Thomas McInerney, CEO of Genworth Financial Inc (GNW), says the company is rolling out a new long-term care insurance product called Privileged Choice Flex 3. The product is intended to address the reality that people are living longer and long-term care costs are increasing. He says the new product will offer lower-cost options than traditional long-term care insurance policies.
“The new product we are launching will include more affordable product options, such as lower ultimate coverage amounts. For some, that coverage will be more than sufficient. For others that might mean that if someone was to become disabled, they might not have full coverage, so they might have to use some of their own assets,” McInerney says. “But at least there would be a reasonable amount of coverage with the view that the costs of that would be more affordable. We know that clearly there is a much larger market if we could keep the costs to $1,200 or $1,500.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
McInerney says Genworth also is beginning to offer so-called hybrid policies that combine a long-term care rider with a life insurance or annuity policy. Those policies also tend to be more affordable than traditional policies and appeal to a certain segment of the market.
“That’s particularly attractive to people who have a concern that if they buy a regular long-term care policy, and they never use it, they pay premiums, and they get nothing back,” McInerney says. “With these hybrid or combination products, they have a life insurance cover, a death benefit or a cash value, and they can use it for long-term care to the extent that they need it.”
Edwin Miska, Director of Equities at First Investors Corporation, got involved with Delphi Automotive PLC (DLPH) early on in the company’s public life, and has seen DLPH benefit from the growth in car sales due to its share in the electronic component market.
“Automotive suppliers went through a cycle in the post-recession period where they wound up having to restructure relationships that they had with the big three automakers. As a result they emerged with relatively clean balance sheets, free of any sort of legacy issues, and may have been able to grow as car sales have been up globally,” Miska said.
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Miska is attracted to Delphi because of its participation in the electronic components that control vehicles.
“They do both the wiring as well as providing some of the electronic boxed content, or the ‘brains’ of the auto, particularly within the center console. That’s been one of the areas that Delphi has been taking tremendous market share in,” Miska said.
Edwin Miska, Director of Equities at First Investors Corporation, came to own Actavis plc (ACT) through M&A events and has seen the stock outperform due to its continued consolidation activity.
“We had very strong performance in our health care stocks. Actavis, a larger generic and branded drug manufacturer, was one of the leaders,” Miska said. “This was not the holding we bought, however. In fact, we wound up owning Actavis through M&A events.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Miska came to own Actavis through its acquisition of both Watson Pharmaceuticals and Warner Chilcott, and is looking forward to the company’s future M&A activity.
“They are largely a consolidation player in the specialty pharmaceutical and generic pharmaceuticals space. They recently announced another deal, as they will acquire Forest Labs (FRX), generating further earnings accretion and potential upside for us,” Miska said.
Portfolio Manager Ric Dillon of Diamond Hill Capital Management says that his firm’s largest position is in EOG Resources Inc (EOG), which has had success in hydraulic fracturing both on the oil and natural gas sides.
“Several years ago Suken Patel, who is our Energy Analyst, identified EOG as a company that had better prospects than were reflected in the consensus estimates; specifically he thought that they would have good success with their hydraulic fracturing in the middle part of the U.S., primarily on the oil side,” Dillon said.
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Dillon says that this was unusual, as most fracking success within the U.S. has been with natural gas; however, EOG Resources has had success with both.
“Suken was estimating better results, which turned out to be more correct than the consensus. So that would explain why it’s been a good story and why it’s one of our largest holdings.” Dillon said.
Stephens Inc. Analyst Brett Huff says that Alliance Data Systems Corporation (ADS) has two businesses, digital marketing and retail credit cards, that will benefit from strong online advertising tailwinds.
“The reason we like this business is two of the three of their businesses, namely Epsilon and the retail card private label business, we think are poised to participate in the strong secular tailwind of more advertising going online to our phones, to PCs, etc. They are part of that strong secular trend,” Huff said.
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Alliance Data Systems’ retail card base differentiates the company from its competitors, Huff says. Based on its digital marketing expertise, ADS is able to help merchants achieve significantly higher sales.
“They help particular companies market to their customers who have these private label cards,” Huff said. “It allows the collaboration between Alliance Data and the company to help that company drive incremental same-store sales from those customers. In some cases they can double or triple the same-store sales for companies that are using their private label card versus those who don’t.”
Credit Suisse Group Analyst John Pitzer says Intel Corporation (INTL) should deliver earnings “well north” of $3 per share. He says his thesis hinges not on Intel’s PC or handset businesses, but on the company’s potential growth in data centers.
