InvestMacro

Source: Streetwise Reports  (11/3/22)

Shares of turnkey residential solar firm Sunrun Inc. traded 19% higher after the company reported Q3/22 financial results that included a 44% YoY increase in revenue and a 21% gain in its installed customer base.

Disclosures:

1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Source: Adrian Day  (10/31/22)

Today expert Adrian Day discusses results from two core holdings, both doing well, according to him, despite cost inflation. Day believes you can use current weakness to accumulate a portfolio of blue chips. Nestle SA (NESN:VX; NSRGY:OTC) reported a strong quarter, with organic growth of 8.5%, broad-based across most geographies and categories, and off sales increase of 9.2%. Pricing rose 7.5%, reflecting cost inflation.

Spending on Pets Grows Rapidly

As has been the case recently, pet care continued to be the largest contributor to organic growth, particularly the premium brands and veterinary products. It seems people are still prepared to spend increasing amounts on their pets.

Nestlé, the world’s largest food and beverage group, has a strong balance sheet, reflected in Moody’s Aa3 rating. It has increased revenue (and its dividend) in virtually all of the past 60 years and never cut the payout over that period.

It bought back over Euro 6 billion of stock last year and continues with the program. With a consistently high return on capital and equity–its return on invested capital is more than twice virtually every peer–it is trading near the low end of its valuations (with a p/e of 18.3, its lowest since 2015), though the yield (at 2.6%) is lower than its historical average.

Nestlé is a core holding and is a Buy here.

Consistency Is a Virtue, as Agnico Beats Expectations Again

Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) beat market expectations modestly, with a solid quarter that saw most projects advance on track. Costs were relatively under control, though synergies with Kirkland after the merger are still helping, as is the low Canadian dollar keeping USD costs down at its Canadian mines. Management noted that mitigating cost increases is a major focus.

One mine, the new Amaruq, in Nunavit, completed on time and on budget, is experiencing a successful ramp-up, more than doubling production since the first quarter of the year and helping the company’s increase in production.

President Ammar AlJoundi called it “a world-class mine by any standards.” Management, in fact, emphasized the continued progress on all the expansion projects, with some excellent drill results, validating Agnico’s theme of leveraging existing mines and infrastructure.

Cash Flow Used To Pay Down Debt and Buy Back Shares

Agnico has earned an operating margin of US$2.4 billion year-to-date. It used this to reduce debt, repaying US$100 million notes to end the quarter with net debt of US$520 million.

And it repurchased around one million shares, almost twice as many as it had purchased in the previous two quarters.

Agnico, as we have discussed before, is a solid, conservative company with a strong culture, with mines in five mining-friendly jurisdictions, with top management, and a strong balance sheet.

The stock price has bounced in the last 10 days to the top of its four-month range, so we will look for a pull-back to add to positions. But the valuations are quite low, trading at less than 1.3 times book and nine times cash flow.

If you do not own one, this is one to Buy and put away.

BEST BUYS this week, in addition to the above, include Midland Exploration Inc. (MD:TSX.V); Franco-Nevada Corp. (FNV:TSX; FNV:NYSE); Lara Exploration Ltd. (LRA:TSX.V); and Barrick Gold Corp. (ABX:TSX; GOLD:NYSE).

Adrian Day Disclosures:

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

Disclosures:

1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services, or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in the securities mentioned. Directors, officers, employees, or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company release. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of  Agnico Eagle Corp., a company mentioned in this article.

By Daniel Sperling, University of California, Davis; Lewis Fulton, University of California, Davis; Marshall Miller, University of California, Davis, and Miguel Jaller, University of California, Davis 

As part of its effort to reduce air pollution and cut greenhouse gas emissions that contribute to climate change, California is pursuing aggressive policies to promote clean trucks. The state already requires that by 2035, all new cars and other light-duty vehicles sold in the state must be zero emission. Its powerful Air Resources Board has adopted rules requiring that most trucks be zero emission by 2035, and is now proposing that all trucks sold by 2040 must be zero emission. The Conversation asked a panel of transportation experts from the University of California, Davis what’s involved in such a rapid transition.

