Arcan Resources Ltd Trade Alert

Arcan Resources Ltd(ARN:TSXV, CA)

1.09CADIncrease0.14(14.74%)Volume:
Above Average  575,000

Expand/Contract Level 2 Quote

 

Market Maker Shares Bid Price Ask Price Shares Market Maker
3,000 1.090 1.100 8,500
27,000 1.080 1.110 10,500
4,000 1.070 1.120 13,500
1,500 1.060 1.130 1,000
6,500 1.050 1.140 11,500
5,500 1.040 1.160 12,000
22,000 1.030 1.170 10,000
3,000 1.020 1.200 4,000
9,000 1.010 1.240 4,000
1,500 1.000 1.280 2,000

Arcan Resources: It is a Canadian oil and gas company which trades at the Toronto Venture stock exchange (ARN.V) and the U.S. stock exchange (ARNBF). It is a pure light oil producer which operates in the Beaverhill Lake formation of the Swan Hills region in Canada. This is where the grossly undervalued Second Wave Petroleum (SCS.TO) also operates as it was analyzed in Part 1. Arcan holds a large, contiguous land position in the Swan Hills oil play of 110,000 net acres (98% WI) which has excellent infrastructure (roads and pipelines) in place. It has identified more than 400 potential horizontal drilling locations as of today.

Arcan had a big drilling success in the first half of 2012 that boosted its share price. However the drop of the oil price, the natural production declines along with some operational disruptions and problems impacted the share price which dropped much in the second half of 2012. The company produced almost 4,000 boepd (99% oil and liquids) in the third quarter of 2012 and notes that the steep initial production declines from the newly drilled horizontal wells have now moderated. As of the latest report, Arcan estimates NAV per diluted share of $4.37 and 35.7 MMBOE total P+P reserves (96% oil).

Arcan has also initiated a Waterflood program in 2012 in both the DM#2 and Ethel areas. With the majority of the required infrastructure now in place, improved results are becoming apparent at wells closer to injectors. According to the company, the initial results are encouraging and Arcan anticipates that these results will translate to incremental reserve bookings by year end 2012 and in years to come. The effective waterflood techniques increase the production of the well from 50% to 120% according to the average industry data.

In addition, the vice president of engineering, Kevin Gunning, and the vice president of production, Kyle Baumgartner, were buying shares in September and October 2012 according to regulatory filings. Both are strong evidences that the waterflood program works and there are some satisfactory IP rates from those wells.

On top of that, a concerted cost focus in the latter half of 2012 and into 2013 is expected to deliver reductions in operating costs going forward and the new wells being drilled and completed at under $4.5 million per well, will generate very attractive rates of return. All that being said, I believe Arcan is a good buying opportunity currently.

Staples Will Offer In-Store 3D Printing

English: 3D printer Objet Eden 260V. Polyjet h...

English: 3D printer Objet Eden 260V. Polyjet high-precision technology, the 3D printer capable of printing 260x260x200mm’s volume has.This 3D printer is the technical high rapid prototyping. Magyar: Objet EDEN 260V 3D nyomtató. Polyjet technológiával működő nagy pontosságú 3D nyomtató, amely 260x260x200mm-es nyomtatási térfogattal rendelkezik. A gyors prototípusgyártás (rapid prototyping) jelenlegi csúcstechnológiájának számít ez a 3D nyomtató. (Photo credit: Wikipedia)

Nov. 30

The ubiquitous office supply store and print shop, will expand to offer in-store 3D printing services, reports The Register

The service will be called “Staples Easy 3D.” Customers will upload a 3D object file from their home computers, then pick up the completed object at a store or arrange to have it shipped.

So now Staples isn’t just about photocopies and Christmas cards. It will be about physical objects in the real world, only further bringing 3D printing into the mainstream.

One question: will Staples let you use its service to print guns?

3D printing is a process by which a machine shapes plastic into an object by laying down plastic one layer at a time. 

The potential here is huge – any object you can design using computer software can come to life in the real world as a physical object. A number of 3D printing companies have sprung up with the goal of making this technology both affordable and accessible to whomever wants it.

Massachusetts-based Formlabs began a Kickstarter project seeking $100,000 to bring to market the Form-1, its new 3D printer design. It ended up clobbering that goal, finally raising $2.9 million.

