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.