$BT.A – exiting trading position for flat on trade recommended in January…

BT,A shares did reach 345 after it announced OpenReach would have separate management as OFCOM becomes increasingly critical of progress by OpeanREach laying the fibre cables across the UK.

Post the results in May, the share performance has been disappointing and the shares pulled back to 303, the entry point in January – no clear growth strategy!

Looking for better opportunities – time horizon for trading positions between 3 and 6 months, and this does not look it is going anywhere soon!

$AAL (Anglo American) – as Diamond sales hit records in the US, this stock could be worth…

Buying here.DeBeers accounts for 26% of Anglo American Earnings and the stock is looking very cheap here at 1029. US Diamond sales are at record levels – expect the Chinese to also start buying diamonds!

After Indian Billionaire bought a 10% Stake earlier this year, the stock climbed to 1310.

2CentView FairValue = 1200, Consensus target price = 1330

P/E = 6x and Forecast Yield = 3% as the market is epxecting the company to start paying dividends again – the balance sheet is in good shape with low Net Debt to EBITDA ratio compared to peers such as Glencore.

2CentView has a core position in Anglo American and plays to add a trading position on Monday.

Take Profit Target Price = 1230, stop = 850.
Low P/E – cheap stock more upside than down side risk in this name – similar to $IAG at 420!

$IAG – (British Airways) – why is stock higher after IT outage disrupting 200,000 passengers?

The FT Big Read on Friday wrote a story of how cost cutting at BA had gone too far and has lead to the IT outage leading a terrible experience for travellers over the bank holiday weekend.

But why has the stock not reacted – in fact it has gone up?

2CentView is:

The Stock is still relatively cheap trading at 7x 1 year forward EPS – the US Airlines trade on an average of 11x.

An Airline has to be focused on managing costs – this is very important to shareholders – more important than business class travellers having luxury chocolates!

IAG operating profit has gone from 500mm in 2011 to 1.5bn in 2016 (according to FT) under the leadership of Willie Walsh – a whopping 300%  increase over 5 years! In the same period revenues have only gone up 20% – so most of the operating profit has come from cost savings.

The Balance sheet is solid – the Credit default Swaps actually tightened 2bp – so the compensation bill will not affect the companies credit and is probably insured.

2CentView has a core position in $IAG, buying the position at around 4,10 and taking profit at 500 and 600 – at 4.10 it was on an incredible p/e ratio of only 5x when first mentioned by 2CentView.
The stock could easily go to a multiple of 9 (still 2 multiple points lower than US Airlines) which would put the the stock at 7,50.

Dividend yield 4%.

The IT failure was a disaster and the company needs to ensure it does not happen again – but managing costs is most important when running an airline – for shareholders anyway!

2CentView has a core position in $IAG (about 2.5% of the portfolio) , next target 700.

What do MSFT, GOOG, AMZN, BABA, TenCent, Tesla have in common?

They all use Nvdia chips for their cloud and AI Services and Tesla for autonomous driving.

Nvdia is at the heart of an explosion in Gaming (Look at the amazing rise of Electronic Arts over the past 2 years – Destiny2 is coming! ), Cloud – data centers AWS etc – AI – using big data for making decisions and answering questions (Amazon Echo), and finally autonomous driving – which is just beginning…driverless cars exist in Seatttle!

Nvdia is no longer just a gaming chip company – just over 1 billion of the 1.94 billion record Q1 2018 revenue comes from gaming (up 48% on the year), 194 million comes from autonomous driving – Tesla being their main customer.

Back on 1st Jan, recommended taking a position in NVDA – the stock is expensive but the potential is huge – the Q4 2017 was good but not good enough to propel the stock higher, but Q1 2018 reported on Tuesday evening was a blow out.

It does take time for an expensive company to grow into it’s valuation – NVDA is an expensive stock but is a great company – CEO Jensen Huang is a visionary and long time CEO.

2CentView has a position in $NVDA – take profit target $130.

$IAG – hit long term price target after reaching record operating profit….can it go higher?

