This past year could one day be remembered as a watershed in the history of utilities, when a rare confluence of fundamental market changes and technological trends posed a serious challenge to the industry’s longtime business model.
While it’s perfectly understandable for income investors to feel anxious about the uncertainty such change entails, the prospect of an industry-wide transformation means there should be an abundance of new investment opportunities among those firms that rise to the challenge. In fact, we believe these disruptive trends will actually be productive by forcing executives to focus on building better utilities that can deliver value for decades to come.
To survive and thrive, utilities will have to embrace new business models, new technologies, new strategies, and perhaps even diversify into other businesses. These utilities will have to test and retest their assumptions and more boldly embrace the new frontiers of technology that are reshaping the industry.
Top Growth Companies To Watch In Right Now: Grupo Aeroportuario del Sureste, SAB de CV (ASR)
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR), incorporated in April 1998, is a holding company. The Company operates, maintains and develops nine airports in the Southeast region of Mexico. ASUR is a wholly owned company of the Mexican federal government. The Company operates in five segments: Cancun Airport and Subsidiaries (Cancun), Villahermosa Airport (Villahermosa), Merida International Airport (Merida) Servicios Aeroportuarios del Sureste, S. A. de C. V. (Servicios) and others. The Company�� nine airports are located in Cancun, Cozumel, Merida, Huatulco, Oaxaca, Veracruz, Villahermosa, Tapachula and Minatitlan. As of December 31, 2011, eight Mexican and 74 international airlines, including united States-based airlines, such as American Airlines and United Air Lines, were operating directly or through code-sharing arrangements in its airports. Tthe Mayan Riviera is served primarily by Cancun International Airport. The Company�� airports served approximately 17.5 million passengers, during the year ended December 31, 2011.
In 2011, the Company�� airports served a total of approximately 17.5 million passengers, approximately 57.5% of which were international passengers. In 2011, Cancun International Airport accounted for 74.2% of its passenger traffic volume and 72.8% of its revenues from its nine airports. The Company�� Cancun International Airport is located approximately 16 kilometers (10 miles) from the city of Cancun. During 2011, approximately 13.0 million passengers traveled through Cancun International Airport, principally through the old main terminal (Terminal 2) and the new terminal (Terminal 3). Merida International Airport serves the inland city of Merida and surrounding areas in the state of Yucatan. In 2011, approximately 1.2 million passengers traveled through Merida International Airport. The airport has two perpendicular runways, one with a length of 3,200 meters (2.0 miles) and another with a length of 2,300 meters (1.4 miles). The airport has one t! erminal, with four gates.
In 2011, approximately 17,732 metric tons of cargos were transported through Merida International Airport. There were 34 businesses operating in Merida International Airport, as of December 31, 2011. Cozumel International Airport is located on the island of Cozumel in the state of Quintana Roo. The airport primarily serves foreign tourists. During 2011, approximately 441,692 passengers traveled through Cozumel International Airport. Villahermosa International Airport is located in the state of Tabasco, approximately 75 kilometers (46.9 miles) from Palenque, a Mayan archeological site. During 2011, the airport served approximately 851,264 passengers. Oaxaca International Airport serves the city of Oaxaca. The airport served approximately 401,320 passengers, in 2011. There were 17 businesses operating at Oaxaca International Airport, as of December 31, 2011.
Veracruz International Airport is located in the city of Veracruz along the Gulf of Mexico. In 2011, the airport served approximately 867,438 passengers. The airport has one commercial terminal. The airport has two perpendicular runways, one with a length of 2,400 meters (1.5 miles) and another with a length of 1,523 meters (one mile). The airport also has a general aviation building for small private aircraft with 23 positions. Huatulco International Airport serves the Huatulco resort area in the state of Oaxaca on Mexico�� Pacific coast. The airport served approximately 459,640 passengers, in 2011. The airport has one runway with a length of 2,700 meters (1.7 miles). The airport�� terminal has five remote positions. The airport has a general aviation building for small private airplanes with eight positions. There were 19 businesses operating at Huatulco International Airport, as of December 31, 2011. Tapachula International Airport serves the city of Tapachula. In 2011, the airport served approximately 161,892 passengers.
