Offshore drillers like Transocean (RIG), Seadrill (SDRL) and Noble (NE) have gotten pounded this year. Is it time to buy? Well, if not that, at least its time to become less bearish, say the folks at BMO Capital Markets, who upgraded the shares of Transocean, Seadrill, Diamond Offshore (DO), Ensco (ESV), Noble, Rowan (RDC) and Atwood Oceanics (ATW).
Bloomberg
BMO Capital Markets’ Alan Laws and Peyton Mason explain why they see better times ahead of offshore-drilling stocks:
We are upgrading the offshore drillers to Market Perform from Underperform given what we view as a better risk/reward balance over next 6 to 12 months. We believe the stocks largely discount the weakness seen/expected in the industry in 2014/2015 with consensus estimates now reflecting the anticipated level of day rate reductions. Recent fixtures, while likely negotiated in 2013, suggest activity is resuming (albeit slowly), and we expect this to increase as ��learing house��rates are reached for producer cost containment. In other words, the potential for a surprise demand uptick now outweighs already price- in risks of further weakening, in our view. In our view, the largest risk to our upgrade today is being a bit early given what could be a longer drawn-out return to activity. That said we want to be positioned for the technical inflection like the land rigs in fall 2012. Stock downside appears limited with an already negative bias in expectations and ultimately investor fatigue with the thesis. Fundamental valuation metrics (PE and P/BV) also suggest trough levels. We think differentiation (vs. being viewed as one group) is likely to become more pronounced in a bounce, and we prefer ATW and ESV over peers. While other subsectors in Oil Services remain more attractive today, we believe value and contrarian investors should start kicking tires.
Campus Crest Communities, Inc., incorporated on March 1, 2010, is a self-managed, self-administered and vertically-integrated developer, builder, owner and manager of purpose-built student housing properties in the United States. The Company operates in two segments: student housing operations and development, construction and management services. It owns the general partner interest and owns limited partner interests in Campus Crest Communities Operating Partnership, LP (the Operating Partnership). It holds substantially all of its assets and conducts substantially all of its business, through the Operating Partnership. As of December 31, 2010, it owned interests in 27 operating student housing properties containing approximately 5,048 apartment units and 13,580 beds. Twenty-one of its properties, containing approximately 3,920 apartment units and 10,528 beds, are wholly owned. On October 19, 2010, it acquired the remaining interest in Campus Crest at San Marcos, LLC, which owns The Grove at San Marcos, from HSRE. In January 2012, the Company acquired 50.1% interests in The Grove. On December 27, 2013, the Company closed its sale of four wholly owned student housing properties. In January 2014, Campus Crest Communities Inc and Beaumont Partners joint venture partnership acquired the 488-room, 22-story Holiday Inn Midtown in Montreal, Quebec.
As of December 31, 2010, the average occupancy for its 27 properties was approximately 88%. Its properties are primarily located in medium-sized college and university markets. As of December 31, 2010, the Company were party to one joint venture arrangement with HSRE, in which it owns a 49.9% interest.
Student Housing Operations
The Company�� student housing operations are consisted of rental and other service revenues, such as application fees, pet fees and late payment fees. In August 2010, the Company opened three additional properties that were owned by the same real estate venture.
Development, Construc! tion and Management Services
The Company provides development and construction services to unconsolidated joint ventures in which it has an ownership interest. The Company acts as a general contractor on all of its construction projects. In addition to its wholly owned properties, all of which are managed by the Company, it also provides management services to uncombined joint ventures in which, it has an ownership interest.
Advisors' Opinion: - [By Jonas Elmerraji]
2013 is panning out to be a rough year for Campus Crest Communities (CCG) -- shares of the small-cap student housing REIT have slid 12.7% since the calendar flipped over to January. While that sounds bad enough as it is, it's actually 31% underperformance vs. the S&P 500. And a quick glance at the chart makes it pretty clear to see why.
CCG is stuck in a textbook downtrend right now, bouncing between trendline resisatnce to the upside and a parallel support level below. You don't have to be an expert technical analyst to figure out where CCG's high probability price action is from here; it's down. Trendline resistance has acted as a ceiling for shares on the last four tests in 2013 – and with shares hitting their head on that resistance level this week, now's the optimal time to sell (or short) this REIT.
If you're looking for an opportunity to buy CCG, you could be in for a long wait. But the 50-day moving average has been a pretty good proxy for resistance since the start of the summer. I'd recommend waiting for that line to get broken before even thinking about doing anything but selling this stock. Until then, it's toxic.
