Monday, March 10, 2014

Special Situation Ideas for week of 10-MAR-2014

URS (NYSE: URS): This is an interesting time to take a look at a company, that’s a play on US and internal infrastructure. The company operates in 4 major sectors – Government (roads, bridges, water infrastructure, nuclear, among others); Oil & Gas, Power and Industrial. The firm has underperformed its peeps for a while, however, the firm does not look like it’s badly managed.
The company trades at 11x earnings, with a 1.9% yield. I believe that this and next year should see capital spending, especially on infrastructure and capital spending, especially on Industrial, and Oil & Gas sectors should pick up in the next two years.
Another interesting thing that has happened in the last month, is the involvement of some very well-known hedge funds in this business, among them Jana Partners, which has declared a 9.9% stake in the company at an average cost of $47.46 per share. Jana Partners is having discussions with the company regarding capital and corporate structure. March 14 is the new deadline for submitting director nominations. This deal is a little different from the usual activist situation for Jana; it started out as a passive 13G investment that was converted to a 13D after the company announced poor financial results. For now, it's an amicable engagement, with the company agreeing to extend the deadline for stockholders to nominate directors so it can continue negotiations with Jana. Despite generating $1.5bn of FCF and completing $5.3bn of acquisitions since 2006, the company has grown its EV by only $2.5bn. These acquisitions left the company with many separate businesses that haven't been integrated, and with strong cash flow significantly in excess of earnings. So, the activist opportunities here are to use free cash flow to buy back stock, divest some of the businesses that haven't been working out, and/or take advantage of the FCF to sell the entire company or do a leveraged buyout. Because URS' long-time chairman/CEO is expected to retire this year, and his logical successor recently resigned, now is likely a good time to proceed, since activist agendas are much easier to implement when the management team is in transition.

Chemtura (CHMT):
This is a FY10 post-bankruptcy play. The firm filed for bankruptcy pressured by rising raw material costs and declining sales. It eventually emerged in FY10 with a liquidation value of $750M. It had 4 segments, Consumer division, and Industrial Performance Product (IPP), Industrial Engineering Product (IEP), and Agricultural division.  Recently, the firm got out of consumer unit, by selling it for USD 315M.  The company is in the process of selling its agricultural unit, which is expected to be sold around $800M - $1bn.
The company has discussed using the cash from divestitures, to return it to shareholders and deleverage the balance sheet. The company is expect to generate FCF of $72M In in FY14, and currently has net debt of approx. $350M, with $550M in cash.
The firm has been going through some major restructuring and cost reductions since FY10, that are expected to bear fruit in FY14.  In addition, IEP unit, which has been the most problematic is expected to have hit a bottom is should begin to improve going forward. The IEP+IPP division generated $310M in EBITDA and I expect them to generate $282M this year and improve going forward. Agro solutions generates about $75M in EBITDA.  At 8x EBITDA, I believe that investors get agriculture division for free, if they can buy this company at $25 range. The stock can easily be valued at more than $35, in a year. The kicker is the management. The CEO of CHMT was appointed by the Debtors committee, and is the former CEO of Hercules. He was instrumental in the sale of the company to Ashland in FY08.  

BroadRidge Financial (BR):
Given the current market environment, everything thinks about investing in such a firm that would largely remain unaffected by the daily gyrations that markets go through. I recommend to look at BR. BR is a service company that provides trade processing and Investor communications business to the financial service industry. It services 4 major clients, mutual funds, Corporates, Banks and broker dealers. The firm controls 90% of the proxy market, approx. 33% of equity processing and 55% fixed income processing market in the US. There are huge regulatory hurdles to enter and compete with BR, putting it in a good position. Additionally, the company is technologically savvy and disruptor in the space. It also is helping its clients save cost (eg: it does fixed income processing for its clients at 25% cheaper cost than institutions can do internally).  Since it’s the leading firm in the US, its innovation should only produce modest growth. Its also going into buy side, a new area for BR.
The kicker comes from its recently announced JV with Accenture, to scale its capabilities and products into Europe and Asia. With its credibility already working for Major US institutions, it should not have trouble cracking those markets and providing the next leg up in terms of revenue generation and profits. It already counts SocGen as its client and is growing in Europe. BR comes with a solid balance sheet. It has $300m of net debt and approx. $300M of FCF. The firm sports a 2.2% dividend yield and trades at 17x earnings. It stands to benefit, as major banks and broker dealers cut costs and look for a credible partner to provide them with the same quality services and BR might just prove to be that. If it continues to execute, BR stock can easily be $50+ in 1 to 1.5yrs.

