Copyright © Daniel Cullinane CPA.
3 HOT MEDICAL STOCKS
After absolutely rampaging over the last year, the PHLX Semiconductor Sector Index (SOX) corrected 7% since the highs posted in June. While the index has retraced some of the declines since early June, many of the valuations still look stretched. The good news is that some of the other stocks are looking much better, and top analysts on Wall Street are saying that this current pullback may be an outstanding chance for investors to jump in and grab some of the best companies, especially with earnings on the way.
A new Stifel research report makes the case that rather than an imminent cyclical downturn in the industry that forced the selling, overall rotation out may be the main factor in the decline. With industry fundamentals still looking positive, especially in the industrial and automotive sectors, the analysts think investors should buy some of the top companies now. They pound the table on three and like two others after steep declines in share price.
This stock spiked recently and has come back into a good buy range. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
The company recently introduced a highly integrated polyphase analog front end with power quality analysis designed to help extend the health and life of industrial equipment while saving developers significant time and cost over custom solutions. Achieving extremely accurate, high-performance power quality monitoring typically requires customized development, which can be expensive and time-consuming.
The analysts believe that the Linear Technology acquisition, which closed recently, is a big positive. In addition, many on Wall Street expect that corporate management ultimately will exceed its $150 million of targeted synergies. Toss in a very positive recent analysts day, and the signals look strong.
Analog Devices investors receive a 2.24% dividend. The Stifel price target for the stock is $97. The Wall Street consensus target is $95.02. The stock closed Wednesday at $80.37 per share.
Maxim Integrated Products
This company supplies chips to Samsung for the Galaxy line. Maxim Integrated Products Inc. (NASDAQ: MXIM) designs, develops, manufactures and markets various linear and mixed-signal integrated circuits worldwide. The company also provides a range of high-frequency process technologies and capabilities for use in custom designs. It primarily serves automotive, communications and data center, computing, consumer and industrial markets.
This stock has traded down over 10% since early June and could be a great company to own in front of earnings. It has beaten the earnings projections for each of the past six operational quarters, and it is projected to for this quarter as well by some analysts.
Stifel has a $36 price target for the shares, while the consensus target is $35. The stock closed Wednesday at $46.70
This top chip company has been hit very hard and is offering the best entry point in some time. Silicon Laboratories Inc. (NASDAQ: SLAB) is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal integrated circuits. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs’ diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption.
The company recently introduced a new family of high-performance crystal oscillators offering the industry’s lowest jitter frequency-flexible solution. These new crystal oscillators provide best-in-class frequency flexibility and excellent jitter margin for demanding applications including 100G/200G/400G line cards and optical modules, hyperscale data centers, broadband, wireless infrastructure, broadcast video, industrial, test and measurement, and military/aerospace.
Stifel has set its price objective at $82, and the consensus target price is $80.70. The shares closed trading on Wednesday at $69.45.
Inphi and Microsemi
The Stifel analysts also were very positive on two additional companies — Inphi Corp. (NYSE: IPHI) and Microsemi Corp. (NASDAQ: MSCC) — that have seen steep declines in the share prices. They cite very attractive valuations as a reason to buy them now.
Inphi is a strong contender in the data center arena. The company provides high-speed analog and mixed signal semiconductor solutions for the communications, data center and computing markets worldwide. Its end-to-end data transport platform delivers high signal integrity at leading-edge data speeds, addressing performance and bandwidth bottlenecks in networks, from fiber to memory. Inphi has solutions minimize latency in computing environments and enable the roll-out of next-generation communications infrastructure.
Many on Wall Street feel that the battle for dominance in outsourced cloud services between Amazon, Google, Microsoft and others, should continue to drive growth in data center capital expenditures. The analysts feel that Cloud Data Center customers are more likely to embrace Inphi’s exciting 100G products, like the PAM-4 solutions, ColorZ and others.
Inphi shares were down at one point 29% from highs. The Stifel price target is $52, and the posted consensus estimate is $47.30. The stock closed Wednesday at $38.52, up almost 5% on the day.
