Dr. John Bonfiglio, CEO of Oragenics Inc (OGEN), says the company decided to license its LPT3-04 weight-loss compound to an outside third party.
“The Phase II trial did show a significant weight loss in some patients,” Bonfiglio says. “But given the focus of the company on ethical therapeutic drugs, at this point in time, we didn’t have the bandwidth or the resources to move that forward, so we have licensed that out.”
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Bonfiglio says that when he joined Oragenics in 2011, there were many different technologies under consideration. Bonfiglio says his strategy is to focus on antibiotics, which is the area where he believes the company can make the most progress.
“Because with our relationship with Intrexon, we not only have the lead compound that was discovered by us, but we have been able to generate a whole pipeline of new analogs of this lead compound, MU1140, that we believe have the possibility of being extremely helpful in the fight against resistant bacteria,” Bonfiglio says. “That’s one area where we think the value of the company would greatly be enhanced by the continued development of those products.”
Randy Paine, President of KeyCorp’s (KEY) KeyBanc Capital Markets, says his segment of the business will expand into new verticals. While Paine did not disclose which verticals KeyBanc Capital Markets will target, he did provide some insight on where management will focus expansion efforts.
“We look for niches and verticals that are full of middle market companies,” Paine says. “We look for financial sponsor activity in those verticals because that tells you that there are consolidation opportunities and that there will be transaction activity that we can lead.”
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Paine says his team identifies the public companies within the verticals they are targeting, as well as the investment banks that cover those companies. He says many of the middle market companies aren’t broadly covered, creating an opportunity for greater depth of equity research coverage.
“So, again, we are looking for opportunities to really exploit the capabilities of our integrated corporate and investment banking franchise focused on the middle market,” Paine says. “Lastly, we want to find verticals that are well-positioned to grow in the current economic environment.”
Todd Hagerman, Analyst with Sterne Agee, says M&T Bank Corporation’s (MTB) acquisition of Hudson City has been disrupted by regulatory risk. He says M&T Bank received a consent order from bank regulators related to bank secrecy and anti-money laundering. But, Hagerman is confident that M&T Bank has taken the necessary steps to address the outstanding regulatory issues.
“My belief on the stock is we are talking about a company that consistently ranks among the most profitable companies within the top 50 banks in the United States, a top-tier management team that I’m quite confident will put together a best-in-class risk management and compliance program, which is going to position them well to complete the acquisition by the end of the year,” Hagerman says.
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Investors have not yet factored in potential earnings accretion from the Hudson City acquisition, Hagerman says. As a result, he sees upside in terms of estimates, as well as cost savings related to the transaction and compliance activities.
“So M&T is really my top pick among the regional banks,” Hagerman says. “It’s been trending higher, it’s still a relative underperformer at this point, but the catalysts have yet to kick in to the name.”
Analyst Bryan Agbabian of Allianz Global Investors says Marine Harvest ASA (MHG), a Norwegian seafood company, is set to benefit from an increase in demand worldwide for salmon.
“[Marine Harvest is] the largest salmon-farming company globally. Salmon prices have been very strong, and the growth in demand for salmon is growing mid-single digits, like 5% to 6%,” Agbabian said.
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Agbabian says a 6% growth rate is solid for a product like salmon, as it is growing higher than other meat products.
“If you compare it with beef or pork or chicken, it’s not growing as high as salmon,” Agbabian said. “Again, Marine Harvest not only sells to the local market in Norway, but they export as well.”
Analyst Bryan Agbabian of Allianz Global Investors says Tyson Foods, Inc. (TSN) is a solid play on the increase in chicken demand in the U.S. and internationally, particularly in areas like China, where they are battling food safety issues.
“Tyson is developing an in-country, in-China integrated production of chicken so that Tyson can then sell to not only the local market there, but also to the U.S.-based restaurants that are doing business there such as Kentucky Fried Chicken (YUM) and McDonalds (MCD) — two companies that are doing business in China and are having a problem with sourcing safe food,” Agbabian said.
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Agbabian says that chicken companies in general have done better over the last few quarters, due to an increase in corn acres and the resulting lower feed costs.
“Last year [farmers] increased to around 95 million acres of corn planted, and they actually had a good harvest; corn prices had declined. The increase in production has helped replenish some of the low inventories, and that in turn has been a positive factor for chicken companies that are now benefiting from lower feed cost,” Agbabian said.
