Catching up as we go into new quarterly reports
So much for hammering a bunch of details out quick. It's amazing how life can get in the way of things sometimes (and how I lack discipline others). So the good news is that I have listened to the conference calls I haven't talked about. The bad news is I just haven't talked about them. At this point, I'm not going to go in-depth any more because it's not worth it. I do want to clearly state my thoughts and position, though.
We'll start with Encana Corporation (ECA). As an oil and gas exploration company that's primarily focused on natural gas, it's safe to say the quarter wasn't anything to write home about. They missed expectations, primarily due to the awful Nat gas prices (and they only get worse for Q1). On the good side, they managed to keep costs below guidance and they've also produced some divestitures that should help keep their balance sheet stable until Nat gas prices recover. In addition to the divestitures, they're also reducing Nat gas output wherever they can and increasing exploration and development of liquids-rich resources. Quite a bit late to the game, in my opinion, but they're clearly adjusting to where the money is. At the same time, they have lots of Nat gas that's very valuable and there's an LNG export station they have a 30% stake in that will open up in 2013, so they have potential for good earnings on the horizon. Their cash flow is in good shape and the dividend is all but guaranteed. At 4% today, it seems foolish to sell at this point. Downside risk? Even if the markets as a whole go bad, I don't see this stock dropping past 5% yield, which would be around $16. At this point, I say down side risk is $3 upside potential is $11.
Next up, Broadwind Energy (BWEN). I've dealt with dirty diapers that stunk less than this quarter. There were few things I truly liked about this quarter and as soon as I heard it, I knew the gains that have happened in the stock price were going to disappear. I just didn't feel it was worth selling with where I'm at on this investment. Just as good to let it sit there and consider that a lost cause at this point. Of the good things I did hear, they were the fact that they're quickly getting to a point where wind tower sales aren't their primary income, and that all of their work to reposition themselves appears on track. I find myself wondering if this company is ever going to make a profit, though. Not only that, but the stock price is so low that they'll likely be asking investors to allow a reverse split so the price can stay high enough to stay in the Nasdaq - ouch!. The final good thing I could think of is the fact that they landed some large contracts and seem to be building a reputation with customers as a company they want to work with. It's going to take time to build that out to something meaningful, though. So in a nutshell - peeeeww!!! Stay away from this stink bomb - I wish I did!
Finally, we come to John Deere & Company (DE). As I anticipated, management followed their regular routine of making a good quarter sound bad and the stock took a hit. It's recovered some since then, as is customary, but they face "concerns" because China's GDP is expected to slow down. I've said it before, I'll say it again - Deere's profits are not as much about China as they are about the US! On top of that, all of these high-paid analysts base what's happening off of Deere's anticipated crop production and distribution. Crops are crops, folks, and people have to plant and harvest them no matter if they're corn, beans, cotton, or wheat. And Deere is the best farm equipment maker there is. Crop prices are expected to remain steady at this point, but weather can change that in a matter of days, so that's what there is to keep an eye out for. Deere, themselves, said farmers will have more money this year to spend than last year, and trust me, they'll buy equipment with that money. The "renewal" cycle is still going strong. If DE slips down to 78 or lower again, this is a buy. Potential downside I'd say is $10 - and things would really have to get bad in the market for that to happen, while the upside potential is $20 based on continued growth and current value.
So that's my sum of the market at this time. More to come again some time soon, I hope. Thanks!
We'll start with Encana Corporation (ECA). As an oil and gas exploration company that's primarily focused on natural gas, it's safe to say the quarter wasn't anything to write home about. They missed expectations, primarily due to the awful Nat gas prices (and they only get worse for Q1). On the good side, they managed to keep costs below guidance and they've also produced some divestitures that should help keep their balance sheet stable until Nat gas prices recover. In addition to the divestitures, they're also reducing Nat gas output wherever they can and increasing exploration and development of liquids-rich resources. Quite a bit late to the game, in my opinion, but they're clearly adjusting to where the money is. At the same time, they have lots of Nat gas that's very valuable and there's an LNG export station they have a 30% stake in that will open up in 2013, so they have potential for good earnings on the horizon. Their cash flow is in good shape and the dividend is all but guaranteed. At 4% today, it seems foolish to sell at this point. Downside risk? Even if the markets as a whole go bad, I don't see this stock dropping past 5% yield, which would be around $16. At this point, I say down side risk is $3 upside potential is $11.
Next up, Broadwind Energy (BWEN). I've dealt with dirty diapers that stunk less than this quarter. There were few things I truly liked about this quarter and as soon as I heard it, I knew the gains that have happened in the stock price were going to disappear. I just didn't feel it was worth selling with where I'm at on this investment. Just as good to let it sit there and consider that a lost cause at this point. Of the good things I did hear, they were the fact that they're quickly getting to a point where wind tower sales aren't their primary income, and that all of their work to reposition themselves appears on track. I find myself wondering if this company is ever going to make a profit, though. Not only that, but the stock price is so low that they'll likely be asking investors to allow a reverse split so the price can stay high enough to stay in the Nasdaq - ouch!. The final good thing I could think of is the fact that they landed some large contracts and seem to be building a reputation with customers as a company they want to work with. It's going to take time to build that out to something meaningful, though. So in a nutshell - peeeeww!!! Stay away from this stink bomb - I wish I did!
Finally, we come to John Deere & Company (DE). As I anticipated, management followed their regular routine of making a good quarter sound bad and the stock took a hit. It's recovered some since then, as is customary, but they face "concerns" because China's GDP is expected to slow down. I've said it before, I'll say it again - Deere's profits are not as much about China as they are about the US! On top of that, all of these high-paid analysts base what's happening off of Deere's anticipated crop production and distribution. Crops are crops, folks, and people have to plant and harvest them no matter if they're corn, beans, cotton, or wheat. And Deere is the best farm equipment maker there is. Crop prices are expected to remain steady at this point, but weather can change that in a matter of days, so that's what there is to keep an eye out for. Deere, themselves, said farmers will have more money this year to spend than last year, and trust me, they'll buy equipment with that money. The "renewal" cycle is still going strong. If DE slips down to 78 or lower again, this is a buy. Potential downside I'd say is $10 - and things would really have to get bad in the market for that to happen, while the upside potential is $20 based on continued growth and current value.
So that's my sum of the market at this time. More to come again some time soon, I hope. Thanks!
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