Microsemi could benefit from continued industrial demand. It offers a comprehensive portfolio of semiconductor and system solutions for communications, defense and security, aerospace and industrial markets. Products include high-performance and radiation-hardened analog mixed-signal integrated circuits; power management products; timing and synchronization devices and precise time solutions, setting the world’s standard for time; voice processing devices; RF solutions; discrete components; security technologies and scalable anti-tamper products; Ethernet solutions; power-over-Ethernet integrated circuits and midspans.
While it hasn’t actually announced a deal, Microsemi is said to still be running a sale process after receiving takeover interest from Skyworks Solutions, according to people familiar with the matter. Microsemi hired Bank of Montreal last year to run a broader auction after Skyworks offered to buy the company, the people said, asking not to be named because the negotiations are private. The process is in the early stages, no deal is imminent and a transaction may not occur.
The $65 Stifel price target compares with the consensus target of $63.09 and the most recent closing share price of $50.21.
The biotech industry has made a splash in 2017, outperforming practically all the broad markets. With this incredible display, it’s no wonder that investor interest in this particular industry has grown, and one analyst sees this continuing even further.
Jefferies is fundamentally positive on the biotech sector, considering that the group has been primarily a laggard and underweight by institutional investors. Not to mention this group is not expensive compared with other subgroups and the market. Also with the biotech and pharma witch-hunt that we saw over the past couple of years firmly in the rear view, it seems that these stocks have a clear runway for growth.
The iShares Nasdaq Biotechnology ETF (NASDAQ: IBB) has been locked in a 15% to 20% trading band ($240 to $300) for more than a year. As a result, the brokerage firm believes that the sector will sustain a breakout move over $300 and continue to grind higher for the year due to:
Health care rotation and reversion from other groups/sectors along with biotech playing catch-up (huge sell-off in 2016 and slow repair in 2017).
Low-expectation set-ups in biotech (beaten down and pretty negative sentiment).
Consensus earnings estimates are beatable for Amgen, Celgene and Vertex.
Shares of this exchange traded fund were last trading at $310.65 on Tuesday, with a 52-week range of $246.71 to $323.45. Over the past 52 weeks, shares are up 14%, while year to date the stock is up 17%.
With such a bright future for the industry, Jefferies issued these calls for its favorite picks in the biotech space:
Acorda Therapeutics Inc. (NASDAQ: ACOR) has a Hold rating with a $22 price target.
Amgen Inc. (NASDAQ: AMGN) has a Buy rating with a $195 price target.
Axovant Sciences Ltd. (NYSE: AXON) has a Buy rating with a $40 price target.
Biogen Inc. (NASDAQ: BIIB) has a Hold rating with a $310 price target.
Celgene Corp. (NASDAQ: CELG) has a Buy rating with a $160 price target.
Esperion Therapeutics Inc. (NASDAQ: ESPR) has a Hold rating with a $55 price target.
FibroGen Inc. (NASDAQ: FGEN) has a Buy rating with a $50 price target.
Gilead Sciences Inc. (NASDAQ: GILD) has a Hold rating with an $80 price target.
Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) has a Buy rating with a $275 price target.
Prothena Corp. PLC (NASDAQ: PRTA) has a Buy rating with a $100 price target
Spark Therapeutics Inc. (NASDAQ: ONCE) has a Buy rating with an $85 price target.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) has a Buy rating with a $155 price target.
JULY NEWSLETTER 3
Daniel Cullinane CPA
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PRICE OF NATURAL GAS DROPS
BUYS TO PACIFIC FOODS
“Spider-Man: Homecoming,’’ the sixth film in the blockbuster’s series, finished first in the weekend box office with a $117 million gross, cementing its place among the biggest movie franchises of all time.
The latest movie in the franchise had the third-largest opening weekend of the year so far, according to Box Office Mojo, and played in 4,348 theaters. The opening currently stands as the second-largest ever for a Spider-Man flick.
The Spider-Man franchise is the ninth-biggest of all time, according to Box Office Mojo, raking in $1.69 billion for six films. The average domestic box office take for a Spider-Man movie is $282.6 million. The first Spider-Man film in 2002, starring Tobey Maguire, did $403.7 million in domestic business.
