Sunday, May 31, 2015

Alexion Pharmaceuticals Inc ALXN Organic Growth Potential Kanuma, Transforce Inc TFI a powerhouse trucking company acquisitions

Alexion Pharmaceuticals (ALXN) is a global leader in the development and commercialization of transformative therapies for patients with rare diseases.  Since taking over Synageva Biopharma (GEVA) the company now operates in more than 50 countries.

Last year at this time Alexion was rumored as a takeover target - today it is the one doing the takeovers !
transport companies, trucking, eculizumab, rare diseases, organic growth stocks, enzyme replacement, mergers, aquisitions, mergers and acquisitions, alexion pharmaceuticals, alxn, market leader, rare, medical, medicine, ecoli, treatment, kanuma, genetic mutations, shareholders, cost savings, soliris,
ALXN experienced lots of organic growth during the past few years and that isn't expected to change with little to no competition (thanks in part to successful takeover bids for rivals Enobia and Synageva Biopharma Corp (GEVA).  Also notable is that the company has high institutional ownership (97%) meaning that many of its shareholders are leading investment firms.

What is clear is this - the company is growing fast and no wonder

  • it owns the patent rights to three of the hottest (and priciest) drugs on the market for rare diseases: Kanuma (treats LAL a life threatening disease caused by genetic mutations leading to liver and other tissue problems), Soliris ($2 billion in revenue last year just from this one drug) and Eculizumab.  Its latest acquisition has eight other product candidates including one relating to enzyme replacement therapy for patients with MPS a genetic metabolic disease - 30 pre clinical programs in total.
  •  recently initiated multinational trial of Eculizumab for prevention of delayed graft function.
  •  is on an acquisitions spree !  and the takeovers are aggressive and that's leading to more successful bids.
  • June 2015 acquires Synageva for $8.4 billion
  • average price target set by the sixteen major equity research groups is $210.07 or 28% higher than the stock is currently trading at.
  • price remains above the most conservative estimate of $173 set by Citigroup.
  • cost savings from acquisitions will allow it to spend more in the future
  • between June 2014 and March 2015 the company's cash and equivalents rose by 50% to $916.81 million with total debt down 40% to $45.5m and long term debt down to zero.
  • only drawback is that there are dividends.

latest financials
-- 1q2015 Alexion revenue of $600.3 million beats estimates ($594.4 million).  Earnings were as expected ($1.28 vs $1.32 est).


Montreal-based Transforce Inc (TSX:TFI) another growth stock

Canada's largest trucking company has grown into one of North America's three largest transport companies.
  • significant growth stateside in just four years (key acquisitions include Dynamex, IE Miller, Concord Transport).
  • May 20, 2015 - acquires US based Hazen Final Mile, a last minute delivery company.
  • takeover of Contrans Group ($580 million, early 2015) makes TransForce a powerhouse in Canada.
  • unlocking value from its waste management business presents unique opportunity for organic growth.

Thursday, April 30, 2015

Increasing Oil Production in Canada Despite Price Plunge oil sands, China Revises Gold Reserves renminbi

Like their Saudi Arabian counterparts Canadian oil producers appear to be concerned with maintaining their share of the market, even at the expense of earnings - At a time of record low realized prices, Canada exported a record 3.11 million barrels of oil in January - 13 per cent more than it did in January of last year, and 80% more than in 2010.
Even with a collapse in oil prices Canadian oil production - driven by activity in the oilsands, is expected to increase by 150,000 bpd this year and by that same amount again next year.  Canadian Association of Petroleum Producers

According to ARC Financial, the number of wells drilled in Western Canada will be down 50% this year as compared to last (5,300 vs 11,222).  Though production keeps rising, companies remain burdened with higher than acceptable costs.
- estimates suggest as many as 30,000 workers have lost jobs in Canada’s oil and gas industry since the downturn began last fall.

china, china imports, yuan, renminbi, renminbi yuan, renminbi exchange, currency swap, currency reserves, foreign exchange, gold reserves, china reserves, china disclosure, africa, china gold, china gold reserves,
Keeping production up when oil prices are down is much easier for Iran and Saudi Arabia to do than it is for their western counterparts
  • low-cost oil reserves in Saudi Arabia vs high cost reserves in Alberta (Alberta oil) and us shale (North Dakota shale)
  • Canada’s reserves may be as massive but they are much more expensive to extract from
  • This appears to have had more of an effect on producers south of the border (where shale exploration has officially stalled) than in Canada .. Canadian companies have huge cash reserves which they are they able to dip into when prices get too low .. and so they are able to fund core projects until new cost cutting measures take effect.

