational investors who will get the completely wrong impression of how “investing” works.

History tends to repeat itself
You may have come across the phrase that history tends to repeat itself; I believe this is a perfect case in point to describe the trading action in Bitcoins over the past six months.

In 1999 you could throw a dart at the newspaper, purchase the stock your dart landed on, and probably have come out a winner. Earnings, cash flow, and valuation were all placed on the back burner as the emergence of the Internet as a commerce medium was putting all of those “archaic” investment tools back in the box. The technology-driven Nasdaq Composite would eventually cross 5,000, and both Cisco Systems and Microsoft would top $500 billion in market value. Near their peaks, Cisco traded for around 120 times earnings, while Microsoft was valued at a multiple of 55. It was truly a time of emotional and irrational investing, and Wall Street encouraged it just as much as speculative traders promoted it.

This week, I came across an article from the Silicon Valley Business Journal dated March 19, 2000, just nine days after the Nasdaq’s all-time record close. In that article, it’s stated that 37 investment banks at the time had “strong buy” or “buy” rating on Cisco without a single “sell” or even “hold” rating. Furthermore, George Kelly, a Wall Street analyst who was working for Morgan Stanley Dean Witter at the time and was a player in bringing Cisco public in 1990, was quoted as saying in his defense of Cisco’s enormous P/E multiple: “A

From: http://www.dailyfinance.com/2013/04/13/this-is-the-real-danger-of-the-irrational-exuberan/

Business, Finance, Occupation & Industry

America's 9th Best CEO Will Give You an Investing Edge

Leave a comment

By Brian Stoffel, The Motley Fool

Filed under:

Once you get the hang of it, it’s pretty easy to dissect balance sheets, income, and cash flow statements. This is the first step in getting your feet wet in the investment world.

But it doesn’t stop there. If we were to base investing decisions solely on what we read in these statements, that would be akin to picking a significant other based solely on their Facebook profile — to many, it just doesn’t make sense to avoid real-life interaction.

Investigating these “soft” aspects of a company are important for investors. And although we can’t capture all of the intangibles of a company in one article, Glassdoor.com — a website that collects employee sentiment for companies across the world — recently came out with a list that could help: the Top CEOs of 2013.

Over the past few days, I’ve covered CEOs 25 through 10. Today, I’m going to introduce you to the company with the 9th highest-rated CEO, give you some background on the company, and at the end, I’ll offer up access to a special free report that covers the biggest names in tech.

Citrix Systems
In an interesting twist, both the No. 10 and No. 9 CEOs are both leaders for the cloud computing revolution. Last week, I detailed how Marc Beinoff, CEO of salesforce.com and 10th rated CEO for 2013, was one of the earliest pioneers of cloud computing and Software-as-a-Service, or SaaS.

If the concept of “the cloud” is somewhat foreign to you, don’t be embarrassed; when I first heard of the the cloud years ago, I though it had to do with the things floating through the sky. Foolish colleague Alex Planes wrote a great primer on the cloud that’s worth reading here. 

Whereas Salesforce focuses on providing the platform for companies to use the cloud, Citrix provides the technology that helps the cloud to function. Today, we’ll be focusing on Citrix CEO Mark Templeton.

Templeton arrived at Citrix in 1995 and has been CEO since 2001. Under his watch, Citrix has been able to grow revenue by a steady 15%, and earnings by 13%, per year.

CTXS Revenue TTM data by YCharts.

Leadership as a differentiator
Citrix certainly goes up against some big competition in an effort to make the cloud faster and more efficient. Cisco and VMware are in the same industry and have market capitalizations exponentially higher than Citrix.

Cisco itself is worth over $100 billion, and though VMware is a much more modest $34 billion, 80% of the company is owned by EMC , which sports a market cap of $50 billion. I throw these numbers at you to demonstrate that Citrix, sitting at $13 billion, is far smaller.

