JIM ROGERS: The World’s Savers Are Being Wiped Out

English: American investor Jim Rogers in Madri...

English: American investor Jim Rogers in Madrid (Spain) during an interview. Español: El inversor norteamericano Jim Rogers en Madrid (España) durante una entrevista. (Photo credit: Wikipedia)

Jim Rogers decries the growing uncertainty and recklessness of global central planners as the world enters uncharted financial markets:

 

For the first time in recorded history, we have nearly every central bank printing money and trying to debase their currency. This has never happened before. How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns. When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.

I own the dollar, not because I have any confidence in the dollar and not because it’s sound – it’s a terribly flawed currency – but I expect more currency

turmoil, more financial turmoil. During periods like that, people, for whatever reason, flee to the U.S. dollar as a safe haven. It is not a safe haven, but it is perceived that way by some people. That’s why the dollar is going up. That’s why I own it. Will I own it in five years, ten years? I don’t know.

It makes it extremely difficult for the investor looking for acceptable risk/reward, or the saver looking to protect their purchasing power; as in Rogers’ view, all options have their problems:

I own gold and silver and precious metals. I own all commodities, which is a better way to play as they debase currencies. I own more agriculture than just about anything else in real assets because of the reasons we discussed before. We were talking before about the risk-free or worry-free investment. Even gold: the Indian politicians are talking about coming down hard on gold, and India is the largest buyer of gold in the world. If Indian politicians do something — whether it’s foolish or not is irrelevant — if they do something, gold could go down a lot. So I own it. I’m not selling it. But everything has problems.

To Rogers, the bigger danger that concerns him is the hollowing out of the ‘saving class’ resulting from this situation. Central planners’ policies are punishing the prudent in favor of rescuing the irresponsible. This has happened before in world history, and the aftermath has always had grievous economic, social — and often human — costs:

Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.

In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.

If you go back in history, you’ll see what happened to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.

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Globus Medical Q4/12 SOLID AS EXPECTED; 2013 GUIDANCE IN LINE FOR YEAR

GMED : NYSE : US$13.82
BUY 
Target: US$22.00

COMPANY DESCRIPTION:
Globus is a medical device company focused exclusively on the design, development, and commercialization of products that promote healing in patients with spine disorders. All amounts in US Dollars.

Investment recommendation


We reiterate our BUY rating on Globus following a solid Q4/12. Best-inclass top-line growth combined with strong operating margins reinforce
our thesis of Globus offering investors multiple opportunities to create value. Net, net we are encouraged by Q4/12 results that slightly
outperformed our and consensus expectations. Our thesis remains intact given continuous new product flow combined with distribution
expansion and best in-class financial discipline that positions the company well for both top- and bottom-line growth in 2013 and beyond.
Investment highlights
 Q4/12 results of $100.5M/$0.22 were above our and consensus estimates for $99.2M/$0.18 and $99.1M/$0.19.
 Breakdown of Y/Y revenue growth in the Q4/12: Innovative fusion +3%, Disruptive technologies +35% Y/Y; US grew +13%, and International +36%. Disruptive tech and US drove results.
 Favorable guidance for double-digit revenue growth, ~13%, and adjusted EBITDA of 34%-35% (inclusive of ~ 180bps impact from the medical device tax) vs our expectation for 12% and 33.7%.
Valuation
We are maintaining our $22.00 price target based on a 24.0x PE multiple applied to our 2014 EPS estimate of $0.92

Teck Resources

English: This is a logo for Teck Cominco.

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

(TCK.B : TSX : $33.28), Net Change: -1.17, % Change: -3.40%, Volume: 3,996,733
Teck Resources continued to slide on Friday. On Thursday, the diversified metals producer announced Q4/12 results that saw the company report $0.61 per share, well ahead of  consensus estimates of $0.48.

The earnings beat versus estimates was due to lower coal cash costs of $103 per tonne, higher copper sales volumes of 105,000 tonnes and lower depreciation, partially offset by higher copper cash costs of US$1.79 per pound.

TCK.B also provided initial 2013 guidance which overall was soft. For 2013 copper production guidance ranged 330,000-370,000 tonnes, while coal production guidance ranged 24-25 million tonnes. Both of these were below Wowkodaw’s estimates of 374,000 tonnes and 25.5 million tonnes respectively. 2013 coal cash cost guidance of US$107- 117/tonne was in line with estimates of US$113/tonne. 2013 capital cost guidance was higher at $2.0 billion, due to spending on the QBII project being brought forward. For Q1/13, TCK.B has already reached agreements to sell 6.0 million tonnes of coal at an average price of US$159/tonne.

