|Dividend Yield||Market Cap|
Longer term, we need to pick the company with better dividend growth prospects.
|Dividend Yield||Market Cap|
Longer term, we need to pick the company with better dividend growth prospects.
Pandora (P) is in the business of online radio. Twitter (TWTR) is in the business of communication via microblogging. Tesla (TSLA) makes cars. That’s where the dissimilarity ends and the similarity starts. All of them are hot tech stocks (yes I called Tesla a tech stock). None of them are profitable yet (except Tesla on a non-GAAP basis). Tesla went IPO in 2010, Pandora went IPO in 2011 and twitter went ipo a few weeks ago. From 2010 – 2012, all three showed similar revenue growth. All of the estimates for 2013 are based on reports for the first few quarters and estimates for the remaining quarters. For Twitter, I estimated revenues and losses by just doubling the first two quarters. For Pandora I doubled revenues and for losses, I used data from a previous article. For Tesla I used 4/3 * first three quarters.
However, as far as losses go the picture is not so similar:
We can already begin to see how Twitter doesn’t particularly paint a good picture. The other two seem to be reducing losses significantly.
From my previous article on Pandora, it is obvious that the path to profitability for Pandora is only becoming smoother in 2013.
2013 for Tesla, was a great year where they finally started delivering cars in volume (on track for 21,500 Model S delivered this year). I have covered Tesla extensively before.
The picture for Twitter is unknown. It has grown revenues significantly in 2013 but profitability seems out of reach. Pandora revenues come from both advertising and subscriptions. Twitter, on the other hand, solely relies on advertising. Also, Pandora advertising is fairly unavoidable – ads are forced listen. Twitter, in comparison, by design is difficult to advertise in, especially on mobile devices where a majority of their customers are. In fact twitter started out by using SMS, where it is inherently difficult to advertise in the limited space.
Looking at the numbers (on 11/20):
It is fairly obvious that for companies with sort of comparable revenues and revenue growth, Twitter is wildly overpriced compared to both Pandora and Tesla. If anything, Twitter should be worth much less than the other two.
As of now, Tesla stock is depressed from highs thanks to adisappointing quarterly report, media attention to Tesla cars on fire and an accident at its factory. Pandora is hitting new highs thanks to analyst upgrades. Twitter stock direction is currently flat to slightly down from its IPO but I’m predicting a slow downward movement.
So if you were thinking of adding a hot tech company to your portfolio and were considering Twitter, thanks to the hype – maybe you should consider Pandora or Tesla instead.
Disclosure: Long TSLA
Over the last few days, I’ve worked on analyzing Pandora as an investment.
See my thoughts here:
When And What Would It Take For Pandora To Be Profitable + Earnings Expectations - I attempt to predict when Pandora will be profitable and what it can do to be profitable.
An Analysis Of Pandora Before Earnings - I look at statistics of Pandora listeners, market share and other related statistics.
I first got convinced to buy Apple stock when everyone around me was using a very expensive iPhone that had no 3G, no Apps, nothing. Similarly we (Parchayi and me) are invested in Tesla because no car in my life has caused so much excitement in buyers.
Here are some quotes from Tesla owners:
“ It no longer makes sense to drive the Ferrari – the Tesla provides such a greater depth of satisfaction.”
“ the P85 feels a LOT quicker than the Ferrari in the real world.”
“Our 911 C4 sits in the garage and nobody wants to drive it anymore. ”
“You might add a classic Corvette Stingray to the list. Now it just seems – Old Fashioned.”
“I sold my BMW M6 to[o] noisy to[o] primitive”
“Add another Porsche (1 yr old 991 CS Cab) to the list. Loved the car when i got it, but after the S, seriously wondering whether it should take up space in the garage. ”
“The Maranello sits in the garage with not even enough love to keep the battery charged.”
“I can’t remember what my Mercedes felt like and don’t care.”
“Add my BMW 550i and my TDI SUV to the list”
“But now my Pagoda seems less related to a Gullwing or an SLS or a Ferrari than they all seem related to Model Ts.”
