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Google, Apple and Microsoft are arguably three of the most successful companies of the past decade. They've made early shareholders filthy rich.
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| | | 10/14/2014 By Thomas Scarlett 
Metals plays are always something to consider in an uncertain market. The minds of investors often go to gold and silver, but what about a metal that is even stronger than either of those -- titanium. Accelerating demand for titanium in key economic sectors indicates that this versatile and ultra-strong metal will exhibit the true Midas touch.
Exchange-traded funds (ETFs) invested in metals also include more volatile holdings such as gold, so the purest play on rising titanium demand is the stock of the best-positioned producer.
The titanium stock with the most luster now is Allegheny Technologies Inc.(NYSE: ATI), which produces and sells specialty metals worldwide. The company not only dominates the market in the silvery metal, but recent soft demand has left its share price at bargain-basement prices, just as the company's customers are beginning to clamor for more titanium.
The company operates in three segments: High Performance Metals, Flat-Rolled Products and Engineered Products.
The High Performance Metals segment provides various alloys, including those based on titanium, nickel, cobalt, and zirconium, primarily in the form of ingots, bars, rods, wires, seamless tubes, precision castings, and machined parts.
The Flat-Rolled Products segment provides most of the same alloys, in the form of plates, sheets, engineered strips, and precision rolled strip products.
The Engineered Products segment offers tungsten in the form of powders, carbide materials and carbide cutting tools.
Founded in 1960 and based in Pittsburgh, the company's customers include major manufacturers that are back on their feet, as the global economy improves.
The resurgent aerospace sector is especially hungry for titanium. To be sure, carbon fiber composites are in great demand for aircraft construction and represent a promising investment theme, but today's advanced flying machines also require titanium---lots of it.
According to the consultancy Research and Markets, the global titanium products industry will reach $6.9 billion in annual revenue in 2017, representing a five-year compound annual growth rate of 5.3 percent from 2012-2017.
In the United States, the aerospace industry accounts for more than 70 percent of titanium demand, while industrial applications predominate in other countries, such as China.
Boeing (NYSE: BA), the world's leading aircraft maker, requires huge amounts of the super-alloy for its commercial and military airplanes, especially its Dreamliner 787, the world's most advanced long-haul commercial jet liner.
Allegheny's major competitors include Carpenter Technology Corp. (NYSE: CRS), which sports a market cap of $2.36 billion, slightly lower than Allegheny's market cap of $2.82 billion. Allegheny is a stronger, more direct play on growing titanium demand, largely due to its historical relationships with large customers in key sectors. Allegheny Technologies reported second quarter 2014 sales of $1.119 billion and a loss from continuing operations of $3.8 million, or $(0.03) per share. Second quarter 2014 results include $4.0 million pre-tax, or $2.8 million, net of tax, of Hot-Rolling and Processing Facility (HRPF) start-up costs, and $11.4 million pre-tax, or $8.1 million, net of tax, of costs related to the Rowley titanium sponge facility Premium Quality (PQ) qualification process. "We continued to see improvement in end market demand as we moved through the second quarter 2014. Sales increased 13% compared to the first quarter 2014 due to improved demand for our nickel-based alloys and superalloys, and titanium alloys in the High Performance Materials & Components segment, as well as increased shipments in our Flat Rolled Products segment," said Rich Harshman, Chairman, President and Chief Executive Officer. "Demand from the jet engine market is improving for both new builds and aftermarket spares. Sales to the oil & gas market in the second quarter 2014 were 30% higher than in the first quarter. The markets for flat-rolled stainless sheet and plate and grain-oriented electrical steel continue to improve and modest base price increases are being realized on non-contract business. In addition, demand from global projects in the industrial titanium market is beginning to shows signs of modest improvement after a period of stagnation." Despite the company's strong fundamentals, ATI shares have been in a slump in recent months. From a high of 46 back in June, the stock has fallen to the neighborhood of 34. The market seems to be overreacting to some of the less positive news in the company's latest earnings report. But the company has demonstrated the ability to come back from adversity before, and the price trend has already turned upward. The stock rates a buy up to 42. Tom Scarlett is an investment analyst at Personal Finance. | | |
Got 9 minutes a week to spare? I'll show you how you can collect at least $6,833 every month – GUARANTEED. That's $82,000 a year in extra income. This fast-growing retirement strategy has become so popular with the over-50 crowd that Reuters calls it the "new Baby Boomer hobby." And it's so profitable that Forbes says it's "like finding money in the street." Details here.