In project development, the company continues to make good progress on the mill modernization at its Highland Valley Copper mine, the acid plant project at Trail and the advancement of TCK.B’s new mine development projects. On TCK.B’s quarterly conference call, CEO Don Lindsay discussed acquisition opportunities (from Seeking Alpha transcript), “We talked about, in the past, that iron ore would be a  good fit for our portfolio and it really would for all sorts of good reasons. I said in the last quarterly call that we’ve moved on because we just found the values too high.  But values have come down and also, as probably those who follow the industry closely, there’s a few new assets that have become available.”

NxStage Medical Buy Target $ 17

This photo shows a hemodialysis treatment in p...

This photo shows a hemodialysis treatment in progress using a NxStage System One cycler. The treatment was done aboard a boat. This made possible because of the machine’s use of bags of dialysate. This particular treatment used 25 litters of dialysate over the course of a 195 minute treatment.BillpSea 16:26, 27 September 2007 (UTC) (Photo credit: Wikipedia)

NxStage Medical

NXTM : NASDAQ : US$10.42
BUY  Target: US$17.00

COMPANY DESCRIPTION:
NxStage Medical, founded in 1998, develops, manufactures and sells a portable (home) hemodialysis system, the System One. The System One is the smallest, commercially available hemodialysis system. The company is committed to improving the quality of life and clinical outcomes for hemodialysis patients suffering from ESRD.

Investment recommendation

Improving patient access to predictable reimbursement for home-hemodialysis remains the long-term valuation driver, but we believe the company has a robust strategy in place to continue driving market penetration and therefore revenue growth.
Investment highlights
 NxStage continues to focus on improvements, both user interface and product related, to its SystemOne platform. Multiple new products are to be commercialized in the US in 2013/2014.
 Catalysts with unknown timing include the potential for improved training reimbursement and the roll-over of patients from PD to HHD, both of which could occur within the next 12 months.
 NxStage is moving forward with its strategy to build centers of excellence dedicated to demonstrating the business model of homehemo
as well as improve its patient/nurse/physician training.
Valuation
We are maintaining our price target OF $17.00. We base our valuation on a 4.6x EV/sales multiple applied to our 2013E sales estimate of $182.7M for the System One and a 1.0x multiple applied to our 2013E sales estimate of $78.9M for the MediSystems business. Our price target assumes cash of $102.7M, no debt and 58.9M shares outstanding.

Guyana Goldfields – Revised Study

Guyana Goldfields

(GUY : TSX : $4.13)
Shares of Guyana Goldfields jumped after the company announced a revised feasibility study on its 100%-owned
Aurora Gold project.

The estimated initial capital required to achieve commercial production is $205 million and reflects numerous positive changes, in particular, the phased mining and milling approach, reduced footprint of the mine site and facilities, and utilization of an optimized mobile equipment fleet. Based on the key findings of the study, the company will continue to move forward with mine construction and development of the project.

The improved mine plan will produce 3.29 million ounces of gold over an initial 17 year mine life at an operating cash cost of US$527 per ounce (including royalty). Average annual gold production over the life of mine is 194,000 ounces, and averages 231,000 ounces per year over the first ten years. Gold production peaks in 2020 at 349,000 ounces.

Commercial production is expected to commence in Q1 2015. Gold production will be staged, with initial open pit production of 5,000 tonnes per day from the Rory’s Knoll deposit and expanding to 10,000 tonnes per day in early 2018 when underground mining commences. A Bay Street analyst was positive on the study and noted that he believes this is the report that will convince investors that Aurora, re-optimized and re-designed, presents an attractive project with robust economics.

Bed Bath & Beyond Buy Target $ 72

English: Bed Bath & Beyond

English: Bed Bath & Beyond (Photo credit: Wikipedia)

Bed Bath & Beyond

BBBY : NASDAQ : US$57.95
BUY Target: US$72.00

COMPANY DESCRIPTION
Bed Bath & Beyond sells a wide assortment of merchandise including home furnishings, domestics, giftware, health and beauty care items, and infant and toddler merchandise. BBBY operates around 1,000 Bed Bath & Beyond stores, 265 Cost Plus World Markets, 75 Christmas Tree Shops, 80 buybuy BABY locations, and 45 Harmon stores

Investment recommendation
BBBY reported Q3 EPS of $1.03, $0.03 ahead of our estimate and $0.01 above consensus. SSS increased 1.7% on top of +4.1%, versus our forecast of +3.5% and consensus at +3%. Hurricane Sandy negatively impacted SSS by 90bps in Q3. This was offset by a smaller yr./yr. increase in the SG&A expense rate than we had modeled. A lower tax rate added $0.04 of upside to our EPS estimate, partially offset by a higher interest expense. BBBY guided for Q4 EPS of $1.60-$1.67, $0.08 below prior consensus. We are maintaining our BUY rating with shares trading at 11x our F2013 EPS estimate (excluding cash of $3.46 per share) and 6x F2013E EV/EBITDA based on the after-hours quote.
Investment highlights
 The addition of Cost Plus resulted in a market share gain in Q3. We calculate that the company’s share of the home furnishings market increased 160bps in the quarter to 23.5% based on total sales reported by the U.S. Census Bureau.
 We are lowering our Q4 EPS estimate by $0.10 to $1.66. We increased our SG&A expense rate forecast by 70bps driven by continued integration costs and infrastructure investments. We are reducing our gross margin estimate by 30bps as a result of higher couponing and negative mix shift.