However, that doesn’t mean the company isn’t performing well within its virtualization niche. VMware recently had to hold a strategy day to make it clear it wasn’t being taken to school by Citrix. Citrix has been stealing market …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The First Cracks Appear in the Dow's Monster Bull Market

Leave a comment

By Alex Planes, The Motley Fool

Filed under:

On this day in economic and financial history…

The Dow Jones Industrial Average was six months away from an all-time high that wouldn’t be matched again for a generation when the trading of Mar. 26, 1929 revealed a dangerous frothiness in the market. Headlines and subheaders in The New York Times read: “Stocks Crash then Rally in 8,246,740-Share Day,” “Market Sets New Record,” “Stocks Dumped as Loan Rate Mounts, Sending Wide List Down,” “300 Issues at Year’s Low,” and “$13,874,000 Bond Sales Also Biggest for 1929.” For all this volatility, in what was then the most active day in exchange history, the Dow ended up a single point lower than its previous close at 296.51.

The day’s record volume, 1.3 million shares higher than the old record, was a reaction to Federal Reserve warnings that credit issued for market speculation ought to be restricted. This was an evidently sensible policy, as many brokerage firms allowed margins of 25% or lower, even during the worst days of the autumn collapse. However, a junkie can’t quit cold turkey without suffering serious withdrawal, and thousands of levered-up investors were forced into margin calls. The Times wrote:

Stocks dropped like plummets … with no visible signs of support. Thousands of accounts were wiped out in this violent swing and many thousands of speculators, on their own volition and in a stage bordering panic, committed financial hari-kari. Every brokerage house in New York and throughout the country was jammed to the doors with excited customers.

The primitive tickers of the day were not equipped to handle such immense volume, and closing prices from 3 p.m. EDT were not printed out until after 5 p.m. EDT. As much as $400 million in brokers’ loans was estimated to be lost over the previous week’s trading, and a common refrain on Wall Street was “The back of the bull market has been broken.”

It was not quite finished, but the great rise of the Roaring ’20s was nearing its end. The Dow had only 29% more to rise before it peaked in early September of 1929. After the crash was through, it would take a quarter of a century — until 1953 — for the Dow to reach the closing price of March 26, 1929.

If you’re looking for some long-term investing ideas that won’t collapse in a market downturn, you should check out The Motley Fool’s brand-new special report “The 3 Dow Stocks Dividend Investors Need.” It’s absolutely free, so simply click here now and get your copy today.

The article The First Cracks Appear in the Dow’s Monster Bull Market originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Analysts Debate: Is Tesla Motors a Top Stock?

Leave a comment

By Travis Hoium, Sean Williams, and Alex Planes, The Motley Fool

F Total Return Price Chart

Filed under:

The Motley Fool has been making successful stock picks for many years, but we don’t always agree on what a great stock looks like. That’s what makes us “motley,” and it’s one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.

In that spirit, we three Fools have banded together to find the market‘s best and worst stocks, which we’ll rate on The Motley Fool’s CAPS system as outperformers or underperformers. We’ll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we’ll be discussing Tesla Motors , the leading electric vehicle maker.

Tesla Motors by the numbers
Here’s a quick snapshot of the company’s most important numbers:

Statistic

Result (TTM or Most Recent Available)

Market Cap

$4.5 billion

Forward P/E

30.1

Revenue

$413.3 million

Gross margin

7.3%

Net income

($396.2 million)

Cash

$201.9 million

Long-term debt

$452.3 million

Vehicles

Model S: 20,000 annual production rate, 15,000 reservations

Model X: Scheduled for delivery in early 2014

Key competitors

Ford

General Motors

Honda

Nissan

BMW

Sources: Yahoo! Finance and company earnings release.

Travis’ take
Historically, auto companies have been a terrible investment. General Motors went bankrupt a few years ago, so did Chrysler, and even Ford hasn’t outperformed the S&P 500 long term.

Source: F Total Return Price data by YCharts.

When you’re in a capital-intensive business with union workers it’s hard to alter your cost structure when the economy falters or consumer tendencies change. So, I come into any auto debate with a skeptical eye.