GameStop (GME):  After reporting weak sales of videogames during the holiday season, GME fell 18% to $37.50. The market reaction creates an opportunity for investors. The shares now trade for 10x FY14 earnings. Plus, the company has $5 a share in cash on its balance sheet and no debt. The stock yields 3%, and last year the company bought back 7% of its shares. GME has no debt on the balance sheet, healthy cash flow and sports a 3% dividend yield. GME remains the dominant seller of videogames, with a roughly 50% market share, and sits at the center of a lucrative ecosystem involving new and used games. GME's sales of new-game hardware nearly doubled during the holiday period as Sony introduced its new PS4 and Microsoft rolled out its Xbox One. Software sales, however, fell 22.5%, which GME attributed to reduced sales of games for the older Sony and Microsoft consoles, but the Street worried that the report signaled a slide in the disc portion of the business. One reason that software sales might have been weak is that consumers bought millions of new PS4s and Xbox Ones—which cost $399 and $499, respectively—leaving little money to spare for new games, which usually cost about $60 apiece. Given the high upfront investment, new-game sales may follow. However, there seems to be a strong pipeline of games in FY14 and FY15. According to some industry estimates, this stock can be valued at $55 to $60 a share on modest new and used software sales growth and flat hardware sales.  

Insulet Corporation (PODD):
Insulet (PODD), an insulin-device maker that has risen 130% over 2yrs. But there is a problem – PODD is a one-trick pony, selling OmniPod and has yet to make a profit since 2005, the time it had the tubeless-pump market pretty much to itself. There are other big companies with deeper pockets, such as Medtronic (MDT) and Roche Holding (ROG). There are about 1.5 million to 1.7m Americans with Type 1 diabetes, of which 25%-30% use some kind of pump, rather than manual injections. Medtronic has been talking about a "patch pump" for a while, but investors should pay attention to the September settlement that terminated its patent-infringement lawsuit against Insulet. PODD can use some patents of Medtronic but in return, Medtronic is licensed to use some of PODD’s, including the one for automatic needle insertion, an important OmniPod feature. The settlement precludes Medtronic from making a replica of the OmniPod, but doesn't stop it from producing a similar product—that is, a wearable, disposable tubeless pump with automatic needle insertion. Profit expected by 2014 and 2015. This company might make a good short.

Personal Note: I am long, CHMT, URS, GME and BR.

Saturday, February 8, 2014

Special Situation Ideas for week of 10-Feb-2014

Those looking into some catalyst might want to ponder over these names for the week. I have done research on few of them, the other I have read online on Barron’s and other publications.

