Quantcast

PRO Weekly Digest: Revisiting Healthcare Ideas, Plus Some Of Our Top Articles This Week


Shutterstock photo
By SA PRO Editors :

Welcome to the latest issue of the PRO Weekly Digest. Every Saturday, for Seeking Alpha PRO subscribers, and Sunday, for all other Seeking Alpha users, we publish highlights from our PRO coverage as well as feature interviews and other notable goings-on with SA PRO. Comment below or email us at pro-editors at seekingalpha.com to let us know what you think. Find past editionshere.

Notable PRO articles this week

In addition to the four Top ideas we published this week, we wanted to highlight a few of our PRO editors' favorite PRO ideas this week:

SA Editor John Leonard, CFA : The New York Trust (a new Seeking Alpha author who focuses on special situations) discusses why Sutherland Asset Management ( SLD ) is an undiscovered newly public company trading below TBV (and a significant discount to peers) with a unique business model and increasing dividend.

SA Editor Jeffrey Fischer, CFA : Illuminati Investments originally called out Conn's Ltd ( CONN ) in early 2014 regarding its short-sighted over-reliance on subprime customers, with great timing and success. After a recent turnaround in shares of CONN, Illuminati is warning that nothing has really changed.

PRO Managing Editor Daniel Shvartsman : Silky Oak Capital digs into the various segments of Rentech ( RTK ) and makes a compelling case for upside in all but the most extreme cases. In the speculative pile, perhaps, but it's worth taking a look at for micro-cap investors.

Elephant Capital shared his second idea on Seeking Alpha this week. His first, Long ClickSoftware Technologies (CKSW) in 2014 worked well for investors as the stock was acquired at a 50-60% premium to the price at publication 11 months later. This one is also a tech takeover target , as he feels Allot Communications ( ALLT ) could attract activists as well as potential suitors (and reports on one company already rumored to be looking at ALLT). The stock has had PRO coverage before but hasn't played out yet.

Calls from the archive - AGN, TEVA, and ESRX

The healthcare sector is back in the news given President-elect Donald J. Trump's recent comments about drug prices. In light of that, we wanted to pull a few PRO ideas from the archive that might be of interest.

First, Graham Osborn wrote up Allergan ( AGN ) and Teva (TEVA) this spring as shorts in light of their transaction, limits on AGN's business model, and the heavy debt burden TEVA was about to take on. The TEVA price target has already been hit, and AGN is close to the post-deal price target he set, but given the pressures in the industry and TEVA's debt load, it may be worth revisiting. It's an interesting case given that Osborn was early to the Valeant (VRX) story (writing it up in May 2015) and that AGN is often considered a contrast to Valeant.

In fact, there are a few solid cases on AGN as a long. For example, Thomas Lott called Allergan a buy after the Pfizer (PFE) deal broke. The headlines are changing every day, but the fundamentals of both AGN and TEVA may be of interest to readers.

Separately, Express Scripts (ESRX) found itself in the news Thursday after Citron Research tweeted about the company as a prime target for the new administration in the case it looks to rein in drug prices. We published a Sohn investment idea contest entry from a buyside analyst, JRE Capital Partners, making a similar fundamental case . It starts with concerns about how ESRX makes sizable margins given its purported offering of lower drug costs. It also reviews the Anthem (ANTM) lawsuit and the claims brought up therein. With an obsolete business model and waning growth, the author felt the stock should trade at $25/share (vs. ~$75 at the time). The stock was mostly flat until the Citron-induced dip, so it may be still in play for readers. (Note that the article is a PowerPoint presentation).

PRO idea playing out

iRobot (IRBT) is up ~60% since Magic Investments wrote a bullish thesis in June 2016 (which was also a notable entry in the Industry Leader contest ). IRBT was a classic GARP play with solid cash flow, no debt, a leading market position and long runway, driven by growth in the robotics market. Several of the expected catalysts have been realized, including 2Q and 3Q16 earnings beating consensus estimates by a wide margin (management also increased full-year guidance for the second quarter in a row) and the Braava jet driving growth in the APAC market.

In a follow-up comment earlier this month, Magic Investments reiterated the bullish long-term thesis/outlook though noted that IRBT was close to fair value and advised investors to wait for a dip before buying.

Next week

We are sharing a new interview next week. PRO subscribers will automatically receive this in their inbox. If you are not a PRO subscriber and would like to be notified of this, click follow at the top of this article to follow the SA PRO Editors account, or click to subscribe to the free newsletter below to receive these in your inbox. And if you're interested in SA PRO, check out the details here to sign up or learn more.

See also Filloon's Oil Update: The OPEC/Non-OPEC Deal And 2017 Investment Opportunities In The Oil Patch on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: SLD , CONN , ALLT , AGN



More from SeekingAlpha







SeekingAlpha
Contributor:

SeekingAlpha

Market Commentary










Research Brokers before you trade

Want to trade FX?