 Our DCF-generated price target moves from $73 to $72.

Brokerage 2013 Uranium Pick (and 2013 review )

Raymond James Stadium entrance, Tampa, Floride...

Raymond James Stadium entrance, Tampa, Floride, USA (Photo credit: Wikipedia)

*************************************************************************
ENDEAVOUR MINING (T-EDV) $2.07 -0.03
CAMECO CORP. (T-CCO) $20.51 +0.51
It’s that time of year that some of the brokerage houses come up with their “Best Picks” for the coming year and we see that Raymond James is one of the first ones out. In the introduction in their piece, they note “The Raymond James Canadian research team is proud of our stock picking record with the annual best picks list delivering a simple average holding period return of 16.4% over the past 10 years, outpacing the S&P/TSX Small Cap index by 7.5%…” which of course was the good news.

The bad news was that last year it was not particularly generous, particularly for small caps and resource stocks… (we all know that). In fact it was simply brutal. But the world continues to turn.
Here is the list of Raymond James’ Best Picks for 2013:
Aecon Group Alamos Gold
B2Gold Corp. Black Diamond Group
Cameco Corp. Canfor Corp.
Copper Mountain Endeavour Mining
HudBay Minerals Open Text
Potash Corp. of Sask. Savanna Energy
Shoppers Drug Mart
This selection list covers a lot of fields, but again resources seem to dominate. Here’s hoping for a little bit more luck in that sector next  ear…right?
But a couple of the suggestions stand out to us, maybe because we are just hoping that they succeed. One of them is Endeavour Mining which also happens to be a favorite pick of Canaccord .
Raymond James analyst Brad Humphrey writes, “With the Avion transaction now closed, shares of Endeavour Mining remain at depressed levels, trading at 0.6x NAV relative to peers at 1.0x. We view this as an opportunity for investors to build positions in the name as the company moves forward developing its Agbaou project (with production slated for 1Q14), as well as optimizing the performance of its newly acquired Tabakoto mine. Endeavour Mining is one of the few emerging mid-tiers that has the balance sheet strength to largely fund its growth with access to
$130 mln in cash and equivalents and $100 mln in undrawn credit.”
Their comments on Cameco Corp. by David Sadowski has gone bullish on uranium. He writes, “Positive Uranium Outlook: Bullish supply-demand fundamentals, including rising Asian demand, insufficient mine supply growth and the expiry of the Russian HEU Agreement (2013) .

Cannacor forecasts US$58/lb  U3O8 in 2013E and US$72/lb in 2014E (vs. US$42/lb today).” That’s what a lot of people are hoping for—that the
beaten up uranium sector makes a comeback as Asian demand is expected to climb in the coming years, while production

decisions are going to lower demand. It’s not so much Cameco that we are looking at though as some of the junior names in the uranium sector, many of them trading at a quarter or a fifth of their previous prices .

Check your copy for the AMP selections if you are inclines to accumulate at these levels  – The Apprentice Millionaire Portfolio ( available from Amazon )  has a WATCH  ONLY / AVOID on the sector .

Numerex Target $ 15

Machine II Machine (Photo credit: Wikipedia)

Numerex 
NMRX : NASDAQ : US$13.36
BUY Target: US$15.00

COMPANY DESCRIPTION:
Numerex is a leading provider of machine-to-machine (M2M) business services, technology, wireless network connectivity, and products used in the development and support of M2M solutions for enterprise and government markets worldwide.

Investment recommendation:

eNumerex’s vertically integrated Device Network Application (DNA) M2M offering is well positioned in key verticals such as security, remote monitoring, and asset tracking and should grow at least in line with our 25% M2M unit growth CAGR estimate over the next several years.

We believe an increasing mix of high-margin recurring services revenue should drive operating leverage from Numerex’s infrastructure and platform R&D investments. As such, we believe Numerex should post strong sales and earnings growth, and we reiterate our BUY rating and $15 price target.
Investment highlights
 With its strong Q4/12 guidance, Numerex should exceed 30% Y/Y subscriber growth for 2012 on its WorldPass M2M network. Given our expectations for continued strong growth primarily driven by further penetrating its existing customer base in the security, fleet, and asset tracking/monitoring verticals combined with a solid deal pipeline, we believe Numerex should post strong subscriber growth at least in line with our 25% M2M industry growth CAGR.

