Friday, February 6, 2015

GoPro Earnings Smash Estimates – but Don't Buy GPRO Stock Now

The GoPro earnings report for Q4 2014 was released today (Thursday) and the camera company smashed estimates.

GoPro Inc. (Nasdaq: GPRO) reported earnings per share (EPS) of $0.99 on revenue of $633.9 million. Analysts had predicted EPS of $0.70 and revenue of $580 million.
Not only did revenue beat estimates, it also grew 75% compared to Q4 2014.
Full year revenue in 2014 reached $1.4 billion. That was an increase of 41%.
Gross margins came in at 48%. The firm had previously set a margin range of 43.5% to 44.5%.
What drove revenue through the holiday shopping season was GoPro's newest camera, the Hero4. GoPro released it in September, which also helped Q3 sales.
During the fourth quarter, GoPro shipped 2.4 million devices. For the full year, total shipments reached 5.2 million.
The company has also been driving customers to its app. Downloads of the GoPro app exceeded 2.8 million in the quarter. Now more than 13 million people have downloaded the app total.
Following the bullish report, GPRO stock jumped 13% in after-hours trading. After last quarter's earnings, GoPro stock jumped 13% when the company beat expectations and raised guidance figures.

GoPro Inc. (Nasdaq: GPRO)

Closing Price: $54.37
After-Hours Performance: +13%
Market Cap: $6.96 billion
Institutional Ownership: 54%
Beta: 0.66
P/E Ratio: 151.75
This is the third straight strong earnings report for GoPro since going public. In its previous two earnings reports, GPRO beat expectations by an average of 41.6%.
And it looks like investors expected today's strong numbers. GPRO stock finished Thursday up 4.9% before the earnings report.
While today's earnings report certainly looks bullish at first glance, GPRO stock is not a good investment according to Money Morning's experts.
In fact, it's facing a major problem that's only growing larger. And it's been weighing on the stock since October…
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DECLINE OF THE U.S. EMPIRE: Due To The Worst Oil Productivity In The World / February 5, 2015
The U.S. Empire continues to disintegrate from within due to the worst oil productivity in the world.  This collapse is due to a falling EROIEnergy Returned On Invested.  While this has been a long and ongoing process, the rate of decline is speeding up as the U.S. Shale Oil Industry is in deep trouble.
Unfortunately, most investors are clueless to the falling EROI and its impact on the U.S. and Global economies.  The (EROI) Energy Returned On Invested is the fundamental driving force behind the world’s financial and economic system.  However, you won’t find one word about it from any economist, analyst or MSM talking head on CNBC, Bloomberg or Fox Business.

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Where Interest Rates Are ACTUALLY Headed

Who are you going to believe? The "King of Bonds" or your mortgage broker?
For years the experts have said interest rates HAVE to go higher. Your mortgage broker probably spent most of the last five years telling you that NOW is the time to refinance.
But interest rates keep heading lower... with mortgage rates following in their footsteps.
Instead of listening to your mortgage broker, let's listen to the "King of Bonds," Jeff Gundlach...(more)
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Sanderson Farms (NASDAQ: SAFM) is in for a Double-Digit Rally

One of my favorite investing tactics is to target stocks that are fundamentally solid but get hit hard when investors overact to news stories.
Russia's ban on U.S. chicken and oversupply concerns helped knock the United States' third-largest poultry processor 25% off its summer highs.
I recommended a bullish options play on Sanderson Farms (NASDAQ: SAFM) in late June that quickly netted us 42% profits as the stock hit a 52-week high in mid-July.
Shortly after, Vladimir Putin imposed a one-year embargo on U.S. agricultural products, including chicken, in response to Western economic sanctions stemming from the Ukrainian conflict. (more)

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Hornbeck Offshore Services, Inc. (NYSE: HOS)

Hornbeck Offshore Services, Inc. operates offshore supply vessels (OSVs) and multi-purpose support vessels (MPSVs) primarily in the U.S. Gulf of Mexico and Latin America. The company owns and operates a fleet of U.S.-flagged OSVs and MPSVs that support the deep-well, deepwater, and ultra-deepwater exploration, development, production, construction, installation, inspection, repair, maintenance, well-stimulation, and other enhanced oil recovery requirements of the offshore oil and gas industry. It also operates a shore-base support facility located in Port Fourchon, Louisiana, as well as provides vessel management services, such as crewing, daily operational management, and maintenance activities for other vessels owners.
Take a look at the 1-year chart of Hornbeck (NYSE: HOS) below with the added notations:
1-year chart of Hornbeck (NYSE: HOS)
HOS has been trending its way lower since its July peak. However, since bottoming in December, the stock seems to have stabilized and has been trying to work its way higher. Twice over the last 4 months HOS has found support at the $25 level (purple), which was also a tough resistance back in December. A break back above $25 should result in higher prices for the stock.

The Tale of the Tape: HOS has a key level at $25. A trader could enter a long position on a break above $25 with a stop placed under the level. However, if traders are bearish on the stock, or the market overall, a short trade could be made at the $25 level instead.
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