According to the latest quarters as of May 2015 company earnings are way down - earnings losses mount in Canada

Suncor Energy Inc (SU) -  1Q15 $(341) million loss or 24 cents per share vs $1.485 billion or 101 per share in the previous year.
Oil Sands operations production was 440,400 bbls/d in the first quarter of 2015, compared to 389,300 bbls/d in the prior year quarter, primarily due to minimal maintenance activities in the first quarter of 2015. Production highlights included 346,500 bbls/d of SCO due to strong upgrader reliability, and record production of 188,700 bbls/d at Firebag.  Cash operating costs per barrel for Oil Sands operations decreased in the first quarter of 2015 to an average of $28.40 per barrel (bbl), compared to $35.60/bbl in the prior year quarter, due to increased production and lower costs as a result of lower natural gas prices,Suncor's share of Syncrude production of 35,200 bbls/d in the first quarter of 2015 remained comparable to the prior year quarter production of 35,100 bbls/d.

UK has lowered its tax rate on oil profits made in the North Sea ! At suncor this saved the company $406 million (62-> 50%).

Cenovus Energy Inc (CVE) - Oil Sands production is up 20% (to 144,000 bpd) but the company endured a massive $668 million quarterly loss recently attributable to the decline in the realized price of oil and natural gas (-47% -> $37.66; -25%-> $4.47).  In the quarter just prior to this one the loss was $472 million.

Top Producers of Shale in North Dakota (Bakken)

  • Whiting Petroleum Co. (NYSE: WLL) - quarterly production 1.6 million barrels (19% of company production)
  • Continental Resources Inc. (NYSE: CLR) - 127,788 bpd
  • Hess Corp. (NYSE: HES) - 63,000 bpd (85% of company production)
  • Statoil ASA (NYSE: STO) - 50,000 bpd (9% of company production)

China Revises Gold Reserves (October 2015: China reserves)

- First time in four years China says anything about its reserves
- According to Wood Mackenzie China has 30,000 tonnes of gold, more than any other country.
Since the middle of the last decade China has been leading all countries in terms of gold output - very little of that actually leaves the country.. add to that the fact that China imports another 1000 tonnes of the yellow metal through various ports (HK being the largest) and you can start to see the potential it has to accumulate massive reserves.

  • Gold withdrawals from the Shanghai Gold Exchange hit a record high of 620 tonnes in the first three months of 2015. 
  • Private consumption in China is probably not that high meaning at least a portion of that is going to China's central bank.  Current estimates put China's reserves at just over 1000 tonnes, far behind the top four countries which have a combined 16,500 tonnes.

  • According to various sources out of China, the upcoming report will act to bolster China's currency - This gives foreign currency traders (and governments) more confidence in the yuan-renminbi as an alternative to the US dollar.

  • China and Brazil have already signed a $30 billion currency swap agreement.

Tuesday, March 31, 2015

Bearish Signals Make These Diversified Companies Ripe For The Picking, Royal Gold, Vale SA, Magna MGA, Gold Silver Industry

Seabridge Gold (SA) - Where else can you get 40 million ounces of gold and nearly 300 million ounces of silver with molybdenum to boot for only $286 million ? The company has more gold reserves than Russia !

gold stocks, silver stocks, auto industry, magna international, bearish signals, gold industry, silver industry, gold mining, vale sa, royal gold, stable business, diversified companies, less risky, earnings, revenue,
Royal Gold (RGLD) - despite a crash in metal prices net earnings have been relatively stable; first quarterly loss in years occurred last December and at $6.5 million it isn't anything to be concerned about.

  • stable business model
  •  cash equivalents up 200% last two years
  •  current assets up 90%
  •  over the same time frame total debt has barely changed 

-> take note however that unusual expense is up, surpassing $26 million last quarter after being nearly non-existant in previous periods.  watchout for mine writedowns.

Vale SA (VALE) - This company is trading at a 52-week low which is what caught my attention.
- maintains high quality mines around the world - diversified exposure makes it less risky (diversified companies).  Vale is a hortizontally and vertically integrated company meaning that it owns the infrastructure and controls key logistic services used to transport mined materials.

