Posts tagged BA
The market rally was back on today with stocks shooting up faster than Ben Bernanke could chant “quantitative easing” over his bubbling cauldron (though he was heard incanting: “Double, double toil and trouble; Dollar burn, and assets bubble“) and faster than Sofia Vergara‘s son’s popularity on take your mom to school day. That said, with little news and sort of positive earnings results, the strength of the rally was more confusing than AIG’s balance sheet or why people with the last name Wadhams would name their son Dick.
Macro news was light today with mortgage applications falling by 10.5% (though as far as Money McBags knows, 10.5% of 0 is still 0) even with near record low mortgage rates. Refis were down 11% (due to something about not being able to borrow against an asset you no longer have equity in) and purchase mortgage applications were down ~7% (due to something about no one having any fucking jobs). The only other macro news was that Bernanke released his beige book today which was nowhere near as insightful as his little black book where we learned that it takes more than just a strong M2 to get in to Elizabeth Duke’s overnight facility.
The beige book basically showed an economy staler than Money McBags’ writing (and with 1/2 the dick jokes) as the recovery is now continuing on at merely a “modest pace” which was enough to erase any doubts of the upcoming QE2 (and it is not upcoming because it has Peyronie’s disease, but rather because it will occur at the beginning of November). Highlights of the modest growth include 8 of the Fed banks reporting some growth, 2 reporting mixed economies, 1 holding steady, and Atlanta reporting that “shit is still fucked up.”
The only other interesting story today was that according to Bloomberg, the government made an 8% return on the Wall Street bail out which not only beat returns on Treasuries and money market funds over that same time period, but the $25B the government made should be enough to fund the SEC’s tranny porn habit for years to come. That said, the TARP can now be seen as an unmitigated success (unless you also add back the loss from non-financial bailouts such as GM and the fact that the slippery slope of moral hazard for bank risk taking is now not only slipperier than Teflon with it’s coefficent of friction of .04 but sloped steeper than Ashlee Simpson’s new nose). Given that, Money McBags plans to run for Senate under the “Bail Outs Give Us Savings” platform, or BOGUS for short, as bailing out failing companies seems to be the only way the government may get out of debt. It’s a bit counter intuitive, and completely illogical, but with social security benefits soon to be fucked, the government has to do something to raise their returns and TARP II seems to be the best alternative.
Internationally, the Chancellor of the Exchequer George Osborne detailed the deepest budget cuts ever in Britain (though why the ex-chequer’s chancellor would be in charge of that and not the current chequer’s chancellor, is beyond Money McBags). The cuts will eliminate ~500k public sector jobs, add a new levy on banks, and limit the Queen’s Netflix plan to only two movies a month while completely shutting off her membership to the Bang Bus (google at your own peril). The new plan will also cut welfare by 7B euro by capping benefits to unemployed families, curbing payments for housing subsidies and tax credits, and simply rounding up poor people and telling them to get the fuck out.
Earnings news was mostly positive today with WFC reporting a huge Q driven by improved credit, increased revenue from community banking, and sleight of hand. As always, Money McBags believes in bank balance sheets and bank earnings as much as he believes in karma or female friends without benefits because bank assets remain less tangible than the Higgs Boson. And it’s not just Money McBags who feels this way as noted adventure capitalist to the stars Jim Rogers was on CNBC today and said bank stocks are still unattractive because of the uncertainty with their balance sheets. Um, Jim, you know what Money McBags calls uncertainty in bank balance sheets? Wednesday.
In other earnings news, BA flew above analyst guesses and earned $1.12 per share after a loss in the year ago quarter as jet deliveries picked up, YHOO searched for a good Q and came up with more of the same, and MS stumbled by earning only $.05 per share from continuing operations (and Money McBags would love to be part of the team that decides which of their operations should be continuing) vs. analyst guesses of $.15 per share. Also, just about every airline stock flew higher than Icarus (and luckily their wings were made out of metal) as Delta, American, and United all posted positive earnings which came in only four hours late.
