Thomas Curran, CFA, is Senior Vice President of B. Riley FBR, Inc. With over a decade of experience as a senior sellside equity analyst, Mr. Curran has covered every segment of the energy equipment and services value chain as well as select other industries, e.g., desalination equipment, calcium chloride, power transmission, etc., and conducted due diligence and/or provided support for diverse array of equity offerings totaling over $775 million, including 144a, IPO, private placement and ATM — at the market — transactions.
He has been ranked number three out of 40 for stock picking in the energy equipment and services category in the 2018 Thomson Reuters Analyst Awards and has appeared in myriad media outlets, such as The Wall Street Journal, Bloomberg and Forbes.
In this 3,406 word interview, Mr. Curran details the current state of the small cap oil and gas sector, and how investors can position their portfolios.
“What happened is the global oil complex has been dealt two seismic shocks. One hit first on the supply side, and that was the breakdown of the original OPEC Plus agreement, or what was also called the Vienna Alliance, led by two of the three main competing oil export powers, and that is the Saudi-led GCC OPEC and then Russia.
What you had was a breakdown in the willingness to continue to constrain output, at least in part because you had the third major player — U.S. light tight oil — essentially being subsidized and rapidly growing share.
As a result of that breakdown, a brief production war erupted between Saudi Arabia and Russia that ran headlong into a nuclear strike that hit on the demand side, which was the evolution of the COVID-19 outbreak in China into a global pandemic.
That led to a historically unprecedented blow to global oil consumption. The IEA predicts global demand will contract by 9% this year, which is more than twice the size of the largest annual percentage drop on record: 4% in 1980. World annual oil demand only contracted by 1% in 2009 during the Great Recession and by more than 1% just five times between 1955 and 2019.”
This market disruption has led inexorably to an investment decision situation:
“Then, there are investors, and that client group is a mixture of energy-dedicated, value-oriented and opportunistic bottom fishers.
For them, we think even at these current levels, the stocks of the best-quality companies are offering a generational investment opportunity on a multiyear basis. As an investor, the longer your time horizon, the more attractive the risk/reward of the best-in-class names are here.
Our top pick overall is Aspen Aerogels (NYSE:ASPN). We have three names we like that we expect to emerge as secular winners in onshore North America.
All three of which are offensive completions players, and those are Liberty Oilfield (NYSE:LBRT), Select Energy Services (NYSE:WTTR) and then Solaris Oilfield Infrastructure (NYSE:SOI), and then finally, our favorite defensive idea is Archrock (NYSE:AROC).”
Get the full reasoning detail behind this stock picks in the complete 3,406 word interview, only in the Wall Street Transcript.
Travis Miller is an Energy and Utilities Strategist for Morningstar, Inc. Prior to joining Morningstar in 2007, Mr. Miller worked as a reporter at several Chicago-area newspapers, including the Daily Herald, Arlington Heights, Illinois. He holds a bachelor’s degree in journalism from Northwestern University’s Medill School of Journalism and an MBA from the University of Chicago Booth School of Business, with concentrations in accounting and finance.
In this 2,326 word interview, exclusively in the Wall Street Transcript, Mr. Miller sees some investment upside to US energy generation:
“There are two ways that investors can play the battery trend development. The first way is through upstream investment. That would be investing directly in the material stocks that produce the lithium, process the lithium and refine it into a battery-level type of material.
Morningstar has a top pick here called Albemarle (NYSE:ALB). It is one of the largest lithium producers. Our analyst has a 5-star, strong “buy” rating on them right now. It is the world’s largest lithium producer. Lithium represents about half of its total profits.
It has mines in primarily Chile and Australia. In Chile, it has the world’s lowest-cost lithium mine source. If lithium-ion becomes the technology that goes into the utility scale batteries, then certainly it would be a leader in that upstream area of electric vehicle battery demand.
The other way is to play the downstream investments in batteries, and that would be with utilities. Utilities are going to invest billions of dollars in battery storage over the next few years and multiples of that over the next 10 and 20 years.
All of that investment, if it receives regulatory support, will be a source of earnings growth for utilities. AES, in particular, has a joint venture with Siemens (OTCMKTS:SIEGY) to develop battery storage, and I would expect they’re going to be the leader out of the blocks on battery investment in the U.S.”
The country as a whole has a chance to make energy independence based on renewable sources:
“Solar alone will never supply 100%. But when you combine solar with wind, with batteries and with some other noncarbon or renewable energy sources, then I do think you can get to 100%.
Solar already is at the top of the investment list for nearly all investors, from utilities to corporates, who want to expand their renewable energy profiles. Most of the market agrees that solar is the accepted choice for incremental renewable energy. It will only grow over the next decade as utilities and energy companies try to meet the demands from policymakers and corporates.”
