Monday, February 24, 2014

Groupon: Destined for Failure or Poised for Recovery?

I decided to play Groupon (GRPN) on their earnings report and bought in at $10.10 the day before earnings came out. I am still holding the shares because I believe the strengths the company reported outweighs the weaknesses.
The strengths in the annual earnings report (I am looking for long term growth) included raising revenue, expanding their mobile presence, and continuing to grow their user base. Revenue increased to $2.6 billion in 2013, as compared to $2.3 billion in 2012. This is due to a few reasons. 

First Groupon is gaining in popularity on the mobile market. It is the #1 free lifestyle app on the App Store with nearly 70 million downloads (around 9 million were from Q4 2013)

50% of global transactions were from mobile devices which is great for Groupon because there is a big movement from retailers to grow their e-commerce and mobile sales which Groupon already has an established position in. They must continue to grow their mobile users and create that "pull" factor that draws people to Groupon instead of bombarding people with emails or "pushing" groupon to them. How Groupon utilizes it's mobile section will be one of the reasons it either makes a come back or crashes and burns.

Active customers (in thousands) kept growing in 2013. With 44,877 active users compared to 41,049  and 33,742 in 2012 and 2011 respectively. Groupon did drop their average billing per active customer though with $ 134.01 in 2013 compared to  $ 143.88 and $ 186.75 in 2012 and 2011 respectively. If Groupon can focus on keeping a growing customer base while also increasing the average billing back to the levels in 2011 there will be a significance increase in revenue. Most of the focus from the most recent earnings report wasnt on the revenue or EPS (they beat analysist expectations for both!) for Q4 or fiscal 2013. It was on the drop in guidance that the company predicted for Q1 2014.

Groupon recently acquired Ticket Monster, a South Korean ticket and ecommerce company, for 260 million (100 million in cash and 160 million in Class A common stock). But how does this help Groupon? South Korea is one of the fastest growing ecommerce markets in the world. Ticket Monster provides Groupon a foot in the door with exposure to Korea and the whole Asia Pacific region. Ticket Monster also generated  more than $800 million of annualized billings which has the potential to add to Groupon's top line. 

Groupon also recently acquired the fashion discount website Ideeli. The company sells designer goods at a highly discounted price (up to 90% in some cases). But while fashion is a leader in ecommerce sales the retail industry has been struggling lately even in the midst of a highly promotional holiday season. Ideeli has never turned a profit and cost Groupon 46 million in cash. Of the two acquisitions I believe this is the more risky of the two. It has the potential to grow the scope of Groupon and help in add more high end vendors in the fashion industry, but it also has the potential to be a dud with flash sales declining in popularity.

Both of these acquisitions happened in January 2014 which is part of the reason guidance was lowered for the 1st quarter. They spent alittle over 300 million which will hurt the bottom line short term. Investors saw this lowered guidance as a step back for the company. But sometimes you have to take a step back before you take two steps forward.

Saturday, February 22, 2014

My top dividend stocks for 2014

New York Mortgage Trust Inc. (Nasdaq: NYMT) is a Real Estate Investment Trust ( REIT) This company currently pays $1.08 annually for a yield of almost 15% and has paid this consistently for the past  4 years. NYMT has increased the amount paid 4 of the last 5 years. 

 With the housing market on the rebound, I believe that any dip under $7 is a good buying point for investors wanting to get in to this high yielding stock.

Atlas Resources Partners (NYSE:ARP) This company is still relatively new to the market having its IPO in 2012. This company deals with the production of natural gas and oil. ARP is also the largest sponsor of natural gas and oil partnerships in the United States. They pay an annual dividend of $2.32 right now which is roughly 11%. As of Q4 2013, the company Increased the quarterly dividend by 2 cents a share and since they first announced paying a dividend in 2012 it has always increased.

This growth of dividends paid back to the shareholders will hopefully be continuous in the future as the company continues to grow.

I will continue to update this as I find more stocks. I am currently long in NYMT and have no position in ARP. If you have any suggestions for growing high yield stocks please leave the ticker in the comments and I will check it out. Thanks.

Is GW Pharmaceuticals a buy on the pullback?

The beginning of 2014 has sparked a new Green Revolution for pot stocks with some outstanding results. For instance, an almost 2000% growth in GreenGro INC (GRHN) in just 6 trading days. (1/1/14 - 1/8/14) This has caused daytraders to flock to companies such as PHOT,CBIS, CANV, MJNA, and other penny pot stocks. But do the risks of penny stock investing outweigh the rewards? Most of these companies have peaked and are substantially down from their 52 week high (which for many was seen in either January or February of this year). For people who are wanting to get in on the “High” of marijuana  stocks but aren't comfortable with investing in penny stocks in OTC markets then I suggest checking out GW Pharmaceuticals (GWPH) because it is the only marijuana stock not traded OTC. It is traded on the NASDAQ and according to Jim Cramer, founder of “The Street” and host of CNBC’s Mad Money, "is the most legitimate marijuana stock,".
GW is a london based company whose #1 product is an oral treatment for Multiple Sclerosis (MS) called Sativex. MS affects over 1.3 million people in the world of which 400,000 are in the US. Sativex was submitted for phase III clinical trials in 2006.Phase III results for FDA approval for treating cancer pain are expected sometime this year. If this is approved for use in the US expect the stock price to soar to new highs due to the expansion for the possible new users of Sativex that GW will gain. While it isn't ready for the US markets just yet, Sativex has already been approved in 22 countries most of which are in Europe (England, France, Germany, and the other green countries on the map).

GW Pharmaceuticals has a 52 week high of $67.62 (2/11/14) and after Friday’s close is trading at $56.26 which is about 17% from its high. They released earnings for Q1 2014 and their outlook for the rest of the year. While they predicted a loss for the overall year there were signs of progress that the company can be proud of. Revenue for Sativex went up to $1.3 Million which is $.3 million more than the previous first quarter and sales of Sativex grew 36% due to an increasing German demand and a strong start in Italy.
Outside of Sativex, GW has other ongoing studies. They have an orphan durg designation for Epidiolex in Dravet syndrome as well as other drug that are still in early testing phases. This means that GW isn't a hit or miss company with its future tied to just one drug.

All of these factors is why I think that GW Pharmaceuticals will continue to grow this year and why I think it will be a safer investment than investing in a pot penny stock. GW has been around 15 years and is a leader in Cannabinoid Science. With some important FDA rulings coming out later this year, growing Sativex revenue, and GW being able to fund more of their projects without relying on the money from partners, Japanese Otsuka Pharmaceuticals I believe that this pull back is a buying opportunity.