We spoke with Formlabs cofounder Maxim Lobovsky to get his take on why the project ended up being such a home run.

“There was an unmet need,” he said. “Professional 3D printers at the high end run tens of thousands of dollars. The low-end equipment is more affordable but less than professional. There was a huge hole in between to satisfy with architects, jewelers, and other professionals in that middle ground who can make use of 3D printing.”

The current batch of affordable hobbyist 3D printers carry out their process by means of plastic extrusion–plastic is melted and laid out very precisely one layer at a time until a fully-formed 3D object takes shape. Formlabs decided to take an entirely different approach.

“We use a photochemical process called stereolithography,” they said. “We hit liquid resin with a wavelength of light. It polymerizes and hardens, but this has nothing to do with heat. It’s an extremely precise laser that traces out objects to within 5 microns of precision.”

Stereolithography is one of the oldest forms of 3D printing technology, but Formlabs seems to have improved on a classic. The Form-1 was engineered to have as few moving parts as possible and the team took efforts to keep the price low–for example, the blue laser that hardens the liquid is the same as the readily-available laser in consumer Blu-Ray players.

They told us, “3D printers work fine when they cost $100,000, so we wanted to bring that price down.”

The most obvious parallels are to the early days of the PC industry. Where mainframe computers of the 1970s are like the super-expensive 3D printers of today, the first Macintosh is like the Form-1, a device that fits on your desk but still carries out all the functionality of its larger, pricier counterpart.

“The first PCs didn’t go to homes. They went to businesses,” Formlabs told us. “We tend to see that as the parallel to what we’re doing here.” And this obviously doesn’t exclude other 3D printing companies. Brook Drumm of Printrbot and Bre Pettis of Makerbot each chipped in for a Form-1 of their own.

For the immediate future, Formlabs plans to deliver products to its Kickstarter backers and hopes to make them “very happy.”

The larger mission after that is to prove that there’s far more demand for 3D printing than has been realized, and if a Form-1 3D printer should end up on every single engineer’s desktop in the process, they can certainly consider that a mission accomplished.

The Windows 8 Sales Data Is In, And It’s Horrible

Image representing Windows as depicted in Crun...

Image via CrunchBase

Nov. 30

Steve Ballmer facepalm

AP

MSFTNov 30 12:31PM
26.62

-0.34

% Change

-1.24%

NPD research published some horrible news for Microsoft yesterday.

 

  • Despite releasing an entirely new operating system on October 22 of this year, Windows PC sales shrank 21 percent between 10/21 and 11/17 versus the same period last year.
  • Windows 8 tablet sales during that period were “almost nonexistent” – just 1 percent of all Windows 8 sales.

“It hasn’t made the market any worse, but it hasn’t stimulated things either,” Stephen Baker, an analyst at NPD, told The New York Times. “It hasn’t provided the impetus to sales everybody hoped for.”

No kidding.

Yesterday, we reported other bad news:

  • Asus CFO David Chang’s comment that “demand for Windows 8 is not that good right now.”
  • Microsoft cut its order of Surface tablets for the year to two million units, down from four million.

This is a very scary time for Microsoft.

InterMune, Inc. Buy Target $ 13

Nov 30

InterMune, Inc.

ITMN : NASDAQ : US$9.36
BUY  Target: US$13.00 

COMPANY DESCRIPTION:
InterMune is a development stage biopharmaceutical company focused on the development of drugs that address unmet medical needs in hepatology and pulmonology. The company is developing pirfenidone for the treatment of idiopathic pulmonary fibrosis (IPF).

Investment recommendation
Reiterate BUY, $13 target on improved EU Esbriet (pirfenidone) launch momentum. We think Esbriet, ITMN’s drug for idiopathic pulmonary
fibrosis (IPF; an orphan lung disease), has good peak EU potential. Esbriet launch has encountered marketing challenges, but appears to now be
trending positive. Still, we see headwinds from potential competitor data in late 2013. Our worldwide peak sales estimate is ~$2B in 2025, and our
target is based on a DCF and pNPV analysis.
Investment highlights
 As expected, Esbriet gets an initial negative recommendation from NICE in appraisal first draft; we think price flexibility could lead to positive recommendation later in 2013. ITMN hinted in its Q3 call that it might receive a negative first round appraisal.

