Friday, October 31, 2014

Wasatch International Growth Fund Comments on CALBEE Inc

Calbee (TSE:2229) is the dominant snack-food brand in Japan with over 50% market share. The company has stable and cash-generative domestic operations that continue to gain market share. Recent growth has been fueled by the increasing contribution of high-margin international sales. After years of conservative investment in international markets, the company's positioning has resulted in stronger overseas investments driving sales growth.From Wasatch International Growth (Trades, Portfolio) Fund Q3 2014 Commentary.Also check out: Wasatch International Growth Undervalued Stocks Wasatch International Growth Top Growth Companies Wasatch International Growth High Yield stocks, and Stocks that Wasatch International Growth keeps buying

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Thursday, October 30, 2014

Seattle Genetics, Inc. Posts Record Adcetris Sales

Seattle Genetics (NASDAQ: SGEN  ) is up in after-hours trading after posting record sales for its blood cancer drug Adcetris, and raising guidance for the year. The biotech sold $48 million worth of Adcetris in the U.S. and Canada, a 32% year-over-year increase.

Seattle Genetics also booked $8 million worth of royalty revenue from sales of Adcetris by its overseas partner Takeda. The drug is now approved in 47 countries, including 11 new approvals in the last 12 months.

In the U.S., the big driver of sales is coming from off-label use treating Hodgkin lymphoma to knock back the lymphoma so patients can get a stem cell transplant. Adcetris is currently only approved to treat Hodgkin lymphoma patients that have failed a stem cell transplant, so Seattle Genetics can't promote it for use before stem cell transplants, even if doctors are choosing to use it then.

On the back of a strong third quarter, Seattle Genetics raised its guidance for sales of Adcetris this year to between $172 million and $177 million. That guidance implies fourth-quarter sales of $40 million to $45 million.

If you're playing along at home, you'll notice that's less than the $48 million in the third quarter. The holiday season will result in less shipping days, which will affect sales; but it doesn't necessarily mean that demand is down. The aforementioned off-label sales could also diminish -- they tend to be lumpy as doctors explore what's working. And, of course, there's a good chance that management is just sandbagging its guidance.

Looking forward, Adcetris sales growth should come from consolidation therapy immediately following an autologous stem cell transplant in patients with Hodgkin lymphoma. Using it on all patients -- not just those who have failed a stem cell transplant -- will obviously increase sales.

Seattle Genetics recently presented top-line data for a trial in that indication, which showed Adcetris significantly extended survival without the lymphoma progressing, referred to as progression-free survival. We'll get more data on the trial at the American Society of Hematology meeting in December, where Seattle Genetics expects to have data presented at eight oral presentations. The company plans to submit an application to the FDA in the first half of 2015 for using Adcetris as a consolidation therapy, which would put it on track for an approval toward the end of next year or in early 2016.

Of course, Seattle Genetics is more than just Adcetris. The drug is built on its antibody drug conjugate technology, which the biotech has licensed to 12 different companies, including Genmab, which signed up for a second collaboration in September. During the quarter, three of the collaborators -- GlaxoSmithKline (NYSE: GSK  ) , Takeda, and Bayer -- moved drugs along in the clinic, triggering milestone payments.

Seattle Genetics isn't profitable yet; but with $340 million in cash and investments, solid growth in sales of Adcetris, and potential for future royalties from collaborators' drugs, the biotech looks like it's in good shape for now.

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Wednesday, October 29, 2014

Nearly 60,000 Pounds of Chicken Parts Recalled Nationwide

#fivemin-widget-blogsmith-image-350949{display:none}.cke_show_borders #fivemin-widget-blogsmith-image-350949,#postcontentcontainer #fivemin-widget-blogsmith-image-350949{width:570px;display:block} Meat Company Recalls Nearly 32,000 Pounds Of Breaded Chicken Two food production companies recalled nearly 60,000 pounds of chicken products because of possible staph and Salmonella contamination, the Agriculture Department's Food Safety and Inspection Service said. A third company recalled 377 pounds of broccoli kale salad with chicken. Murray's Inc. of Lebanon, Pennsylvania, on Sunday recalled 31,689 pounds of gluten free breaded chicken products that may be contaminated with Staphylococcal enterotoxin, the FSIS said. The products are dated Aug. 9 and were packed in 12-ounce and 10.5-ounce boxes under the Bell & Evans brand. The problem was discovered by the Colorado Department of Agriculture during a retail surveillance and sampling program. Staphylococcal food poisoning is a gastrointestinal illness. Aspen Foods Division of Koch Meats of Chicago on Saturday recalled 28,980 pounds of chicken products that may be contaminated with Salmonella Enteritidis, FSIS said. The chicken was sold under the Antioch Farms brand name in five-ounce packets with sell-by dates of Oct. 1 and Oct. 7. Salmonellosis produces diarrhea, abdominal cramps and fever within 72 hours of consumption. Taylor Farms of Swedesboro, New Jersey, on Saturday recalled 377 pounds of Signature Cafe Broccoli Kale Salad with chicken for misbranding that neglected to list walnuts among the ingredients. The salads were sold in 9.75-ounce plastic clam shell packages with use-by dates of Oct. 23, 25 and 27.