“Spider-man: Homecoming’’ is focusing its sights on overtaking the Middle Earth movie franchise, which has grossed $1.84 billion thus far.
“Spider-man: Homecoming,’’ released by Sony Pictures and starring Tom Holland, is riding the momentum of critical acclaim and strong viewer approval as evidenced by ratings from Rotten Tomatoes. The movie website gave the film a 93% fresh rating and an audience score of 92%.
24/7 Wall St. reviewed the 39 movie franchises with the highest ticket price inflation-adjusted revenue. All 39 brought in $1 billion or more in ticket sales so far. We considered the highest gross revenue figures adjusted to 2017 dollars for the 186 franchises with data from Box Office Mojo. Movie counts per franchise, highest-grossing films, and individual film-revenue figures also came from Box Office Mojo. Franchises include special editions such as remastered and updated films as well as reissues.
There was never any doubt that it would happen, because it always does. Despite pledges from OPEC countries to lower production, OPEC’s compliance with production cuts fell in June to its lowest levels in six months as several members pumped much more oil than allowed by their supply deal, thus delaying market rebalancing, according to data from the International Energy Agency (IEA). This in turn has pushed the price under the psychological $50 level and has kept it there for a while.
The question for investors is what companies are attractive now given the lower for longer scenario, which could be in place through 2017 and well into 2018 and beyond. In a new research report from J.P. Morgan, while they lower their oil price deck levels for Brent crude for the next two and a half years they do stay very positive on three top large cap picks. All three are rated Overweight at the firm.
This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.
The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some on Wall Street estimate the company will have a compound annual growth rate of over 5% for the next five years.
The company reported solid earnings for the first quarter, and the Jefferies analysts have noted that the Permian Basin remains a key source of capital flexibility, and it is a key issue behind their relative preference for Chevron versus some of the other majors. JPMorgan noted this in its report:
Chevron is positioned to show healthy cash flow improvement with cash flow from operating activities (CFO) ramping (Gorgon/Wheatstone projects and fewer transitory headwinds) and capex coming down. As a result, the company’s sustaining breakeven dividend coverage should go from $55 per barrel in 2017 to $50 per barrel in 2018 and its balance sheet is ~1.6x net debt/CFO at $50/bbl in 2018.
Chevron shareholders receive an outstanding 4.16% dividend. The JPMorgan price target for the stock is $112, and the Wall Street consensus price objective is $119.50. Shares closed Wednesday at $103.89.
This stock may offer investors solid upside potential and the company could start growing the dividends again. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, LNG and natural gas liquids (NGLs) worldwide.
Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects. Many Wall Street analysts feel the company can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, and with visibility on future growth from a sizable position in the Permian.
Conoco has redefined its investment case with the highest free cash leverage to a recovery in oil prices among the big oil plays. Management has addressed key questions around portfolio resilience: maintenance capital expenditures have dropped to $4.5 billion and share buybacks have been prioritized over growth. The report noted:
ConocoPhillips has significantly improved its balance sheet (2018 ~1.7 x net debt/CFO at $50/bbl Brent) and is committed to returning $6 billion via buybacks through 2019 in most realistic pricing scenarios.
Investors receive a 2.45% dividend. JPMorgan has a $48 price target, but the consensus target is much higher at $56.74. Shares closed most recently at $43.24.
Canadian Natural Resources
This top Canadian play is JPMorgan’s top pick, based on a free-cash-flow yield basis. Canadian Natural Resources Ltd. (NYSE: CNQ) acquires, explores for, develops, produces, markets and sells crude oil, natural gas and NGLs. The company operates primarily in Western Canada; the U.K. sector of the North Sea; and Côte d’Ivoire, Gabon and South Africa in offshore Africa.
The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen and synthetic crude oil (SCO). Its midstream assets include three crude oil pipeline systems and a 50% working interest in an 84-megawatt cogeneration plant at Primrose.