We think ITMN will exercise flexibility on price, allowing eventual launch in the UK. Based on conversations with UK IPF experts, we think the final UK price may be substantially lower than the $42K/year ITMN submitted to NICE, possibly as low as around $30K/year. Nevertheless, we expect
good UK uptake to be positive on UK IPF expert support.
 ITMN expects final NICE appraisal in March 2013; we think NICE could stretch process in H2/13. After this recommendation, a ~1 month
consult period begins for comments on the first appraisal. After this, the committee may meet again, after which final guidance is published.
Given the consultation period falls during holiday season, ITMN cautioned review could stretch into Jan., with a meeting in late Jan. 2013 and final guidance in March. We see Esbriet as just the sort of drug NICE tortuously appraises, and expect a decision in H2/13.

Retail Weakened By Sandy

English: This is a logo for Costco.

English: This is a logo for Costco. (Photo credit: Wikipedia)

 

Nov. 30

SPDR Retail ETF (XRT : NYSE : US$63.36)

 Several U.S. retailers reported their November sales numbers with the impact of Hurricane Sandy being a consistent theme.

All in, retail sales increased by 1.6% in the month, less than half the 3.3% increase that analysts were expecting.

Target (TGT) and Macy’s (M) both missed expectations due to weakness from the storm while Kohl’s (KSS)
posted a surprise drop in November sales, sending shares dramatically lower. Additionally, Kohl’s management said the online
strength that it saw in the moth would not be replicated in December.

Limited Brands (LTD), parent company of Victoria’s Secret, Bath & Bodyworks and La Senza, reported a 5% increase in sales, beating expectations while all three of Gap Inc’s (GPS) business lines, Gap, Old Navy and Banana Republic, saw sales improve. Costco (COST), the largest retailer to report results, said that sales rose by a better-than-expected 6%, helping to buoy overall results.

Avago Technologies Limited BUY Target $ 43

Apple iPhone 3GS, Motorola Milestone and LG GW60

Apple iPhone 3GS, Motorola Milestone and LG GW60 (Photo credit: Wikipedia)

Nov. 30

Avago Technologies Limited
AVGO : NASDAQ : US$35.10
BUY Target: US$43.00

COMPANY DESCRIPTION:
Avago Technologies Limited is a designer, developer and global supplier of analog semiconductor devices. Avago offers products in three primary target markets: wireless communications, wired infrastructure, and industrial and automotive electronics. Applications for Avago products
include smartphones, connected tablets, consumer appliances, data networking and telecom equipment, and enterprise storage  servers.

Investment recommendation:

Avago reported strong Q4/F2012 results with mixed Q1/F2013 guidance, as sequentially flat Wireless guidance for the seasonally weaker January quarter was offset by soft Wired Infrastructure and Industrial division guidance. Despite near-term macro headwinds in these divisions, we believe Avago’s proprietary technologies, strong IP portfolio, and diverse customer base in several growth markets position the company for strong long-term growth.

Investment highlights
Q4/F2012 sales of $618M and pro forma EPS of $0.77 were above our $614M/$0.73 estimates driven by very strong sales of Wireless division PA and FBAR filtering solutions into LTE smartphones.
 Avago’s strong Wireless results were consistent with  checks indicating strong sales for LTE smartphones including the iPhone 5 and Samsung Galaxy S III. Further, we believe Avago is well aligned with leading LTE baseband supplier Qualcomm as other OEMs launch LTE smartphones in an attempt to regain share. Management highlighted plans to quadruple its FBAR production capacity exiting 2013 over 2011 levels given strong FBAR demand due to the growing mix of LTE smartphones.
 However, Avago guided to a 5%-9% sequential sales decline, well below  estimates. Sequentially flat Wireless sales guidance was in line with our estimates given strong FBAR demand, but weaker trends and limited visibility in Avago’s Wired and Industrial businesses led to the lower guidance than our estimates. As such, we are decreasing our F2013 pro forma EPS estimate from $3.05 to $2.90 and introducing our F2014 estimate of $3.28.
Valuation:

Our $43 price target is based on shares trading at roughly 13x our F2014 pro forma EPS estimate.

