Author Archives: Scalper1

Pure Storage Remains Valiant In Fierce Battle With EMC, NetApp

Tectonic shifts to cloud computing and flash storage make the time ripe to build a new storage franchise, with Pure Storage ( PSTG ) seen as an industry disruptor. Pacific Crest Securities analyst Brent Bracelin, in a new research note, says that Pure Storage has been able to sustain solid growth and market share gains despite legacy vendors such as EMC ( EMC ) and NetApp ( NTAP ) putting Pure Storage in their cross hairs. Bracelin’s report came as Pure Storage introduced several new products on Monday that expand its portfolio of storage systems, including products that integrate more tightly with server gear from Cisco Systems ( CSCO ). Pure Storage provides the $24 billion enterprise storage market with technology using flash chips, similar to the chips that smartphones use. Flash-based storage arrays are much faster than disk-drive storage systems but come at a higher price, depending on how the technology is deployed. Flash is seen as the future of storage, with the transition well underway but still in the early stages. “We believe these new products, coupled with continued declines in flash pricing to less than $1 per GB, should give Pure Storage the ammunition to sustain share-gain momentum into 2016,” Bracelin wrote. EMC and NetApp lead in the disk-storage systems market and also have expanded into flash-chip storage systems. NetApp and EMC, which Dell is acquiring, are much larger than Pure Storage, but the smaller company is growing much faster. It has yet to turn a profit, however. Storage Ready For Revolutionary Changes Pure Storage revenue has zoomed from $6 million in 2013 to $440 million for its fiscal 2016 ended Jan. 31. But the company has posted big losses as it spends heavily on research and development and on marketing to grow market share. Pure Storage kept its string of triple-digit revenue growth alive on March 2, when it posted fourth-quarter earnings that beat Wall Street estimates, as did its Q1 outlook. Company CEO Scott Dietzen says that the data storage industry is on the cusp of a revolutionary change that Pure aims to lead. But a recent report from Summit Research said that while Pure Storage has cutting-edge data technology, it will face an  uphill battle trying to dislodge EMC and NetApp. Bracelin has an overweight rating on Pure Storage stock and a price target of 24. Pure Storage stock was near 12.50, in midday trading on the stock market today   — down 3% despite the bullish research note. Pure raised $425 million with its initial public offering on Oct. 7, pricing shares at 17. The stock peaked at 20.60 on Oct. 15 and hit a low of 11.05 on Feb 8. “While execution risks remain elevated as legacy vendors attempt to grab share by discounting storage pricing, a solid track record of execution since the October 2015 IPO increases our confidence that Pure Storage can sustain solid momentum and share gains,” Bracelin wrote. Image provided by Shutterstock .

Catch These Brazil ETFs On A Rebound

With a highly charged political drama in the backdrop, the Brazil stock market has been one of the best performers this year. The benchmark Ibovespa is up 14.5% year to date (as of Mar 11, 2016). This rebound in Brazil after a disappointing 2015 can be attributed to improving commodity prices and a new round of speculations regarding a change in government. Brazil relies heavily on export to fuel its economic growth. As per data from International Monetary Fund’s World Economic Outlook Database , Brazil’s total Gross Domestic Product amounted to $3.208 trillion in 2015 out of which exports accounted for approximately 6% of the output. The country exports commodities like oil, iron, steel, soy and coffee. With oil prices stabilizing after hitting rock bottom and iron ore and soybean prices up this year, Brazilian exports look poised for a comeback (read: Can Emerging Market ETFs Sustain the Rally? ). Meanwhile, turmoil on the political front continues. Speculations that President Dilma Rousseff will be impeached were afoot after her predecessor and mentor, Luiz Inacio Lula da Silva, was taken into custody for questioning related to a corruption probe. Investors in favor of a change in government believe that new leadership could be in a better position to revive the battered economy. The Brazilian economy has been bearing the brunt of economic slowdown and an endless streak of corruption scandals for some time now. A new government could infuse a fresh lease of life into the ailing economy which otherwise is expected to contract for a second straight year in 2016. After shrinking 3.9% in 2015, the economy is expected to contract by 3.5% this year (read: Brazil Stocks, ETFs Ignore Slump: Rally on Rousseff Issues ). Apart from that, markets were also buoyed by potential rate cuts by Brazil’s central bank. Although in its meeting earlier this month, the central bank kept the benchmark Selic rate at 14.25%, several analysts are of the view that inflation would peak at around the end of the first quarter, which could lead the central bank to consider lowering interest rates later in the year. A rate cut could help boost consumer and corporate spending and bring cash to equities from safer fixed income alternative. ETFs in Focus Even though the Brazilian economy is still in shambles, early signs of a recovery can be seen. In the light of these developments we highlight four ETFs – the iShares MSCI Brazil Capped ETF (NYSEARCA: EWZ ) , the Market Vectors Brazil Small-Cap ETF (NYSEARCA: BRF ) , the iShares MSCI Brazil Small-Cap ETF (NYSEARCA: EWZS ) and the Global X Brazil Mid Cap ETF (NYSEARCA: BRAZ ) – that have jumped 30.8%, 23.9%, 26.9% and 19.6% respectively, in the last 10 days. So, investors looking to tap into this market could consider the following ETFs in the days to come. EWZ This product tracks the MSCI Brazil 25/50 Index and is the largest and most popular ETF in the space with AUM of over $2.5 billion and average daily volume of more than 19.8 million shares. It focuses mostly on large cap stocks and charges 64 bps in fees per year from investors. Holding 61 stocks in its basket, the fund is highly concentrated in its top two holdings with one-fifth of the portfolio invested in them. In terms of industrial exposure, financials dominates the fund’s return at 37.1%, followed by consumer staples (19.4%), energy (10.3%) and materials (10.7%). BRF This fund provides exposure to the small cap equities of the Brazilian market and tracks the Market Vectors Brazil Small Cap Index. The fund holds a total of 67 small cap stocks and has a total asset base of $77.3 million. The fund trades in average daily volume of 55,000 shares. The fund is well diversified with no stock holding more than 5% of weight. Among the different sectors, consumer cyclical and consumer defensive occupy the top two positions with 42% of investment made in these two categories. Market Vectors Brazil Small-Cap ETF charges a fee of 60 basis points for the investment. Investor should invest in small cap companies with caution as these are more volatile than their large cap counterparts and may prove to be weaker than large cap companies at times of global crisis. EWZS Another fund tapping the small cap companies of the Brazilian market is EWZS. The fund seeks to track the MSCI Brazil Small Cap Index. The fund has a total asset base of $19.9 million and trades in average daily volume of almost 49,000 shares. The fund holds a total of 53 stocks with none holding more than 6% weight. Among sectors, the fund has 40.4% of assets invested in consumer discretionary followed by industrials (16%) and finance (13.1%). The fund charges an expense ratio of 64 basis points. BRAZ The Brazil Mid Cap ETF has been designed to tap the mid cap market of Brazil. The fund seeks to track the Solactive Brazil Mid Cap Index. The index comprises mid-market capitalization securities of companies that are domiciled or have their main business operations in Brazil. The fund, through an asset base of $3.3 million, taps 41 stocks. The fund has average daily volume of 1,500 shares. However, BRAZ appears to be highly concentrated in the top 10 holdings with 52% of the assets invested in those securities. Among sectors, the fund has 19% invested in basic materials, thereby holding the top position in terms of sector exposure. The investors pay an expense ratio of 69 basis points for the investment made in the fund. Link to the original post on Zacks.com

