Thursday, February 20, 2014

Gafisa (NYSE: GFA) Under $3 Brazilian Turnaround Play Could Deliver 100% Upside

More than a half decade removed from a deep crisis, the U.S. housing market is on the mend. Home prices in many cities have been rising again, and the PHLX Housing Sector Index has risen more than 250% from its March 2009 lows.
The other major economy of the Western Hemisphere is still in the midst of a housing hangover. After decades of robust growth that catapulted its economy into the seventh slot in terms of GDP, Brazil's economy in general, and the housing market in particular, is in a pretty deep funk.
As a result, most investors are overlooking a classic turnaround play. Gafisa (NYSE: GFA), a Brazilian homebuilder, has seen its shares plunge by nearly 90% since the global economic meltdown took root in 2008. And though shares are unlikely to re-visit those heights, this fallen stock now has at least 100% upside.  (more)

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The Crash Continues: Oil/Natural Gas Ratio

This is one that we haven’t discussed here in a while but I think it’s worth mentioning. Long time readers remember how annoying I was about the Crude Oil to Natural Gas bubble back in early 2012. A spread that has averaged 10:1 over the past 20 years went parabolic above 54:1 in the second quarter 2012.
I wrote countless blog posts about this, mentioned it on TV several times, and followed up afterwards. But the crash continues into 2014. What was once as high as 54:1 is now down to 18:1 and still falling hard putting in fresh multi-year lows this month. Here’s the beauty of the whole thing: prices are still 45% away from the historic mean. And more importantly remember that, “we are not just in a reversion to the mean business, but in a reversion beyond the mean business” (to quote Soros’ technician John Roque).
Here is the chart of the bubble popping and subsequent crash:
2-16-14 cl vs ng ratio
This is a monthly line chart, so it does not show the absolute highs above 54:1, just the monthly closing prices. But you get the idea. I would not be surprised to see this thing down under 8:1 – 10:1.
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Is Corn Ripe for a Bounce?

The corn market is balancing several factors as we move towards the US planting season. On one hand, we have the bearish factors of a record global corn crop and the largest year ending stocks since 2001. On the other hand, we are witnessing a rapid and sustained growth in exports along with weather complications taking their toll on South American supplies. Given the technical and seasonal factors at play in this market, I think we have finally put in the post-2013 harvest lows and could continue higher into the planting season.
The corn market, particularly here in the US, has been beaten down in the fields and in the papers since the 2012 highs above $7. The corn market has declined by more than 45% since those highs and is now trading around $4.40 per bushel. This past summer's growing conditions turned out wonderful after a late start, and combined with the largest acreage planted since 1936, the resulting record harvest was no surprise. I'm willing to bet that we'll see fewer acres allotted to corn this year after five straight years of acreage growth and increasing South American competition on the world market. (more)

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Tom Dyson: The Big Dividend Cover-Up

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The Best Biotech Takeover Targets for 2014

Insmed Inc. (Nasdaq: INSM) primarily develops inhalation therapies for the treatment of lung diseases. Insmed's most notable project is ARIKACE, an inhaled antibiotic for patients suffering from cystic fibrosis and non-tuberculous mycobacteria. Currently, ARIKACE is in phase II trials in the United States and phase III trials in Canada and Europe.
INSM stock has gained an impressive 241% in the last year and currently trades at $19.73. Insmed has a market cap of just $772 million, which also makes it an attractive takeover option for large-cap pharmaceutical companies.

Acorda Therapeutics (Nasdaq: ACOR) provides treatments for people suffering from multiple sclerosis (MS), spinal cord injuries, and other nervous system disorders. The biggest product for Acorda is Ampyra, which helps MS patients who have difficulty walking. The company reported that through the first nine months of 2013, Ampyra sales had risen by 13%. Ampyra is already approved by the U.S. Food and Drug Administration (FDA), and Acorda currently has three FDA-approved drugs in its portfolio.  (more)

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Chart of the Day - MDU Resources Group (MDU)

The Chart of the Day is MDU Resources Group (MDU). I found the stock by sorting today's New High List for frequency in the last month, skipped the stocks that did not have positive gains for the last week and month, then used the FlipChart feature to review the charts. Since the Trend Spotter signaled a buy on 12/24 the stock gained 12.97%.

MDU provides value-added natural resource products and related services that are essential to energy and transportation infrastructure, including regulated businesses, an exploration and production company and construction companies. MDU includes regulated electric and natural gas utilities and regulated natural gas pipelines and energy services, natural gas and oil production, construction materials and contracting, and construction services.

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