Citi – Energy / Commodity Pricing Forecast

Nov 29

Citi’s Energy Outlook For 2013

Considering this year’s rather volatile performance, one thing can be agreed upon by almost all investors – commodity investing is essentially a crap shoot. This year’s unprecedented summer drought and escalated geopolitical tensions in the Middle East have wreaked havoc on commodity markets, leaving some lucky investors with profitable returns and others with steep losses. Overall, however, commodities have been experiencing a steady uptrend for quite some time, as global demand has continuously inched higher despite the recent economic slowdown. In a recent statement, global head of commodities research at CitigroupEdward Morse warned that the “commodity super-cycle” is over and that “no longer will a pure long-only strategy bring the returns expected in 2002 to 2008, nor will conditions approximating those of the last decade return anytime soon”.

Citigroup’s 2013 forecast for energy commodities is somewhat mixed, though the slowdown in China’s economy is expected to have a significant impact on global demand and supply levels. Below we highlight what Citi expects to be in store for three crucial energy commodities:

Bearish On Brent

Despite a recent rise in geopolitical tensions across the Middle East, analysts believe that Brent prices are in for a modest decline over the next two years. The United States’ push for energy independence has been the single most important factor contributing to the massive stock piles of oil. With domestic oil production on the rise, demand for Brent form West Africa, Middle East, Venzuela, Mexico and other OPEC countries will likely decline.  Analysts predict the

average price of Brent will come down from $110/barrel to $99/barrel. In 2014, prices are predicted to drop even further to $93/barrel.

Cloudy Forecasts For WTI

The U.S. Energy Information Administration, along with several other economists,  has somewhat of a mixed outlook on WTI  prices, as they believe significant uncertainty and potential supply disruptions could either push crude either way. According to Citi’s chief energy economist Ed Morse, however, peak oil proponents couldn’t be more wrong .

He believes that crude is at a critical turning point, as increased supply levels and slowing global demand, particularly from China, will ultimately put WTI prices around $80-$90 per barrel by 2020. His conclusions are based on the fact that upstream spending on oil & gas capital expenditures have increased six-fold over the last decade, and with the historically high oil prices in recent years, producers have been scrambling for new supplies, which will ultimately lead to lower prices down the road.

Natural Gas Could Catch Fire

Edward Morse has somewhat of a bullish long-term outlook on natural gas, as he believes reduced supply levels will have a significant impact on prices. Imports of natural gas from Canada are expected to fall next year, while exports to Mexico are projected to to be higher as a result of a loss of gas-processing capability after an explosion at the Reynosa plant. Meanwhile, power plants will likely continue to switch from coal to gas, putting additional pressure on supply levels. Citigroup estimates prices for the fossil fuel will rise 6% to $3.55 per million btu in 2013

Goldman Sachs Top Trends For 2013

Nov 29.

1. “Global growth: A ‘hump’ to get over, then a clear road ahead”

Growth will be weak in early 2013 with increased fiscal restraint.  Spanish economic risks and Italian political risks will ease in the second half of the year.  And there will be “room to grow” thanks to output gaps.  Looser energy supplies will also help.

“The biggest challenge from a markets perspective is that we see risks to growth concentrated early in the year, with Q1 likely to show a step-down in growth globally.”

    

2. “More unconventional easing in the G4″

Interest rates will stay ultra-low in the world’s largest economies.  “Fed to move towards macro-based criteria; ECB to conduct private asset purchases.”

“However, the most hotly debated shift currently is whether the BoJ will make a more convincing attempt at easing. … And while we do expect incremental progress, our central case is not for a quantum leap in BoJ policy, particularly in the near term.”

 

3/11

   

3. “Termites eat away at the foundations of the ‘search for yield’”

US Treasury yields will rise modestly. But investors will be driven toward corporate bonds as they look for yield.

“Increased risk that easy credit will lead to corporate re-leveraging … [E]xcluding peripheral Europe, corporate credit quality (as measured by debt-to-earnings measures) remains good in most markets, and this should continue to support the fundamental risk profile of most credit portfolios.”

4. “Housing stabilisation and private-sector healing in the US”

US housing activity will continue to increase, as mortgage rates remain record low and lending conditions loosen.

“On that front, two kinds of assets come to mind. The first is select vintages of the ABX index on subprime mortgages. … The second is US domestic banks, which could benefit further from a gradual normalisation of housing credit finance if home prices continue to drift higher.”

 

5/11

   

5. “Euro area a smaller driver of global risk, but still a source of tails”

5.