JPMorgan feels that the company’s metrics remain among the best in its research universe. The report said:
The company can cover sustaining capital and dividends at $40 per barrel with an improving balance sheet (2018 estimated ~3.1x net debt/CFO at $50 per barrel Brent), levers to pull if required, and a good mix of growth/return of capital.
Shareholders receive a solid 2.9% dividend. The $41 JPMorgan price target compares with the consensus target of $38.02. Shares closed trading on Wednesday at $29.31.
Despite the concerns over the struggles of politicians to craft a new health care plan for the United States, the health care sector, and many of its subsectors, have had an outstanding first half to 2017. That comes as no surprise to some on Wall Street as the sector faced some bitter political rhetoric during the campaign season last year and was clearly out of favor. Medical technology had a second strong quarter in a row, up a stunning 13.2%, versus 5.5% for the S&P 500.
A new report from the medical technology team at RBC warns that the premium in the group has jumped considerably due to the strong performance, and the top companies need to beat guidance and consensus to continue their solid runs. The analysts noted this in their recent report:
While the MedTech index was trading at a 5% discount to S&P 500 at the start of the year, it now trades at a 5% premium, a 10-percentage point swing in the space of six months. The premium peaked in early July 2016, before the second quarter 2016 reporting season started, and then nose-dived in the next six months. MedTech needs support from a strong earnings season to avoid a similar outcome this year.
The RBC analysts do remain very positive on three top companies that they feel have the ability to beat earnings estimates and raise guidance going forward. All three are rated Outperform.
This top medtech company has remained on a slow and steady grind higher over the past five years. Boston Scientific Corp. (NYSE: BSX) develops, manufactures and markets medical devices that are used in interventional cardiology, peripheral interventions, vascular surgery, electrophysiology, neurovascular interventional, oncology, endoscopy, urology, gynecology and neuromodulation.
The analysts noted in their report that the company is a benefactor of the weakening U.S. dollar, and despite the company tapping the brakes on slower revenue growth, they remain positive. The report also said this:
Boston Scientific needs to beat second quarter earnings-per-share guidance and raise full year forecast for the stock to move higher near-term. The company’s shares rose 28.2% in the first half of 2017, and were the third best-performing large-Cap MedTech stock we track. Longer-term, we believe the shares can touch $40 by the end of the decade.
The RBC price target for the stock is set at $31, and the Wall Street consensus price objective is $30.39. The stock closed trading on Monday at $27.56 per share.
This company pioneered the artificial heart valve, and it could be poised for big growth. Edwards Lifesciences Corp. (NYSE: EW) provides products and technologies to treat structural heart disease and critically ill patients worldwide. The company offers transcatheter heart valve therapy products, comprising transcatheter aortic heart valves and their delivery systems for the nonsurgical replacement of heart valves.
The company also provides surgical heart valve therapy products, such as pericardial valves for aortic and mitral replacement, and minimally invasive aortic heart valve system, as well as tissue heart valves and repair products, which are used to replace or repair a patient’s diseased or defective heart valve.
Top Wall Street analysts feel that the company’s acquisition of privately held CardiAQ last year made good sense going forward. CardiAQ has human implants of transcatheter mitrial valves, and Edwards is focused on the mitrial valve opportunity after its very strong success in aortic valves. The company also has had tremendous success with transcatheter valve replacement. Transcatheter heart valve replacements are rapidly gaining favor in the medical community for use in those patients who are deemed unsuited for open heart surgery, and they are a fast growing revenue stream for the company.
The RBC report said about Edwards Lifesciences:
Following a strong first quarter 2017 print, the company narrowed revenue guidance toward the high end and increased earnings-per-share guidance. They now forecast 2017 revenues of $3.2-$3.4 billion, raising the low end of the guidance by $200 million. Non-GAAP EPS guidance is in the range of $3.43 to $3.55. If our assessment of the Trans-catheter Aortic Valve Replacement market is correct, we believe they will raise guidance again after second quarter results. Worldwide revenues of $3.3 billion and EPS of $3.50 will likely be the new lower bounds of updated 2017 guidance. Our revenue and EPS estimates are $3.33 billion and $3.50, while consensus is $3.35 billion and $3.54.