In small cap stocks, most companies Money McBags follows had strong days as they tend to have high beta with the market due to their small size and yet high growth profiles. That said, Money McBags finally got around to looking at WGO’s Q and loyal readers will know he is prone to shitting all over this stock as if he’s filming his own scat film. Money McBags’ thesis remains that in a fucking recessionary environment, people are going to be less interested in buying ridiculously expensive completely discretionary products (when there are much cheaper alternatives) than Travis Henry is interested in buying a condom (or a financial planner). That said, they put up another meh quarter and have rebounded faster than Money McBags thought they would, but they are still trading at a valuation that is less attractive than Minnie Driver‘s gunt.
Revenue of $123MM was up 107% in the Q which would seem spanktastic but it is coming off an almost company killing low number and was down sequentially by ~9% which isn’t seasonality because in the sequential Q last year, revenue was up 30%. The company did manage to boost gross margin to 8.5% (ex,. the $750k LIFO adjustment) from ~7.5% and hold their operating costs flattish at ~$6.3MM. The interesting thing to Money McBags (besides Gia Allemand) is that their expensive Class A gas vehicles drove sales and were up a bit sequentially while their cheaper Class C vehicles were down ~33% sequentially, so Money McBags guesses as long as people are going to blow money on something they don’t need, they might as well go all out. Afterall, overspending is the American way.
So the company seems to have reached a stagnant/steady state sales level and earned $.17 but did not pay taxes due to carrying forward losses from 2009. Their Q isn’t out yet so Money McBags isn’t 100% sure how much of a benefit they have left but he thinks that they had ~$6MM last Q and would have used ~$3MM this Q so have about one more Q before they have to pay taxes, but again, Money McBags is pulling that so far out of his ass that there are still whole chunks of undigested food in it. So if we take the $.17 reported EPS, deduct out the 750k positive LIFO adjustment, and tax it at 35%, real run rate earnings are more like ~$.09 per share, and as a reminder, this company is trading at ~$9.50.
So what the fuck do we do with this as their business seems to have leveled off, the economy is not getting better, there is still a strong secondary market for used vehicles, and they have cut every cost they possibly can. Even if we take the best case scenario $.17 non-taxed LIFO infested EPS and annualize it, we get ~$.68 and the company is trading at ~14x that despite a sequential sales decline and backlog down 13% (and yes, Money McBags said backlog, huhuhhuh). Using the taxed EPS number, annualized EPS would be ~$.36 so they are trading at 25x that, which makes this valuation more out of whack than Rachel Uchitel‘s lips. EBITDA was ~$7.5MM so that would put them at a ~$30MM run rate and their EV is ~210MM so they are trading ~7x that which isn’t terribly expensive but one shitty economic Q and margins go back negative so there is still a fuckload of risk for this company.
Money McBags thinks earnings will remain ~$.10 to $.15 because growth has been basically flat for 3Qs so next year maybe they earn $.50 and Money McBags wouldn’t pay more than 10x for that so WGO is still something that is worth shorting. Fuck even if they hit $.60 for the year, is that worth paying 16x which is where the company is now trading?
The market was up today despite the government lowering their forecast of Q2 GDP to 1.6%, down from the 2.4% they fabricated last month and likely up from the lower number they will make up next month in their “hold the shock and hope for no awe strategy.” Growth in the economy has now slowed to the pace of a 150 year old tortoise with MS and a hella bad case of hemorrhoids. Most of the downward revision was caused by government analysts incorrectly assuming that companies added more inventories than they actually did which wasn’t just a result of analysts being bad at their jobs but also being bad at math.
Inventories were originally reported to have grown by $75.7B, but actually only grew by $63.2B as iPhones and ramen noodles flew off the shelves while Gum Job Grannies stocks were not replenished. Some economists think the lower inventory number is a positive since if the economy grows, businesses will have to add workers to ramp up production, but then again some economists didn’t think we were even going to have a housing bubble (cough Art Laffer cough), while others spend their days eating paste, licking windows, and worshipping at the altar of John Maynard Keynes, so who really cares what they say. Sure, if the economy grows inventories will build, even if they were $15B higher that would happen, so the fact that companies held down inventories either means all of their forecasting models are wrong (possible) or real growth isn’t going to come back anytime soon. The good news Money McBags guesses is that economists guessed that the downward revision would be to 1.4% after they shook their Magic Eight Balls and asked if they’d marry Olivia Munn when they grew up, so GDP beating downwardly revised expectations is a positive.
