24-APR-14 – Innovative Solutions and Support, Inc. (ISSC:BUY) Revenue beat largely due to record Engineering sales. EPS shortfall reflects greater contribution from lower-margin Engineering sales versus higher-margin Production sales. Trimming FY:14 EPS estimate. Maintain price target and BUY rating. |
Q2:14 HIGHLIGHTS
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Innovative Solutions and Support, Inc. (ISSC:BUY) Revenue beat largely due to record Engineering sales.
Innovative Solutions and Support, Inc. (ISSC:BUY) Revenue beat largely due to record Engineering sales.
April 24, 2014 By
Arabian American Dev. Co. (ARSD:BUY) Record Q4 petrochemical revenues (+33%) driven by 40% rise in volumes.
Arabian American Dev. Co. (ARSD:BUY) Record Q4 petrochemical revenues (+33%) driven by 40% rise in volumes.
25-APR-14 – Arabian American Dev. Co. (ARSD:BUY) Record Q4 petrochemical revenues (+33%) driven by 40% rise in volumes. 2013 saw records for revenues, EBITDA, net income, and EPS. We maintain our BUY rating and raise our price target, as we believe ARSD remains substantially undervalued with continued opportunities in petrochemicals and equity income from its AMAK investment. |
Q4:13 HIGHLIGHTS
RISKS
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Syntel (SYNT:SELL) Quarter beats consensus but FY:14 EPS guidance lowered.
Syntel (SYNT:SELL) Quarter beats consensus but FY:14 EPS guidance lowered.
22-APR-14- Syntel (SYNT:SELL) Quarter beats consensus but FY:14 EPS guidance lowered. We are lowering our FY:14 EPS estimate while maintaining our price target of $76.00 and SELL rating. |
Q1:14 HIGHLIGHTS
RISKS
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IEC Electronics Corporation (IEC:DROP) Terminating coverage in order to focus resources elsewhere.
IEC Electronics Corporation (IEC:DROP) Terminating coverage in order to focus resources elsewhere.
22-APR-14 – IEC Electronics Corporation (IEC:DROP) Terminating coverage in order to focus resources elsewhere. |
KEY POINTS
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Edgewater Technology (EDGW:DROP) EDGW shares have risen above our prior price target of $8.10.
dgewater Technology (EDGW:DROP) EDGW shares have risen above our prior price target of $8.10.
21-APR-14 – Edgewater Technology (EDGW:DROP) EDGW shares have risen above our prior price target of $8.10. With no discernible justification for an increased price target at this time we are closing out our coverage. |
NOTES
RISKS
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Abbott Laboratories (ABT:SELL) Sales falling faster in Q1:14 due to weakness in multiple segments.
Abbott Laboratories (ABT:SELL) Sales falling faster in Q1:14 due to weakness in multiple segments.
17-APR-14 – Abbott Laboratories (ABT:SELL) Sales falling faster in Q1:14 due to weakness in multiple segments. |
ABT HIGHLIGHTS
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Director’s Letter April 2014: Small Caps Hit and Air Pocket
Director’s Letter April 2014
Small Caps Hit and Air Pocket
March saw equities, and small cap stocks in particular, give up some of February’s advance. While events in the Ukraine might be viewed as the primary risk point on the global stage, we view that as more of a coincident catalyst as small caps may have simply been due for a pullback. Given the stellar performance in 2013 it is not difficult to view the market segment as needing some time to consolidate those gains relative to corporate fundamentals. In that context, a sideways move with attendant back and forth swings around a flat-line is not hard to fathom.
Looking at key macroeconomic statistics, the most recent round of unemployment data indicated a positive downward trend continues. Obviously such data needs to be viewed over a continuum and in concert with myriad other data points. Even so, as we sift the data looking for clues on which direction the market may trend, growing employment could be one point supporting the notion that the market is consolidating before a next leg up.
For March, the S&P 500 was up 0.67%, the Russell 2000 was down 0.67% and the aggregate Singular List was up 3.8%. For the trailing twelve months, the S&P was up 19.2%, the Russell 2000 was up 23.3%, and the Singular Research List was up 19.2%.
We initiated coverage on two companies during March, both with SELL ratings. The first was Abbott Labs (ABT), which we initiated with a $30 price target, and the second was Syntel (SYNT), which we started with a $76 price target.