| | | 10/13/2014 By Robert Rapier 
Upstream MLPs Take a Beating In last week's MLP Investing Insider (Upstream or Up the Creek?) I discussed the "upstream" MLPs, which are those focused on the extraction of oil and gas. As I mentioned in that article, this MLP category has far more downside risk than most when oil and gas prices are weakening. As if on queue, the price of West Texas Intermediate broke decisively below $90 per barrel last week, with the front-month contract closing the week at $85.82. The outcome was a bloodbath for upstream MLPs. By the end of the week, much of the upstream sector had capitulated to the reality of falling oil prices. Seven of the 10 worst performing MLPs last week were upstream MLPs mentioned in last week's issue. The worst performer for the week was Viper Energy Partners (NASDAQ: VNOM), down 24.2% for the week and 43.3% since its July IPO. As we warned investors in Stingy Viper Soars, Foresight Found Lacking, "Given the commodity risk associated with Viper Energy Partners' business model and the now paltry 3.2% yield, this security could prove quite poisonous should commodity prices fall or interest rates rise." In addition to VNOM, two other MLPs dependent on drilling -- Atlas Energy (NYSE:ATLS) and Legacy Reserves (NASDAQ: LGCY) -- both had losses for the week of over 20%.Emerge Energy Services (NYSE: EMES), which provides sand used for hydraulic fracturing (fracking), was down 21.9% for the week. EMES is still up nearly 400% since its 2013 IPO, but has now shed more than 40% in six weeks. Downstream MLPs Rise Is there a safe haven for MLP investors when oil prices are rapidly falling? The MLP declines were broad-based last week, with only half a dozen MLPs seeing gains for the week. Two of the gainers were refining MLPs -- Alon USA Partners (NYSE: ALDW) and CVR Refining (NYSE: CVRR). Like the upstream MLPs, the downstream MLPs can be very volatile, and are therefore only suitable for investors with a high risk tolerance. But the downstream sector -- where the refinery MLPs reside -- is one that can rise when oil and gas prices are declining. I explained in a 2012 Energy Letter article --Rockets and Feathers-- the reason for this. It comes down basically to consumer behavior. When prices are rising, consumers are more discerning about price when filling up with gasoline. When prices are declining, they are happy enough at the falling prices that they aren't likely to drive all over town looking for lower prices. This behavior can benefit fuel retailers, wholesalers, and refiners even as the upstream sector suffers. For more information on downstream MLPs, see my November 2013 article Don't Give Up on the Refiners. Although the downstream names are not an appropriate choice for conservative MLP investors, those attracted to the higher risk upstream MLPs may find the refining plays more attractive in the current environment. Dominion Midstream Partners Debuts For most MLP investors, the midstream sector will continue to hold the most appeal. This week, a new midstream offering will debut. We have previously covered the impending IPO of Dominion Midstream Partners (ticker will be DM), and this week it will finally launch in a $350 million offering. To recap,Dominion Resources (NYSE: D) is a $41 billion provider of electricity and natural gas in the eastern US. The company has a broad portfolio of assets, some of which it has expressed interest in dropping down into an MLP. One of its assets is the Cove Point liquefied natural gas (LNG) terminal on Maryland's Chesapeake Bay. Last fall Dominion became the fourth company to win an LNG export license from the Department of Energy. Last month the company received final approval for LNG exports from the Federal Energy Regulatory Commission (FERC). The license allows Dominion to export 0.82 billion cubic feet per day (Bcfd) of natural gas. The project cost is estimated at $3.8 billion, and 100 percent of the available capacity of the facility is contracted with two parties: Sumitomo/Tokyo Gas and GAIL (India) Limited. Both contracts are long-term fixed reservation fee agreements with a 20-year term commencing on the date the project is placed in service. The MLP structure is unique in that initially the sole cash flow generating asset will be a preferred equity interest in Dominion Cove Point LNG, which entitles the limited partner to the first $50 million of annual cash distributions made by Cove Point. Future distribution growth is expected to take place primarily through assets dropped down from Dominion Resources. The offering for Dominion Midstream Partners is for 17,500,000 common units that are expected to price between $19 and $21. The minimum quarterly distribution is forecast at $0.70 on an annualized basis. At the midpoint of the offering, this represents a stingy 3.5% annual yield, but Dominion Resources is already developing a number of future assets to be dropped down, which should enable distributions to grow for the foreseeable future. MLP investors spooked by the recent action in the upstream MLPs should find much less volatility with Dominion Midstream Partners. This article originally appeared in the MLP Investing Insider column. Never miss an issue. Sign up to receive MLP Investing Insider by email. | | |
This fortunate nation is about to become a global economic superpower. Already, investors reap capital gains soaring to 347%, 649%, and 784%, plus yields as high as 16.7%. And the best is yet to come. Bonus: It's just as easy to invest there as it is to buy stocks here in the U.S. Full details.