The airport has one runway with a length of 2,000 meters! (1.3 mil! es). The airport has one terminal with three remote boarding positions. The airport also has a general aviation building for small private aircraft with 24 boarding positions. There were 17 businesses operating at Tapachula International Airport, as of December 31, 2011. Minatitlan International Airport is located near the Gulf of Mexico. In 2011, the airport served approximately 108,521 passengers. The airport has one runway with a length of 2,100 meters (1.3 miles). The airport�� main terminal has four remote parking positions. The airport has a general aviation building for small private airplanes with 30 boarding positions. There were 13 businesses operating at Minatitlan International Airport, as of December 31, 2011.
Aeronautical Services
The Company�� revenues from aeronautical services are derived from passenger charges, landing charges, aircraft parking charges, charges for the use of passenger walkways and charges for the provision of airport security services. Charges for aeronautical services generally are designed to compensate an airport operator for its infrastructure investment and maintenance expense. Aeronautical revenues are principally dependent on three factors, which include passenger traffic volume, the number of air traffic movements and the weight of the aircraft. Approximately 54.6% of its total revenues were derived from aeronautical services, in 2011. ASUR collects a passenger charge for each departing passenger on an aircraft.
The Company collects various charges from carriers for the use of its facilities by their aircraft and passengers. For each aircraft�� arrival, it collects a landing charge that is based on the average of the aircraft�� maximum takeoff weight and the aircraft�� weight without fuel. The Company also collects aircraft parking charges based on the time an aircraft is at an airport�� gate or parking position. It also assesses an airport security charge, which is collected from each airline based on the nu! mber of i! ts departing passengers. The Company provides airport security services at its airports through third-party contractors. ASUR also provide firefighting and rescue services at ASUR's airports.
Non-aeronautical Services
ASUR�� from non-aeronautical services are derived from commercial activities, such as the leasing of space in its airports to retailers, restaurants, airlines and other commercial tenants, and access fees charged to providers of complementary services in its airports, such as catering, handling and ground transport. In 2011, the Company opened nine commercial spaces, including six in Cancun, one in Cozumel, one in Minatitlan and one in Tapachula. Within the Company�� nine airports, it leased approximately 221 commercial premises, as of December 31, 2011, including restaurants, banks, retail outlets, currency exchange bureaus and car rental agencies. At each of its airports, ASUR earns revenues from charging access fees to various third-party providers of services, including luggage check-in, sorting and handling, aircraft servicing at ASUR's gates, aircraft cleaning, cargo handling, aircraft catering services and assistance with passenger boarding and deplaning. Seven different contractors provide handling services at its nine airports. Each of the Company�� airports has public car parking facilities consists of open-air parking lots. At each of its airports, security services are provided by independent security companies that the Company hires.
Advisors' Opinion:- [By Aubrey Pringle]
Detour Gold Corp. and Alacer Gold (ASR) Corp. each added at least 6.8 percent to pace advances among producers of raw materials. Maple Leaf Foods Inc. jumped 10 percent as the company said it might sell its 90 percent stake in Canada Bread Co. Athabasca Oil Co. slid 2.9 percent to the lowest since May to pace declines among energy producers.
- [By Seth Jayson]
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Grupo Aeroportuario del Sureste (NYSE: ASR ) , whose recent revenue and earnings are plotted below.
Hot Electric Utility Companies To Own In Right Now: Retail Opportunity Investments Corp.(ROIC)
Retail Opportunity Investments Corp., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of necessity-based community and neighborhood shopping centers in the eastern and western regions of the United States. As of December 31, 2011, its portfolio consisted of 30 owned retail properties totaling approximately 3.2 million square feet of gross leasable area. The company has elected to be taxed as a REIT, for U.S. federal income tax purposes. The company is based in White Plains, New York.