Having a more positive affect on the market was Ben “Bennie B.” Bernanke taking time out from his schvitz at the annual Fed Symposium and Rodeo to address the economy (and Money McBags is told he addressed the economy with a simple “hello” before inviting it back to his room to jiggle its balance sheet a bit). Bennie B. said that the FOMC “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.” He then said those unconventional measures could include shifting the composition of the Fed’s bond portfolio, reducing the rate the Fed pays on bank reserves, or playing the fiddle on top of Capitol Hill while the economy burns, which wouldn’t fix the economy but would soothe his withered nerves.
Bennie B. also opined that “Central bankers alone cannot solve the world’s economic problems,” using the last four years of policy decisions as his case and point. Finally he said that deflation was not a significant risk and that “preconditions for a pickup of growth in 2011 appear to remain in place.”
Now look, Money McBags doesn’t want to drop a turd in everyone’s punchbowl here (unless it’s Gina Lynn‘s punchbowl and it’s not a turd he is dropping), but what the fuck are “preconditions?” That sounds more like BS gobbeldygook than “misremembering,” not having sexual relations, and “hiking the Appalachian Trail.” You know what? Money Mcbags is exhibiting the preconditions for a threesome with Kate Bosworth and Natalie Portman as he knows their names and knows exactly what will fit where, but that sure as fuck doesn’t mean it will happen (though if it does, Money McBags will keep it quiet for all of those involved, you hear that ladies? It’s the promise of discretion). Anyway, the economy is showing some made up “preconditions” for growth a year from now (until it doesn’t) which is about as reassuring as finding out your doctor got his degree from the University of Phoenix, so rally on, market, rally on.
In stock news, INTC cut their Q3 revenue and gross margin forecast, citing weaker consumer pc demand and “preconditions” for growth not being in their forecasting models. The stock traded up today on that bad news and as a result, the company is rumored to be taking guidance down even more just to keep the rally going. In other stock news, BA said their Dreamliner plane will be delayed by several weeks due to the lack of availability of the Rolls Royce engine it uses and continued air congestion causing it to wait on the runway for a gate to open up. Finally, JCG gave shitacular guidance and dropped 7% on a day when even WGO closed up. The company actually had a nice quarter, handily beating analyst guesses by growing top line by 14%, but they lowered full year guidance from $2.45 per share $2.25 to $2.35 per share and gave Q3 guidance of $.55 to $.60 per share which was below the Street’s $.71 EPS guess and a result of weaker spending trends and some fashion missteps such as lumberjack costumes and scratch and sniff jeggings. And last and most certainly least, Dell and HP continue to up their bids for 3Par in an attempt to show the market just how much they believe growth in their business has slowed.
In small cap news, just about everything was up today because unless you missed the memo (which was stapled to the back of the TPS report), the preconditions for growth are here. CTGX and KITD are bouncing off lows while EBIX continues to show strength until they fire their auditors again for the 4th time. Money McBags wanted to get to more of a deep dive on BRLI today but their 10Q was not out yet and he wanted to go over a few more details. The stock isn’t a home run and obviously could run in to some rough patches with people losing their work insurance, medicare dropping prices, or having collections made harder by no one having any money, but personalized medical testing remains a huge trend and the company continues to put up good numbers. The stock isn’t terribly cheap, but even if the economy double dips Nouriel Roubini’s balls in a recession teabag if you will, people are still going to get sick and doctors are still going to want to run more effective tests to limit their liabilities (or cure people, whichever). So if you have some time this weekend, take a look at BRLI as a longterm investment (and take a look at Catherine McNeil as a dong term assessment, and Money McBags has no idea what that means but it rhymes and it is late Friday afternoon, so it is what it is).
