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Business, Finance, Occupation & Industry

CAPS' Weekly Top Stock Idea

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By Dan Dzombak, The Motley Fool

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Each week I cull a top stock idea from the pitches made on CAPS, the Motley Fool‘s 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

Coach

Star Rating

****

Industry

Consumer goods

Market Cap

$13.93 billion

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

Coach investors have had a rough year, with the stock down almost 35% in the past year and down 10.5% year to date after the company missed earnings expectations in January. The company is attempting to reinvent itself as a “lifestyle” brand as it strives to compete with fast-growing competitors Michael Kors , Ralph Lauren , and Tory Burch, which benefit from their famous founding fashion designers. The stock is down as investors are nervous over the company’s transition which will include a new CEO next year. Some investors think the drop is an opportunity, including CAPS All-Star NovaTodd. Last September, NovaTodd picked the stock to outperform the market over the next five years, and just last week, NovaTodd made a pitch for Coach.

Coach Outperform Pick

Pitch Submitted By:

NovaTodd

Member Rating:

84.80

Submitted On:

March 20, 2013

Stock Price at Original Outperform Recommendation:

$53.33

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

This Week’s Pitch:
I bought yesterday at $48.00. I consider this a bargain for a company with such an outstanding track record of efficiency and profitability. ROIC has been consistently north of 40% over the past several years, and checked in at 56% last year; sales per square foot is close to $2,000 and ranks among the very best in the retail sector. Coach has a rock-solid balance sheet with a strong cash position and minimal long-term obligations; in fact, FCF generated last year alone adds up to about 80% of total liabilities on the balance sheet.

The valuation looks good right now: Price/Cash Flow is about 11.5, which is below the industry average of 16 and the company’s own five year average of 15. The shares yield 2.4%, and the current dividend payout is only about 35% of free cash flow. Realistically, the shares could yield north of 4% in five years using the current price and applying a fairly conservative growth estimate to the dividend. The share count has also been in decline over the past few years.

I’m no fashion aficionado, but I think Coach has built a durable brand that will continue to command a premium price for the next several years.

Another fresh idea
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Avoid This Pharma Stock

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By Dan Dzombak, The Motley Fool

Filed under:

Editor’s note: This article is a stock pitch made by a member on CAPS, The Motley Fool’s free investing community. The pitch is published unedited and is the opinion of the CAPS member whose pitch it is, in this case: zzlangerhans.

Each week I cull a top stock idea from the pitches made on CAPS, the Motley Fool‘s 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

AP Pharma

Star Rating (out of 5)

*

Industry

Health care

Market Cap

$177 million

 

AP Pharma Underperform Pick

zzlangerhans

Member Rating

99.66

Submitted On

3/26/2013

Stock Price At Underperform Recommendation

$0.63

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

This Week’s Pitch:

I’ve watched from the sidelines as AP Pharma stock ran and sagged ahead of the APF530 PDUFA, likely the result of a self-fulfilling prophecy of the “run-up” enthusiasts. As always, it is good to be an early adopter of manufactured momentum plays in low float stocks and painful to be late to the party. Getting back to fundamentals, I see AP as a prime candidate for a post-PDUFA decline regardless of outcome. In my mind, the company’s goose was cooked when results of the phase III trial indicated that APF530 was equivalent but not superior to the standard of care Aloxi. The smart money abandoned the stock and the next few years were a blur of CRL, time and resource-consuming studies, and dilution. The penny stock share price masks a startling 193M market cap, the result of a massive dilution last July that suggests the company is already looking ahead to their next act after APF530. Even if approved, APF530 is unlikely to become a significant player in the generic-dominated CINV market.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool‘s free report “3 Stocks That Will Help You Retire Rich” names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Avoid This Pharma Stock originally appeared on Fool.com.

Fool contributor Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

CAPS' Weekly Top Stock Idea: CARBO Ceramics

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By Dan Dzombak, The Motley Fool

Filed under:

Each week I cull a top stock idea from the pitches made on CAPS, the Motley Fool‘s 180,000-member, free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words.

Company

CARBO Ceramics

Star Rating

*****

Industry

Oil & Gas Equipment and Services

Market Cap

$2.22 billion

Outperform Pick Submitted By:

googlespooch

Member Rating:

37.88

Submitted On:

3/18/2013

Stock Price At Outperform Recommendation:

$95.98

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS

This week’s pitch:

Carbo Ceramics makes some of the best proppant in the entire industry. Unlike US Silica’s sand-based proppant and Chinese low-quality sand/ceramic proppant, Carbo Ceramics makes ceramic proppant that is high in quality. In doing so, Carbo Ceramics improves the yields of the companies that it does business with (Halliburton and Schlumberger). This fact has started to greatly improve Carbo Ceramics‘ position with these and other drillers as drillers are starting to realize that Carbo Ceramics can provide them with a greater ROI.

In addition, Carbo Ceramics is in the process of opening a new plant in the Bakken in order to be closer to its customers so that it does not have to deal with shipping its inventory to the Bakken. This should help greatly in reducing logistical costs (which I can imagine are high considering that proppant is dealt with in millions of tons).

It is very important to also consider that, while rig counts are currently depressed, they will not likely stay that way in the long run. Many experts are starting to figure that there will be a large economic boom resulting from the Bakken oil drilling as well as other American drilling. Resulting from this will be increased focus on oil plays and other liquid plays. As anyone will agree, a rising ocean lifts all boats… and Carbo Ceramics is one of those lucky boats.

Making an investment in Carbo Ceramics protects the investor from the commodity prices of oil to some degree since all drillers will need proppant of some kind in order to continue fracking operations. Though rig count may increase or decrease, Carbo’s products will still be needed regardless.