1. Why is California targeting medium- and heavy-duty trucks?

Although diesel engines are valuable for moving heavy loads, they also are major polluters. Diesel trucks account for one-fourth of greenhouse gas emissions and about half of conventional air pollution from transportation in U.S. cities.

Pollutants in diesel exhaust include nitrogen oxides, fine particulates and numerous cancer-causing compounds. Since many disadvantaged communities are located near highways and industrial centers, their residents are especially affected by diesel truck pollution. Two regions in California – the Central Valley and Los Angeles-Long Beach – have some of the dirtiest air in the U.S., so the state has placed particular emphasis on cutting diesel use.

2. Are zero-emission trucks ready to go?

To a degree, yes. Some new models, mainly powered by batteries but some by hydrogen fuel cells, are available on the market, and more are being announced almost daily.

But the production volumes are still small, and there are many variations of truck models needed for very diverse applications, from delivering mail locally and plowing snow to hauling goods cross-country. Many of these needs cannot be met with currently offered zero-emission trucks.

Another hurdle is that new electric truck models have higher purchase prices than comparable diesel trucks. However, as the market for zero-emission trucks grows, economies of scale should bring these costs down significantly. We already see this happening with zero-emission cars and light-duty trucks.

The total cost of ownership for zero-emission trucks, which includes the purchase price, fuel costs and maintenance, is already competitive in some applications with conventional diesel trucks. One example is trucks used for local goods delivery by companies like Amazon, UPS and FedEx. This stage is also known as last-mile delivery – getting a product to a buyer’s door.

These trucks are typically driven less than 150 miles per day, so they don’t need large battery packs. Their lower energy costs and reduced maintenance needs often offset their higher purchase costs, so owners save money on them over time.

Our studies indicate that by 2025 and especially by 2030, many applications for battery trucks, and perhaps hydrogen fuel cell trucks, will have competitive or even lower total costs of ownership than comparable diesel trucks. That’s especially true because of California subsidies and incentives, such as the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, which reduces the cost of new electric trucks and buses. And the state’s Low Carbon Fuel Standard greatly reduces the cost of low-carbon fuels and electricity for truck and bus fleets.

The market in California is already reacting to these policy signals and is developing quickly. In the past year, there has been a large increase in sales of last-mile electric delivery trucks, and companies have stepped up their pledges to procure such vehicles.

Over 150 zero-emission truck models are commercially available and eligible for state incentive funding. They range from large pickup trucks to heavy-duty tractor units for tractor-trailer combinations.

3. Is there enough charging infrastructure to support all these vehicles?

Providing near-zero-carbon electricity for EVs and hydrogen for fuel cells, and expanding charging and hydrogen refueling infrastructure, is just as important as getting zero-emission trucks on the roads.

Fleet owners will need to install chargers that can charge their battery-powered trucks overnight, or sometimes during the day. These stations may require so much power that utilities will need to install additional hardware to bring electricity from the grid to the stations to meet potentially high demands at certain times.

Fuel cell trucks will require hydrogen stations installed either at fleet depots or public locations. These will allow fast refueling without high instantaneous demands on the system. But producing the hydrogen will require electricity, which will put an additional burden on the electric system.

Presently there are few public or private charging or hydrogen stations for truck fleets in California. But the California Public Utility Commission has allowed utilities to charge their customers to install a significant number of stations throughout the state. And the U.S. Department of Energy recently allocated $8 billion for construction of hydrogen hubs – networks for producing, processing, storing and delivering clean hydrogen – across the country.

Despite these efforts, the rollout of charging and hydrogen infrastructure will likely slow the transition to zero-emission trucks, especially long-haul trucks.

4. Who would be affected by a diesel truck ban?

California’s rules will affect both truck manufacturers and truck users. The state’s Advanced Clean Trucks rule, adopted in 2020, requires the sale of increasing percentages of zero emission trucks starting in 2024. By 2035, 40% to 75% of all trucks, depending on the truck type, must be zero emission.