Tuesday, October 28, 2014

HealthSouth (HLS) Stock Declining in After-Hours Trading Following Earnings Release

NEW YORK (TheStreet) -- HealthSouth (HLS) shares are down 1.5% to $39.94 in after-hours trading on Monday after the company released its third quarter earnings results after the closing bell today.

The country's largest owner and operator of inpatient rehabilitation hospitals reported a 5.8% increase in consolidated net operating revenues to $596.9 million, ahead of analysts expectations of $595.2 million.

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Earnings for the period were 53 cents per diluted share, 4 cents better than the consensus analysts expectations.

However, the company's shares are declining after it narrowed its full year earnings guidance to between $2.24 and $2.27 per diluted share from its previous expectations of $2.25 to $2.31 per share. TheStreet Ratings team rates HEALTHSOUTH CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation: "We rate HEALTHSOUTH CORP (HLS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows: You can view the full analysis from the report here: HLS Ratings Report HLS Chart HLS data by YCharts

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Sunday, October 26, 2014

Home Buying 101: Fixed or Adjustable-Rate Mortgage?

Your choice: fixed or adjustable-rate mortgage? Joe Raedle/Getty ImagesProspective homebuyer Juan Carlos Correa, left, is shown a home by a real estate agent in Coral Gables, Florida. Adjustable-rate mortgages got a bad rap after the housing bust. Many homebuyers used the low initial interest rates on adjustable loans to keep payments low, but weren't able to afford to pay their mortgage when the loans reset to a much higher rate a few years later. In the years since, banks have tightened their lending standards to ensure borrowers who get adjustable-rate loans, or ARMs, can afford a rate reset. And as interest rates have begun to rise, ARMs have become a more attractive option for homebuyers seeking the lowest rate on a home loan. Last month, ARMs made up 8.2 percent of all home loan applications, up from 7.7 percent in February and matching the level in December, according to the Mortgage Bankers Association. The last time ARMs' share of mortgage applications has been at least this high was June 2008. Mortgage rates have risen almost a full percentage point since hitting record lows about a year ago. At the same time, the spread in the rates between adjustable loans and fixed-rate loans has widened. The average U.S. rate on a fixed, 30-year home loan ticked up to 4.33 percent from 4.27 percent last week, according to mortgage buyer Freddie Mac. By comparison, the average rate on a five-year adjustable mortgage stood at 3.03 percent. But is an adjustable-rate mortgage right for you? Here are some things to consider when weighing whether to take on an adjustable-rate mortgage: Length of Ownership Banks typically offer adjustable-rate mortgages with a fixed interest for five, seven or 10 years. After that initial period, the loans could reset to a higher rate, sometimes multiple times. That's why it can make good financial sense to use an ARM when buying a home that you plan to sell before the initial fixed-rate period ends, say in less than five years. In that scenario, you'd pay a lower interest rate that if you had a 30-year, fixed loan and then sold the home within five years. "If the homebuyer plans on staying in the home for a period longer than the initial rate lock, consider a fixed-rate loan, particularly while we're still enjoying historically low mortgage rates," says Don Grant, a certified financial planner in Wichita, Kansas. Lending Requirements Banks typically don't hold on to loans until they're paid off by borrowers. They sell them to investors or, in many cases, government-owned mortgage buyers like Fannie Mae and Freddie Mac. But to do this they must follow the government's lending standards when they qualify a borrower for a loan. Those lending standards were tightened as home loan defaults skyrocketed after the housing crash. That's made it tougher to qualify for a home loan, but particularly an adjustable-rate mortgage, says Rick Sharga, executive vice president at home auction site Auction.com. "They have to give you that loan based on your ability to make payments at a higher rate than your initial monthly rate, and that's a big, big difference," Sharga says. "It makes it harder to get an adjustable-rate loan today than it did during the boom." A key factor that lenders consider when evaluating credit worthiness is the borrower's debt-to-income ratio, or how much of their income goes to cover debt payments. Expect that anything above 43 percent debt will rule out most borrowers, although the lender may take into account the borrower's prospects for earning more money or paying down existing debt after a few years. While there are exceptions, it's unlikely that someone who fails to qualify for a 30-year mortgage will be approved for an adjustable-rate loan, says Cameron Findlay, chief economist for Discover Home Loans. "Not qualifying for a 30-year, fixed [mortgage] definitely is suggesting there is a challenge there somewhere with your credit qualification," he says. Payment Preferences ARMs can offer a lower monthly payment than fixed-rate loans. That means you can put that extra money to pay down other debt or use it to invest, for example. The typically lower interest in an ARM also means more of the monthly payment goes toward principal, accelerating the homebuyer's equity in the home, notes Grant. But if you're more comfortable with the security that your payments won't go up, stick with a fixed-rate loan. "The ability to lock in the biggest component of your household budget and know that it's not going to increase in years to come is a key step toward being able to increase your lifestyle and savings in the years ahead," says Greg McBride, chief financial analyst at Bankrate.com. Loan Rate Adjustments Many ARMs now come with a limit on how much the rate can potentially increase beyond the initial fixed period. Take a standard 5/1 ARM. This is a loan that has a fixed rate for five years and then resets in year six. A loan like this can be structured with an initial increase that's capped at 2 percent, followed by subsequent rate hikes also capped at 2 percent. But it won't rise more than 5 percent overall over the lifetime of the loan. When you sit down with your lender to discuss an adjustable-rate mortgage, ask them to lay out the details of when the loan will begin to reset and by how much. You'll also want to know exactly how much your payment will increase.