First tweeted this name December 11, as low p/e stock with potential upside following rally in US Airlines.

P/E then was 5 with yield of 5%! – now it is around 7 and has the potential to go to 8x – so around 660p.

Took some more profit at 600, keeping a core position as the yield is great and lower oil prices should help drive profits higher.

Average P/E in larger US Airlines now around 9x, so depending on your view it could go even higher. 2018 Forward EPS projection – 99 EUR Cents, Consensus target price = 600, which could be revised higher following today’s results.

2CentView has a core position in IAG, trimmed to 2.5% of the portfolio after recent run up.

Some Insight into Incyte – a hot Biotech stock in the FT this week…

Incyte is developing a drug which prevents cancer tumors effectively ‘hiding’ from the body’s immune system which fights disease.
When the body encounters foreign bodies which could do it harm, our immune system kills it off or may reject it in the case of say an organ transplant. But in the same way a female foetus does not reject sperm from a foreign body – an IDO enzyme protects the tumour or foreign body from the immune system – by inhibiting the IDO enyzme, the tumours cannot hide from the immune system!

All sound simple, but drug development is anything but smooth!

2CentView fair value for $INCY = $60 vs 123, consensus target price 144.

So the stock is expensive – the trials data the company will present in June needs to be good – also Gilead has been rumored as a potential buyer of $INCY, so the price also includes some take over premium.

Biotech stocks are very risk, keep positions manageable and be prepared for downside shocks!

If you like $INCY, keep an eye on the stock and hope for a pull back to 80-100 area,

$GILD fair value = $80.

US Financials Update post results….one is great buying opportunity….

US Financials have had a great run since the US election, but have pulled back as the bond markets have rallied following the failed US Health care bill and a FED which does’nt seem to be in any rush to raise rates soon….

The pull back is a potential buying opportunity, especially Goldman Sachs which reported a disappointing quarter where their fixed income trading revenues disappointed – maybe they were caught offside on the bond rally!
Remember MS which reported a terrible quarter about a year ago – but reported a great quarter in Q1 in – with earnings well exceeding expectations – even great companies have bad quarters – look for these bad quarters as a buying opportunity!

Px Vs Fair Values

$JPM 84.5 vs 83 Yield 2.3% [Dimon top CEO!]

$C 58 vs 64 Yield 1% – cheapest to Book value – but seems to be the least liked!

$MS 42 vs 44 Yield 1.9% – reported a great quarter, Gorman is doing a great job….

$GS 217 vs 250 Yield 1.4% [ 1.1 x book value] tough quarter, but they will bounce back!

$BAC 22.5 vs 24.5 Yield 1.4%

Goldmans is now the CHEAPEST of the banks, and a great buying opportunity. Mnuchin and Cohn, 2 key people in the Trump Administration are ex Goldman!

Tax reform and deregulation is coming – and these will help the banks regardless of interest rates and the shape of the yield curve.

2CentView has a core position in Morgan Stanley, added a trading position in MS at 40.5 and plans to add a trading position on Goldman Sachs tomorrow.

Suggested trade: Buy here at 217, Take profit Target 250, Stop 195.

$ACOR (Acordia) – exited following patent judgement….

Last tweeted on Acordia when the stock was close to $30 target price taking profits but leaving a core position.A month on the stock has collapsed following an unfavorable patent decisions on 4 patents relating to one of their key Parkinson’s drugs.

The company will appeal the ruling, but EPS forecasts are now negative best to keep out of the stock for the moment.

Biotechs are risky so keep positions manageable, take profits when you can to reduce cost basis and hope they make breakthroughs in horrible diseases, like Parkinsons.

2CentView has exited the core position in $ACOR for an overall small profit.

$AMZN approaching 880 take profit target

Amazon continues to go higher as it expands in India and the Middle East ….just came back from India and they love it much better service than existing e commerce players

Meanwhile traditional retailer get crushed ….still need to queue up to pay … destroying the experience….that hasnt changed in my life time. They are so behind the curve.

2centview has taken profit in trading positon, maintaining a core. Bezos is a genuis.