IO gets big contract

I own these guys.

They are up 15%+ in the past 2 weeks.

Today they landed a major Indian contract for $60M. To put this in perspective, their total revenue last year was $450M.

It goes back to what I was saying: OPEC is not the only game in town. Countries as well as global oil companies are aggressively looking for oil/gas.

TRID - Blinded by Love?

This was posted by someone who reads this blog

You are in love with this company.
When the options scandal occurred you said no material expense and held on. When they expensed it, you said the matter has been cleared up and now it can rise.
You also thought the CEO was just greedy, not unethical. Well he was kicked out, so I dont think you were correct there.
I think you need to be concerned that maybe their numbers are also not so ethical and those numbers that are giving you $ eyes may be a mirage.I think several resignations/firings means things are not at all right with this company. Dont lose your shirt.

This person is absolutely correct. For almost 9 months I have been in love with TRID and I have lost a lot of money.
I have not ignored the negatives, I simply felt that the positives were too strong.

I am, first and foremost, a follower of fundamentals. Time and time again, I have seen companies surge or collapse because of the underlying health of their business. Sure, there is always room for other variables, but ultimately a stock grows because the company's business is growing.

The model that I have crafted does factor in the other variables. For example, I love Sandisk, but there is no denying that the stock is broken stock. The market sentiment is not with them






Fundamentally, I know that TRID's business isn't just growing, it's surging. But the market sentiment is not there. Very rarely do I make contrarian plays. I can be absolutely correct about a company's prospects and the market was wrong but catches up to me (NTRI, BMHC, CPWR). I can also be 100% correct and the market doesn't care about the rising or crashing fundamentals (WHR, ETH, RSH, NVL, WFMI, for example). That is why I rarely go contrarian: I can be 100% dead-on correct about a company's health but the market takes a while to be rational.

What to do about TRID? If the market were positive about the company, this would be a $50 stock, no question (40 P/E minimum given 90% earnings growth). If the market were neutral, this would be a $30 stock. They lack market support but that doesn't last forever. Solid numbers have a way of waking up Wall Street.
I also note that they tested their $19 low and have re-bounded. Not a strong re-bound, but a re-bound anyway.
It is only a matter of time. Today, Wall Street sees a company that offers unclear earnings history and unclear Executive management. Questions remain. This is exactly why I have been loading up on them: uncertainty will disappear soon and the fundamentals will shine. A new leader will be brought in. The PR spinning and positioning will start up again.

I am waiting and thinking of even buying more to average up.

TRID Testing Lows

TRID fell below $19, that is below it's recent low on Nov 9th.

What is going on? There seem to be 3 events of concern here
1. Options backlash:
The CEO and Chief Accounting Officer are out. The cost of the due diligence is $7M to date. There are lawsuits. Also, and more dire, there has been no earnings statement since March.
To keep things in perspective, their situation is mild compared to others. Even Apple and Whole Foods are under the same options cloud. I remain dismayed that they still can not get their finances cleared up - this is a relatively small company. Perhaps firing the Chief Accountant is a step towards finishing things.

2. MIPS lawsuit. This is noise. It was estimated by Jefferies that the exposure is less than $500K per year.

3. Concerns about future business.
An analyst said that there is a flat panel slowdown. That means sales will fall from a brisk 40% to a still brisk 35%. LCD makers see a 3.4% drop in volume production. Time to panic? Hardly. First of all, GLW still expects to grow 25% for the next year, and that is factoring in price cuts. (GLW makes the actual glass).
Second, the slowdown is from PCs not TVs. Standalone LCD monitor sales grew 16%. Laptop sales 25%. LCD TVs are pushing the growth to 40% this year and 25% next year.
BBY even reported strong TV sales amidst cut-throat competition with Circuit City, Costco, and Walmart.

In short, there is nothing but great news for TRID from the business side. For the last 12 months, sales are ~$210M vs $100M for the previous 12 months. Forward projections are for $350M in sales and $1.35 eps. That would be a 25% growth against company expectations of much higher growth.