| | | 10/10/2014 By Ari Charney 
Remember Australia's blockbuster August jobs report? The Australian Bureau of Statistics (ABS) initially reported that the country's economy added a whopping 121,000 jobs that month, the highest number on record, blowing past the consensus forecast of 15,000 jobs. To put this result in a context more readily understood by US investors, analysts with the Commonwealth Bank of Australia said the August number would be equivalent to a rise of about 1.3 million in US payrolls, when taking into account the different sizes of the two labor markets. Well, if you thought it was too good to be true, then you were right. But the ABS went way beyond its normal approach to revisions of initial estimates. This time around, the agency's statisticians decided to throw out the usual seasonal adjustment for July, August and September, after deciding that typical seasonal patterns had not been evident during this period. Instead, the revised data show that the Australian economy added just over 32,000 jobs in August. That's still a strong result when compared to the country's typical pace of job creation, but it's a far, far cry from a gain of 121,000 jobs. Even worse, September's labor force survey was a huge disappointment. The number of jobs fell by nearly 30,000 last month, a stark contrast to the consensus forecast that the economy would add 15,500 jobs. The part-time category drove these results, with job losses totaling just over 51,000. However, full-time employment rose by almost 22,000 positions. Though there's no getting around that this is a poor jobs report, at the very least the economy experienced gains in the higher-quality category. Even so, over a longer-term period, full-time job creation has fallen well short of part-time job creation. Over the past year, full-time employment has grown by just 18,700 jobs, while part-time jobs are up by 103,200. The unemployment rate now stands at 6.1 percent, which is the high for this cycle. And the labor force participation rate is at 64.5 percent, which is the low for this cycle. Total hours worked, which can augur future employment demand, fell by 0.9 percent month over month. In explaining the agency's rationale for implementing such a seemingly drastic change, acting Australian Statistician Jonathan Palmer said, "It is critical that the ABS produces the best set of estimates that it can, so that discussion is on what the estimates mean, and not the estimates themselves." To that end, the ABS plans to commission a review with an independent third party to develop an objective framework for deciding when it's appropriate to apply seasonal adjustments when calculating future data. The agency said it did not make this decision lightly and believes the new approach will result in a more meaningful set of seasonally adjusted data. Since key data, especially employment figures, can be highly politicized, some observers take a skeptical view of how they're calculated. And statisticians are hardly infallible, as we've experienced when monitoring employment data in our sister publication, Canadian Edge. We certainly don't like it when additional subjectivity appears to have been added to what should be an objective process. But for now at least, we'll have to assume that this was a good-faith effort to accurately reflect what's happening in the Australian economy. While we're disappointed by these revisions, economists with Westpac note that leading economic indicators suggest that the pace of employment growth should accelerate through the year's end. This article originally appeared in the Down Under Digest column. Never miss an issue. Sign up to receive Down Under Digest by email. | | |
Oil imports recently fell to their lowest level since 2010. And they're forecast to fall even further in the coming years. That's all thanks to the fracking revolution taking place around the country. I've found six companies that form the backbone of the oil and gas industry – yet not a single one of them owns a well. They're up six times more than the S&P 500 this year and have handed a select group of investors gains up to 511%. I show you why – and how you can get in on the action – when you click here.
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