Potash, fertilizers are staples in farming - when basic metals such as nickel and copper aren't performing you can always rely on the sale of material needed to grow food.

Over the last year, Vale (nyse:VALE) is down 58%, compared to only 23% for Rio Tinto (nyse:RIO) and 30% for BHP Billiton (BHP) despite similar circumstances affecting all three companies - don't see why Vale stock should continue to be punished.

Rio Tinto - Mega project Oyu Tolgoi is entering a second developmental phase (first one already reached critical production 733,700 tonnes last year (metal sales +$1.6 billion).

The second phase is worth $6.5b but calls for $4b in project financing for construction.

Safe stock pick of the month : Magna International (nyse:MGA)

Thanks to low oil prices and the cheap Canadian dollar Magna has gained a competitive edge - latest quarterly revenue was up $220 million (+2.4%) despite a 10% decline in vehicle sales.  Net earnings were also up to $509 million quarterly (+11.1%) or $2.44 a share.  on the year the bottom line was even better (per share $6.76->$8.69).

Because of these results, quarterly dividend was upped to 44 cents (16%).  
Take advantage of these results before the company goes through with a planned stock split later next quarter.

Saturday, February 28, 2015

Obama Blocks Keystone Pipeline TRP but What Happens When Oil Prices Increase Recovery in 2016 ? opec higher price

Of the many possible scenarios for the future direction of oil prices the consensus appears to be that they will begin to increase within one and two years up to a price range of between $75-$85, which should hold steady for some time thereafter.  By then, projects that the US supply currently relies on (north dakota/california shale/alberta tar sands) will have lost a lot of their investment thanks to the price crash of 2014-2015;

oil prices, oil prices up, oil price recovery, 2016 oil supply, 2017 oil price, oil demand, oil supply and demand, keystone, keystone xl, keystone pipeline, pipeline to texas, texas refineries, houston economy, obama veto, obama approved, tar sands, alberta, canada, energy independence, padd regions, north america, glut supply, refinery rates, supply demand, wcs, western canadian select, west texas intermediate, wti, crude oil, oil transport safe, oil transport by train, expensive, travel costs, president clinton, clinton, opec estimate, gasoline, gas prices, oil export ban, opec strategy, opec, emissions,

They will require a lot of time to restart - perhaps a year or more. That could mean trouble for US consumers who won't be able to handle the eventual spike in prices, which could last months or even years.  The Keystone pipeline would alleviate much of the supply concerns and don't forget that Canadian oil remains the cheapest available on the market !  WCS is routinely 30%+ cheaper the alternatives West Texas Intermediate WTI and European crude.  Also keep in mind that Canada is home to over half of economically viable oil available to investors.

A 2017 oil price revival
oil price recovery in 2016 ?

According to the International Energy Agency IEA by 2017, the supply demand curve will move significantly in the opposite direction.. this will lead to a rapid rise in US oil output from shale projects : +17% -> 5.2 million barrels per day.

according to key people in the petroleum industry:

..there's "evidence that future production will be curtailed,” chief economist and portfolio manager at Nuveen Asset Management
-- this is already ringing true in Canada where Cenovus Energy has already made two capital spending cuts with heavyweight Husky Energy cutting back as well.

.. OPEC is saying that US gasoline demand will increase 1.17m bpd -> 92.3m bpd next year.

US shale production is being hit hard by the lower price.. in the second half of this year, a lot of marginal barrels will disappear from the market and demand will rise for OPEC.. this allegedly is a result of a decision back in 2014 by OPEC to maintain production levels in spite of the price correction.

Approving Keystone Pipeline Makes Sense

consider the ramifications of NOT having it built AND facing the steep rise in oil price - oil price increase that will happen by 2017

70% of Americans support lifting the present ban on oil exports to Mexico.. among other countries - and this is something the President is currently mulling.  Approving Keystone XL will give America's largest refineries first dibs on 100+ years worth of crude oil reserves (with the best flow through rates) and that makes perfect sense !  even the state of Nebraska, home of the aquifer which environmentalists were initially considering their key to winning the debate, now supports the project after careful consideration convinced even them that the benefits far outweigh any conceivable risks; safeguards include 24 hr a day surveillance, state of the art monitoring/sensor systems, cutting edge pipeline technology - not to mention a new route that puts more spacing between it and the more sensitive areas of the acquifer.