Our top five performers in March include companies from a variety of industries. The top performer was Vertex Energy, up 70.1%. The company announced a significant, accretive acquisition followed by strong Q4:13 earnings. Orion Energy was up 30.1%in March. After reporting earnings in February there was no news to directly account for the solid performance leaving us to conclude investors are methodically warming to the story. SELL-rated SolarCity was down 26.2%. Absent any specific news, we attribute the decline to the overall weakness seen in many high-risk names in March. Bacterin was up 25.3%, following a similarly strong February, driven by a solid earnings report. SELL-rated Pandora declined 18.9% as Amazon emerged as the latest threat in the music-streaming space.
Our worst performers in March are from a variety of industries and for differing reasons. Despite the adverse moves in the near term, we believe our theses are sound on all of them, offering significant alpha from here. Reed’s was down 26.3%in March. The company reported earnings which disappointed although we feel the issues that weighed on earnings can be cured. Global Ship Lease was down 18.1% despite the lack of an observable catalyst. Seabridge Gold was also down 18.4% following a decline in gold for the month. Arabian American Development was down 11.3% following the release of earnings early in the month. Hudson Technologies was down 10.5% in March as the shares continued to slip following a nice gain last December following the EPA’s latest ruling on coolant phase out regulations.
At Singular Research we continue to seek out investment ideas that have minimal to no Wall Street coverage. There are a number of uncovered and under-covered names we have been investigating, and we plan to launch coverage on several names in the coming weeks. We thank our clients for your support of independent equity research.
Sincerely,
Jeremy Hellman, CFA
Chief Operating Officer
Singular Research Director's Letter: March 2014, Headwinds Out of the Gate
Singular Research Director's Letter: March 2014
Headwinds Out of the Gate
After a poor start to the year, the market rebounded in February with the S&P 500 and Russell 2000 each recovering over 4%. The solid market performance points to an overall positive reaction to this round of corporate earnings and guidance coupled with favorable macroeconomic conditions.
Looking at key macroeconomic statistics, Q4:13 GDP came in at 2.4% versus the consensus estimate of 2.5%. This was down from 4.1% in the 3rd quarter and the advance estimate of 3.2%. While the number looks poor versus these comps, a significant unknown exists in the form of the impact that the unusually cold weather in much of the country had on the number. Market participants will naturally be looking to the Q1:14 estimate to gauge the weather impact although this quarter has also seen several spells of severe cold too.
For February, the S&P 500 was up 4.2%, the Russell 2000 was up 4.4% and the aggregate Singular List was up 2.4%. For trailing twelve months, the S&P was up 22.5%, the Russell 2000 was up 29.6%, and the Singular Research List was up 19.5%.
We initiated coverage on one company during February, Salem Communications (SALM), which we launched on with a BUY and a $13 target price (versus a price at initiation of $8.38).
Our top five performers in February include companies from a variety of industries. The top performer was Edgewater Technology, up 27.6%. The company had a strong earnings report marked by accelerating service revenue and improved gross margins. SELL-rated Angie’s List was down 22.5%in February (for a positive return on our recommendation). The company reported disappointing membership additions and increasing churn. Flexsteel was up 20.5%, also the result of a solid earnings report which noted continued record sales. Bacterin was up 21.2%. Although the company is not due to report earnings until March, management presented at multiple conferences, likely fueling increased interest in the shares. Anika Therapeutics was up 18.3% as its Arthritis drug Monovisc was approved by the FDA.
Our worst performers in February are from a variety of industries and included one of our SELL-rated companies. Despite the adverse moves in the near term, we believe our theses are sound on all of them, offering significant alpha from here. University General Health System was down 36.6%in February. The company reported earnings early in the month while also getting up to date on its financials but the shares faded nonetheless. NetSol Technologies was down 16.1% as the market was disappointed with the company’s earnings report. Orion Energy Systems was also down 16.0% following its Q3:14 earnings report. Aceto was down 14.2%, continuing the trend of companies seeing negative reactions following earnings. SELL-rated Solar City was up 14.6% in February. The company had several announcements which lent a positive bias to the shares.
At Singular Research we continue to seek out investment ideas that have minimal to no Wall Street coverage. There are a number of uncovered and under-covered names we have been investigating, and we plan to launch coverage on several names in the coming weeks. We thank our clients for your support of independent equity research.
Sincerely,
Jeremy Hellman, CFA
Chief Operating Officer