RBC raised its price target to $124. The posted consensus target is $122.39, and the stock closed most recently at $117.53 per share.
ALSO READ: 5 Stocks to Buy for the Rest of 2017 That Benefit From Massive Dollar Weakness
Wall Street has been positive on this huge 2015 merger from the get-go. Zimmer Biomet Holdings Inc. (NYSE: ZBH) is a global leader in musculoskeletal health care. The company designs, manufactures and markets orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, cranio maxillofacial and thoracic products; dental implants; and related surgical products.
While the RBC analysts feel this may be a longer term play, they like it into the earnings and noted in their report:
The stock Currently trades at a ~24% forward P/E discount to its large-cap Medtech peers. While there is still risk of future supply-related hiccups as Zimmer Biomet completes its root cause/action plans and transitions into its action implementation for various form 483 observations, we believe the valuation, which now sits near 10-year lows on a P/E basis, and is compelling enough to assume this risk. We continue to recommend longer-term, value focused investors buy at current levels.
Shareholders of Zimmer Biomet are paid a 0.76% dividend. The $140 RBC price target compares with the consensus target of $133.57. The shares closed on Monday at $127.40
The U.S. Energy Information Administration (EIA) reported Friday morning that U.S. natural gas stocks increased by 72 billion cubic feet for the week ending June 30. Analysts were expecting a storage injection of between 57 billion and 69 billion cubic feet. The five-year average for the week is an injection of 66 billion cubic feet, and last year’s storage injection for the week totaled 39 billion cubic feet. Natural gas inventories rose by 46 billion cubic feet in the week ending June 23.
Natural gas futures for August delivery traded up about 1.2% in advance of the EIA’s report, at around $2.93 per million BTUs, and slipped to around $2.89 shortly thereafter. The highest close for the past five trading days was registered last Thursday and Friday at $3.04. The 52-week range for natural gas is $2.82 to $3.62. One year ago the price for a million BTUs was around $3.12.
Domestic demand for natural gas in the week ahead is expected to be high as hot high pressure systems dominate the western, central and southern United States with highs ranging from the upper 80s to the 100s. The Great Lakes area and the northeastern states will be spared until the middle of next week when the hot temperatures spread to all but small corners in the northwestern and northeastern parts of the country.Stockpiles fell week over week to 9% below last year’s level, but remain 6.9% above the five-year average.
The EIA reported that U.S. working stocks of natural gas totaled about 2.888 trillion cubic feet, around 187 billion cubic feet above the five-year average of 2.701 trillion cubic feet and 285 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.173 trillion cubic feet for the same period a year ago.
Here’s how share prices of the largest U.S. natural gas producers reacted to this latest report:
Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.3%, at $79.89 in a 52-week range of $79.26 to $95.55.
Chesapeake Energy Corp. (NYSE: CHK) traded down about 4.2% to $4.46. The stock’s 52-week range is $4.17 to $8.20.
EOG Resources Inc. (NYSE: EOG) traded down about 1.4% to $87.38. The 52-week range is $78.04 to $109.37.
Also, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 0.5%, at $6.48 in a 52-week range of $6.43 to $9.74.
Campbell Soup Co. (NYSE: CPB) shares did not react much early on Friday despite the company making a sizable acquisition. The American soup giant is looking to add some more organic flavor to its portfolio by buying Pacific Foods for a total of $700 million in cash. In the past Campbell has tried to move into organic foods but was not entirely successful, so the question is whether Campbell can hit the mark on this one.
Pacific Foods was founded in 1987 and is a leading producer of organic broth and soup, which also produces shelf-stable plant-based beverages and other meals and sides. Pacific Foods has a sustained track record of growth, and it generated approximately $218 million in trailing 12 month net sales as of May 31, 2017.
This acquisition will help accelerate Campbell’s efforts to deliver real food and beverages that meet consumers’ changing tastes and preferences. At the same time, it will further Campbell’s efforts to drive innovation in health and well-being to reinvent the center store, while giving the company more access to natural and organic customers and channels.
