Growth Stock Thoughts
An Investment in Knowledge Pays the Best Interest
Benjamin Franklin
Elanco Drives a Herd of Successful Animal Drugs
• Owns 9 of the 40 >$100m in sales “blockbuster” drugs in the animal health market.
• Rapid expansion in China, capitalizing heavily on the global pet boom during the COVID-19 pandemic.
• R&D heavily focused on finding blockbusting novel drugs.
• The spinoff of Eli Lilly was fully completed in 2020.
• Double-digit EBITDA and EPS growth forecast for 2022.
Southwestern Energy SWN. Cost reduction drives free cash explosion. Low PE of 3.3 poised to expand.
• Incredibly inexpensive at 3.3 times earnings.
• Prodigious free cash generation used to pay down debt.
• Highly levered balance sheet poised to be paid down.
• Natural gas producer with basins in Marcellus and Haynesville.
• Natural gas demand continues to grow with electrical power demand.
• Cost improvements increasing free cashflow.
Big Free Cash and Low 3.3 Price Earnings Ratio
• Very inexpensive 3.3 PE for Southwestern Energy.
• Stock poised to rise dramatically as debt is reduced and balance sheet strengthened thus lowering risk.
• Free cash generation used to pay down debt which will drive PE higher.
• Natural gas demand continues to grow for electricity generation.
• Reductions in drilling costs driving free cash flow higher.
• Expanded footprint by 700 MMcf/d with GEP Haynesville LLC (GEP) acquisition.
Energy Stocks Benefit from Limited Investment in Oil & Gas production.
• Recovery in Oil and Gas prices and stocks looks sustainable. Stocks still represent a good investment opportunity in our opinion. Energy stocks benefit from limited investment in oil and gas production and development.
Concerns over global warming and greenhouse gas emissions limit capital flows to the oil and gas industry.
• This lack of capital has reduced the amount of new development and production. US drilling activity down thus lowering supply.
• Demand for oil has recovered to 2019 levels and is poised to grow at 3% for the next several years.
• Increased demand has eaten into OPEC’s excess capacity cushion.
• Lower supplies of oil result in higher price. US supplies unusual lack of response to higher price means prices will stay higher longer.
Omega Healthcare Investors Recovery Fails to Materialize
Omega Healthcare Investors (OHI) was sold as the damage from COVID is lasting longer than we had anticipated. We were expecting a stronger recovery in occupancy that is failing to materialize.
enCore’s US Uranium Radiates a Secure Green Electricity Supply
• Uranium resurgence as greenhouse-free electricity.
• Low-cost domestic uranium resources with large production and long lives.
• Azarga merger strengthens US Uranium resources.
• Nuclear Electricity Plants under construction and in planning will drive demand for uranium dramatically higher.
• The price of uranium is set to increase as many new reactors come online.
• Higher prices are needed to justify producing out of many the existing uranium mines.
• Bipartisan support for nuclear electricity generation in the US.
China Becomes More Difficult for Foreign Investors
China Becomes More Difficult for Foreign Investors Recent Sells January 19, 2022 Investment Thesis China has implemented policies to reverse some of the free-market policies
Acadia and Biogen Hit Regulatory Block
Acadia and Biogen Hit Regulatory Block Recent Sells January 19, 2022 Investment Thesis Acadia (ACAD) was slated to release the novel NUPLAZID for Parkinson’s related
Green Electricity as Uranium Radiates Power. Cameco CCJ and enCore ENCUF set to benefit.
• Uranium demand poised to surge as the world builds out electrical nuclear energy which is greenhouse gas emission free (carbon free).
• Uranium prices on the rise, leading to increased profitability and cash flow.
• US and Canadian supplies are a national security imperatives.
5G and EV Opportunity Powers Up EnerSys
• EnerSys (ENS) is the global leader in stored energy solutions for industrial applications.
• Products include motive power, reserve power, and specialty batteries with a full range of integrated services and systems.
• 50% market share in North America motive market.
• Battery leadership strengthens entry into Electric Vehicle (EV) truck and passenger car markets.
• Manufacturing charging stations are being redesigned to address passenger and truck EV markets.
• ENS Lithium-Ion Batteries are powering the new James Webb space telescope.
• Energy Storage and Management for Renewables.
• 100 years of battery experience.
• Profitable growth and generating free cash.
• Inexpensive at PE of 15 and buying back its own stock.
• Management calling for north of $10 eps in 2025.
Battery and Charging leader positioned to grow as EV trucks and passenger cars charge ahead. EnerSys (ENS)
• EnerSys (ENS) is the global leader in stored energy solutions for industrial applications.
• Products include motive power, reserve power, and specialty batteries with a full range of integrated services and systems.
• 50% market share in North America motive market.
• Battery leadership position strengthens entry into Electric Vehicle (EV) truck and passenger car markets.
• Manufacturing charging stations which are being redesigned to address passenger EV and truck EV markets.
• ENS Lithium-Ion Batteries powering the new James Webb space telescope.
• Energy Storage and Management for Renewables.
• 100 years of battery experience.
• Profitable growth and generating free cash.
• Inexpensive at PE of 15 and buying back its own stock.
• Management calling for north of $10 eps in 2025.
Coupang is the Amazon of Korea
• Coupang (NYSE: CPNG) grew third-quarter revenues to $4.6 billion, up 48% year over year (YoY).
• Coupang grew more than twice as fast as the 20% growth rate of the Korean e-commerce industry.
• Expected to grow revenues 25% for 10 years. Will be 10X bigger.
• Not profitable currently, but margins are improving, and expect profitability in 2024.
• Its own network of warehouses, trucks, bikes, and drivers provides a great customer experience and will be difficult to replicate.
• This network is a big moat and provides a sustained competitive advantage.
• Services include food delivery, grocery delivery, and streaming.
• Highest customer satisfaction of competitors in several sectors.
• This is a high-risk, hypergrowth stock.