The Daily Kill Sheet Picking Off Profits One Stock At A Time!

March 21, 2013

Daily Kill Sheet For March 21, 2013

Filed under: Industrials,Shorts,Uncategorized — Administrator @ 2:47 pm

Take a look at Parker Hannifin (PH, $93.24) on the short side. This one is a bit of a no brainer. We are going to take advantage of the stock’s seasonal bias coupled with its deteriorating technicals and its weakening fundamentals.

On a fundamental basis, the shares are trading near the higher end of their traditional valuation range even though orders have turned negative across most of their business segments and earnings are down on a year over year basis. Aerospace has been the only segment where sales have remained strong, but with the impact of sequestration still an unknown PH shares at the current quote are a questionable long.

Typically the March to June time frame is a poor time to hold Parker Hannifin shares. Indeed, if you had shorted the stock on March first and bought the shares back at the June low, you would have had a profitable trade in 21 out of the past 27 years. In other words, you would have made money 77.7% of the time. A popular saying is the trend is your friend and in this case it’s your best friend! Indeed, in nine out of the past twenty-seven years having a short over this time frame has garnered a double-digit return. That’s a double-digit return in one out of every three years on average!

On a technical basis, PH shares look over bought and are at a dangerous level on two fronts. To start, the stock is in the process of forming a double top with its April 2011 high. Last time the shares had pulled back nearly 40% in six months after reaching its peak. Parker shares fell through their 50-day moving average today after Goldman Sachs resumed a Sell rating on the shares. Now that that key support level has fallen, there is no real support until about $86 a share, about the mid point of an unfilled gap in its chart from the beginning of January. Typically all gaps get filled at one point or another, thus its a good bet that this one will too. At this juncture, the 200-day moving average sits just below $84 a share. I suspect that fear of weakening orders, coupled with fears about the banking crisis in Europe and the slowing of Asian economies will be enough to push the shares toward their 200-day moving average. With that said, my near-term price target is $84, implying an 11% gain to my target. For the record, the lat decline from the top was halted when the stock hit its long-term 200-period moving average.

March 13, 2013

Daily Kill Sheet For March 13, 2013 – Position Update

Filed under: Long,Sure Shot Update!,Uncategorized — Administrator @ 12:13 pm

Willbros Group (WG, $8.60) has been mentioned positively in a new research report by UBS. The report cites eight stocks that stand to benefit from infrastructure rebuild in the United States and Willbros is one of the stocks mentioned. At this point, we are up 55% since I first wrote up the stock in the January Sure Shot Letter. At this point, I recommend that we continue to Hold the stock here.

March 6, 2013

Daily Kill Sheet For March 6, 2013

Filed under: Industrial,Long,Sure Shot Update!,Uncategorized — Administrator @ 1:29 pm

Just a quick update on our Deep Value position in Willbros Group (WG, $7.10). Willbros announced fourth-quarter earnings of $0.11 a share, $0.05 better than the consensus estimate. Revenues jumped 54% year over year. 

Management noted that their strategy to reduce the impact of seasonality in the businesses during the first and fourth quarters is proving successful as evidenced by improving top line and operating results. 
 
Backlog:
 
Willbros reported total backlog from continuing operations of $2.2 billion up approximately 7% from last year.  Twelve month backlog at the end of 2012 was $1.1 billion up over $240 million from December 31, 2011. 
 
Strategy: 
 
Key objectives in 2013 are to improve operating results and financial flexibility. They intend to improve performance through strengthening project management capabilities, bolstering training programs and adding work with more favorable terms and conditions to backlog. In addition, they expect to further reduce debt to strengthen the balance sheet.
 
Guidance:
 
Management now expects annual revenue to range from $1.9 to $2.1 billion, excluding the Hawkeye and Oman businesses, and debt reduction of $50-$100 million by the end of the year. The business model has experienced improved results in the first and fourth quarters year over year and they expect that trend to continue, with the strongest operating results in the second and third quarters.
At this juncture, we are up nearly 30% in the shares since our January recommendation. I recommend to continue to hold the shares here. The company remains well positioned to help build out the infrastructure necessary for the U.S. to continue to increase its oil and natural gas output. Energy security is a focus of this administration and it’s likely that oil and gas production will continue to increase regardless of the U.S. economic environment. With that said, the stock is volatile and with patience you should be able to increase your positions at prices below $6.50.

Powered by WordPress