“When you think about data analytics, Intel enables data analytics through their server processors, and they dominate this market with over 90% market share,” Pitzer says. “A couple of years ago they made $0.70 or $0.80 a year of earnings power just out of their data center business; today it’s closer to $1. We think in our $3 earnings potential number, they could do north of $1.50 just out of DCG alone.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Pitzer says Intel’s PC business is stabilizing, but he believes it will be more profitable than bears argue. On the mobile side, Pitzer says Intel is still in “investment mode.” He says Intel’s mobile business is losing $0.55 a year in earnings, but he believes the segment can get to breakeven, which will be earnings accretive to the overall business.
“We think if that were to happen, and you put a 12 multiple on that, you have a stock that’s in the mid-30s, which for a large-cap stock like Intel that’s a lot of market cap to add between here and now, which is the reason why we like it,” Pitzer said.
Stephens, Inc. Analyst Harsh Kumar says he is starting to see leverage return to Microsemi Corporation’s (MSCC) model. He says that should be helpful to the stock.
“The issue here has been that the company is fairly heavily involved in defense and aerospace,” Kumar says. “It’s right at about 50% of total revenues, and that business suffered from the government shutdown we had late last year.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Kumar says that as that business becomes steadier with the government coming back and defense, particularly aerospace, spending improving, Microsemi stands to benefit.
“The management has a goal of 30% operating margins,” Kumar says. “The company today is running at 21% operating margins.”
J.P. Morgan Analyst Harlan Sur sees upside in the low-20s range for Marvell Technology Group Ltd. (MRVL). His estimate is derived by using a group multiple and adding back the cash that Marvell currently has on its balance sheet. The company is his top large-cap pick in the semiconductor space.
“They are a leader in mobile and wireless connectivity, storage semiconductors communications and networking chipsets,” Sur says. “Marvell provides the Wi-Fi and Bluetooth connectivity that fits in the latest generation of game consoles from Xbox One to PlayStation 4. Marvell provides the chipsets that power the cellular connectivity in some of these new 4G smartphones that are being rolled out by the largest service provider in the world, China Mobile (CHL).”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Sur says Marvell is also is the number-one hard disk drive and merchant market, solid-state controller, chipset market supplier. In their networking space, Sur says Marvell is playing into the trends of next-generation data center and next-generation wireless infrastructure.
“They’ve got a product line of processors that do a lot of the heavy-duty data analysis and data processing and next-generation base stations and next-generation switches, next routers, and that’s a good example of the content processing that we talk about as it relates to our theme of connectivity, content processing and storage,” he says.
John Pitzer, Analyst at Credit Suisse Group, recently downgraded Xilinx, Inc. (XLNX) to “neutral.” He says one of the key factors in his rating change was the LTE base station buildout in China and the fact China Mobile (CHL) has designed to build up to 600,000 TD-LTE base stations this year.
“The concern we had was that once you got to CQ2, we’d already be at a run rate to hit that 500,000 to 600,000-unit number and there wouldn’t be a lot of sequential upside from here, and that is the reason why we downgraded Xilinx,” Pitzer says. “It’s one of those things that in the semiconductor industry you get to a point where ironically good news becomes bad news and bad news becomes good news.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Pitzer says he does not expect to see Xilinx’s revenue fall apart, but he doesn’t anticipate much sequential growth from current levels. Based on the stock’s current valuation, he thinks earnings upside will be difficult.
“We think this not only because we don’t see a lot of sequential topline growth in the comms business from here, but the mix toward comms is also gross margin dilutive, and one of the things that I think surprise people for both Xilinx and Altera through earnings is that the comms revenue growth was strong, but they both missed their gross margin targets because of that mix toward comms,” Pitzer says.
RBC Capital Markets Analyst Doug Freedman is not currently recommending investors to buy Intel Corporation (INTC) stock. He says the shares are not inexpensive on his cash-flow metric.
“I have not been bullish on Intel for a few months here largely on the fact that we don’t see that growth in compute or a growth in cash flow that’s material,” Freedman says.
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Freedman recommends looking for stocks that are trading at 10 times projected cash flow. Intel, he says, is trading at 13 times forward cash flow.
“Given the overarching thesis that I have that the real growth in spending is going to be on the network and storage side, we’re steering people away from the compute of which Intel would be really the center name there,” Freedman says.