This is Campbell’s fifth acquisition in five years as the company is looking to expand its organic portfolio to meet a growing market. Looking at its acquisitions over this time, the direction is obviously tied to this trend.
Keep in mind that organic food is a growing trend in the United States, with a total addressable market of over $11 billion, which has grown at a compound annual growth rate of 15.3% over the past four years.
Denise Morrison, Campbell’s president and chief executive, commented:This acquisition is consistent with our Purpose, ‘Real food that matters for life’s moments.’ Pacific is an authentic brand with a loyal consumer following. The acquisition allows us to expand into faster-growing spaces such as organic and functional food.Although $700 million is nothing to sneeze at, it makes up just under 5% of Campbell’s total market cap of $15.7 billion.Shares of Campbell Soup traded up 0.6% at $51.98 Friday morning, with a consensus analyst price target of $57.79 and a 52-week trading range of $51.62 to $67.12.
JEFFERY'S PICKS ON BIOTECH
A run of bad news has lowered the market cap of Tesla Inc. (NASDAQ: TSLA) by 19% since the shares of the electric car maker reached their closing high price for the year on June 23.
On that date, Tesla’s shares closed at $383.45, and its market cap of $62.98 billion exceeded those of combustion-engine rivals Ford and General Motors.
Palo Alto, California-based Tesla was riding high in early June following the news that its 2017 Tesla Model X had been awarded a five-star crash safety ratings in every category from the National Highway Traffic Safety Administration, the first sport utility vehicle to achieve this.
But Tesla’s fortunes have taken a wrong turn since that time. So far this week, the company’s shares are down more than 16% and closed Thursday at $308.83 in trading in New York. Tesla’s market cap was $50.73 billion on Thursday. The shares were regaining some of the losses in premarket trading Friday and were up 1.8%.
This week, Tesla’s Model S missed the top safety rating from the Insurance Institute for Highway Safety (IIHS) in a crucial crash test for one of its models.
The Tesla Model S had earned an “acceptable” rating in the small overlap front test in an earlier appraisal of the vehicle by IIHS, a nonprofit organization funded by auto insurers. It was the only one of five categories in which Tesla failed to receive a “good’’ rating from IIHS. The overlap test simulates the type of crash that occurs when the front driver-side corner of a vehicle hits a tree or utility pole or collides with another vehicle.
Tesla tried to minimize the results. In a statement to CNBC, a Tesla representative alluded to possible subjective motivations by IIHS, while touting the ratings the Model S and Model X received from the National Highway Traffic Safety Administration.
Other doubts about Tesla have emerged in the investment community. Production of its cars was short of the analyst consensus in its most recently released quarter. Goldman Sachs questioned the strength of Tesla’s business model and warned the stock could plunge
BAD NEWS HURTS TESLA
YogaWorks has registered an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering (IPO). The company intends to price its 5.0 million shares in the range of $12 to $14 per share, with an overallotment option for an additional 750,000. At the maximum price, the entire offering is valued up to $80.5 million. The company intends to list its shares on the Nasdaq under the symbol YOGA.
The underwriters for the offering are Cowen, Stephens, Guggenheim Securities, Roth Capital Partners and Imperial Capital.
This is one of the largest and fastest growing providers of high-quality yoga instruction in the United States, with almost 3 million student visits in 2016 and 50 company-owned studios, as well as its internet-based digital media service. YogaWorks is the only national, multi-discipline yoga instruction company, and its brand is present in six geographically dispersed U.S. markets: Los Angeles, Orange County (California), New York City, Northern California, Boston and Baltimore/Washington D.C.
Its teachers taught more than 180,000 classes in its conveniently located studios and attracted more than 225,000 students in 2016. Since 1990, YogaWorks has offered the YogaWorks teacher training program, which it believes is the gold standard within the yoga community and respected across the globe for instructing teachers on how to teach yoga to a broad population of students.
Management believes its YogaWorks teacher training program extends the brand beyond current six markets and that its 11,000 graduates serve as ambassadors of the YogaWorks brand.