Constellium (CSTM): CSTM is  a producer of specialized aluminum products. The company went public in 2013 at $15 a share, and is not well known. The firm is 9% owned by Rio Tinto, 20%+ by Apollo, 10%+ by FSI (arm of the French Govt.), about 5% some by the management and the rest is public.  For a more detailed view, you can read CSTM’s F-1 (Click here).
CSTM converts aluminum into specialty products. It earns a conversion spread [the difference between aluminum and finished-product prices] and has minimal exposure to the underlying aluminum prices. It produces aluminum plate for aerospace customers, can stock for beverage manufacturers in Europe, and sheet and crash-management parts for automotive manufacturers. CSTM is a play on structural changes in both the aerospace and automotive markets. The demand for lighter, stronger materials that are environmentally friendly will significantly increase aluminum usage in the years ahead. CSTM enjoys long-term relationships with key customers including Airbus, Boeing, Audi, and Mercedes. These companies require suppliers' plants to be certified, which provides barriers to competitors.
In aerospace, CCTM is the global leader in plate and one of only two producers with certified production plants in both North America and Europe. CSTM signed a 10-year contract with Airbus to use Airware on the A350, and deliveries should start in 2015. Overall, this market is expected to grow by about 10% a year.
CSTM is also the largest producer of aluminum sheet for a vehicle's core body structure, known as Body-in-White, for the premium European auto makers. Next year could mark a significant step-change in demand in North America, with the rollout of the new Ford [F] F-150. Demand in NorthAm could grow to 450K tons by FY15 and a 1 mn tons by 2020 from less than 100K in FY12. The firm announced on 23-Jan-14 that it had formed a joint venture with UACJ to supply Body-in-White to North. America.] This is being driven by federal fuel-economy regulations mandating an average of 55 miles per gallon for corporate fleets by 2025.
CSTM has 105mn shares outstanding. Net debt is USD 225mn. The company is headquartered in the Netherlands and reports financials in euros. Yet, the shares are listed in New York. CSTM is expected to earn about $2 in 2013 with potential to earn more than $2.50 a share in t2 to 3 years. It could start to pay a dividend this year. Firm can go upto USD 35 in 2 years The company estimated that the replacement value of its assets is north of USD 8.2bn, which compares to an enterprise value of USD 3bn today.

 GAP Inc. (GPS): Most of the street is bullish on the stock with people expecting 17% gain in addition to a 2.1% dividend yield. At 12.6x earnings, GAP sells at discount to all of its domestic peers, despite having the best margins; competitors being ANF, ARO, ANN, H&M, Inditex. GAP stores, baby gap and gap kids: 40% of sales, old navy: 38%; Banana republic: 18%; rest by intermix, athleta (competes with lulu lemon) and Piper lime. Operating margins have climbed to 13% from 10%, 3 years ago. Growth will come from stores of Athleta (1st store in FS in FY11), Piper- lime with first store in in Soho, NY in Fy12. GAP’s Athleta is benefitting from Lulu lemon’s mishaps. International expansion should also help the company and justify multiple expansion. Additionally, company has history of buybacks. Fisher family, which controls 40%, is not selling, so slowly the firm is going private because of buybacks. Once the firms is seen as a global player, then at 15x earnings, which is S&P 500 multiple, share should be valued at $49 based on FY15 earnings of $3.27. The company has a ROE of 40%+; 13x P/E; holds USD 1bn cash on the balance sheet with USD 1.25bn debt.

Timken (TKR):
TKR manufactures, markets and sells products for friction management and mechanical power transmission, alloy steels and steel components. The big story here is the imminent spin-off of the company in Summer of FY14. TKR will spin-off its more cyclical steel business from its bearings business which should yield much better return for the long term shareholders.  The company yield about 1.6%. There are two activist investors involved who have pushed for the spin-off. There was a huge pension overhang on the company, which is not a factor anymore. IN the most recent conference call, the company stated that its pension are now fully funded, which in addition to other cost restricting efforts, should free up the cash flow, to be reinvested or returned to shareholders. On the SOTP basis, TKR post spin should trade at USD 69 a share, which is a hefty return from the current $55.  Activist Presentation (click here)

Few Other Names: As i wrote earlier, FY14 will be a volatile year for stocks, and unless something unforeseen happens, i think market this year will trade sideways to modestly up. However, in this stock picker market, we are better off investing in defensive value plays with good dividends that are playing into a growth theme and has some support. Here are few names worth revisiting:  Hess (HES): I wrote about this a while ago, and its coming back into the price range, where this might again be a good buy.  Another two names that are worthy of a look for long term shareholders is ManTech (MANT) and Leidos (LDOS) which spun off SAIC in FY13. Another name for those, looking to play the energy efficient space, might do themselves a favor by reading a really good article on Cree (CREE) which was written in IBD.

