Intrepid Potash, Inc (IPI)

Can Intrepid Potash (IPI) follow in the footsteps of Potash Corp. Saskatch, Inc. (POT)?

If you don’t know by now, POT is up 552% over the past two years, 230% over the past 12 months and 43% year to date; all while the S&P 500 is down 2.25% year-to-date, an amazing accomplishment in this market environment (see chart below).

Intrepid Potash Inc, a producer of crop nutrients, raised $960 million with an initial public offering that priced shares above expectations in the $27 to $29 range. The IPO price came in at $32, $3 above the top of the range expected by underwriters. The original estimate was for 24 million shares to be priced between $24 and $26 per share (30 million shares were offered at $32).

Intrepid Mining, the parent company of Intrepid Potash claims to be the largest potash producer in the U.S. I missed the HUGE up-trend in POT but IPI may give this industry one last run before the trend is over. Markets are not efficient so the greed of crowds may take this IPO higher due to the recent performance of POT. Risks will be associated as a quick sell-off could be a huge possibility if things don’t go the way investors expect.

As you can see from the charts, IPI priced at $32 per share but jumped as much as 50% during the trading debut. The stock reached a high of $53.50 today but closed down 2.6% at $49.09.

Tate from Self Investors notes:

“As far as the fundamentals, they look solid but nothing extraordinary. My take on this is that this IPO comes at a time when the agriculture stocks appear to be near a major top with perhaps one more last climax run left in them. Does this IPO signal the top? Just maybe. Like all IPO’s I’ll let it trade for at least two weeks and only enter on a breakout from a bullish pattern.”

I tend to agree with his analysis for the most part. I will not hesitate to jump on a trend if IPI starts to run higher because crowds are persistent and I don’t like to fight them.

Titan Machinery (TITN)

Stock of the Day
Titan Machinery Inc. (TITN)
Friday’s Closing Price: TITN – $23.97

Sector: Retail
Industry: Retail/ Wholesale Building Products
52-week Price: $9.18 – $24.09

February 25, 2008: TITN – $19.70

Three stocks are catching my eye while making multiple screens over the past couple of weeks. MTL is up over 13% in less than two weeks since I highlighted it in a post titled Basic Materials (Oil) Stocks Making New Highs

Trading momentum is paying-off in the current market environment. Swing trading breakouts making new highs on volume at least 100% larger than the average is king. It’s working so pay attention and be smart while putting on trades. MTL is no longer a buy since it has become extended but TITN and RIO may be setting up for new 52-week highs.

April 14, 2008: TITN – $22.39

TITN – 22.39, solid young stock with an ideal entry point near $20 (looking good)

Fourth quarter earnings are scheduled for Monday, April 28, 2008. I would not be a buyer until after earnings are released (this event will shape my view on the stock and a potential position). Last quarter’s net income rose to $2.7 million, or 36 cents a share, from $0.8 million, or 13 cents a share, a year ago (sales increased 67% to $132 million).

My ideal accumulation area is between $19 and $22 with the best entry coming along the 50-day moving average, which seems to be providing support. The weekly chart is showing clear accumulation by institutional investors as most up-weeks are happening on larger volume while down-weeks are happening on lighter volume.

I will definitely be interested in a position since this stock has been making my nightly screens and scans since February. I have learned that the best stocks are the ones that continually make these scans (that is fact since I started investing with this method in 2001).

Potential Trade Set-up:
Entry: $21.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $18.90
Number of Shares: 476
Position Size is $10,000
Risk is $2.10
Target is unknown (too little information)

Institutional Analysis:
Held By Institutions: 42.75%
Total Held by Institutions: 62
Money Market: 43
Mutual Fund: 18
Other: 1

New Positions: 60
Positions Sold: 0
Shares Held: 7.43M
Shares Held Previous Period: 0.13M

Shares Bought: 7.3M
Shares Sold: 0
Value of Shares Bought: $134.1M
Value of Shares Sold: $0

Top Institutional holders; Shares Held:
Systematic Financial Management, L.P.; 711,600
Trafelet Capital Management L.P.; 528,500
Heartland Value Fund; 350,000
Heartland Advisors Inc.; 350,000
Wasatch Advisors Inc.; 325,000