The market sold off today as it couldn’t keep ignoring the data and finally had to come to grips with where the bad macro news had touched it. The biggest negative was the Fed’s Beige Book report which failed to titillate the market like either Money McBags’ book report on the Kama Sutra (which he described as both thought provoking and delicious) or Fonzie’s little black book.
In Bernanke’s beige book we found out that economic activity has slowed in some areas and that Federal Reserve Bank President of Cleveland Sandra Painalto doesn’t let you get to second base on the first date (Newsflash Sandy: If you ever want to get out of Cleveland, you’re going to need to loosen up a bit, lower your reserve standards, and give Bennie B. some of that gold you’ve been hoarding). Eight of the twelve regions tracked by the Fed saw growth including New York, Richmond, and Andy Roddick’s pants (he is married to her, you know that right?), while Atlanta and Chicago saw a slowdown, and Cleveland and Kansas City held steady. The Fed cited high unemployment, an ailing housing market, and consumers being more fucked than Lisa Ann in I’m a MILFaholic as reasons for the slower than hoped for recovery.
In other macro news, durable goods orders fell by 1% in June while analysts had guessed they would rise by 1% which makes guesses just an absolute value sign away from being correct which is a fuckload better than usual. Orders for long lasting goods like machinery, metals, and herpes were down the most they have been in almost a year and a half. Even worse, non-defense aircraft orders tumbled 25.6% after falling 30.2% last month as airlines brace for the continuing growth of staycations and poverty.
Finally, mortgage applications fell 4.4% last week but were led by a 5.9% drop in refinancings as rates ticked up 10bps and anyone who still owns a non-foreclosed upon home has pretty much already refinanced it. Surprisingly new home purchase mortgage applications were up 2% but since the majority of those will likely be rejected, that 2% number is more fictitious than the easter bunny, santa claus, or male affectionate lesbians.
In stock news, RIMM jobbed it’s way up today despite the bad taste it has left in investors’ mouths as of late. Rumors are that the company will be launching a new operating system and potentially a new keypad before officially giving up to AAPL and thus becoming the second biggest thing to ever be defeated at Waterloo (fyi, RIMM’s headquarters are in Waterloo, Ontario).
Also, BA nosedived a bit after reporting a strong bottom line but a weak topline which was down 10% from last year. The company did reaffirm guidance which was slightly below analyst guesses but BA promised their new 787 would be more spacious and thus allow more opportunities for flyers to join the mile high club. And finally, Moody’s lowered their ratings on banks BAC, C, and WFC from stable to negative citing lessened government support for banks under new regulations and something about shitty track records which means those banks are going to eventually need that lessened government support. And if any company knows what a poorly run company who sucks at their jobs looks like, it is certainly Moody’s who never saw a huge market collapse it couldn’t misinterpret.
In small cap news, beta sold off as these stocks had run strongly over the past week or so as if they were trying to catch a glimpse of the delightful Melissa Archer and thus it’s not surprising that investors would want to take profits. CTGX reported last night and results were pretty much inline with Money McBags’ expectations. The company grew revenue 21% thanks to both strong staffing and health care services businesses. Health care services is now 27% of revenues and should start driving this business like Nipsey Russell drove all of the housevies crazy on the Hollywood game show circuit in the 1970s. In addition to a solid topline, SG&A was down 120bps, operating margins were up from 3.6% to 4.3%, and EPS went from $.09 to $.12.
The stock sold off on the day though due to the general market taking it in the yingus and lowered full year EPS guidance by CTGX due to a reduction in demand for solutions work from one of their large customers in their energy practice. Excuse me while Money McBags yawns on this one. Full year revenue guidance was increased to $320MM to $328MM from $314MM to $322MM (which is 18% growth) while eps guidance was reduced to $0.45 to $0.51 from $0.47 to $0.55 and although it is down, it is still a 26% increase from 2009. But the point is, Money McBags gives less of a shit about 2010 guidance than he does about Alan Greenspan’s thoughts on the housing, Nassim Taleb’s thoughts on lyrical prose, or Audrina Patridge‘s thoughts on anything other than which hole to enter.