“Can’t stand my CLK500 any more. ”
“I refuse to drive an ICE now”
“Add Ford Mustang a Shelby KR and a whole bevy of other high end Mustangs.”
“I literally just sold my 2005 911S yesterday.”
“ I can also say goodbye to my Audi TTRS.”
“after the test drive I feel my Jaguar XKR obsolete”
“I still love Ferrari but not near as much as the Tesla.”
“I have a BMW 765i …. Used to love the feel of the V12, but now it’s nothing compared to the Tesla.”
“ My BMW M6 is gathering dust in the garage.”
“I never hand wash my car until i got the Model S.”
“You can add an Aston Martin V8 Vantage to the list of ICE’s that have become second choice”
Now if that doesn’t convince one to buy into a car company, well here are some numbers for you in my SeekingAlpha Articles:
A Less Optimistic Look At Tesla Numbers (still makes for a great investment)
Tesla Sales: What you need to know before earnings (this is my optimistic look at Tesla)
I received intense follow-up on the two articles I wrote about Tesla (TSLA), the first one countering the bear arguments of the stock and the second one attempting to value the company. Most of the intense arguments hinged on the assumption that the auto industry will not stand still as Tesla marches forward and by the time the Tesla Gen III launches, it will have intense competition from the rest of the auto industry. While that is possible and something that I would really appreciate at a personal level, the state of innovation in the auto industry indicates otherwise.
Read the full article at Seeking Alpha – State Of Innovation In The Auto Industry And The Allure Of Tesla
In my previous article Analyzing The Logic Of Tesla Bears, I presented a takedown of Tesla (TSLA) bears’ objections to the growth story. And with this one I will attempt to summarize additional key objections to my previous analysis and also a simple method to come up with a valuation for Tesla extending some thoughts in the comments.
Read the full article at SeekingAlpha here - Analyzing The Logic Of Tesla Bears 2 – Valuing Tesla
Looking at Seeking Alpha articles negative on Tesla (TSLA) over the last few weeks and the intense commentary generated has been entertaining to say the least. I will not argue that for the current state of affairs Tesla is not overvalued. What I will try to do is present a take-down of most arguments from bears about why Tesla’s growth story will fail..
Read the full Article at Seeking Alpha – Analyzing the Logic of Tesla Bears
This article also appears at The Motley Fool.
I have been following the prices of LinnCo (NASDAQ: LNCO) and Berry Petroloeum (NYSE: BRY) for the last few months. LinnCo is basically a holding company for shares of Linn Energy (NASDAQ: LINE) and a means to invest in Linn Energy without the hassles of a K1.
Linn Energy expects to merge with Berry Petroleum, with the deal closing in the third quarter, a delay from the original expected close by the end of June caused by an SEC review. Investors in BRY will receive 1.25 shares of LNCO for each share in BRY. However, BRY has consistently been trading at at least a 5% discount to the deal value. On Friday, buying BRY at close would have netted you LNCO at 34.80, an 8% discount.
To add to that, thanks to persistent negativity by some analysts, including Barrons and others, both Linn energy and Berry have been tanking lately providing a great opportunity to get into an MLP with extraordinary dividends. Currently (as of Friday, May 31) the dividend for LNCO stands at 8.1%. Add to that the 5% extra you get from buying BRY instead of LNCO and you have a great deal.
The management of Linn has also announced that they plan to boost dividends further once the acquisition completes.
If you don’t care about the simplicity of LNCO or the hassle of a K1, then you could directly buy LINE for an even better deal. LINE closed Friday at just 32.90, another 5% off the price of LNCO and a dividend of 8.8%.
In short, if you were planning on acquiring shares of LNCO to take advantage of the current negativity in the stock, you would be better off buying BRY or LINE instead.
This article also appeared on The Motley Fool.
