Tag Archives: oud

Small Permian Producers’ Charts, EPS Forecasts Outpace Industry Recovery

Domestic oil production stocks have staged a remarkable rebound, alongside the 14-week rally in oil prices. Despite a number of the stock rising more than 100% during the run-up, nearly all still remain far below their 52-week highs. There are a few exceptions. Stocks including Callon Petroleum ( CPE ), Diamondback Energy ( FANG ) and Parsley Energy ( PE ) are poised to retake highs established in 2014. While their EPS are projected to continue declining through this year, all are forecast to see a sharp profit rebound in 2017. Callon is a good example of why the three are outperforming many of their oil patch brethren. It cleared a cup-with-handle base April 20, is now 20% above the base’s 9.68 buy point and 4% below a high set in July 2014. Like many stocks in the industry, Callon peaked in June 2008, as oil prices stabbed to highs near $150 a barrel. Callon is puny by oil business standards: $138 million in 2015 revenue. It teetered on the brink of collapse in 2007-08, as the failure of an offshore project caused earnings to collapse and revenue to retreat, despite spiking oil prices. The company responded by getting out of offshore work and placing its emphasis on gathering acreage in the Permian Basin. Located in West Texas and southeast New Mexico, the Permian has gained new life as horizontal drilling techniques have opened its multilayered formations to exploitation. While larger players are more diversified, Callon’s Permian focus has allowed it to claim a 41% initial rate of return at $41 per-barrel oil prices, putting it well ahead of most of domestic producers. That makes it an early mover in an industry where many larger companies won’t see a profit until oil reaches $50 a barrel or higher. The price of West Texas Intermediate oil has remained largely above $41 since mid-April. It has not touched $50 since October. Callon has also managed to recover thanks to a conservative debt load, well within the bounds of group peers. Analysts’ consensus projects earnings will contract sharply for a second straight year in 2016, then rebound 300% in 2016. Revenue, which declined in three of the past four years, is forecast to surge 36% this year and 44% next. Callon’s chart position — poised just below a 2014 high — is important due to a factor called overhead supply. This comes into play when existing shareholders who bought near previous peaks have held on waiting to offload shares at or near the price where they purchased. As Callon has advanced, it has overcome just about all of its overhead supply. Moreover, areas of overhead supply are not much of an obstacle after a couple of years have passed since they were formed. Oil producers Parsley Energy, RSP Permian ( RSPP ) and Diamondback Energy are Permian producers, all carry relatively modest debt and all are tinkering with new highs. Most the oil industry’s major industry think tanks have projected a rebalancing of oil supplies in the second half of this year or entering 2017.  Supply data has progressively appeared to support those views. That combination gives good cause for optimism, and is largely responsible for helping to fuel the speculative lift oil prices. But economic data does little to suggest any kind of significant, pending rebound in demand. And oil producers around the world — a group with a poor track record of balancing production with the market’s needs — remain ready to push production higher as soon as prices reach each company’s predetermined target levels.

Fitbit’s New Bands Could Double As Mobile Wallets

Fitbit ( FIT ) signaled it might add mobile wallet capability to upcoming fitness trackers, as it announced Wednesday that it had bought the assets of financial technology firm Coin. San Francisco-based Fitbit said the transaction closed on May 12. Financial terms were not disclosed. The deal includes key personnel and intellectual property specific to Coin’s wearables payment platform. The acquisition excluded smart payment devices, such as Coin 2.0. “While there are no plans to integrate Coin’s wearable payments technology into the 2016 Fitbit product roadmap, the acquisition accelerates Fitbit’s ability to develop an active NFC (near field communication) payment solution that could be embedded into future Fitbit devices, broadening its smart capabilities,” Fitbit said in a press release . Inclusion of payment technology into future Fitbit bands and watches would further the company’s strategy of making its products an indispensable part of people’s lives, CEO James Park said in a statement. Mobile payment technology lets consumers pay for items at tech-equipped retailers with the wave of a smartphone, smartwatch or other device using NFC technology. Examples include  Apple ‘s ( AAPL ) Apple Watch and newer iPhones carrying the Apple Pay mobile payments service. Fitbit stock was down close to 1%, near 14, in late-afternoon trading on the stock market today . RELATED: Fitbit, Apple Lead In Wearables, But Other Brands Gaining Fast .

Apple Bull Sees Path To $1 Trillion Market Cap

Ever since Apple ( AAPL ) stock peaked last summer, few on Wall Street have talked about the iPhone maker potentially reaching a market capitalization of $1 trillion, as they once did. But on Wednesday, Bernstein analyst Toni Sacconaghi resurrected the possibility. In a research report, Sacconaghi said the company’s “recipe for a $1 trillion market cap” could be a shift from being a hardware company to a service provider. Today, Apple is valued as a computer hardware company, making it vulnerable to replacement cycles and falling average selling prices and margins, Sacconaghi said. Apple would be valued more highly if it offered its devices on a service plan, he said. Apple stock was up nearly 1%, above 94, in afternoon trading on the stock market today , giving it a market cap of $516 billion. Sacconaghi rates Apple stock as outperform, with a price target of 135. “Consumers have become accustomed to paying monthly bills for various services, such as internet, cable, Netflix ( NFLX ), and Spotify, to name a few,” Sacconaghi said. “Even among the quantitatively-minded investment community, many find it easier to justify a $30 monthly charge (for an iPhone) than a $720 purchase every 2 years … even though they’re essentially the same.” Apple’s Slowing Upgrades Argues For Recurring Model By offering Apple products as a service, the company could switch to a recurring business model, which would likely get customers to spend more over time. In return, Apple customers could avoid hefty upfront payments for hardware and get the latest devices sooner, he said. Apple’s main business problem today is getting users to upgrade to newer devices when their current iPhones, iPads and Macs are working just fine. Apple isn’t like other makers of PCs and smartphones because it has a much stronger brand attachment. People love their iPhones, he said. “The challenge and opportunity for Apple is whether it can migrate from a transactional monetization model to a subscription model,” Sacconaghi said. Companies that have successfully shifted their business models to subscriptions include Adobe Systems ( ADBE ), Microsoft ( MSFT ) and Amazon.com ( AMZN ), he said. “We see the monthly cost of a family plan of Apple products amounting to similar or less than what U.S. consumers spend for cable television and wireless service,” Sacconaghi said. “We estimate that an Apple package needed for our family (3 iPad Minis, 1 iPad Air – each with a three-year replacement cycle; and 3 iPhones, each with a 2-year replacement cycle) would cost ‘only’ about $140 per month — well below the price of our current monthly cable bill and wireless bill. “Even if we included additional Apple services (Apple Music for $15 per month; iCloud storage for $10 per month; and a speculated but yet to be released over-the-top television offering for $40 per month), our hypothetical Apple monthly would be an estimated $207 per month.” If Apple were to pursue such a strategy, it would face resistance from its wireless carrier partners and would have to educate consumers of its benefits, Sacconaghi said. Apple already offers a smartphone subscription plan called the iPhone Upgrade Program. That program charges a monthly fee for iPhone hardware and handset upgrades every year. RELATED: Apple To Double iPhone Memory With Next Handset: Report Apple Has Reportedly Started Production On iPhone 7 Apple Should Be Valued Like Internet, Not Hardware, Company