Author Archives: Scalper1

Why Investors May Be Turning To Healthcare

By Jonathan Jones and Tom Lydon The Health Care Select Sector SPDR ETF (NYSEArca: XLV ) is up 2.3% over the past month and the largest healthcare exchange traded fund has shown some signs of awakening out of a long slumber, but some traders are not convinced, according to industry analyst ETF Trends . For XLV and rival healthcare ETFs, the good news is that the U.S. economy moving into the late-cycle phase, overall growth may slow and signs of an economic slowdown could pop up. Consequently, investors may also turn to defensive sectors that are less economically sensitive, such as health care. Looking ahead, in the years through 2024, spending growth is projected to average 5.8% and peak at 6.3% in 2020. Additionally, the actuaries calculated that around 8.4 million Americans became insured in 2014 and noted their increased use of medical services. The number of people on Medicaid is projected to increase to 78.1 million by 2024, outstripping Medicare, which is expected to have 70.3 million enrolled. Those anecdotes and data points apply to the long-term. In the near-term, some options traders are expressing doubt regarding XLV’s upside. “optionMONSTER’s tracking program detected the sale of 5,000 March 65 puts sold for $0.06 and the purchase of 5,000 April 65 puts for $0.69 today. Volume was below open interest in the near-term contracts, which expire at the end of this week, indicating that a bearish position was rolled forward by a month,” according to optionMONSTER . XLV is heavily allocated to blue-chip pharmaceuticals names, such as Dow components Johnson & Johnson (NYSE: JNJ ), Merck (NYSE: MRK ) and Pfizer (NYSE: PFE ), but the ETF also devotes more than 20% of its weight to biotechnology stocks. “Puts outnumbered calls by a bearish 4-to-1 ratio” in XLV on Wednesday, according to optionMONSTER. Health Care Select Sector SPDR Click to enlarge Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Attorneys Target SunEdison Yieldco TerraForm Power In Probes

Four law firms are investigating whether SunEdison ( SUNE ) yield company TerraForm Power ( TERP ) violated securities laws in conjunction with its annual report filing delays. Two say their probes concern the fraud and insider trading sections of the Securities and Exchange Act of 1934. TerraForm Power is facing a series of potential investor class action lawsuits and could be delisted from the Nasdaq if it doesn’t come into compliance. The SunEd yieldco has until May 16 to regain compliance or submit a plan to do so, though it could be granted an extension until  Sept. 12 . In midday trading Thursday, TerraForm Power stock was trading down more than 6%. SunEdison was down more than 3% on the  stock market today . Shares closed down 7.9% and flat, respectively, on Wednesday. Goldberg Law Firm said it is investigating whether TerraForm Power violated securities rules by issuing “misleading” information to investors and cites “claims of potential misrepresentations” by the company. Its investigation is focusing on Terraform’s Feb. 29 announcement that it would delay filing its form 10-K annual report with the SEC. Rosen Law Firm; the Pomerantz law firm; and Bronstein, Gewirtz & Grossman launched TerraForm Power investigations too. On Feb. 29, SunEdison said it needed more time to wrap an audit into its liquidity stance, stemming from allegations of financial misconduct by former executives. Early Wednesday, the firms again delayed their 10-Ks, but SunEd said it found no “material weaknesses” thus far. TerraForm Power blamed its parent company for the holdup, saying its accounting systems are tied to SunEd’s. On this news, TerraForm Power “fell sharply during intraday trading on March 16,” Rosen Law Firm said in a press release. “Rosen Law Firm is investigating a potential class action lawsuit to recover losses suffered by TerraForm Power investors,” the firm wrote.

Let TransCanada Pump Income Into Your Portfolio

Click to enlarge TransCanada Corp (NYSE: TRP ) is a huge North American pipeline company whose network includes over 3,460 kilometers of oil pipeline and over 67,000 kilometers of gas pipeline that transports approximately 20% of North America’s gas. They currently own over $64 billion worth of assets which includes pipelines as well as storage for gas and oil. TransCanada faced huge headwinds in 2015 as the stock dropped as low as -32% from its 2014 high. The stock currently yield a very bountiful 4.7% and has partially rallied from its nasty dip last year, the company has a great history of dividend growth and share buybacks and I think TransCanada represents a good opportunity to buy in on its weakness considering its very impressive ability to grow its revenue. Huge projects to continue TransCanada’s impressive revenue growth TransCanada currently has $13 billion worth of projects that are expected to be operational by 2018 and $45 billion worth of long term projects that are due after. These projects will be a consistent driver of growth for both the medium and long term as the cash flows continue to increase to support the very generous dividend that TransCanada rewards to its shareholders. There has also been talks of acquisitions as TransCanada is reported to be interested in Columbia Pipeline Group for a deal expected to be worth over $10 billion, I believe such a project would unlock value for investors in the long term as Columbia would add over 24,000 kilometers of U.S. gas pipeline to TransCanada’s portfolio. It is clear that TransCanada is focused on growing its pipeline exposure in North America and I believe management is very capable of delivering consistent growth over the long term. Risk: Government rejection of pipeline projects Barack Obama recently rejected the Keystone pipeline which was a huge opportunity for TransCanada to expand, this currently puts phase 4 of the pipeline on hold which consists of over 526 kilometers of new pipeline running through Montana. It is expected that this project may be reviewed at a later time but for now TransCanada will have to focus on expanding elsewhere. There is always the risk that further pipeline expansions will be rejected, although this is a setback – I do not believe that it will stop TransCanada from trying to expand in other areas in order to achieve top of the line growth. Decent Q4 2015 earnings despite energy headwinds TransCanada reported beat analyst expectations for EPS reporting $0.64 compared to $0.61, but missed for revenue as they reported $2.85 billion compared to $2.89 billion expected. TransCanada still had decent revenue growth due to growth in its natural gas pipeline division where it enjoyed a 6.3% growth to $1.49 billion, the energy division which saw 14.5% growth to $895 million and the liquid pipeline division which saw 7.8% growth to $469 million. TransCanada also increased its dividend by 8.7% to $0.56 per share which is a sign of confidence from the management. Safe and growing dividend when combined with share buybacks makes for a very attractive pick TransCanada has increased its dividend for over 15 years straight and I believe income investors should feel very comfortable holding onto this stock as its cash flow growth is very attractive and they are very capable of sustaining its high yield. Given the huge growth potential TransCanada expects dividends to increase up to 10% each year, this makes the stock a dividend growth hero that I believe every investor should consider adding to their portfolios. Warren Buffett is bullish on pipelines as he picked up a huge amount of shares in TransCanada’s competitor Kinder Morgan (NYSE: KMI ). Income investors should pick up the stock and its huge 4.7% yield as I do not believe the current weakness caused by energy woes will last forever. While there are risks of future pipeline rejections, I believe that these concerns will not slow TransCanada’s growth significantly. Dividend investors can sleep well feel safe holding TransCanada and its fat yield as it rebounds from the energy weakness in 2016. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.