What Tesla brings vs. its larger competitors is a whole new look at the auto world. The company is building nothing but electric vehicles, it doesn’t have legacy costs to worry about, and it’s building its own dealer network. It’s also making no qualms about going after the high-end consumer. Instead of trying to build an electric vehicle for the masses, like GM, Honda, and Nissan did, it went after affluent consumers who wanted an electric vehicle with all the perks of a BMW. This year’s Motor Trend Car of the Year award validated all of those efforts.

On the financial side, Tesla is seeing some major progress. Revenue for the fourth quarter jumped 500% from the third quarter as production ramped up. Production run rate hit 20,000 annually by the end of the year and the result is an expected profit in the first quarter of this year and will be near breakeven on operational cash flow.  

The future is even brighter given the company’s pipeline. Toyota is buying powertrains for the RAV4 EV and the company is progressing on its Mercedes-Benz B-Class EV program. The Model X, a crossover vehicle, will begin production in late 2013, bringing more scale to Tesla’s manufacturing. …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Analysts Debate: Can J.C. Penney Become a Top Stock Once Again?

Leave a comment

By Sean Williams, Travis Hoium, and Alex Planes, The Motley Fool

JCP Revenue TTM Chart

Filed under:

The Motley Fool has been making successful stock picks for many years, but we don’t always agree on what a great stock looks like. That’s what makes us “motley,” and it’s one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.

In that spirit, we three Fools have banded together to find the market‘s best and worst stocks, which we’ll rate on The Motley Fool’s CAPS system as outperformers or underperformers. We’ll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we’ll be discussing J.C. Penney , one of the oldest and most well-known apparel retailers in the U.S.

J.C. Penney by the numbers
Here’s a quick snapshot of the company’s most important numbers:

Metric

Result (TTM or most recent available)

Market cap

$3.28 billion

Revenue

$12.98 billion

Price/book

1

Price/sales

0.3

Price/cash flow

10.9

Forward P/E

N/A

Cash/debt

$930 million/ $2.98 billion

Competitors

Macy’s
Kohl’s
Sears Holdings

Source: Yahoo! Finance, Morningstar. TTM = trailing 12 months. N/A = Earnings are expected to be negative over the next 12 months.

Sean’s take
I don’t have a word to describe just how horrific J.C. Penney’s fourth-quarter results were. It obliterated every imaginable barrier for how bad a company could perform on a year-over-year basis. Total revenue plunged 28.4%, same-store sales fell 31.7%, and direct-to-consumer sales caved 34.4%. Cumulatively for the entire year, Penney’s reported a loss of $985 million. These results have left Penney’s and investors at a crossroads. We know something needs to be done (and quickly), but the question is whether or not management has all the right answers now.

Looking at this from the bulls’ perspective, Penney’s is now as cheap as it’s been relative to sales and book value since the height of the recession. Penney’s is a well-known department store that’s one of the anchor brands often found in malls. In addition, it doesn’t have a novice at the helm. CEO Ron Johnson has a history of success under his belt, having led Target to success in the mid-1990s after he altered the company’s strategy to go after designer brands. Johnson understood early that consumers crave designer brands and moved Target back into relevance. His greatest victory came with the opening of Apple‘s first retail store in 2001; I think we all know how well that turned out.

However, investors couldn’t care less about Johnson’s past successes because his current plans have failed to produce anywhere near the desired results. Johnson attempted to remove sales from Penney’s stores and instead introduced a low everyday pricing strategy. The plan backfired after roughly a year with comparable-store sales nose-diving. Kohl’s saw a blistering January same-store sales rise of 13.3% and Macy’s solid fourth-quarter results …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

These Stocks Missed the Dow's Record Run

Leave a comment

By Dan Caplinger, The Motley Fool

Filed under:

It’s not every day that the Dow Jones Industrials set a new all-time high. For the first time in more than five years, the Dow set a new record, rising more than 125 points to close at 14,254, well above its former closing record of 14,164. With that milestone behind them, investors will now turn their attention to the S&P 500, which is now less than 2% below its closing record high of 1,565.