Advisors' Opinion:- [By David Trainer]
Over the past few years, SWK has demonstrated little ability to grow NOPAT organically. Instead, the company has relied on big acquisitions to fuel growth. This strategy is unsustainable because the company cannot indefinitely pump more capital into the business while getting back proportionally less cash flow (NOPAT). That strategy leads to declining ROICs, which is what the company is doing now. Figure 1 contrasts SWK's rising NOPAT with its declining return on invested capital (ROIC). Investors should focus on the bottom line, which is ROIC, not the top line revenues or earnings because those metrics ignore the amount of invested capital used to generate them.
- [By David Trainer]
Pilgrim's Pride Corp (PPC) is another one of my least favorite holdings in FVL. PPC is not a bad company. Its return on invested capital (ROIC) of 9% puts it near the median of all the companies we cover. The issue for PPC is its valuation. To justify its price of ~$17/share, PPC would need to grow after-tax profit (NOPAT) by 12% compounded annually. There is not a lot of value in this stock or this "value" index.
- [By David Trainer]
Kroger (KR) is one of my favorite stocks held by All Cap Blend ETFs and mutual funds and earns my Attractive rating. Kroger has grown profits (NOPAT) consistently since 1998 with a compounded annual growth rate of 8%. While Kroger's return on invested capital (ROIC) of 7% may not be top of the heap, its cost of capital (WACC) is less than 5%, allowing it to achieve positive economic earnings that have grown at a rate of 45% compounded annually since the financial crisis in 2008. Despite KR's excellent past few years, the stock is still trading at ~$37.63/share, giving KR a price to economic book value ratio of 0.7, implying that the market expects KR's profits to permanently decline by 30%. Judging by KR's past few years and its recent acquisition of expanding rival Harris Teeter (HTSI), this looks extremely unlikely, and investors should jump on while the stock still trades at a discount.
Hot Electric Utility Companies To Own In Right Now: Hi Crush Partners LP (HCLP)
Hi Crush Partners LP, formerly Hi-Crush Partners LP, is a domestic producer of monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. The Company reserves consist of Northern White sand, a resource existing in Wisconsin and limited portions of the upper Midwest region of the United States. It owns, operates and develops sand reserves and related excavation and processing facilities and will seek to acquire or develop additional facilities. The Company's 561-acre facility with integrated rail infrastructure, located near Wyeville, Wisconsin, enables it to process and deliver approximately 1,600,000 tons of frac sand per year. In June 2013, Hi Crush Partners LP announced the completion of its acquisition of D&I Silica, LLC (D&I).
The Company�� frac sand production is sold to investment grade-rated pressure pumping service providers under long-term, contracts that require its customers to pay a specified price for a specified volume of frac sand each month. The Company owns and operates the Wyeville facility, which is located in Monroe County, Wisconsin and, as of December 31, 2011, contained 48.4 million tons of proven recoverable sand reserves of mesh sizes it has contracted to sell. From the Wyeville in-service date to March 31, 2012, it had processed and sold 555,250 tons of frac sand.
Advisors' Opinion:- [By Robert Rapier]
MLPs that specialize in sand for hydraulic fracturing, like�Hi-Crush Partners�(NYSE: HCLP) and�Emerge Energy Services�(NYSE: EMES), �have shown outstanding performance since their IPOs, but if there is any slowdown in business each could be in for a sharp correction.
Hot Electric Utility Companies To Own In Right Now: Applied Nanotech Holdings Inc (APNT)
Applied Nanotech Holdings, Inc., incorporated on May 22, 1989, is engaged in nanotechnology research and development business. The Company's nanotechnology research involves performing contract research and development services for others to develop products and materials for new applications, and then leveraging this research by applying it to other similar applications in other industries. The Company also develops intellectual property (IP) around its products and technologies. The Company develops five technology platforms: nanosensor technology; nanocomposites, based on carbon nanotube composites; thermal management materials; nanoelectronics applications, and electron emission activities, primarily in the display area. The Company's electron emission IP is divided into display activities and non-display activities. Applied Nanotech Holdings, Inc. is the parent company. Applied Nanotech, Inc. (ANI) is a subsidiary of ANHI. During the year ended December 31, 2012, the Company formed EZDiagnostix, Inc., (EZDX).