Back in 2012 democratic presidential nominee Hillary Clinton put her support behind it - a future president Clinton will get the keystone pipeline approved !

New Technologies Makes Oil Pipelines Safer (and cheaper) Than Rail For Petroleum Transport

Currently, the Canadian oil that does eventually get down to Houston's oil refineries is coming in on rail cars which makes the end products more expensive to buy.  As illustrated by the October 2014 Lac-M├ęganticQuebec rail disaster, oil-by-rail is not always a safer method of transport.

Saturday, January 31, 2015

Reasons to Buy Gold and Silver in 2015: US Dollar, Currency Wars, Russian Reserves, Central Bank QE

Gold and Silver Market Ripe For Rapid Growth

Though stateside gold prices may appear docile, from a foreigner's perspective precious metal prices are already too high because in much of the rest of the world the key precious metals have become a lot more expensive to purchase thanks to currency wars : the mighty US dollar.

Seventy-five percent of silver production (mine production) happens at gold mines - this means that, when gold production slows down (companies shuttering mines which started happening in the middle of last year) silver output declines.  This keeps the gold silver ratio intact despite the delinking of the two metals at London's commodities bourse.

The core price is set by comex, the commodities exchange in NYC and thus is traded in USD.
The fact that the price of both pcm's has barely increased over the past six months in my opinion makes both ripe for the picking ! 
Elsewhere the strong US dollar is making gold increasingly harder to afford, but that's inflation spurred by changes in local currency rates;  though quantitative easing and changes in interest rates are wreaking havoc on other currencies, the USD already has that factored into its value.. with The Fed at its side nothing aside from a shaking of the Fed's basic policy of money creation can shake its value... or of course a tiring by currency traders of the endless excuses for more QE.

In my opinion however, gold should've gained much more than nothing in US dollar terms.  Demand is still rising especially among those seeking a tangible hedge against inflation, as well as by those transferring money out of equities in response to growing global economic uncertainty, a shrinking middle class. 

The Gold Supply Problem

reasons to buy gold, investing in gold bullion, silver bullion, gold price, silver price, fx rates, foreign currencies, wars, rumors, russia central bank, russia gold, russia, china gold currency, china gold imports, festivals, india gold, switzerland, gold exports, us dollar, dollar index, deliveries, swiss gold, switzerland exports, swiss franc,
Now there's also the inevitable gold supply problem : let's face it, prices crashed last year - and the big producers responded by shuttering mines, big mines that weren't producing at reasonable cash costs.  Restarting those mines doesn't happen overnight - it can take years to complete new shaft reconstruction, bring in the necessary capital investment funding, and in some cases may even involve reapplying for licenses and approvals.  The big gold companies are now worth a lot less making it increasingly difficult for them to get banks to lend them the billions of dollars needed to make the mines work.  Then of course there's the shareholders who need to be convinced that the metal prices won't collapse again.

As of 2014 there is an estimated 24 billion ounces of silver existing in the form of jewelry.  Total historic production of silver is about 52 billion ounces, eighty percent of that mined since the dawn of the twentieth century.  However, much of the 52b oz will never be available to the bullion market due to its historical value (in the form of religious items, museum pieces, non-scrap jewelry).

India Imports Record Amount Of Gold From Switzerland

According to data from November 2014 Indian imports of gold from Switzerland totaled CHF2.9 billion up a whopping 600% versus the previous year; it's not just that month either, in October it was up 280%; January through November gold imports amounted to 457 kilos.

Russia Continues To Add To Gold Reserves
Russia purchased 20.73 tonnes of bullion in December - note also that in December gold prices were up for the first time in five months (+1%).  Makes Russian reserves fifth largest at 1210 tonnes.
Also notable - Ukraine held onto its reserves after selling 16 of 40 tonnes in Oct/Nov. 

Then there's the other central banks who cumulatively only became net buyers of gold since 2010 after 20 years of being net sellers.

Russia is key here - July through September 2014 it accounted for 59% of the 92.8t of net gold purchases by central banks.  Gold comprises just under 11% of Russian reserves up from 8% in 2013.  Those purchases allowed it to leapfrog China (1150 vs 1054).
Gold imports from HK by China were down last year but it was still the second highest on record at 813 tonnes.  Demand for gold should continue to increase into February as a result of Chinese new year festivities.

Don't Bet Against The Canadian Dollar !