A new proposal scheduled for adoption in early 2023, the Advanced Clean Fleets rule, would require fleets with over 50 trucks to purchase an increasing number of zero-emission trucks over time, with the requirement that all truck sales and purchases be zero emission by 2040.

These two policies would work together. The Advanced Clean Trucks rule ensures that zero-emission trucks will become available to fleets, and the Advanced Clean Fleets rule would give truck manufacturers confidence that the zero-emission trucks they produce will find buyers.

These two rules are the most ambitious in the world in accelerating a transition to zero-emission trucks.

5. Are other states emulating California?

Yes, there is strong interest in many other states in electrifying trucking. Oregon, Washington, New York, New Jersey and Massachusetts have already adopted the Advanced Clean Trucks rule, and others are in the process of doing so. Seventeen states and the District of Columbia have agreed to work together to foster a self-sustaining market for medium- and heavy-duty vehicles.

We expect that transitioning to zero-emission truck fleets will require strong policy support at least until the 2030s and perhaps longer. The transition should become self-sufficient in most cases as production scales up and fleets adapt their operations, resulting in lower costs. This could be soon, especially with medium-duty trucks.

Converting large long-haul trucks will be especially challenging because they need large amounts of onboard energy storage and benefit from rapid refueling. Fuel cell systems with hydrogen may make the most sense for many of these vehicles; fleets will ultimately decide which technologies are best for them.

The transition to zero-emission trucks will be disruptive for many fleets and businesses, and will require government support during the early years of the transition. Overall, though, we believe prospects are bright for zero-emission trucking, with enormous clean air and climate benefits, and eventually, cost savings for truck owners.

About the Author:

Daniel Sperling, Distinguished Blue Planet Prize Professor of Civil and Environmental Engineering and Founding Director, Institute of Transportation Studies, University of California, Davis; Lewis Fulton, Co-director, STEPS (Sustainable Transportation Energy Pathways), University of California, Davis; Marshall Miller, Senior Development Engineer, institute of Transportation Studies, University of California, Davis, and Miguel Jaller, Associate Professor of Civil & Environmental Engineering, University of California, Davis

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Source: Streetwise Reports  (10/28/22)

Shares of Oceaneering International Inc. traded 16.5% higher yesterday after the diversified offshore engineering services and manufacturing firm reported Q3/22 financial results that included a 20% YoY increase in revenue and improved operating performance and profitability across all its business units.

Oceaneering International advised that for Q3/22, it recorded a net income of US$18.3 million, or US$0.18 per share, versus a net loss of US$7.4 million, or a net loss of US$0.07 per share in Q3/21.

The company added that adjusted net income for Q3/22 was US$23.7 million, or US$0.23 per share, and noted that the adjustments were the result of US$1.1 million in pre-tax adjustments related to foreign exchange losses and another US$4.4 million in discretionary tax adjustments pertaining to asset valuation and tax allowances.

The company stated that during Q3/22, it generated cash flow from operations of US$85.9 million, had a free cash flow of US$66.6 million, and ended the quarter with US$428 million in cash on its balance sheet.

The firm pointed out further that during Q3/22, its fleet of 250 remotely operated vehicles (ROVs) achieved a utilization rate of 67%, and each, on average, contributed revenue of US$8,468 per day. The company added that as of September 30, 2022, its Manufactured Products division had a backlog of US$365 million.

Oceaneering International’s President and CEO Roderick A. Larson commented, “Our third-quarter results were driven by improved offshore activity and pricing, particularly in the Gulf of Mexico, which ticked up further during the quarter. We produced adjusted consolidated EBITDA of US$77.6 million, which exceeded our guidance and consensus estimates.”

“Offshore activity drove significant operating improvements in our energy businesses, which were led by our Subsea Robotics (SSR) and Offshore Projects Group (OPG) segments. In addition, increased manufacturing throughput led to improved operating margins in our Manufactured Products segment. We also saw a meaningful recovery in our government-focused businesses after experiencing the effects of negative timing during the second quarter of 2022,” Larson added.