Key Fundamental Numbers:
Market Cap.: $320.3M
Outstanding Shares: 13.4M
Float: 6.0M
P/E (TTM): 46.02x
PEG Ratio: 2.09x
EPS Growth (MRQ): 229.23%
Revenue Growth (MRQ): 66.99%
3-Yr Earnings Rate: 54%
3-Yr Sales Rate: 34%

[Read more…]

Leucadia National Corp (LUK)

I am going to start an occasional monthly post that highlights a stock that falls within the definition of a value stock but acts more like a growth stock. Berkshire Hathaway could be the ideal pick for the debut of this type of research but I am going to start with a company that structures itself in a similar fashion, Leucadia National Corporation (LUK).

I will also be looking into stocks such as BRK/A, SHLD, BAM and some of the recent banking stocks that may be undervalued (now and in the near future).

Value Stock of the Month
Leucadia National Corp. (LUK)
Wednesday’s Closing Price: LUK – $54.10

Sector: Financials
Industry: Multi-Sector Holdings
52-week Price: $30.01 – $54.10


Leucadia is a diversified holding company that has subsidiaries engaged in manufacturing, real estate, medical product development, gaming entertainment, mining, and energy. Does this remind you of Berkshire? Leucadia is known, by some, as a “mini Berkshire Hathaway” with an average annual return of over 22%.

By the way, BRK/A is currently trading along the 200-d m.a. for the first time since last summer ($110k per share). It closed today at $129,475 after reaching a 52-week high of $151,600 in December (a 14% slide). Chart at bottom of blog post.

Leucadia executives Ian Cumming and Joseph Steinberg each own about 13% of Leucadia’s shares and practice a methodology similar to that of Warren Buffett. A $10,000 investment 5 years ago in LUK is worth $43,029 today.

Leucadia has a strong record of stock market performance due to its strategy of finding assets and companies that are out of favor or troubled and are therefore selling at a discount to their inherent value.

The stock just made a new 52-week high after using the 200-d m.a. as support while giving us a 10-week/30-week moving average crossover to the upside. My ideal accumulation area is near (slightly above or slightly below) the 200-day moving average (currently near $46). In hindsight, late 2006 and early 2007 was the “true’ ideal time to buy before the latest run. However, I should have listened to my old friend Kevin Pickell and grabbed shares years ago.

I was completely off on my timing of SHLD back in May 2007 so I may not be that bright when it comes to value companies but it’s time to start a new portfolio for my family that isn’t so young/fast time growth oriented (especially when people are running scared). SHLD will be my next value stock to research as it looks to be entering an area where accumulation is appealing.


Potential Trade Set-up:
Ideal Entry: $45 (low $40 range is better)
Risk is set at 3.0% of total portfolio or $3,000 of $100k
Stop Loss is 25% or $33.75
Number of Shares: 267
Position Size is $12,000
Risk is $11.25
Target is not material (value play)

*Notice the unusually large stop loss and risk versus trading a growth stock.*

[Read more…]

SandRidge Energy (SD)

I screened a stock on Monday named SandRidge Energy (SD) in a post titled, My Latest Stock Watchlist and noted that it made just about every screen I ran over the weekend. I looked back at scans from earlier in the year and it did make a few of them but didn’t grab my attention until now.

SD – 44.28, made almost every screen I ran this week (buy near $40)


Stock of the Day
Sandridge Energy Inc. (SD)
Monday’s Closing Price: YGE – $44.38

Sector: Oil & Gas
Industry: Oil and Gas Production
52-week Price: $28.50 – $45.40

SandRidge is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The Company also owns and operates drilling rigs and a related oil field services company with focus on exploration and exploitation of its significant holdings in West Texas. SandRidge operates in four segments: exploration and production, drilling and oil field services, midstream gas services and other.

The stock recently logged a new all-time high on increasing volume as it broke-out above the ideal entry area of $41.15. Unfortunately for me, it broke out during the week of my vacation (and return). I can’t say that I would have bought shares but I am interested now. I understand that crude is selling at all-time highs and some people are calling for a top but I am not about to listen to them. Money is still to be made in this industry. By the way, SandRidge is in the #1 rated industry group as produced by Investor’s Business Daily.