All problems stem from the options overhang.

Markets hiccuped today

Today was a non-event but the market and many stocks sagged. Why?
My guess is end of the year profit taking.

The news of the day that mattered (BBY reported strong sales, NUE admitted to steel weakness, and the Fed did not raise rates) were all positive but the market took the news badly.

CONSUMER SPENDING REMAINS STRONG
Best Buy (BBY)'s earnings showed strong sales (up 16% YoY) and equally strong margin pressure (gross margins dropped 1%).
Fortunately, Flat Panel LCD TV sales were incredibly high.

Texas Instruments (TXN) also reported chip sales stumbling. This is partly a cell phone problem and partly rising competition.

The markets sensed potential problems with consumer spending and took it out on chip companies as well as PC companies (Apple got clipped for this and a slowdown in iTunes business).

TRID took a similar tumble, despite heading for a massively powerful quarter. I estimate that this company is now at a 17 P/E and a PEG of 0.35. This is a takeover candidate, especially once they resolve the options bullshit and release earnings for the last 2 quarters.

MATERIALS GET HIT
Nucor (NUE) reported that steel is hurting. I have been saying that there is a steel surplus and it is finally showing up in the numbers. ATI got hit hard (8%), TIE somewhat hard (3%+). This is not, repeat NOT tied to a slowdown in demand but to an aggressive oversupply out of China. China's demand has dropped and it is also exporting its excess, driving down spot prices.

TIE got hit in sympathy - they make Titanium for Boeing whic hhas 8 years of plane demand - but ATI makes steel products.

OTHER MOVEMENTS
ILMN dropped 1.5% from an analyst covering them as HOLD
KSU up a bit
NTRI continued its slide
NUAN up ~7% on 4X the average volume. I think that a takeover is possible.
T up. I knew we should have bought back
UCTT held ground - a good sign.
MVL down 5%

ATW report

I listened to the conference call and it answered my questions.

To re-cap, they beat expectations in sales but missed the earnings. A key issue was the tax rate change: from 13% to 17%.

For forward business, rates are almost doubling. Chevron Thailand, for example, is using them currently for $85K. They will now pay $95K for 8 months and then $150K for 2 years. Another example: India is paying $113K for 3 months and then $133K for 12 months. They are booked up and rates are surging. So I am happy.

DIGE Gets big boost from CDC

http://biz.yahoo.com/prnews/061211/nym066.html?.v=64

To quote the story:
The CDC states that "molecular tests can be used to detect HPV DNA. The only such test that is currently approved by the FDA is Digene's Hybrid Capture® II HPV Test." The Digene® HPV Test is approved in the United States for routine screening of all women age 30 and older, along with the Pap, as well as for follow-up evaluation of women of all ages with inconclusive Pap results.
"In international cross-sectional studies that examined both cytology (Pap testing) and the HPV DNA test, the sensitivity of a single Pap test for identifying CIN 2 or 3 (cervical disease) or cancer ranged from 33 percent to 94 percent, (while) adding the HPV DNA test to conventional cytology increased the sensitivity to 87 percent to 100 percent," the document states. "Women who are HPV DNA negative and cytology negative are at very low risk of having CIN 2 or 3 or for developing it."

To boil it down
1. CDC for the first time acknowledges benefit of HPV test
2. The only approved test is DIGE's

NTRI Getting a Diet - Down ~6%+

NTRI is down almost 6% right now (falling like lead at the opening bell) to $68.
Technically, the resistance should kick in hard at $65, so it isn't yet testing the waters.

There is no news driving this, so I look to the technicals and that's where things get interesting.

NTRI is a trading stock - it moves up and down based on trading momentum and not fundamentals. That spells speculation to me and worse.

A remarkable element in NTRI is the massive short position: 43%. I have never seen a stock have this much negative sentiment. One side effect is that short covering creates an underswell of price pressure pushing up prices as shorts have to keep buying shares to cover their positions. This week is options week, so get ready for something interesting. The stock had run up $10 since the last options week, and it is now giving back a lot of it.