Friday, October 24, 2014

Nucor Q3 Earnings: Strong Results in a Tough Environment


Steel-intensive, nonresidential construction projects like this one remain near historic lows. Source: Nucor.

Another quarter, another strong performance by steelmaker extraordinaire Nucor  (NYSE: NUE  ) . Revenue for the quarter came in at $5.7 billion, 8% above last year's quarter and well above the market's expectation of $5.37 billion. Earnings also came in strong, with EPS of $0.76 coming in above both Nucor's guidance and analyst estimates.

However, there are still a number of headwinds in the steel industry, so despite the improved results even Nucor has a lot of work ahead of it. Let's take a deeper look at the earnings release. 

Operational improvements and product mix behind profit growth

Steelmakers have high fixed costs than can be tough to lower in periods of declining demand. Because of these high costs, even a small reduction in output can have an outsize impact on earnings and cash flow. Nucor has long been an industry leader at managing its fixed costs and responding to the market environment. 

DRI produced in Louisiana. Source: Nucor.

Much of this profit growth can be summed up in one key metric: utilization rates.

So far this year, the company's utilization rate is significantly improved compared to last year, increasing from 74% in 2013 to 78% so far in 2014. This is one big driver of improved profits in 2014 versus last year. 

The company also pointed to improved profitability in its fabricated construction products business versus the second quarter of this year, due to improvements in the nonresidential construction market. While total revenues increased 15% over last year, total tons shipped increased only 10%, meaning that Nucor was able to command higher prices. This was driven both by higher-price products and by some cost increases it was able to pass along. 

Headwinds remain 

While Nucor has been able to raise its prices modestly, imports continue to put pricing pressure on the steel market. However, the tariffs implemented earlier this year do seem to be having some impact on improving conditions for domestic steelmakers. 

However, tariffs won't do anything to improve the demand picture. While there has been strength in supplying manufacturing goods for the automotive market and the energy industry, the building industry -- both residential and especially nonresidential -- remain at historically low levels of production. Until the demand cycle turns, Nucor and the rest of the industry will continue competing for a smaller pie. 

Looking forward 

Nucor completed its acquisition of Gallatin Steel in the quarter, which will expand its capacity of flat-rolled steel -- used for pipe and tube steel -- by about 10%, and in the Midwest, where demand is the highest. This facility will be able to use direct-reduced iron from Nucor's Louisiana DRI plant, a further benefit of this facility and its scale. 