Get the full 2,326 word interview, along with more stock picks from this Morningstar equity analyst, only in the Wall Street Transcript.
Robert Yu Lang Mao is Chairman of the board of directors, President and Chief Executive Officer of Energy Recovery Inc. Mr. Mao joined the Energy Recovery Inc. board of directors in September 2010 and was elected as Board Chairman in June 2019.
He was appointed to the additional role as President and CEO in May 2020 after serving as Interim President and CEO from November 2019 through April 2020.
He brings to Energy Recovery extensive experience in helping equipment manufacturers successfully expand into new product and geographic markets. His strong strategic and analytic skills will help guide the diversification of Energy Recovery’s product line and its growth into new global markets.
Previously, Mr. Mao served as Chief Executive Officer of 3Com Corporation from 2008 to 2010 and was on that company’s board of directors from 2007 to 2010.
Prior to 3Com Corporation, Mr. Mao worked for Nortel Networks as CEO of the company’s Greater China operations from 1997 to 2006. Before joining Nortel, Mr. Mao was Regional President of the Greater China region for Alcatel-Lucent from 1995 to 1997. Mr. Mao also held executive positions at Alcatel and ITT in Asia and the United States.
Mr. Mao has served on the board of directors of companies listed on the Nasdaq, the Hong Kong Stock Exchange and the Taiwan Stock Exchange across a number of industries. Mr. Mao is a graduate of Cornell University with a bachelor’s degree in materials science and a master’s degree in metallurgical engineering. He also holds a master’s degree in management from the Massachusetts Institute of Technology.
In this 2,385 word interview, exclusively in the Wall Street Transcript, Mr. Mao explains how his company will deploy cutting edge technology to solve one of the biggest issues facing the environment.
“Our flagship PX Pressure Exchanger consumes no electrical power and reduces energy waste, enabling seawater reverse osmosis desalination plants to reduce their energy consumption by as much as 60%.
We helped make reverse osmosis the leading desalination process by drastically reducing the energy and costs needed to produce fresh water.
Beyond desalination, our technology can also be applied to generating greater efficiency in other industries, and we are currently investigating other applications of our PX technology.”
Mr. Mao is excited about the near term dominance of this desalination technology:
“Our in-house ceramic manufacturing facility allows us to produce truly superior products. The precision and efficiency of our micron-level manufacturing capability is reflected in our PX industry-leading efficiency, durability and reliability. This consistency has made us the most trusted energy recovery technology provider in the world.
With that, we achieved a commanding position. We win when our customers win. We have been able to do that time and time again. When people decide to invest billions of dollars in a major facility, such as desalination, they come to us because they know our product works.”
Get the complete 2,385 word interview, exclusively in the Wall Street Transcript.
Hans C. Mosesmann is Managing Director of Rosenblatt Securities Inc. Prior to joining Rosenblatt Securities, where Mr. Mosesmann is a long-standing analyst, he was an electrical engineer who spent a decade working at the chipmakers Texas Instruments and Advanced Micro Devices before moving to Wall Street in 1996.
Mr. Mosesmann spent a decade at Raymond James & Associates, Inc. covering the semiconductor industry. Prior to that, he worked as an equity analyst for several boutiques, including Needham & Company, LLC, Volpe Brown Whelan & Co. and Soundview Securities, as well as Prudential Securities.
In his 3,359 word interview, exclusively in the Wall Street Transcript, the award winning analyst Mr. Mosesmann gives his current research into the semiconductor sector for investors:
“What we can discern, at the moment, is that about 40% to 45% of semiconductor sales are seeing a period of enhanced demand, where the work-from-home and learn-from-home dynamics have changed the business of semiconductors.
Cloud activity, data center activity, and the need for notebooks and PCs have changed for the better. Some areas have gone quite bad, including industrial and automotive. Some consumer and smartphone-related markets are not good at all.”
The development of new technologies also leads Mr. Mosesmann to specific investment opportunities:
“The amount of computing power that is necessary to do AI-based systems is very, very different relative to what it had been in the past, as in, for example, recognizing traffic patterns or individual faces, say, if you’re looking for a criminal.
There are implications for the players from a semiconductor perspective that in past decades they have been very successful in doing certain things within their portfolio of products and their skill sets.
Is it adaptable to this new form of computing, of which AI is one? Obviously, NVIDIA has done pioneering work in the area of AI, including in AI in the data center, that a lot of other companies are starting to try to catch up with.
There are some significant implications with some of these new AI-related areas in computing and in semiconductors in general.