Therefore, we believe Numerex will generate strong recurring sales growth that should drive margin expansion and operating leverage.
 Given Numerex’s considerable prior investments in its scalable infrastructure and low penetration at leading large customers, we believe the economics of Numerex’s growing subscriber base are improving with its scale. We believe Numerex’s current subscriber acquisition cost is roughly $25 and trending downward. Given Numerex’s monthly Recurring Revenue & Support ARPU of roughly $2.21, we believe the company’s user acquisition payback period is less than one year – considerably less than the average customer lifetime of over five years, yielding strong earnings leverage.
 Given these trends, we believe Numerex is well positioned for earnings growth consistent with our Q4/12 and 2013 estimates. Valuation: Our $15 price target is based on shares trading at roughly 18x our 2013 pro forma EPS estimate.

Valuation: Our $15 price target is based on shares trading at roughly 18x our 2013 pro forma EPS estimate

Canadian Oil Sands Ltd.

Canadian Oil Sands

Canadian Oil Sands (Photo credit: Wikipedia)

Canadian Oil Sands Ltd. 

COS : TSX : C$20.43
HOLD Target: C$22.00

eld on November 30 at 10am ET: 888-231-8191 or 647-427-7450. We don’t expect anything meaningful to come out of the call.
 2013 production guidance of 106-116 MBbl/d net (with a single point target of 110.4 MBbl/d net) is in line with our 109 MBbl/d estimate and the Street’s 111 MBbl/d forecast. As expected, it incorporates a planned turnaround of Coker 8-1 in H2/13.
 2013 capex budget of $1.33 billion is in line with our $1.3 billion estimate and only slightly below the Street’s $1.4 billion forecast. This is also up roughly $200 million YoY. Unit opcost guidance of $36.67/Bbl is in line with our $36.62/Bbl forecast.
 COS plans to maintain its $0.35/share quarterly dividend (we weren’t expecting a cut), equating to a total annual dividend payout of roughly $678 million. However, of note, at our US$90/Bbl WTI price deck we estimate that COS will outspend cash flows (before dividends) by almost $190 million. Nevertheless, at 9/30/12, the company had $963 million of working capital, $1.5 billion of unused credit, and a net debt to total net cap of only 6%, which is why the company has confidence in the sustainability of its dividend.
 2014 is expected to be the last year of the multi-year major project spending. Specifically, COS reiterated that major project spending is
expected to be roughly $800 million in 2014. Therefore, adding an estimated $400 million of maintenance capex on top of this would
yield a total 2014 capex budget of roughly $1.2 billion. As such, post 2014 is when investors can look forward to a potential significant
increase in dividends.
Reflecting some minor adjustments, we are slightly raising our 2013 CFPS estimate to $2.43 from $2.41. We maintain our $22 target,which is based on 0.9x our risked NAV estimate.

Imperial Metals Corp. BUY Target $ 20

A share entitling to 1/8 of the Great Copper M...

A share entitling to 1/8 of the Great Copper Mine. Dated June 16 1288. (Photo credit: Wikipedia)

Nov. 12

 

Imperial Metals Corp.

III : TSX : C$12.73

COMPANY DESCRIPTION:
Imperial Metals is a Canadian-based company with interests in two mature producing copper mines in British Columbia (Mount Polley [100%]; Huckleberry [50%]). More importantly, the future and value driver of the company resides in its 100% interest in the very large but undeveloped Red Chris copper-gold project in northwest BC, which is permitted and scheduled to enter production via an open-pit in late-2014.

Q3 Results As Expected

Investment recommendation
Imperial Metals reported relatively in line Q3/12 results (adjusted EPS of $0.10 vs. our estimate of $0.08 and the First Call consensus of $0.06) and reiterated its 2012 guidance. The development of Red Chris is now well underway, with no material updates this quarter. We are reiterating our BUY rating and 12-month target of C$20.00 per share. Our C$20.00 target price is based on a 25/75 weighting of 5.0x our 2013E EV/EBITDA (C$5.05 per share) and 1.0x our 10% NPV estimate (C$25.61 per share). Our BUY rating is supported by the company’s 100% interest in the Red Chris Cu-Au deposit, which in our view, represents one of the only world class assets in the hands of a Canadian mid-tier producer. However, we believe the company’s relatively weak balance sheet and lack of secured funding for Red Chris is likely to overhang the shares in the near-term.
Investment highlights
With the development of Red Chris Phase I, we forecast annual average copper production to reach 135 million lbs at a cash operating cost of US$1.16/lb Cu beginning in 2015; this compares to 2012 Cu production of only 51 million lbs at cash costs of $1.77/lb.
Valuation
Imperial is currently trading at a relatively compelling 50.4% discount to our 10% NPV estimate of C$25.61 per share versus a 33.2% discount for the mid-tier peer group.

 

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