On Feb. 28, a few minutes before closing, a single research paper sent Intuitive Surgical (NASDAQ: ISRG) tanking from the $570ish range to under $500. The widely circulated paper concluded that overall outcomes in hysterectomies using Intuitive’s Da Vinci robot were no better than laparoscopic surgery — and that the robot option was more expensive. Read the paper here. Critics of the paper say its authors did not consider faster recovery times.
When that fall happened, I doubled my exposure to Intuitive Surgical. The next day, the stock recovered, but not to previous levels. Then last week, Intuitive found a new source of criticism – the president of the American Congress of Obstetricians and Gynecologists — causing the stock to go even lower, into the $450s. However, there are plenty of surgeons holding opposing views in favor of robotic surgery, as evidenced by this response from a group of OB/GYNs.
Keep in mind that all this hullabaloo is limited to hysterectomies, one area in which a non-robotic, minimally invasive laparoscopic option is available to compete with Intuitive’s robosurgeons. Also, the robot doesn’t perform the operation all by itself; it’s a system to give doctors more fine-grained control and better visibility from a much smaller incision. In short, DaVinci’s system is just a better way of performing laparoscopic procedures.
In any case, this is the future, and even though the robotic option is more expensive now, that’s the price for new technology. In most cases where the robot is used, it is a better, less invasive option with faster recovery times. The use of the Da Vinci system is only expanding, and will continue for a while as more surgeries are approved to be performed using the system, and more doctors and hospitals obtain the system and get trained in using it.
So why were investors so spooked? In its Q4 2012 conference call, Intuitive said that OB/GYN and general surgery were responsible for most of its growth, and benign hysterectomy was amongst the largest individual contributors to its procedure growth. Also, hysterectomies accounted for 80% of GYN procedures. So a slowdown in adoption of the robot for GYN procedures could put a dent into the growth of the company.
The da Vinci robot is a general purpose surgical robot and even if GYN growth slows down other procedures will eventually lead to growth. In my opinion any impact will be temporary.
The other robots from Mako (NASDAQ: MAKO) or Hansen (NASDAQ: HNSN) are special purpose robots. Mako’s is only for bone related issues such as Knee and Hip resurfacing or replacement. Hansen’s are specifically for catheterization and use intra-vascular surgery.
So take this chance to acquire the stock of a fast-growing company with no real competition representing the future of surgery under $500.
This article also appeared at The Motley Fool.
In part 1 of this series, I covered ETFs that invest exclusively in India. In part 2, I covered CEFs and mutual funds. In this article, I’ll look at ADRs’ premiums or discounts vs. their underlying securities, and talk about Indian technology ADRs.
Lets start with a list of all ADRs and their relation to the underlying stock.
|Company||Stock Quote (INR)||ADR Quote (USD)||ADR Premium/Discount %*|
|Dr. Reddys Labs||1800.55||33.88||2.21|
*As of Friday, Feb. 15.
As you can see, most Indian ADRs are trading at a premium to their underlying stock in India, with the largest premium belonging to Wipro. Four of the 11 companies are technology companies: Infosys (NYSE: INFY), Rediff (NASDAQ: REDF), Sify (NASDAQ: SIFY) and Wipro (NYSE: WIT). Let’s look at these in more detail.
Only Wipro and Infosys seem to be consistently growing revenues.
EPS trends paint a similar picture of consistent growth only by Wipro and Infosys. The data for Sify was missing at YCharts, but the company posted a loss in its fiscal year ending 2012, albeit a smaller one than it recorded in 2011.
The stock prices of both Wipro and Infosys have not kept up with either their EPS or revenue growth, which currently reflects of the Indian stock market as a whole. So 2013 is a good year to invest in India, in spite of its slowing economic growth.
The valuations of stocks, especially of those like Infosys and Wipro are likely to catch up with their growth rates. But is Wipro worth the premium over the underlying stock when compared to Infosys? The current P/E of Wipro is around 18, and Infosys around 16.
I would say no. Among the Indian technology ADRs, I recommend Infosys, which is currently undervalued compared to its five-year average P/E of 20.
Stay tuned for coverage of the rest of the Indian ADRs.