- [By Lawrence Meyers]
Campus Crest Communities (CCG) operates 33 student housing properties comprising 6,324 apartment units under its ��rove��brand name. It�� a REIT, so it distributes a minimum of 90% of taxable income as a common dividend of roughly 6%, which may even attract other investors. Campus Crest carries $225 million in debt and services it at a rate of about 5%. The company came into its own in 2012, as it reported solid EBITDA of $16.5 million and a profit after debt service and preferred stock payments, which it just started that year.
Top Oil Service Companies To Buy For 2014: Citadel Capital SAE (CCAP)
Citadel Capital SAE is an Egypt-based company engaged in the private equity investment activities. The Company manages an investment portfolio that consist of 19 Opportunity-Specific Funds (OSFs), which controls entities platform distributed across 12 countries in the Middle Eastern and North African markets, and span 14 industrial sector such as energy, cement manufacturing, solid waste management, real estate, mining, agricultural, glass manufacturing, transportation and metallurgy. Its OSFs entities include Asec Holding, Ascom Geology and Mining SAE, Nile Logistics, Rift Valley Railways, Gozour, Wafra, Nopc / Rally Energy Group, Nile Valley Petroleum Ltd, Egyptian Refining Company, Taqua Arabia, GlassWorks and Finance Unlimited, among others. On December 9, 2012, the Company announced that it has sold 100% of its interest in National Petroleum Company Egypt Limited (NPC Egypt), a wholly owned portfolio company, to Sea Dragon Energy Inc.
Advisors' Opinion: - [By Joshi Madhavi]
Charlemagne Capital Limited (CCAP) is an established asset management group in the UK with an exclusively emerging markets focus and bottom-up stock picking process. The business is cyclical with fortunes linked to emerging market performance. The company�� strategy is to grow each category within its broad fund range: mutual funds, hedge funds, specialist funds and institutional products.
Top Oil Service Companies To Buy For 2014: Gardner Denver Inc. (GDI)
Gardner Denver, Inc. designs, manufactures, and markets engineered industrial machinery and related parts and services primarily in North America, Europe, Asia, South America, Africa, and Australia. It operates in two segments, Industrial Products Group and Engineered Products Group. The Industrial Products Group segment offers rotary screw, reciprocating, and sliding vane air and gas compressors; positive displacement, centrifugal, and side channel blowers; and vacuum pumps for use in manufacturing, transportation and general industry, and original equipment manufacturer (OEM) and engineered system applications. This segment also markets and services complementary ancillary products. The Engineered Products Group segment designs, manufactures, markets, and services pumps, compressors, liquid ring vacuum pumps, reciprocating pumps, diaphragm vacuum pumps, water jetting systems, and related aftermarket parts used in oil and natural gas well drilling, servicing, and producti on, as well as in medical and laboratory, and industrial cleaning and maintenance. It also offers liquid ring pumps for various applications, such as water removal, distilling, reacting, flare gas recovery, efficiency improvement, lifting and handling, and filtering, principally in the pulp and paper, industrial manufacturing, petrochemical, and power industries. In addition, this segment designs, manufactures, markets, and services other fluid transfer components and equipment, including loading arms, swivel joints, storage tank equipment, dry- break couplers, and tank truck systems for the chemical, petroleum, and food industries. The company sells its products through independent distributors and sales representatives, as well as directly to OEMs, engineering firms, packagers, and end users. Gardner Denver, Inc. was founded in 1993 and is based in Wayne, Pennsylvania.
Advisors' Opinion: - [By Eric Volkman]
Gardner Denver (NYSE: GDI ) isn't moving from the dividend policy it's kept in place for more than three years. The company has declared a quarterly dividend of $0.05 per share. This will be paid on June 25 to shareholders of record as of June 11. That amount matches each of the firm's previous distributions, the most recent of which was paid in late March.
- [By Eric Volkman]
Gardner Denver (NYSE: GDI ) results for the company's Q1 have been unveiled. For the quarter, revenue was $514 million, a 15% drop from the $604 million in the same period the previous year. Net income saw a steeper decline over that time frame, by 17%, to $46 million ($0.93 per diluted share) from Q1 2012's $55 million ($1.08).
Top Oil Service Companies To Buy For 2014: Covidien PLC (COV)
Covidien Public Limited Company is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. It operates its businesses through three segments: Medical Devices, which includes the development, manufacture and sale of endomechanical instruments, energy devices, soft tissue repair products, vascular products, oximetry and monitoring products, airway and ventilation products; Pharmaceuticals, which includes the development, manufacture and distribution of specialty pharmaceuticals and active pharmaceutical ingredients, and Medical Supplies, SharpSafety products and original equipment manufacturer products. In May 2012, it acquired Newport Medical Instruments, Inc. In May 2012, it acquired superDimension, Ltd. In June 2012, the Company acquired Oridion Systems Ltd. In October 2012, its Mallinckrodt acquired CNS Therapeutics, Inc. In January 2013, the Company acquired CV Ingenuity.