 Personal Note: I am invested in GAP, LDOS, MANT, CSTM and TKR.

Sunday, February 2, 2014

Thoughts on the 2014 markets

US markets have done pretty well over the last two years, and by that reason, to some, the emerging and EU markets look much more promising for this year.  That might be so, however, for an investor sitting in the United States, it’s sometimes very difficult to calculate the risks that come with investing in the emerging markets.

EU has done very well, over the last year. If you heard Mark Lasrey, someone I greatly respect, then there have been many turnaround opportunities in Europe which could have generated double digit returns. However, Europe has faced its own crisis, with unemployment still very high in some of the so called richer countries. Spain, France, Italy in particular are worth mentioning. Germany has performed relatively well over the last year or two – however it’s still tied to Europe in many ways. UK is doing well, but its more due to the easy monetary policies of the central bank. Global companies such as Nestle, however, are always a sure and safe bet.

The emerging markets have presented us with lot of opportunities as well, however, it’s very hard to gauge the political risks that comes with investing there. Recent slowdown in China, political opposition in Bangkok, sudden changes in rules ( for example gold) regarding imports in India, problems in Pakistan and Afghanistan, volatility in the Philippines should provide us with a note of caution – especially those sitting in US trying to play the emerging markets. Vietnam and Singapore might be good cases of investments, however, you better be visiting those places before putting your money to work.
Middle-east is a story that speaks for itself.  The markets in Brazil, Argentina, and Venezuela are not doing that great.

So this brings me back to the US and this year seems to be an interesting market – interesting because the Federal Reserve has started to taper and there is a change in guard. Stan Fisher is coming back as the vice-chair of the Federal Reserve and he has been a proponent of intervention in the past and so is Janet Yellen. I believe that those focused on the US markets investing for the medium term should focus on special situation equities.  I believe FY14 will present good opportunities for turnarounds, spin-off’s, and restructurings. Additionally, I also expect that FY14, given the political climate around the globe, will be a year in which stock markets as well as commodity markets will undergo a lot of volatility. Therefore, those who are looking to do well this year, are better off investing in companies that are light on debt (especially those firms whose debt is coming due in FY15, given the cost of debt will rise), have some yield with good margins and solid business model. Furthermore, the same companies, if they have a catalyst attached to them such as major divestitures, restructuring/turnarounds will perform better than the markets in general. This year might not be the year to bet on risky stocks that have done well in the past just because there was ample liquidity created by the federal reserve. I would say, in general, it will be a good year to play names and focus more on solid balance sheets rather than income statement!

Wednesday, January 15, 2014

Agilent's November Spin-Off To Create Upside For Investors

I have posted an article on Seeking Alpha which goes into details about how to profit from going long Agilent (A). It’s for medium to long term investors.

If anyone reading do invest in special situations, this might make a good read. Either you can click here or go to Seeking Alpha and check out "Kedar special situations" Its under long ideas. 

If you are unable to access it tonight (since the article was exclusively published early morning for Seeking Alpha – Rich subscriber base), you should be able to access it tomorrow after 11am.

Thank you

Sunday, December 15, 2013

Special Situation Ideas for week of 16-Dec-2013

Those looking into some catalyst might want to ponder over these names for the week, that I have come across in my reading.