As said frequently in this space, the coming electronic medical records implementations (and they are coming because the government has mandated them, not just because they ran in to Sonya Kraus in the hallway) are going to be huge for CTGX. As the CEO said in the press release: “We believe we are still in the early stages of the significant increases in demand expected for EMR assessments, systems implementation, and development work.”
This Q, EMR was 1/2 of their health care business which was ~$10MM in revenue and means they were working on 13-20 installations at ~$2MM-$3MM a project annually. But the thing is, only ~10% of hosptials have EMR and they are MANDATED by the fucking government to have them at least underway by 2014 so this business should scale faster than a business selling bronzer, or Valtrex, on the Jersey Shore.
Money McBags has gone through his valuation on CTGX here on When Genius Prevailed many times, so feel free to throw it in the search box, but this company is set for strong growth over the next few years so use this sell off as a potential buying opportunity. Obviously the lack of trading volume and the fact that CTGX’s boring staffing business is still ~70% of their revenues is a concern, but as long as EMR is on the way and this company isn’t full of shit about their ability to service that sector as aplombly as Bunny De La Cruz services the ding dong sector, the company should see solid growth.
Stocks were bouncing around today as macro data came out, courts made some rulings, and the Unicorn meat industry took a hit. Consumer spending numbers were reported and shockingly, income grew faster than spending which means that either the numbers are going to be adjusted later, consumers had their credit card lines lowered significantly, or common sense has crept back in to the US consumer after a 30 year Dionysian spending orgy (and Money McBags will vote for 1 or 2 before he votes for 3). Spending was up .2% which beat the median guess, while incomes were up .4%, pushing the savings rate to its highest level in 8 months since back when people were snowed in and couldn’t overconsume.
The bigger news on the day though was a couple of court rulings which brought slightly positive news to the markets. First of all, the Supreme Court decided not to listen to the federal racketeering case against the tobacco industry because it would have interferred with their daily viewing of Judge Judy (and Money McBags is told Justice John Paul Stevens would like to drop his case load onto Judy Sheindlin’s thin docket). The decision is a positive for both the tobacco industry and the health care industry as tobacco companies are now unlikely to face large industry crippling fines and instead will be free to continue bringing cancer to people everywhere while also helping the top line growth of health care companies.
The other big news of the day of which Money McBags could give a fuck about (right up there with the World Cup, General McChrystal’s dismissal, and anything having to do with Miley Cyrus), the Supreme Court upheld the Sarbanes-Oxley law except it allowed the SEC to now fire members of the Public Company Accounting Oversight Board (known better as the acronymly challenged PCAOB). So now the SEC, an institution that was so fuck awful that they promoted the person who ignored Bernie Madoff’s machinations despite evidence gift wrapped for them, and an institution so incompetent that they spent their days investigating tranny porn instead of securities fraud (when we all know the night time is for tranny porn, the day time is for NSFW guessing muffs which thankfully is back up and running and its return has truly made Money McBags understand how Pamela Smart’s family felt when they found her alive), has the ability to fire the members of some board that supposedly does something to track public auditors. Well thank you for that Supreme fucking Court, really. Money McBags is glad you are wasting your time on shit like this instead of abortion, gun control laws, and banning Ray Romano from network TV. But hey, it’s great that the SEC can now fire any of the five board members of PCAOB for any reason and not just incompetence, especially as THERE ARE ONLY 4 CURRENT MEMBERS of the PCOAB board. So hoo-fucking-ray that a board which does absolutely nothing based on the fact that no one has ever heard of them and is not even at a fully staffed level, can now be better regulated. Perhaps if we got our panties out of a bunch and stopped regulating regulators (especially ones as irrelevant as PCOAB) and instead tried to stop fraudulent activity, the economy would be a wee bit less fucked.