The company intends to use the net proceeds from this offering to repay debt and for working capital and general corporate purposes. Ultimately, the firm will have broad discretion over the uses of the net proceeds from this offering and investors will be relying on the judgement of management regarding the specific application of the net proceeds from this offering.
Amazon.com Inc. (NASDAQ: AMZN) could hardly have released more impressive news than it has in the past month. And experts who follow the company could hardly be more enthusiastic. It will expand its fledgling grocery business via the purchase of Whole Foods Market Inc. (NASDAQ: WFM). Amazon claims its major Prime Day sales have done particularly well, especially compared to last year. Its Echo speakers and Alexa digital assistant are considered the leaders in what likely will be a large and lucrative new field of consumer electronics. However, its stock has stopped rising.
Amazon shares trade at $994, against a 52-week range of $1,017 to $710. Its market cap is $476 billion, which makes it the fourth most valuable American publicly traded company. Amazon is expected to expand its presence in e-commerce, where it is the U.S. leader, as well as in consumer electronics and food sales. Its most important growth opportunity is Amazon Web Services, its cloud business, which is the largest in the sector. AWS is rapidly expanding and already profitable.
One reason Amazon shares may have peaked is that all the major U.S. tech-centric company stocks may be overvalued. The members of the FAAMG group — Facebook Inc. (NASDAQ: FB), Amazon, Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ: GOOGL) — have had extraordinary stock run-ups. Consequently, they have valuations that are too high for their sales and earnings growth, critics of their valuations say.
However, the theory of the valuation of the group does not take into account the specific reasons Amazon’s value may have been capped. Although few think it can be flanked by Wal-Mart Stores Inc. (NYSE: WMT), the world’s largest retailer, the primarily brick-and-mortar company has started to spend billions to mount a challenge. Amazon Web Services is being chased by Microsoft, Alphabet and an army of other cloud companies. This may push down the margins of the cloud sector. Amazon’s leadership in streaming media is challenged today by Netflix Inc. (NASDAQ: NFLX). Apple has started to press into the business, as has Google’s YouTube. Content creators such as movie studios and television networks want to take market share from Amazon’s streaming operation. So do cable and telecom companies. The most recent example of this is AT&T Inc.’s (NYSE: T) buyout of mega-content company Time Warner Inc. (NYSE: TWX).
Amazon’s shares may have peaked because of its own success. Many companies want a piece of all, or at least some of, its action
PRICES ARE UP
The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 57 billion cubic feet for the week ending June 30. Analysts surveyed by S&P Global Platts were expecting a storage injection of between 43 billion and 64 billion cubic feet. The five-year average for the week is an injection of 72 billion cubic feet, and last year’s storage injection for the week totaled 61 billion cubic feet. Natural gas inventories rose by 72 billion cubic feet in the week ending June 30.
Natural gas futures for August delivery traded down about 1% in advance of the EIA’s report, at around $2.98 per million BTUs and inched up to around $2.99 shortly thereafter. The highest close for the past five trading days was registered Tuesday at $3.05. The 52-week range for natural gas is $2.82 to $3.62. One year ago the price for a million BTUs was around $3.11.
Domestic demand for natural gas in the week ahead is expected to be high as hot, high pressure systems dominate most of the United States. The Great Lakes area and the northeastern states will be spared until the middle of next week, when the hot temperatures spread across most of the country again. Overall demand will be high to very high, except in the northeastern states.
Stockpiles fell week over week to 8.9% below last year’s level, but they remain 6.2% above the five-year average.
The EIA reported that U.S. working stocks of natural gas totaled about 2.945 trillion cubic feet, around 172 billion cubic feet above the five-year average of 2.773 trillion cubic feet and 289 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.234 trillion cubic feet for the same period a year ago.
Here’s how share prices of the largest U.S. natural gas producers reacted to the latest report:
Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.1%, at $80.95 in a 52-week range of $79.26 to $95.55.
Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.2% to $4.72. The stock’s 52-week range is $4.27 to $8.20.
EOG Resources Inc. (NYSE: EOG) traded up 1% to $91.31. The 52-week range is $78.04 to $109.37.
Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded flat at $6.70, in a 52-week range of $6.33 to $9.74.
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