Sensors
The Company develops sensors based on ion mobility sensor technology and differential mobility spectroscopy. The Company is involved in projects to develop Mercaptan and Methane sensors for uses in the natural gas industry. The Company is also applying this technology to other applications, including agricultural pathology, wound care, and breath analysis. The Company develops hydrogen sensor for use in the measurement of hydrogen in power transformer products. The Company develops carbon monoxide sensor that can last for 10,000 hours on a single battery. The Company's carbon nanotube technology is for use in biosensors. Sensors based on carbon nanotubes or other nanomaterials can be used to detect chemical, organic, or biological warfare agents, as well as explosives, hydrogen, ammonia and numerous other chemicals.
Nanocomposites
The Company is in the advanced stages of development of nanomaterials using carbon nanotube (CNT) and! other composites. Epoxies are used in industries with worldwide markets, with applications, including adhesives, paints, coatings, and composites. In addition to epoxy resins, the Company develops other types of resins, including polyesters and vinyl esters. Vinyl esters are used in a variety of industrial applications, including storage tanks, piping, and construction. The Company develops a process for coating nylon pellets with CNTs to improves electrical conductivity. Nylon 6 with improved electrical conductivity can be used for its anti-static qualities, electrostatic discharge, and electromagnetic/RF shielding.
Thermal Management
The Company markets thermal management material called CarbAl. CarbAl provides a passive thermal management solution for temperature control issues that plague electronics manufacturers. CarbAl is a carbon based metal nanocomposite comprised of 80% carbonaceous matrix and a dispersed metal component of 20% aluminum. The Company also develops a simplified version of CarbAl based on graphite.
Conductive Inks
The Company develops aluminum and silver inks and pastes that is ideal for use in the production of solar cells. The Company also develops aluminum paste that can be used in current solar cell production.
The Company competes with Zyvex Performance Materials, GSI Creos, Amroy Europe, Ltd., DuPont and Ferro
Advisors' Opinion:- [By Anuchit Nguyen]
India�� S&P BSE Sensex rose, holding at a three-year high, amid better-than-estimated corporate earnings. Engineering company Larsen & Toubro Ltd. (LT) rallied to a three-month high and Asian Paints Ltd. (APNT) surged about 6 percent after reporting profit that beat forecasts.
Hot Electric Utility Companies To Own In Right Now: VizStar Inc (VIZS)
VizStar, Inc. (VizStar), formerly Easy CD Yearbook, Inc., incorporated on June 27, 2006, is a development-stage company. The Company focuses to market software, which enables schools, clubs and organizations to produce their own multimedia yearbook. On June 11, 2010, Celestial Jets, Inc. (Celestial Jets) merged with the Company. Celestial Jets merged (the merger) with and into the Company�� wholly owned subsidiary, Celestial Acquisition Corp. Upon the merger, the name of Celestial Acquisition Corp. became Celestial Jets, Inc. In December 2012, the Company acquired Kimberly Parry Corporation.
A multimedia yearbook is a compact disc (CD)/ digital versatile disc (DVD), which contains video, photos, audio and text that is personal computer (PC) and Mac compatible. As of May 31, 2010, the Company had no revenues.
The Company competes with Yeardisk, Digital Journey LLC and Interactive Software Designs.
Advisors' Opinion:- [By Peter Graham]
Small cap stocks VizStar Inc (OTCMKTS: VIZS), SOHM Inc (OTCMKTS: SHMN) and American Soil Technologies, Inc (OTCMKTS: SOYL) have been getting some attention in various investment newsletters with two out of three of these stocks being the subject of paid promotions. However, there is nothing wrong with some paid for attention so long as everything is properly disclosed, but its going to be up to investors and traders alike to ultimately decide whether any of these stocks have what it takes to be the next hot stock. With that in mind, here is a quick reality check about all three small cap stocks:
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