Internationally, world leaders are still coming down from the G-20 summit which likely featured as much excitement as a summer theatre production of Pride and Prejudice. Finance leaders seem to have come to an agreement to cut deficits by 2013 yet made it clear the deficit reduction is an “expectation” and not a firm or binding deadline. In a similar vein, Money McBags has agreed to marry Brooke D Williams by 2012 but that is also just an “expectation” and not a firm deadline (he’ll give her until 2095 if she really wants). So basically, all that happened at the G-20 summit is that no one fucked anything new up and everyone agreed to keep the staus quo until the the status quo causes the next major downturn, whew. Not only were fiscal policies less changed than Michael Vick after a prison sentence and rehab, but banks avoided new regulations as policy makers said any regulations won’t be finished until the next G-20 summit in November, will take longer than two years to institute, and will be just as bad as current regulation but in a different way. So now we wait until Basel III for new regulation which will likely be the worst performing sequel since Karate Kid III: The Puberty Years or Speed III: Runaway Segway.
In stock news, tobacco companies were up due to the previously mentioned supreme court ruling and BA dropped 44% before the markets opened in trades that were cancelled and were either the result of a fat finger (as always, known on WGP as the Portia De Rossi) or the fact that the market structure is more broken than John Edwards’ wedding vows. The market continues to ponder circuit breakers to avoid manipulated fluctuations like BA had before hours (even though only 1k shares were traded). The fact that 50% of volume is made by non-fundamental investors should make fixing the market structure a priority for all 1,800 regulatory groups looking in to Wall Street, including the now can be fired board of the PCAOB where four out of five members exist.
In small cap news, ISLE dropped 14% today as they announced their intention of issuing 9MM shares to raise $100MM (or at this rate, $75MM by the time of actual issuance). The shares should lead to ~22% dilution and Money McBags broke the company down after their last Q in which they put together a marginal quarter and yet were still burning cash. The problem with this company is that their balance sheet makes Greece look like a fucking miser and they have run down casinos that need to be upgraded because even though gambling is essentially inelastic, it’s not inelastic in shitty casinos with 1970s carpeting that smell of old men and despair. So ISLE needs more cash to modernize their real estate and yet is already almost as highly levered as a Bernie Madoff fund (and his leverage was $50B to $1). So there is room for this company to fall even more since the drop today didn’t equal the dilution (32MM shares going to 41MM shares so owners now own ~22% less) and thus if you want a short term short trade, what better way to do it than jumping in on a shitty company with bad things happening?
3/4/10 Midafternoon Report: Market to Greece: “Your bonds are the one that I want,” just hope they don’t leave “Tears on My Pillow”
The market is bouncing around today as initial jobless claims were out and they fell by 29k to 469k, almost exactly the 470k number that economists estimated proving the old adage that “even a broken economist is almost right once a decade.” While the drop is positive, it didn’t drop by as much as claims rose in the past two weeks which we were told was the result of “weather,” an “administrative backlog,” and “more people getting laid off than expected, stupid.” Also, pending sales of existing homes fell by 7.6% in January as an extension of the government tax credit for first time home buyers failed to spur sales (and Money McBags went through this before, but any first time buyer thinking about purchasing a house rushed to buy before the tax credit ran out last year and thus extending the tax credit now is like if California had reinstated same sex marriage a month after repealing it. Anyone who wanted to get gay married had already done so, thus the remaining opportunity set was thinner than an aneroxic with food allergies.). All of the data will continue to be lumpy as unemployment still remains higher than River Phoenix at the Viper Room and more stagnant than the writing here at When Genius Prevailed (but give Money McBags a break, 1k words of dick jokes and market analysis a day is more draining than being slowly exsanguinated by baby leeches and more draining (and infinitely less fun) than a 12 hour hummer, but Money McBags digresses). In other macro news factory orders were up 1.7% last month and were slightly below estimates but still positive and driven once again by aircraft sales as people have to fly around the globe for job interviews.