Whiting Petroleum (WLL): For many years, Whiting Petroleum (WLL) was just another bit player in the domestic oil exploration industry. WLL tended to buy cheaper acreage in marginal drilling formations. As a player of long shots, Whiting's shares historically have traded at a discount. WLL likes to go out to areas people aren't focused on, paying less. As a result, many were long skeptical of WLL's prospects, however it's beginning to look like its efforts are paying off. In North Dakota's Bakken and Colorado's Niobrara, WLL is now seeing success with properties that were once thought to be "fringy." In the Bakken, by experimenting with new well-completion techniques, WLL has been able to squeeze 50% to 75% more in initial production out of new wells, said the CEO in 3Q call. In Colorado, initial results on a small number of wells have been really good. 
Record production led to record cash flow of $450.1 million, up 31% from the year before. WLL is a major player in two of the hottest Lower 48 U.S. oil plays in the last 40 years: the North Dakota Bakken and now the Colorado Niobrara play. In North Dakota, a state that has been very friendly to drilling interests, Whiting has amassed huge acreage. While Continental Resources (CLR) still leads in the Bakken, WLL is coming on strong. With initial production on new wells up 50% or more, WLL can produce astounding results. Meanwhile, WLL's early success in Colorado's Niobrara is also attracting attention. WLL trails Colorado drilling leaders like Anadarko (APC) and Noble Energy (NBL) but  the success they've had in the Niobrara is better than people expected a couple of years ago. But even with promising drilling results in Colorado, rock-smashing Whiting will have to keep an eye on political opposition. North Dakota is safe but Colorado is not. WLL , according to industry estimates might have  amassed 500,000 acres in unidentified areas, with some believe 200K of the 500K is in Michigan.However like other oil producers, WLL is hostage to global oil prices. The prospect of a negotiated settlement to the Iranian nuclear crisis has already put some downward pressure on prices. The success of fracking in North America has created enough new supply to depress natural gas prices. In time, the success of Whiting and other rock-crackers could weigh on oil prices too. But Whiting can still earn a solid return with oil prices in the low 80s.

Comverse (CNSI): CNSI provides telecom businesses with billing, customer-service, and data-management systems with a stock market value of USD 809m. Becker Drapkin Management acquired a 6.1% position in the firm. Becker acquired shares at an average cost of USD 31.92 per share. CNSI has USD 333m cash (including restricted and escrowed funds) with no debt and USD 69m of Ebitda. CNSI is a company with two strong segments - telecom billing and value-added services, but is in the early innings of a turnaround. In FY12, it hired Philippe Tartavull and Thomas Sabol, respectively the former CEO and former CFO of Hypercom, who executed a successful turnaround resulting in the sale of Hypercom to Verifone in FY11. The new management has already reduced costs at Comverse and rebuilt the sales team. Moreover, Comverse has the balance sheet to fuel a successful turnaround. While undergoing an operational turnaround, the company can easily buy back a meaningful portion of its float and emerge a leaner and more profitable company. Becker will definitely meet with management and could even get involved from a board level to advise on the turnaround and capital allocation.

Gentherm (THRM): New Technology adaptation, initiation of dividend (as all preferreds are paid off by Sep-13). Also credit facility, needs to be looked into. 21x P/E; 23% ROE. Developer and marketer of thermal management technologies for a range of heating and cooling and temperature control applications. Automotive products include actively heated and cooled seat systems and cup holders, heated and ventilated seat systems, thermal storage bins, heated seat and steering wheel systems, cable systems and other electronic devices. The Company is developing materials for thermoelectrics and systems for waste heat recovery and electrical power generation for the automotive market that may have applications for consumer products, as well as industrial and technology markets.

ImmunoGen (IMGN): Develops targeted anti cancer therapeutics using similar technology to SGEN it calls "Targeted anibody payload (TAP)". IMGN licenses its technology to Biogen Idec, Sanofi, Amgen, Novartis and Roche. TAP is a simple MaB that carries its lethal payload of anti-cancer drugs to its target site and the drugs are more effective and cause fewer side effects. Might become a takeover target

Sunday, December 8, 2013

Special Situation Ideas for week of 8-Dec-2013

Those looking into some catalyst might want to ponder over these names for the week. I have done research on few of them, the other I have read online on Barron’s and other publications. 