Net income was 137% higher than a year ago (3rd quarter) with revenue increasing by 71% during the same time period. Natural gas and crude-oil production jumped nearly five-fold. Shares closed at $31.20 ahead of the 3rd quarter report; it has since given investors a 40%+ gain in a few months.

SD is starting to outperform a few of the top stocks in the top rated industry group, something I do make note of. For example, SD is up 24% YTD as the industry groups as a whole is up 18% YTD. As you will notice, SD shares company with some very respectable names (stocks).

Sister Stocks (Top Rated Industry by IBD):
Range Resources Corp – RRC
Continental Res Inc. – CLR
Quicksilver Resources – KWK
Bois D’Arc Energy LLC – BDE
Petrohawk Energy Corp – HK

Potential Trade Set-up:
Ideal Entry: $41.15
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $37.04 (breathing room to $36 is okay)
Number of Shares: 243
Position Size is $10,000
Risk is $4.12
Target is $55+ (based on future growth)
Reward-to-Risk is 3.36-to-1 with ideal entry; less with current price

Continue reading to see the impressive institutional numbers, general fundamental numbers and basic technical analysis that make this stock stand above other recent IPO’s. Net income, revenue, earnings and industry (global) growth make this an ideal stock for my watchlist. I am looking for young companies with increasing earnings and sales.

[Read more…]

VISA (V) set to Launch

Visa Inc. (V) is set to launch the largest initial public offering in U.S. history on Wednesday but I doubt it will do much to help this market (from a bullish standpoint). The company is offering 406 million shares with an anticipated price between $37 and $42, according to SEC filings.

In total, the IPO could raise nearly $17 billion, surpassing the record held by the AT&T Wireless IPO from 2000 which raised $10.6 billion. The $15 to $17 billion projection is approximately 70% higher than what the market was reporting when I was anticipating this IPO last November.

“VISA, the largest U.S. credit card network said it is looking to raise $1o billion in an initial public offering, according to a registration statement with the SEC.”

JPMorgan (JPM) is one of the lead underwriters (Goldman Sachs is the other) so the market wants this IPO to launch successfully so additional fears don’t rise following the $2 Bear Stearns fire sale. A successful IPO would generate a large cash influx to banks such as JPMorgan, Bank of America and Citigroup. Visa’s IPO could generate around $500 million in fees for underwriters, according to documents with the SEC.

Shares will price after the close Tuesday with lots ready to move Wednesday morning.

As pointed out in my last post, Visa and Mastercard (MA) are not directly exposed to rising defaults and late-paying consumers because they process transactions and these transactions typically rise when credit is tight from banks. American Express and Discover are not as fortunate in this sense as they extend the credit to their card holders, exposing themselves to the defaults.

As you can see, Mastercard (MA) has held up very well during this credit crisis. It has not violated it’s major moving averages and is still in an overall long term up-trend.


November 15, 2007: Anticipating the VISA IPO

Why do I like VISA’s potential?

  • $1o Billion would represent the second largest IPO ever!
  • Revenues are expected to grow steadily as consumers continue to use their cards
  • VISA processed 44 billion transactions totaling $3.2 trillion in 2006 (Mastercard processed 23.4 billion transactions totaling $1.9 trillion)
  • VISA has made $771 million on $3.7 billion in revenue during the first nine months of 2007
  • VISA makes their money from the fees it charges to card users and merchants using its network
  • Mastercard is half the size of VISA and is up 5-fold from its IPO


  • Because it acts as an intermediary, Visa doesn’t sustain losses when consumers don’t repay the debts run up on credit cards bearing its brand. Those liabilities instead fall to the banks that issue the cards and set the terms of repayment
  • Most of Visa’s major stockholders are banks. They include: J.P. Morgan Chase & Co., which owns 23.3 percent of the company’s Class B Stock; Bank of America Corp., 11.5 percent; National City Corp., 8 percent; Citigroup Inc., 5.5 percent; U.S. Bancorp, 5.1 percent; and Wells Fargo & Co., 5.1 percent.

NO RISK for VISA; the banks are responsible for the cardholders that don’t pay their bills. What could be better than that? Tell me!