TWST: Do you have a “buy” rating on NVIDIA?
Mr. Mosesmann: Yes, we do actually. The company has done a fantastic job at transforming their graphics-related gaming, and portfolio products have become more of a data center AI play…”
Get the full detail on this company, and many other stock recommendations from Mr. Mosesmann, in this 3,359 word interview, exclusively in the Wall Street Transcript.
Vincent D. Mattera Jr. is Chief Executive Officer of II-VI Incorporated. Dr. Mattera initially served as a member of the II-VI board from 2000 until 2002. Dr. Mattera joined the company as Vice President in 2004 and served as Executive Vice President from January 2010 to November 2013, when he became Chief Operating Officer.
He was reappointed to the board in 2012. In November 2014, Dr. Mattera became the President and Chief Operating Officer. In September 2016, Dr. Mattera became the company’s third President and Chief Executive Officer in 45 years.
In this 3,880 word interview, exclusively to the Wall Street Transcript, Mr. Mattera positions his company as a leader in the 5G future, especially with regards to optoelectronics capabilities.
“We acquired Finisar, a leading provider of transceivers for the optical communications market and an innovator in indium-phosphide-based materials, which are vital for fiber-optic communication networks and represent a technology platform that we had not invested in until now. This technology is vital not only for the existing communications infrastructure but especially for the large and growing 5G markets.”
The company is positioning itself for long term revenue growth:
“The company has been organized into two market-facing segments: one, the compound semiconductors segment, and the other one called the photonic solutions segment. In the process of simplifying our company, we have organized it around those two segments and the business units that are serving their customers.
We have other markets that we are addressing, including silicon-carbide-based materials and devices that we are underpinning. We believe that the electrification of the 21st century is going to depend heavily on innovations around silicon-carbide-based materials.
These materials fall within markets that are easier to see in the long term, as in 100 years. It is really exciting. We started on these 20 years ago.
It should be very clear to everyone, given the challenges with the global warming of the planet and the widespread impact that this is having, that the only way to really control this trend is to stop all this dependence on carbon-based energy.
Anyhow, electrification is going to happen on the foundation of silicon carbide. That is our belief. It is well underway.”
Get the complete detail on how Mr. Mattera intends to grow his company for the benefit of shareholders by reading the entire 3,880 word interview, only in the Wall Street Transcript.
Andy Marsh is President and Chief Executive Officer of Plug Power Inc. Mr. Marsh joined Plug Power as President and CEO in April 2008. Under his leadership, Plug Power has led innovation, bringing the hydrogen fuel cell market from concept to commercialization.
Early on, Marsh identified material handling as the first commercially viable market targeted by Plug Power. Today, the firm’s fuel cell solutions are leveraged by world leaders such as Amazon, Walmart and Carrefour to power industrial electric vehicles.
In this 2,774 word interview, Mr. Marsh outlines the near term tactics and the long term strategy for his successful alternative energy vehicle company.
“…One of the company’s core strengths is that we are the largest user of hydrogen as a fuel in the world, and that is because we have shipped out over 32,000 units and built more hydrogen stations than anyone else. It is a really unique business…”
The future is bright for Plug Power:
“Plug Power is a member of a global group called the Hydrogen Council, which includes 80 companies looking to develop this market. We hired McKinsey to put together a study to tell us where it thinks the market is today as well as the applications that will make fuel cells more attractive than alternatives by 2030.
The long-term view of hydrogen is that it is a $2.5 trillion market, and that view includes storage of hydrogen for power processing and industrial heating where hydrogen is much more effective.
For example, if you are going to use electricity for steel or cement manufacturing, a need is there. We talked about on-road vehicles here, but we also are interesting to a company like National Grid that is looking to convert a natural gas base into a hydrogen one to heat buildings in the U.K. by 2040. Overall, it is a huge pie.
What is going to come first? As the cost of hydrogen continues to go down, it opens opportunities for fuel cells. The lower cost of hydrogen is really closely tied to green hydrogen and a continual reduction in price of renewable energy. But over the next five years, we will see the cost of renewable hydrogen, green hydrogen, on par with hydrogen produced by natural gas.
That opens up huge markets because hydrogen itself today in the fertilizer and other industries is already a $30 billion to $50 billion market opportunity. ”
Get the full picture by reading the entire 2,774 word interview, only in the Wall Street Transcript.
Travis Miller is an Energy and Utilities Strategist for Morningstar, Inc. Prior to joining Morningstar in 2007, Mr. Miller worked as a reporter at several Chicago-area newspapers, including the Daily Herald, Arlington Heights, Illinois.