This is why I’m putting Carbo Ceramics as outperform for the long-term.

Another idea
CARBO Ceramics is highly dependent on drilling activity in the U.S., which is currently booming as companies switch from natural gas to drilling for oil. While drilling activity can fluctuate wildly, oil and natural gas needs to be moved from the fields to where it is in demand.

It’s easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and one …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Avoid This Biotech Stock

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By Dan Dzombak, The Motley Fool

Filed under:

Editor’s note: This article is a stock pitch made by a member on CAPS, The Motley Fool’s free investing community. The pitch is published unedited and is the opinion of the CAPS member whose pitch it is, in this case: zzlangerhans.

Each week, I cull a top stock idea from the pitches made on CAPS, the Motley Fool‘s 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

Chelsea Therapeutics

Star Rating (out of 5)

*

Industry

Biotechnology

Market Cap

$128 million

 

Chelsea Therapeutics Underperform Pick

Submitted By

zzlangerhans

Member Rating

99.56

Submitted On

3/12/2013

Stock Price At Underperform Recommendation

$2.00

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

This Week’s Pitch:

Chelsea is definitely the soapiest soap opera of biopharma. It’s virtually impossible to keep track of the multiple trials, the changing endpoints mid-trial, the dubious and equivocal trial results, the company’s nebulous plans for regulatory submissions, and the company’s confusing descriptions of FDA communications regarding their trials and regulatory submissions. The only consistent outcome is that the binary catalysts constantly seem to find the market wrongfooted.

I think once again the market is taking Chelsea in the wrong direction, enthusiastically bidding up the share price on news that the FDA has reversed itself and stated that study 306B has the potential to serve as the basis for a Northera NDA resubmission. Of course, there’s a big difference between serving as the basis for an NDA submission and the basis for an NDA approval. And the market seems to have forgotten that the 306B topline data was actually pretty bad, with no evidence of statistically significant benefit beyond the first week of treatment.

…The FDA has shocked me before, for example by reversing themselves and approving Vanda’s Fanapt a few years ago. But in general I find it wiser to go with the FDA‘s usual approach to this type of weak NDA application rather than to bet on the black swan.

Foolish bottom line
While this CAPS All-Star thinks you should avoid Chelsea Therapeutics, one of our top health care analysts has a stock you won’t want to avoid. Our brand new free report explores the scourge of rising health care costs and identifies a company poised to profit from one of the problem’s eventual solutions. Just click here for free, immediate access.

The article Avoid This Biotech Stock originally appeared on Fool.com.

Fool contributor Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. The Motley Fool has no position in any of the …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

CAPS' Weekly Top Stock Idea: Michael Kors

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By Dan Dzombak, The Motley Fool

Filed under:

Each week I cull a top stock idea from the pitches made on CAPS, The Motley Fool’s 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

Michael Kors Holdings

Star Rating (out of 5)

**

Industry

Apparel Stores

Market Cap

$12.21 billion

Michael Kors Outperform Pick

Submitted by:

TMF1000

Member Rating:

99.76

Submitted On:

2/26/2013

Stock Price at Outperform Recommendation:

$57.57

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

This Week’s Pitch:

KORS was placed on Caps at $57.57. Their growth has been exceptional. They are trading at the low end of their trading range due to their yearly new stock offering which inflates shares outstanding. Even though shares are growing very quickly they are expanding their store base quickly and the money brought in from shares will allow them to do it without taking on debt. Net income is growing fast enough, not to affect shareholders so far.

The present P/E ratio is 33.87 and although that is on the high side of 30, they have grown revenues by over 70% for the last three quarters. I think this one will do quite well in my Caps portfolio. They have no debt and over $405 million in cash.

KORS
June 12, 2012 4Q: 2012 earnings highlights:

  • 4Q revenue was $379.99 million up 58.3% from $240 million
  • Fiscal 2012 revenue was $1.3 billion up 61.8% from $803.34 million
  • Fiscal 2012 revenue per share $6.60 per share
  • 4Q earnings were $0.22 up from $0.10
  • Fiscal 2012 earnings were $0.78 up from $0.40
  • Diluted share count 196.855 million up from 179.2 million
  • Cash flow for the year was 27.1 million down from $52.96 million
  • Cash flow for the year was $27.1 million or $0.14 per share
  • Trading range between June 12, 2012 and August 14, 2012 was $36.81 to $45.20: P/E ratio range was 47.19 to 57.95: PS ratio range was 5.58 to 6.85: Cash flow yield not meaningful

August 14, 2012 1Q: 2013 earnings’ highlights:

  • Revenue was $414.865 million up 70.6% from $243.126 million
  • TTM revenue was $1.47 billion or $7.38 per share
  • Earnings were $0.34 up from $0.13
  • TTM earnings were $0.99
  • Diluted share count 199.39 million
  • Cash flow for the quarter was $41.2 million up from $36.8 million
  • TTM cash flow was $31.5 million or $0.16
  • Trading range between August 14, 2012 and November 13, 2012 was $47.15 to $58.62: P/E ratio range was 47.63 to 59.22: PS ratio range was 6.39 to 7.94 cash flow yield not meaningful

November 13, 2012 2Q: 2013 earnings’ highlights:

  • Revenue was $532.935 million up 74.4% from $305.532 million
  • TTM revenue was $1.7 billion or $8.48 per share
  • Earnings were $0.49 up from $0.22
  • TTM earnings were $1.26
  • Diluted share count 200.192 million
  • Cash flow for six months …read more
    Source: FULL ARTICLE at DailyFinance