Ciena Corporation (CIEN): Growing demand for data, leading to growing demand for optical network equipment and infrastructure leaders will help the company grow and perform well in the future.Will likely benefit from its partnership with Verizon, AT&T as they start t accelerate the roll out of 100G technologies. VZ is currently field testing a new technology from CIEN that allows use of specialized software to increase spectral efficiency of the networks - doubling the capacity of its 100G network. Could also be a future takeout candidate.

Berry Plastics Group (BERY): Makes plastic containers and drinking cups, including a cup made of a biodegradable plastic it calls Versalite. Styrofoam cups aren't biodegradable, and paper cups aren't optimal for holding hot liquids; the company was taken private in a leveraged buyout by Apollo Global Mgt, and came public again in Oct-12. It generates $2 a share in fcf, and is paying down debt. Shares trade for $21. If nothing happens, you could make 11% just by deleveraging. But revenue are expected to grow.                      

Valero Energy (VLO): VLO operates as an independent petroleum refining and marketing company. VLO recently  spun off its its retail operations. Makes one of every 4 barrels of product exported from US. It’s a play on refining. With WTI-Brent spread bet. $5 -$8 it’s easier to make products here and export them. The company did well over the financial crises. Furthermore, future crack spreads are suppose to move higher, leading to higher operating margins. Stock traded in the 45, 10x earnings and a 2% dividend yield.

Northfield Bancorp (NFBK) – It’s a possible takeover target. The Avenel, N.J., outfit operates 30 branches in attractive markets in NY's Staten Island and Brooklyn, as well as Union and Middlesex counties in NJ. Given its high-quality customer base, it might pique the interest of a larger acquirer. NFBK has $ 2.7bn in assets, and primarily makes multifamily and commercial real-estate loans. Its credit quality is really good! Jan-12, bank raised $ 355m in a second-step conversion, which dissolved its mutual holding company's majority interest. Therefore, NFBK can't be sold for two years from this January.  At a recent $13, they trade for 108% of tangible book value. The bank could be sold for 125% of tangible book, or about $15 a share.

International Game Technology (IGT) – The story for this firm is interesting. IGT purchased an Internet gaming company, DoubleDown. DoubleDown since then has come to dominate the social-gaming vertical of the Internet. DoubleDown is highly profitable and growing very rapidly. DoubleDown is close to generating $ 100m of OCF; applying valuation standards this alone could be valued at excess of $ 1.5bn. IGT sells at around 7x CF with other parts of IGT valued between 4x to 5x OCF. IGT generates stable cash-flow growth, has 20%+ operating margins and ROE of 25%+,; ideally giving it a valuation of 10x to 11x instead of the current 7x. IGT just did another $ 200m buyback. The traditional slots business is a mature business, probably 2% to 3% growth in the U.S. The combination of everything is on the order of 8% growth and operating cash flow; extraordinarily high growth in free cash flow; the ability to buy shares at an attractive price; a decent dividend; and perhaps a transaction. William Hill (WIMHY)—a gaming company is large enough and has a high-enough stock-market value to buy IGT. It  has been expanding in the U.S. and is now licensed in almost all of the important gaming venues, and so that particular barrier that used to exist with IGT isn't as significant as it used to be. On SOTP the firm should be valued atleast 50% higher than it is right now.

 Take-Two (TTWO) - The intersection of consumer electronics and non-casino gaming is a major growth industry globally, and investors undervalue the power of growth of this immersive gaming. Immersive games is very difficult business to get into—you can make a very nice return, and right now, the company that does a good job of this and happens to be very undervalued is TTWO. In addition to creating games, TTWO has been very aggressive in acquiring its stock. The principal asset of Take-Two is Grand Theft Auto. GTA comes out every 5 yrs and each time a new version is released, the cash flow of this game is more significant than it was the previous time. It is very clear the cash flow from the latest edition of Grand Theft Auto—GTA 5—is going to be over $ 500m during its 5 yr lifetime, and that's $100m a year. At a CF multiple of 10x  puts GTA value around  $1bn; that's more or less the entire value of TTWO. Anything else is a bonus for shareholders. Stock should be worth $22 to $23.