Nucor continues doing what it does best: making smart acquisitions that fit within its operational strategy, investing in growth, and keeping its costs low, while positioning the company to remain profitable in bad markets as well as good ones.

It's tough to say when the steel demand cycle will fully rebound. However, Nucor will clearly be ready when it happens. Until then, it remains the most operationally sound steelmaker in the industry, and its management team keeps investing in growth and stability -- a hard thing to do in a tough industry. 

If you're looking for a consistent dividend, Nucor and its 3% yield will be steady. However, I wouldn't count on any significant payment increases before the steel market recovers.

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Tuesday, October 21, 2014

Retail Investors ‘Buy the Dip’ Too

Professional investors weren't the only ones buying the dip last week.

More than half of the individual "active investors" polled by Fidelity Investments said on Oct. 9 that they would buy stocks during a broader market decline of 5% or more. For any readers who have been on vacation without cell reception for the past two weeks, that's just what happened. The S&P 500 fell 7.4% from its Sept. 18 high to its Oct. 15 low.

The Wall Street Journal

It has proven profitable over the past year to step in and buy stocks during any market declines, analysts and strategists note. So during the latest declines, Wall Street was warily watching to see whether the "buy the dip" strategy would pay off yet again.

But Fidelity's active individual investors, who make several trades each month, sounded confident.

"This was definitely a bullish crowd," said Ram Subramaniam, head of the firm's brokerage division.

An average 2,239 active investors answered each question. When Fidelity did the poll, the S&P 500 had already dropped 4.1% from its high. So it wouldn't be a stretch to guess that the 57% of individuals who said they would buy stocks after a 5% decline were jumping into the market last week. The active investors were fans of technology and health-care stocks in particular, the firm said.

Of course, that group was entirely made up of active investors, who tend to pay closer attention to market moves, and sometimes have a stronger appetite for risk.

Across all of Fidelity's15 million brokerage accounts, individuals were buying stocks as well. But they weren't quite as sanguine about the pullback.

The broader customer base sent 1.24 buy orders for every sell order for stocks last week, meaning they were still more bullish than bearish. But that was down from 1.26 during the second quarter and 1.32 in the first quarter, the firm said.

And during the first eight trading sessions of October, individuals still sent cash into stocks, but bought 38% less than the same period the month before, according to a firm representative. Instead of piling into stocks, they crowded into the perceived safety of the bond market, as the money going into bonds doubled from the same period in September. They jumped into that market during a steep rise in Treasury prices, which briefly pushed the rate on the 10-year note below 2%.

Saturday, October 18, 2014

Market Wrap-up for Oct. 17 – A Tumultuous Week in Review

The Columbus Day holiday on Monday made for a slow start, but as the big-name third quarter earnings were released, and the markets started to crumble, it wound up being a very eventful week.

Tuesday Highlights

The big banks, including JP Morgan (JPM), Wells Fargo (WFC) and Citigroup (C), started to release earnings on Tuesday – each of them reporting higher net income from last year, but not all matching analysts’ expectations.

JP Morgan – Turned a profit from last year, but missed earnings estimates. Shares dropped. Wells Fargo – Reported higher net income and beat analysts’ expectations. Shares declined. Citigroup –  Posted higher profits and beat estimates. Shares increased.

Tuesday also included an earnings release from Johnson & Johnson (JNJ). The healthcare giant posted higher earnings and revenue, both beating estimates. Despite the positive results, shares took a steep turn downward. After hours, Intel (INTC) released positive earnings news, reporting that profit and revenue had increased and were above estimates.

Wednesday

Bank of America (BAC) and PNC Financial Services (PNC) both reported lower results, but both beat analysts’ estimates. Despite Bank of America’s net loss, analysts reported that they remained bullish on the bank as its legal troubles are coming to an end.

When the markets opened on Wednesday, it soon became a gloomy day after a disappointing retail sales report was released and fears of a global economic slowdown panicked investors. Towards the end of the trading day, the market rebounded after Janet Yellen reported that she has confidence in the U.S. economy.

Thursday

Thursday began with a positive Jobless Claims report that was released before the market opened, indicating that the number of people applying to unemployment is at its lowest since April 2000. The pre-market also came with several big earnings releases:

Mattel (MAT) – Reported a 22% drop in earnings, which missed estimates. Shares dropped. Phillip Morris (