The firm stated that it expects that revenues in Q4/22 will decline slightly or be on par with those registered in Q3/22. The company indicated that it estimates that the manufactured products group and ADTech revenues and profitability will be higher but will be offset by slightly lower revenues and operating profitability in its SSR, OPG, and IMDS segments, in part due to seasonality.

Oceaneering indicated that for FY/22, it estimates that adjusted EBITDA will be in the range of US$215-240 million.

The company advised that for FY/23, it anticipates higher levels of activity and improved performance in each of its primary business areas led by its SSR and OPG segments. The firm said that for FY/23, it expects consolidated EBITDA of US$260-310 million and free cash flow of over US$100 million.

The company indicated that going forward, it remains focused on safety, financial discipline, free cash flow generation, debt management, and growth. The firm stated that it will continue to look for opportunities to increase its prices and improve margins to benefit shareholders.

Oceaneering is a global technology firm based in Houston, Texas, that provides underwater, on land, and in space engineered services and products and robotic solutions to the offshore energy, aerospace, defense, entertainment, and manufacturing industries. The company employs more than 10,000 people and has operations in 24 countries.

The firm’s Subsea Robotics business segment offers remotely operated vehicles (ROVs) that are used to support offshore oil and gas drilling and vessel-based services such as subsea surveying, installation, construction, inspection, maintenance, and repair. The company fleet includes approximately 250 work-class ROVs. Its Manufactured Products segment manufactures distribution and connection systems, pipeline connections, and other hardware and repair systems for the energy industry.

Through its Offshore Projects Group, Oceaneering offers subsea installation, intervention, inspection, maintenance, and repair services, including ROV workover control systems and project management and engineering. The firm also provides asset integrity management, software, and analytical solutions for the bulk cargo maritime and energy industries through its Integrity Management & Digital Solutions segment. Lastly, the company’s Aerospace and Defense Technologies segment supports U.S. government agencies with engineering and related manufacturing assistance for use in defense and space exploration efforts.

Oceaneering International started yesterday with a market cap of around US$1.13 billion, with approximately 100.26 million shares outstanding and a short interest of about 4.4%. OII shares opened almost 9% higher yesterday at US$12.22 (+US$0.99, +8.82%) over the previous day’s US$11.23 closing price. The stock traded yesterday between US$12.12 and US$13.92 per share and closed for trading at US$13.08 (+US$1.88, +16.47%).

Disclosures:
1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

“The primary value of the Wave Principle is that it provides a context for market analysis”

By Elliott Wave International

Elliott waves reflect the repetitive patterns of mass psychology — so they are ideally suited for analyzing the widely traded main stock indexes.

On the other hand, thinly traded individual stocks may not trace out Elliott wave price patterns nearly as well.

That said, there are many individual stocks which are widely traded — like most of the big and well-known companies (and others which have captured the interest of investors).

Consider the stock of the largest bank in the U.S. Back in March, our Global Market Perspective showed this chart and said:

This chart shows the five-wave pattern of JPMorgan Chase’s rise from March 2009 to September 2021.

Of course, the completion of a five-wave up pattern means a downtrend is next. When that analysis published, the share price was $134.40. As of this intraday writing on Oct.3, it’s $106.79.

Let’s go back in time to review another example of how Elliott wave analysis can be applied to an individual stock.

This case-in-point involves GE. The September Elliott Wave Theorist was discussing wave analysis with individual stocks and showed these side-by-side charts and said:

The October 27, 2000 [Global Market Perspective] published the chart on the left, showing a completed Elliott wave in GE stock. This quarter-century pattern portended a major reversal. The chart on the right shows what happened thereafter.

Not every forecast based on the Elliott wave model works out perfectly. At the same time, keep in mind these words from Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating changes in direction is almost unbelievable.

If you’d like to read the entire online version of the book for free, you may do so once you become a member of Club EWI, the world’s largest Elliott wave educational community (approximately 500,000 worldwide members).

A Club EWI membership also opens the door to free access to a wealth of other Elliott wave resources — such as videos and articles from Elliott Wave International’s analysts.

Jump on the Club EWI bandwagon now by following this link: Elliott Wave Principle: Key to Market Behavior — get free and instant access.