Today’s rally was broad-based, with only two losing stocks in the Dow. One was Coca-Cola , which fell 0.4%. Fool contributor Alex Planes suggested earlier today that news from rival Dr Pepper Snapple might have sent Coke’s shares lower, but the other issue Coca-Cola faces is simply that with slow growth and defensive characteristics, the stock isn’t a favored place for investors during big bull markets like we’ve seen lately. The other Dow loser was Merck, which fell 0.2%.

Elsewhere, Impax Labs fell more than 25% when an FDA inspection of a California manufacturing facility found a dozen problems, three of which had already been cited in a previous 2011 warning letter. Despite the unquestionable promise of Parkinson’s drug Rytary, Impax needs to get its internal operations in better shape to comply with regulatory requirements and bring the drug through the approval process to market.

Finally, SandRidge Energy dropped 4.5%, with an even bigger 11% decline for its SandRidge Mississippian Trust I . Despite impressive dividend yields, SandRidge’s trusts have fallen short of distribution targets even as production has ramped up, and that’s weighing on the parent entity as well. Still, if rock-bottom prices for natural gas ever recover, SandRidge has positioned itself to post impressive gains in the future.

Coke’s drop today isn’t the first setback investors have faced, as the soft-drink giant faces some new threats to its continued market dominance. We’ve recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are thinking about buying shares in the company, you’ll want to click here now and get started!

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Dan Caplinger”, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3D Systems' Earnings: The Good, the Bad, and the Crazy

Leave a comment

By Daniel Ferry, The Motley Fool

Filed under:

Well, folks, you know you’re dealing with a high-flying growth stock when the company reports 54% sales growth, beats earnings expectations, forecasts 24%-37% sales growth for next year and as much as 38% earnings growth … and the share price tanks. That’s exactly what happened to the decades-old leader in 3-D printing and newly minted media darling 3D Systems when it reported earnings last week. After a blowout fourth quarter and fiscal year, shares plunged as much as 15%. So what happened? And what should investors make of it all? Let’s dig in.

The bear case
Fool contributor Alex Planes makes the case that investors reacted reasonably and negatively to a few numbers in the earnings report. He points out that the projected 2013 growth rates are significantly slower than 2012’s growth rates. Alex also notes that despite growing 54% year-over-year and beating analyst estimates for full-year 2012 revenue, 3D Systems’ fourth-quarter revenue came in 2.2% lower than analyst estimates, at $101.6 million rather than the expected $103.9 million.

Alex attributes slowing growth to 3D Systems’ aggressive strategy of purchasing competitors. In 2012, 3D Systems enjoyed 54% growth but only 22% organic growth. With acquisitions acting as the company’s growth engine, Alex rightfully concludes that there are only so many companies 3D Systems can buy, putting a ceiling on growth prospects.

The bull case
On the other hand, Fool contributor Steve Heller urges investors to be patient, arguing that the long-term thesis for 3-D printing remains intact despite temporarily slowing growth. Three-dimensional printing will be a $6.5 billion industry by 2019, from only $1.7 billion in 2011. That’s a strong and growing market, and Steve argues that 3D Systems is among the best-positioned companies to capitalize on it.

So who’s right? Maybe both. Wall Street would obviously like to see growth rates steady or increasing, rather than dropping, and that could account for a short-term sell off. However, over the week 3D Systems actually made up most of the ground it lost on Monday, closing Friday down only 3%. That indicates that not much about the long-term thesis has changed.

Get while the gettin’s good
It’s true that 3D Systems’ rapid acquisitions policy has fueled growth, but I’m not sure this is a bad thing. One charge frequently lobbed at the big 3D printers, 3D Systems and Stratasys , is that even though the 3-D printing market is growing rapidly, the industry is pretty fragmented and there’s no telling who the eventual winners will be. However, investors looking to capitalize on the broad trend have limited options in getting exposure to this market, so many of them have piled into 3D Systems and Stratasys, pushing their share prices to astronomical heights.

You can look at this as the start of a bubble, but 3D Systems and Stratasys are both using their lofty stock prices to aggressively consolidate the market. Stratasys’ share price propped up an influential merger with major provider …read more
Source: FULL ARTICLE at DailyFinance