He holds a bachelor’s degree in journalism from Northwestern University’s Medill School of Journalism and an MBA from the University of Chicago Booth School of Business, with concentrations in accounting and finance.
In this 2,326 word interview, exclusively with the Wall Street Transcript, Mr. Miller details his current outlook on the energy sector:
“…We do think there are a couple of good stocks available in the utility sector. We think renewable energy is also still a good place to invest for the long run. In the midstream space, there are still a lot of good value names out there as one considers the energy
landscape in the U.S right now…Another name that I like is…based in the U.S., with its biggest manufacturing facilities in Ohio. It has a unique technology that is different than the more common silicon-based panels.”
One interesting pick is a renewable energy play for a turnaround utility company:
“In the utility space, one of my top picks is Edison International (NYSE:EIX), which is the utility in Southern California that runs the electric system for just about all of Southern California outside of Los Angeles.
The fallout from wildfires across the state really hit the stock recently. Even though its service territory has not been all that impacted directly, it had to deal with the statewide ramifications following the PG&E (NYSE:PCG) situation.
It was required by state regulators to take on a lot more cost and invest a lot more money in wildfire safety. But at the same time, it was getting a lot of support from customers and from regulators to make these investments and to go beyond to strengthen the system, support electric vehicles and support California’s 100% renewable energy target.
We see exceptional growth available over the next four to five years for Edison. With the stock trading around a 4% yield right now, we think that combination of yield and growth is attractive.”
Get many more detailed energy sector investment ideas from Mr. Miller, exclusively in this 2,326 word interview in the Wall Street Transcript.
Dan Ives is Managing Director and Equity Analyst, Technology Sector at Wedbush Securities. Mr. Ives is a world-renowned software and technology analyst with 20-plus years’ experience educating on cloud computing, cybersecurity, Big Data and the mobile landscape.
Before his tenure at Wedbush Securities, he spent the first few years of his career as a financial analyst at HBO before becoming a well-known research analyst and Managing Director with FBR Capital Markets, focusing on the enterprise software/hardware sectors.
He also served in executive roles at Synchronoss Technologies, a mobile cloud vendor, and GBH Insights, a leading market research firm. Mr. Ives is a highly sought-after tech expert and regularly makes television appearances on networks such as CNBC, Bloomberg, BBC, CNN and Fox to provide commentary related to his technology experience and is often cited by publications such as The Wall Street Journal, USA Today, Investor’s Business Daily, The Mercury News, Financial Times and The New York Times.
In this 2,828 word interview, exclusively in the Wall Street Transcript, Mr. Ives discusses the sector economics of cloud computing along with an introduction to his new cloud computing ETF.
“When you think about call centers, as a good example, more and more of them are moving into the cloud. As they do, companies like NICE Systems (NASDAQ:NICE) facilitate this move. NICE is one of the bigger holdings in the ETF.
Then, there are application players. You look at companies like Datadog (NASDAQ:DDOG) and Anaplan (NYSE:PLAN), and these are enablers or facilitators of the next generation of cloud.
These are all examples of companies that are in the IVES ETF, as opposed to applications such as a Slack (NYSE:WORK) and Zoom (NASDAQ:ZM) that sit on top of the infrastructure.”
The ETF will create returns in this specific sector and will include several stock names that are fairly unknown to investors:
“Cloud has many opportunities, but there are also security issues. That’s where cybersecurity names are so important in terms of guarding cloud workloads with the connections, the data and the pipes accelerating to the cloud. These companies are benefiting from the cloud theme.
Cybersecurity names are seeing significant growth related to the cloud shift. We see that with companies like Zscaler (NASDAQ:ZS) or Palo Alto (NYSE:PANW), CyberArk (NASDAQ:CYBR), just to name a few.”
There are also international names included in the ETF:
“We have companies that are higher, but 4.5% tends to be a lot of the weighted ones. Sinch AB (STO:SINCH) is an Asian infrastructure play and one that plays into the data center theme, especially in Asia.”
Get the complete 2,828 word interview for the full detail from Dan Ives, exclusively in the Wall Street Transcript.
Michael Pachter is Managing Director, Equity Research Analyst and Expert for Wedbush ETFMG Video Game Tech ETF at Wedbush Securities. Michael Pachter is a 20-plus-year industry veteran covering the entertainment software, entertainment retail, social internet, e-commerce and movies/entertainment sectors.
Prior to his current role as Managing Director of Equity Research at Wedbush Securities, Mr. Pachter spent 15-plus years in various financial and management positions. Mr. Pachter has been repeatedly recognized as StarMine’s “Top Earnings Estimator” and WSJ’s “Best on the Street”.
In this 4,873 word interview, exclusively in the Wall Street Transcript, Mr. Pachter details his obsession with beating the market with his informative stock picks.