Nestlé: The world's largest food outfit has one of its industry's best growth outlooks, thanks to a big presence in the developing world. The Swiss company aims for 5%-6% annual organic sales growth, and it should come close to hitting that target this year. Analysts believe that Nestlé is capable of high single-digit yearly gains in earnings per share. Nestlé's U.S.-listed shares, at around $72, fetch about 17 times estimated 2014 profits and yield 2%. Nestlé isn't cheap, but it rarely is a bargain, because of the strength of its global portfolio, which includes candy, coffee, bottled water, ice cream, infant formula, and pet food. It owns almost 30% of cosmetics maker L'Oréal, a stake worth $30 billion. Excluding that, Nestlé trades at only a small premium to slower-growing U.S. food outfits like General Mills (GIS) and Kellogg (K).

 Unit (UNT): The company is in the business of contract drilling, exploration and production, and midstream services in the oil and gas industry.  New Mountain Vantage which owns 5.2% of UNT has had discussions with management regarding its corporate structure, capital allocation, maximizing the value of the midstream division, board structure, and management compensation. The fund bought the shares at an average cost of $45.99. UNT’s midstream business grew 35% this year. New Mountain is an active shareholder that is very engaged with management, but most of the time privately. It believes that UNT is trading at a large discount to the sum of its parts. While UNT is primarily an exploration and production business, its midstream business has been growing and has a good management team that can continue growth by competing for larger jobs and entering into strategic transactions. Soon it will make a lot of sense to do something strategic with the midstream business. The company trades at less than 5x Ebitda, which is low even for pure E&P businesses. Midstream businesses trade at double-digit multiples. A separation of the two businesses could ultimately be beneficial to both. New Mountain has a constructive relationship with management and is likely to support them and work with them to enhance shareholder value. But, if need be, as it has shown in the past, it has the experience and conviction to follow through on a proxy fight

Tuesday, November 12, 2013

Special Situation Ideas for week of 11-Nov-2013

Those looking into some catalyst might want to ponder over these names for the week. I have done research on few of them, the other I have read online on Barron’s and other publications.  These are def. is worth a serious look.

Skyworks Solutions (SWKS): The company was known as Alpha Industries years ago, and made microwave products for the defense industry. SWKS now makes radio-frequency chips in concert with Qualcomm (QCOM), for Apple and Samsung phones. This is a good play on the growth of mobile communications. Minus excess cash, SWKS sells for 9x FY14 expected earnings and revenue is growing by double digits.        
Calgon Carbon (CCC): It’s a play water Scarcity around the world of usable water, especially in Asia. Even in the US the largest water reservoir is depleting and the need to water in only going to increase. Also there is demand in Europe. CCC recently did a 50m buyback. The company can also become a potential takeover target. Some of its comps. are Xylem, Pall Corp, Watts Water and EcoLab. Starboard is an activist in the firm, owning 9% of the company and recently filed a 13D.

American Eagle Outfitters (AEO): The stock has fallen 20% in 12 months on revenue fall of 2% and same store sales down 7%. Blamed on women's division. However, AEO has a debt-free BS and $2 a share in cash, and a nice dividend yield of 3.1%. AEO has shareholder-friendly management. Teens are in constant need of wardrobe replenishment and updating. ROE is 18%. Fair value according to some industry insiders is approx. $ 21. AEO stands out in a market where other stocks are at or near record highs.

Prooftpoint (PFPT): On demand data protection systems, including threat protection, regulatory compliance, achieving and governance as well as secure communication           . Might be a takeover target in the future. Firm has good balance sheet. Might be worth a look.

Infinera (INFN): It’s a play on growing demand for data, leading to growing demand for optical network equipment and infrastrcuture leaders. The company is betting on its new Photonic integrated circuit (PIC), used inside optical transport platforms. it has the world’s only commercially deployed large scale PIC, which it believes is a game changer for its cost scalability and speed. Might be worth to take a look at the company.