Advisors' Opinion: - [By Peter Stephens]
As mentioned, sector peers such as Stryker (NYSE: SYK ) and Covidien (NYSE: COV ) are slightly ahead of St. Jude on EPS growth forecasts, with both companies forecast to increase EPS by 8% in 2014. Meanwhile, they are expected to increase EPS by 10% and 11%, respectively, in 2015. (Note that St. Jude and Stryker have calendar year-ends and Covidien has a September year-end.)
Top Oil Service Companies To Buy For 2014: Robert Half International Inc.(RHI)
Robert Half International Inc. provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. Its Accountemps division offers temporary staffing in the fields of accounting, tax, and finance. The company?s OfficeTeam division places temporary and full-time office and administrative personnel, ranging from word processors to office managers. Its Robert Half Finance & Accounting division specializes in the placement of full-time accounting, financial, tax, and banking personnel. The company?s Robert Half Technology division specializes in providing information technology contract consultants; and placing full-time employees in the areas, ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design, and help desk support. Its Robert Half Legal division places temporary and full-time employees in attorney, paralegal, legal administrati ve, and legal secretarial positions. The company?s Robert Half Management Resources division offers senior level project professionals in the accounting and finance fields comprising chief financial officers, controllers, and senior financial analysts for various tasks, such as financial systems conversions, expansion into new markets, business process reengineering, and post-merger financial consolidation. Its Creative Group division serves clients in the areas of advertising, marketing, and Web design; and places project consultants in various positions consisting of creative directors, graphics designers, Web content developers, Web designers, media buyers, and public relations specialists. The company?s Protiviti division provides experts specializing in risk, advisory, and transactional services. Robert Half International was founded in 1948 and is based in Menlo Park, California.
Advisors' Opinion: - [By Keith Speights]
Temporary staffing agencies also felt the brunt of the employer mandate push-back. Shares of�Robert Half International (NYSE: RHI ) , for example, slipped 5% on the day after the Obamacare delay was announced. The staffing agency reported earlier this year that it was receiving lots of inquiries from employers with around 50 employees, with the implication being that companies would use temporary workers to avoid meeting the 50-employee threshold for the Obamacare mandate.
- [By idahansen]
The entire demand labor industry should do well as the US Department of Labor just reported that 169,000 more jobs were added to the American economy. The more work there is, the more demand there is for the services of staffing solutions firms such as Labor SMART, Paychex (NASDAQ: PAYX), TrueBlue (NYSE: TBI), and Robert Half International (NYSE: RHI).
- [By Jonathan Yates]
For those looking to invest in real estate stocks, highly recommended is the Dr. Housing Bubble blog. In a recent posting, the "Dr." pointed out that there was a "Lost Generation" when it came to household income. That has not happened for those investing in staffing industry stocks such as Paychex (NASDAQ: PAYX), Robert Half International (NYSE: RHI), TrueBlue, Inc. (NYSE: TBI), and Labor SMART (OTCBB: LTNC).
Top Oil Service Companies To Buy For 2014: Exelon Corp (EXC)
Exelon Corporation (Exelon) is an energy provider and holding company for several energy businesses. Exelon is engaged in the energy generation business through its Exelon Generation Company, LLC (Generation) subsidiary; wholesale and retail energy sales through its Constellation business unit, and the energy delivery business through its Baltimore Gas and Electric (BGE), Commonwealth Edison Company (ComEd) and PECO Energy Company (PECO) subsidiaries. It operates in 47 states, the District of Columbia and Canada. Exelon Generation has approximately 35,000 megawatts of owned capacity. Constellation provides energy products and services to approximately 100,000 business and public sector customers and approximately 1 million residential customers. Exelon's utilities deliver electricity and natural gas to more than 6.6 million customers in central Maryland, northern Illinois and southeastern Pennsylvania. On March 12, 2012, Constellation Energy Group, Inc. merged into Exelon. In December 2012, the Company sold its three Maryland coal-fired power plants to Raven Power Holdings LLC (Raven Power).
In August 2012, the Company sold its interest in five California power plants to IHI Corp. It includes two coal-powered and three biomass-based plants-with a total generation capacity of 70 megawatts. IHI acquired Exelon's 50% interest in four power plants and 45% interest in one plant. On September 30, 2011, Generation acquired Antelope Valley Solar Ranch One. On August 24, 2011, Generation acquired Wolf Hollow, LLC.