AP

European growth will be weak, with Spanish economic risks and Italian political risks intensifying early in the year.

“With risk premia still wider than elsewhere, and larger than warranted by fundamentals alone, further policy progress – and an absence of fresh stresses – could see incremental gains in Euro area assets

   

6. “Continued divergence between core and periphery in the Euro area”

“The divergence in growth between the Euro area core (Germany in particular) and the periphery (Spain in particular) is set to continue. Periphery weakness is already well-known, but the potential for German overheating is a more distinctive theme

7. “Emerging Market growth pick-up revisits capacity constraints”

7.

AP

Emerging Markets will see growth accelerate but they will also have “less room to grow” than developed markets.  Inflation will increase the risk of tighter monetary policy.

“We think EM equities should have a better year, but the upside potential may be limited by the fact that inflationary pressure and a potential shift towards tightening could come earlier than the market expects in places

HERE IT IS: Goldman Presents The 10 Stories That Will Dominate Markets In 2013

 

8/11

   

8. “Emerging Market differentiation continues”

Responses to inflation and current account imbalances will differentiate the emerging markets.

“[T]he differences across EM are at least as striking as their similarities… The market may be underestimating the scope for rate hikes (in some ASEAN markets, such as Indonesia or Malaysia) or overestimating the scope for easing in places (Poland), especially if global yields drift higher as well.”

9. “Commodity constraint to loosen in the medium term”

9.

ExxonMobil

“US energy supply story gradually loosens global oil constraint.”

“Most importantly, we expect oil markets to return to a more structurally stable position, where the ability to bring on new supply in the $80-90/bbl range is rapidly increasing. The relaxation of the energy supply constraint globally reduces one major obstacle to a global recovery as we look to above-trend global growth into 2014 and beyond.”

 

10/11

   

10. “Stable China growth, but not like the old days”

“Although we expect Chinese growth to stabilise next year, the pace of growth we envisage is still only a touch above 8%.”

“Our Commodity Research team’s analysis of the Chinese construction cycle suggests that iron ore demand is likely to remain soft as core building demand falls, and that copper will receive a boost from the completion of new buildings in the next 6-9 months, but is likely to peak thereafter.”

Workday : Software as a Service BIG BANG FIRST PUBLIC QUARTER

Image representing Workday as depicted in Crun...

Image via CrunchBase

Nov. 28

Workday

WDAY : NYSE : US$53.19
BUY Target: US$60.00

COMPANY DESCRIPTION:
Workday provides enterprise cloud-based applications that deliver the core functions for global customers to effectively manage both the human capital and financial resources of an organization. Solutions include: HCM, Financial Management, Payroll, Time Tracking, Procurement, Employee Expense Management, etc. Workday was founded by the former founders of PeopleSoft in 2005 and is headquartered in Pleasanton,
California.

Investment thesis
We believe investors should have at least a starter position in Workday. If the stock never corrects, they will make some money. If, however, the stock market gives us an opportunity to buy WDAY shares “on sale,” owning a bit of stock beforehand likely means that investors will be able to make that decision to buy a full position more quickly than someone who would have to spool up on the name. Reiterate BUY and $60 target.
Investment highlights
 A nice start – material revenue and cash flow upside. Workday reported Q3/13 revenues and FCF loss of $72.6M and ($23.8), which were
respectively $9.6M and $23.3M ahead of our estimates. Subscription and total revenue growth was 116% and 99%, respectively. Calculated billings
grew 64% to $77.3M, which was nicely ahead of our $67.4M estimate.
 Solid customer adds, promising User Group meeting. WDAY added 31 new customers in the quarter, bringing the FQ3-ending total to 356. At
Workday Rising, the firm hosted 170 company prospects and 2,500 attendees, which was up 80% y-o-y. At the event WDAY made three major product announcements: availability of Workday 18 (updates include global capabilities for Financials, Education & Government specific functionality, mobile functionality enhancements), plans for a Recruitment module (H1/14), and a Big Data Analytics solution (H2/13).
 Outlook: Q4 better than expected, inching forward estimates higher. Management guided mid-point Q4 revenues roughly $10M above our
forecast (implying ~80% growth). We have increased our F2014 revenue estimate by $5M to $410M (+52%) and cut FCF loss by $7M to ($133M).

All You Need To Succeed – in 500 pages of Investing Strategy and Selections


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