Mr. Pachter is a strong bull on the video game industry:
“I have a view, and it’s super conservative, that the sector grows 8% a year in perpetuity. My not-so-conservative bias is that it is in the double digits. Those numbers are like health care was from the 1960s to the 2000s; it was up 8% or so per year.
The reason was more people aged, lived longer, and the longer you lived, the more health care you consumed, and we were getting wealthier at the same time. So people are older and have greater consumption and more money to spend.
The same is true for games. We have an aging demographic, so literally 20 years ago, the average gamer was probably 20, and now the average gamer is probably 30, and in 20 years, the average gamer will be 40. That gamer keeps aging. Kids playing Fortnite today aren’t going to just stop playing games ever.”
His top picks right now:
“My two favorites are Activision (NASDAQ:ATVI) and Zynga. Activision — the stock is ripping right now — makes Call of Duty, and they own Tony Hawk, World of Warcraft and Overwatch. They have got really big franchises. They are having a great year, and the stock is up because of that.
They have a bunch of catalysts on the horizon. The bigger theme that helps them is that they are a console publisher, meaning that the primary business is selling people a $60 game, and you own it, and you play it till you’re tired of playing it, but the secondary business is in-game purchases, so there’s a free-to-play element of everything that they make.
Some of those free-to-play games are behind a paywall, meaning you have to buy Call of Duty premium and the Call of Duty console game to play the multiplayer Call of Duty and upgrade your weapons and stuff. They also have a straight free-to-play Call of Duty called the Warzone and a straight free-to-play Call of Duty mobile game. They capitalize on the brand a bunch of different ways.
They are going to benefit over the next five to 10 years because we are going to see competition for delivering games to any device from the cloud. ”
To get more detail on these and many other picks from Mr. Pachter, read the complete 4,873 word interview, exclusively in the Wall Street Transcript.
St. Denis Villere III is Partner and Portfolio Manager at Villere & Co. Mr. Villere joined Villere & Co. in 1999 when he launched Villere’s first mutual fund.
He started his career as an institutional research analyst and equity sellside analyst with Gerard Klauer Mattison, a Wall Street institutional equity research firm. He earned a B.S. in finance from Southern Methodist University. He is a member of the CFA Institute.
Mr. Villere has been frequently quoted by The Wall Street Journal, Associated Press and Reuters.
In this 3,950 word essay, only in the Wall Street Transcript, Mr. Villere has some interesting stock picks for today’s volatile market.
“We are really bottom-up investors. We really don’t look at what’s going on in the economy and try to figure the macro and then trickle down to individual stocks. We take the opposite approach and look at very good companies that have low debt and strong cash flow characteristics.
We like companies that are low price-to-earnings relative to their growth potential.
While we are multicap, we do focus on the smaller- and mid-cap names, as we find those are where most of the value is that maybe Wall Street hasn’t seen.”
“Stryker is interesting because we tend to do a lot of research and talk to a lot of orthopedic surgeons that were installing anything from knee replacements to hip replacements to spine surgeries. Stryker is an absolutely industry-leading medical device company.
However, over the short run, interviewing many of these orthopedic surgeons, we found that their businesses literally were going to zero. They stopped performing any of these things during the shutdown, as many of these procedures were considered nonessential.
Therefore, the stocks went down, and I think that just sets up as a perfect opportunity to buy an industry-leading company at an extremely reasonable valuation knowing that these nonessential surgeries will come back…”
Mr. Villere bangs the table for another one in the healthcare tech space:
eHealth (NASDAQ:EHTH) is a great story considering the current environment, as they thrive with people doing more remotely on the internet. They own the website ehealth.com that was essentially founded about 20 years ago to make people buy Medicare insurance. It is a very simple story. They are essentially trying to make it as easy for seniors to buy Medicare insurance online as it is to buy a plane ticket on websites like Expedia (NASDAQ:EXPE) or Travelocity. The competition is literally medicare.gov and healthcare.gov; websites that are extremely clunky and not easy to use.
So the backdrop is, there are about 10,500 people every single day who are turning 65 and eligible to buy Medicare insurance. eHealth is just hoping to go from 1% share of the market up to 4% to be very successful. When we bought the stock, there was a little bit of an opportunity because there was a short report written about how these guys calculate churn or the rate at which customers leave, as this is an important component of the lifetime value of their contracts and how they recognize revenue. It is literally done based on an accounting rule called ASC 606, which is the standard way that companies like this account for it.”
Get more information on these and many other top picks from this highly regarded portfolio manager, in his 3,950 word interview, only in the Wall Street Transcript.