Analyst Chris Kotowski of Oppenheimer & Co. Inc. is pointing investors who want a combination of quality and value toward JPMorgan Chase & Co. (JPM), a company that has a rich mix of business while trading at only 1.4 times tangible book.
“[JPMorgan] is arguably the strongest big bank in the world. It has performed well through extreme adversity, and trading at one point for tangible book and by 10 times earnings, it’s just way too cheap,” Kotowski said.
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Kotowski believes that investing in JPMorgan is a good way to gain exposure to the banking sector, as it has a more robust mix of business than most regional banks, yet is trading at less times tangible book.
“On average the regional banks are probably trading between 1.8 and two times tangible book, and JPMorgan is only 1.4. And if you just do a regression line between return on tangible equity and price to book, if JPMorgan were in its rightful spot in terms of valuation on that regression line it would be closer to an $80 stock,” Kotowski said.
Portfolio Manager Seth Shalov of MAI Wealth Advisors, LLC, is still finding The Home Depot, Inc. (HD) attractive, due to the company’s consistent dividend increases and its exposure to the improving U.S. housing market.
“In 2013, Home Depot raised their dividend by 34%. In 2014, Home Depot also announced another 20%-plus dividend increase. Going forward, we believe they will be able to raise their dividend about 12% to 14%,” Shalov said.
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Shalov is also confident in Home Depot’s cash flow yield as well as its position as the largest home improvement retailer in the world, which will benefit the company as the housing market continues to recover.
“The payout ratio is reasonable, and the company has a free cash flow yield of over 6%. Looking at the economic landscape, we believe that Home Depot, which has done very well, is poised to benefit from the improvement in the U.S. housing cycle,” Shalov said.
Monsanto Company (MON) began selling its Intacta soybean seed in Brazil earlier this year and is expecting further growth in the region, Analyst Bryan Agbabian of Allianz Global Investors says. He is also looking forward to the company’s participation in the precision agriculture trend.
“Intacta is one of the growth drivers for Monsanto, as they’re selling more into Brazil, and then eventually they’re also going to sell into Argentina, Uruguay and Paraguay,” Agbabian said. “They already have had business there, but Intacta could potentially increase that region’s importance for Monsanto.”
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Monsanto is also entering the precision agriculture market, Agbabian says, where the company uses information on regional soil and weather to determine the best practices for farmers.
“Monsanto has integrated farming systems where, actually as a service, it is going to provide farmers for a fee information on what’s the best seed to plant. Monsanto acquired a company called Climate Corporation, which is based here in San Francisco, where its offering will include weather analytics so that during the growing season farmers will have a good idea on how to manage their crops,” Agbabian said.
John Lawrence, Founder and CEO of United States Antimony Corporation (UAMY), says his three- to five-year plan for the company includes a production increase to 25 million pounds of antimony per year. Lawrence says there currently is a large appetite for non-Chinese antimony, and as a result, he says his company is scrambling to produce more.
“We have five operating mines in Mexico, two mills and two smelters. Right now, we have the pleasant problem of mining more than we can actually smelt,” Lawrence says. “We just became permitted to install four more furnaces in Mexico, and we are currently building them.”
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In addition, Lawrence says United States Antimony is hooking up a natural gas pipeline to its smelter to replace propane. And, he says the company is applying for a permit to install two larger furnaces and additional smaller furnaces.
“That is expected to reduce our energy costs — our major cost — by up to 70% and increase our furnace efficiency,” Lawrence says.
Rio Alto Mining Ltd (RIO) is poised for success in exploration, according to Raymond James & Associates Analyst Adam Low. He says the outlook for the company’s La Arena mine in northern Peru is promising.
“They are producing about 200,000 ounces of gold per year at all-in sustaining cash costs in the range of about $700 to $800 per ounce. So they are making very good cash flow right now,” Low says. “And the mine is actually becoming more efficient. Later on this year, they are going to be completing the installation of a connection to the electrical grid in Peru, which will allow them to source much cheaper power than they’re currently getting from their diesel generators that they have on-site.”
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In addition to lower electrical costs, Low says Rio Alto Mining has done a major pushback on the west-wall pit, which he says bring down the company’s strip ratio, and therefore mining costs, over the next couple of years. As a result, Low says Rio Alto will be producing roughly the same number of ounces, but at a lower cost.
“This is a company that is generating good profits. The margin should be improving going forward,” Low says. “It’s got a very strong balance sheet, essentially no debt. They are generating free cash flow.”