Exelon Generation Company, LLC
Generation is an electric generation company. Generation�� business consists of its owned and contracted electric generating facilities, its wholesale energy marketing operations and its retail supply operations. Generation has three reportable segments, which consists of the Mid-Atlantic, Midwest, and South and West regions. As of December 31, 2011, Generation owned generation resources with an aggregate net capacity of 25,544! megawatt, including 17,115 megawatt of nuclear capacity. Generation controlled another 5,025 megawatt of capacity through long-term contracts. Generation�� retail business provides retail electric and gas services as an unregulated retail energy supplier in Illinois, Pennsylvania, Michigan and Ohio.
Mid-Atlantic represents Generation�� operations primarily in Pennsylvania, New Jersey and Maryland (approximately 35% of capacity); Midwest includes the operations in Illinois, Indiana, Michigan and Minnesota (approximately 45% of capacity); and the South and West includes operations primarily in Texas, Georgia, Oklahoma, Kansas, Missouri, Idaho and Oregon (approximately 20% of capacity). As of December 31, 2011, Generation had ownership interests in 11 nuclear generating stations in service, consists of 19 units with an aggregate of 17,115 megawatt of capacity. Generation wholly owns all of its nuclear generating stations, except for Quad Cities Generating Station (75% ownership), Peach Bottom Generating Station (50% ownership) and Salem Generating Station (Salem) (42.59% ownership).
Commonwealth Edison Company
Commonwealth Edison Company is engaged principally in the purchase and regulated retail sale of electricity and the provision of distribution and transmission services to a diverse base of residential, commercial and industrial customers in northern Illinois. ComEd�� retail service has an area of approximately 11,400 square miles and an estimated population of nine million. The service territory includes the City of Chicago, an area of about 225 square miles with an estimated population of three million. As of December 31, 2011, ComEd had approximately 3.8 million customers.
PECO Energy Company
PECO is engaged principally in the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in southeastern Pennsylvania, including the City of Philadelphia, as wel! l as the ! purchase and regulated retail sale of natural gas and the provision of distribution services to retail customers in the Pennsylvania counties surrounding the City of Philadelphia. PECO�� combined electric and natural gas retail service territory has an area of approximately 2,100 square miles and an estimated population of four million. PECO provides electric distribution service in an area of approximately 1,900 square miles, with a population of approximately 3.9 million, including approximately 1.5 million in the City of Philadelphia. PECO provides natural gas distribution service in an area of approximately 1,900 square miles in southeastern Pennsylvania adjacent to the City of Philadelphia, with a population of approximately 2.4 million. PECO delivers electricity to approximately 1.6 million customers and natural gas to approximately 4,94,000 customers.
Advisors' Opinion: - [By Justin Loiseau]
Exelon� (NYSE: EXC ) �made�major headway with efficient smart grid technology�last fall, but efforts tapered off as legislation made modernization costs prohibitive. But with a key bill approved by both the Senate and the House in March, things are looking up for this dividend stock's 10-year smart grid investment. During�Exelon's latest earnings report, CEO Christopher Cane noted: "We are on a good path there."
- [By Sean Williams]
Also in the news...
Electric utility Exelon (NYSE: EXC ) received a bit of good news yesterday after Reuters reported that nuclear outages had hit a nearly two-year low. Exelon is the largest operator of nuclear power plants in the U.S., so this is positive news, and could signal that its pricing power (at least with regard to nuclear) is improving. Exelon still has plenty of challenges ahead, including the assimilation of diverse alternative energies like wind and solar into its energy portfolio, but it also looks brutally undervalued at these levels.
Top Oil Service Companies To Buy For 2014: China Yuchai International Limited (CYD)
China Yuchai International Limited, through its subsidiaries, manufactures and sells diesel and natural gas engines primarily in the People�s Republic of China (PRC). It operates in two segments, Yuchai and HLGE. The company provides engines for light, medium, and heavy-duty for highway vehicles; generator sets; and marine and industrial applications, as well as supplies after-market parts and services. It also offers diesel power generators that are used in the construction and mining industries; diesel engine parts; and remanufacturing services. In addition, the company operates hotels and engages in property development activities primarily in the PRC and Malaysia. It distributes its products directly to auto plants and agents. The company was founded in 1951 and is based in Singapore.
Advisors' Opinion: - [By Rich Duprey]
Following the abrupt resignation of director and President Benny H. Goh on May 27, China Yuchai International (NYSE: CYD ) has been operating with an interim officer, Kok Ho Leong,�who also held the position of CFO while a replacement was found.