Vivint Solar Burned On Widening Q4, 2015 Losses In SunEdison’s Wake

Vivint Solar ( VSLR ) stock combusted Tuesday after the No. 3 residential installer reported mixed Q4 earnings results, underperforming an equally blended Q4 for Chinese solar panel-maker JA Solar ( JASO ). Vivint Solar’s late Monday report comes a week after the company scrapped its sale to   SunEdison ( SUNE ), which, according to a Vivint 8K filing, likely couldn’t afford to close the deal as it faces an ongoing liquidity investigation. In midday trading on the stock market today , Vivint Solar stock was down 12%, near 3.50 and touching an all-time low for the fourth straight trading day. JA Solar stock, meanwhile, was down 4%, near 8.75. JA Solar reported before the open Tuesday. SunEdison stock also fell, sitting down nearly 3% midday Tuesday. Collectively, IBD’s 21-company Energy-Solar industry group was down 1.5%. The group ranks No. 48 out of 197 groups tracked. Vivint Reports Widening Losses For Q4, Vivint Solar reported a 132% year-over-year sales jump to $16 million. But losses per share ex items deepened to 50 cents vs. 36 cents in the year-earlier quarter. Two analysts polled by Thomson Reuters expected a 71-cent loss per share and $19.3 million in sales. Vivint Solar booked 80 megawatts and installed 59 MW during Q4, up a respective 56% and 17% vs. the year-earlier quarter. Cumulative installations reached 68,527, including a 23% year-over-year bump to 8,411 during the quarter. For the year, Vivint Solar’s $64.2 million in sales and a $2.39 per-share loss ex items missed the consensus expectations for $68.2 million and a loss of $1.83, respectively. Sales grew 154%, but losses deepened from $1.99. The company didn’t provide current-quarter guidance. Analysts are expecting $16.3 million and a 66-cent per-share loss ex items. Sales would grow 71%, but losses would widen from 57 cents in the year-earlier quarter. JA Solar Guides Shipments Up Before the open Tuesday, JA Solar reported $709.3 million (RMB 4.6 billion) in sales and 49 cents (RMB 3.14) earnings per American Depositary Share ex items, up 28.5% and 81.5%, respectively, on a year-over-year basis. Sales topped the consensus of the two analysts for $683.3 million (RMB 4.5 billion) and JA Solar’s earlier views for $680 million to $710 million (RMB 4.4 billion to RMB 4.6 billion). But EPS missed Wall Street’s expectation for 68 cents. JA Solar topped its earlier guide to 1.32 gigawatts to 1.35 GW shipped, with 1.366 GW shipped during Q4. For the year, JA Solar shipped 4 GW, up 29% and topping guidance for 3.92 GW to 3.95 GW. JA Solar guided to 1 GW to 1.1 GW in current-quarter shipments, which would be up 54% at the midpoint. For the year, JA Solar sees 5.2 GW to 5.5 GW in shipments, up 30%-37.5% vs. 2015. The company doesn’t provide financial guidance. The consensus expects $421.7 million (RMB 2.75 billion) in sales and 20 cents (RMB 1.30) earnings per ADS ex items for the current quarter, up 9% and 53%, respectively. For the year, analysts model $1.65 (RMB 10.74) earnings per ADS minus items on $2.26 billion (RMB 14.68) in sales, both up 8%.