I don't consider the current CDN/USD fxrate to be sustainable -  Beginning in 2016 oil prices are forecast to go up possibly by as much as 50% ($45->$65 per barrel).  Also note that Canada's federal government is starting to run a balanced budget while the USA has a severe, structural deficit which ultimately will lead the United States into a situation where it will be forced to run up high payments to foreign bondholders further weakening its long term outlook.

Don't Let Yesterday's Gold Selloff Turn You Off

- gold responds positively to durable goods numbers
- most global currencies are either under pressure (canada, australia, euro) or being deflated (asia) - this strengthens the US dollar in the near term but makes it increasingly vulnerable over the long term
- when the dollar shows any sign of weakness expect a big jump in precious metal prices
- Greek debt bailout 80 out of 240 billion is owed to Germany - If Greece doesn't pay up Germany will undoubtedly rethink its financial obligations to the Eurozone and that weakens Europe, its central bank and its structure.

Wednesday, December 31, 2014

2014 the year of Canadian Technology and Services Stocks CAE Inc, Constellation Software, CSU, OTEX, TSX (aviation training, software, growing companies, acquisitions)

CAE Inc (nyse:CAE) - aviation stocks, aviation training services, aerospace industry, healthcare sector

This year CAE Inc of Montreal became one of the world's largest simulation technology companies.  Its business is arguably the most diversified in the training services sector - at just under 200 locations in over 30 countries the company offers training services for pilots (civil aviation, defence), and manufactures key simulation technology for healthcare and security agencies.  50% of revenue comes from the sale of products (simulators and related technology) with the rest coming from services (aircraft operations training - over 100,000 civil and military personnel).

CAE Inc, constellation software inc, open text corporation, toronto stock exchange, security and defence, aviation stocks, aviation training, aerospace industry, ibm competition, organic growth, revenue growth, acquisitions, b2b services, software companies, nasdaq, market leading software, quarterly growth, dividends, growing companies, services stocks, diversified customers, healthcare sector, US Air Force, healthcare, critical software technology, software technology, tech stocks,


why this stock ?  it's low risk !
Among industry observers CAE enjoys a rock solid reputation.  It's extremely diversified (does not rely on a single market sector or customer), owns unique technology that has quickly become a mainstay in global aerospace training.  Business from healthcare is strong (hospitals and universities).
  • a global leader
  • the leading provider of commercial and helicopter aviation training services worldwide - second leading provider of business aviation services - market leader in key regions of China, India, South America
  • highly exposed to the growing defence and security sector (6% increase in revenue quarter ended September 30, 2014 - thanks to more activity in north amerca, europe and asia).
  • secured new contract to train the US Air Force
  • four consecutive years of revenue growth (2,114.90 2,035.20 1,821.20 1,630.80)
  • four consecutive years of dividend growth (0.22 0.19 0.16 0.15)
  • earnings up 38% last fiscal year (March to March) to $190 million.
1-year  6-months  3-months  1-month
1.2%  (1.4)%  6.8%  (1.2)%

Constellation Software Inc

2014 was a great year for Constellation Software Inc of Toronto (tsx:CSU).  The stock is up 60% for the year, bringing the market capitalization of the company to just under $8 billion and for good reason - in the latest quarter
- revenue is up a hefty 33% to $419 million (acquisitions accounted for all but 4%).
- earnings up 44% to $32 million vs $22m (per share $1.51 vs $1.05).
- adjusted ebitda up 73% to $100 million.
it's not just that last quarter either that has investors gleaming - over the last nine months adjusted ebitda is up 55% to $244 million.  net income up 26% -> $64 million.

what I like about the company 
it manufactures market leading software and has exposure to a number of industries (public and private).  the software it provides is critical making its products invaluable (meaning there are few if any alternatives - makes for more reliable customers).  Annual revenue recently surpassed $1 billion ! and quarterly growth is light years ahead of the competition (over 50%).  For a company with a market value over $7.3 billion it's an amazing feat to record 60% growth in stock price in just one year.
tsx:CSU    stock price change
1-year   6-months 3-months 1-month
 59.48%  27.02%       21.35%    4.19%

Open Text Corporation of Waterloo, Ontario  (b2b services, yahoo) - nasdaq:OTEX

2014 was a wonderful year for Open Text Corporation - It's New Year's Eve and year-to-date the stock up 28% to $58.26 (market cap at $7.2 billion on the nasdaq).  Like other Canadian success stories