In international news, Greece offered up 5 billion of euro denominated bonds or as antiquities dealers will call them in a mere 2 years, worthless relics. Greece claimed there was actually demand for another 2B euros worth of the bonds, and seeing as how they need to raise 20B euros, their decision to not offer the extra 2B fits right in with their previous budget management. If I need $20, why would I sell you $5 worth of my shit when I could sell you $7 worth of it, I mean it doesn’t take Euclid to fucking figure out the math here (and yes Money McBags understands the interest payments, etc., but we’re talking about a country that needs money like Lindsay Lohan needs a case of Valtrex and a hot shower.)? Meanwhile traders are seeking out the next Greece in Europe claiming that it is only logical another country would be close to collapse as for every Bear Stears there is a Lehman Brothers, for every American Home Mortgage there is a New Century Mortgage, and for every Disney World there is a Kingdom of the Little People. Greek workers remain on strike as they are apparently protesting that the government overpaid them for the past several years. Really a brilliant strategy, right up there with fully clothed strip clubs (and yes I am talking about you Manhattan) and the Segway.
In stock news, retail sales climbed in February from Heidi Montag‘s singing bad to Heidi Montag‘s acting bad (and that is a slight uptick if it isn’t clear). Same store sales were up 4% beating analyst estimates by 1% or so, but that rise was off of a 4.7% drop last year we so shouldn’t lose perspective, like an MC Esher painting. Most interestingly e-commerce sales were up 16% which should bode well for companies like ARTG, AMZN, and Vivid Video. Large cap stocks moving up today include Disney, Coke, and Boeing, all receiving analyst upgrades. Disney was upgraded by Bank of America-Merrill Lynch in anticipation of a strong advertising market, a strong film docket, and unemployment coming down thus making it easier for people to throw away money on a crappy amusement parks just so their kids can get an overpriced picture with a minimum wage worker dressed as Cinderella. A UBS analyst upgraded KO based on the sell-off after they purchased their bottler and after reading When Genius Prevailed on 2/25/10 while UBS also upgraded Boeing because apparently airlines want more planes sooner than later.
In small cap news, RICK continues to drop and is making Money McBags feel emptier than he does after making it rain for an hour at his local Rick’s Cabaret. Kind readers, you all know Money McBags has been in RICK with you for this stimulating ride, and you all know of his $16 price target (which it bounced up to before collapsing like Taryn Thomas’s anus after one too many cavity searches. And yes, read the wikipedia page, it really did), but we all have to remember that when momentum stocks go bad, they really go bad. Given that, and the fact that Money McBags thought their quarter was worse than a Dan Brown novel and their acquisition of VCGH could be a bit of a clusterfuck (and not in the literal sense, which would be good, but in the “oh shit, we paid what for that?” sense), Money McBags may be bailing on this momentarily and happily taking his profits. He will likely sit it out for a day or two, but if it pops up above $15 again, that will likely be his selling floor. In other small cap news, CRTX annonuced their earnings last night and put together a decent Q while maintaining their guidance. Money McBags broke down CRTX a bit in December as a potential big upside company that needed to show some results. Well this Q could be the start of those results as numbers were generally in-line with Curosurf coming in at $8MM in revenues for the 3 months which is a good sign. While their reporting still seems to be a bit lacking (I mean for fucksake, would it kill you to put a table comparing sales of each product and maybe not lump in Spectracef sales with Factive sales since no one gives a fuck about Spectracef?) and their sales of Factive were probably a bit on the low end since they combined with Spectracef for $3.6MM in revenue and Factive should have been around $3MM by itself, this company continues to trade at around 1x estimated sales. The company maintained their guidance of $115MM but their leading drugs continue to face headwinds so they need to be able to show strong sales of Factive and Curosurf. Money McBags has not had a chance to listen to the call, but the quarter didn’t contain any obvious misses and the company is cheap. If you have some gambling money that you’re itching to put into play, this is the kind of company it may be worth doing some work on because if they can maintain a $100MM+ revenue run rate, they should easily trade at 2x-3x that. Plus they have a nice cash balance remaining to continue their acquisition strategy. Not the best company in the world, but cheap with upside.