Global stocks: My track record to date

Splunk (SPLK US)

Splunk reported its second-quarter results for 2014-15 on August 28 and, as I expected, the numbers were good – very good in fact.

The “big data” software provider beat consensus revenue expectations and guided upwards for next quarter’s sales as well as for the full financial year. License revenues gained 43% year-on-year, with more than 70% of license bookings from existing customers. Splunk added 500 new customers, bringing its total number of customers to 7,900. More importantly, there were 226 orders for more than $US100,000 worth of software products.

The stock rallied 32.3% over two days after the result to  $US59.93.

As our original price target of $US55 has been reached, I will be revisiting my target price and assumptions. Remember that Splunk traded up to $US92 at the end of March 2014.

I would still be a buyer on weakness (low $US50s), given that Splunk seems to be a singular beneficiary of unstructured data and its offering allows more and more applications to be constructed on its platform (see Splunk: “Big Data”, big opportunities).

Whiting Petroleum (WLL US)

Whiting reported its second-quarter results for 2014 on July 31, where both production at 109.8 million barrels of oil equivalent and also earnings per share of $US1.40 beat analysts’ expectations handily.

More importantly, management raised production guidance for 2014 by an impressive 20%. Operational improvements (part of our original thesis) continue to come through, with the Redtail area showing 59% growth quarter-on-quarter due to the new well spacing technology.

In its earnings presentation the company has flagged strong production expansion in the Bakken properties on the back of the cemented liners and coil tubing technology – just as I flagged in the initiation piece Our first offshore stock pick.

Meanwhile, the Kodiak acquisition is still scheduled to close in the fourth quarter of 2014.

The stock has had a solid run from $US78 on August 11 to the low US$90s recently on the excellent earnings metrics and the Kodiak acquisition in spite of the oil price retreating from $US101.70 to $US92.00.

Tata Motors (TTM US)

Tata Motors’ subsidiary Jaguar Land Rover announced on September 3 that it will offer an entry level model of the Discovery Sport, priced at £32,395 ($US53,400), as the beginning of a five-year plan to overhaul its model selection.

The company plans to invest £3.5 billion over the next 12 months to add capacity for existing models and plans to bring out some 50 new models and variants over the next 5 years.

The company also unveiled more specific plans about its new entry level compact sports sedan – the Jaguar XE saloon – which will go head to head with the BMW 3-Series, the Mercedes C-Class, and Audi’s A4 segment. The vehicle will be built on a new lightweight aluminium frame and will try to emulate the success of Jaguar’s high performance sedans of the 1960s as well as offering something to the iPad generation. The car’s doors, temperature controls and infotainment systems can be controlled via a smartphone.

Meanwhile back in India, the “Zest”, Tata Motors' new compact sedan, is said to have received an encouraging response from the market with an "order pipeline of 10,000 plus", within a short span of 20 days of its launch, according to the company. I wrote about the car’s potential in Tata Motors: Driving a good bargain.

It’s also better looking than the Nano (see the picture below)!

Passenger vehicle sales in India, which include SUVs and vans, have risen to 213,915 units in August, a 12.5% increase year-on-year according to the Society of Indian Automobile Manufacturers.

Tata’s stock in American Depository Receipt form is trading at US$47, just below its 52-week high of $US48.88.

FireEye (FEYE US)

FireEye is benefitting strongly from the positive news flow about recent cyber security breaches. The highest profile breaches occurred at Goodwill (a US charitable organization), JP Morgan, Home Depot, and Apple’s iCloud.

The Goodwill organisation reported that malware compromised names, credit card numbers, and expiration dates of over 330 stores.

Home Depot, the largest DIY retailer in the US with over 2,300 locations, announced a breach in its credit card details from embedded malware and is having security firms investigate. The company was reluctant to admit a breach occurred because it is already facing a class action lawsuit over an earlier “breach”.

JP Morgan has said hackers stole gigabytes of data including information on customer accounts sometime in June but (if you can believe it) the theft wasn’t discovered until August when some of the stolen files showed up on a Russian hacker’s website.

Apple announced that photos of celebrities stored in its iCloud accounts were leaked online via targeted attacks of individual iCloud accounts. The stock lost an astounding $US 25 billion of market value on the day and a number of analysts have remarked on the ongoing vulnerabilities of the cloud in general.

As I said in my first write-up of FireEye, the publicised attacks "are the ones we know about”. Out of necessity, demand for enterprise security should remain strong for the foreseeable future.

FireEye shares struggled a bit after we initiated a “buy” on August 11 with a large holder selling into the market. Since then they have surged around 30% to as high as $US36.07 on the back of positive news flow, with several brokers upgrades such as from influential UBS analyst Brent Thill.

Intuitive Surgical (ISRG US)

Intuitive Surgical received Food and Drug Administration (FDA) clearance for its “Firefly Fluorescence Imaging” system on August 21.

This approval for inclusion with the new Xi surgical systems will allow the surgeon to have 3D images of patient’s vessels tissues and blood flow in real time. The company believes this will enhance the appeal of the new second generation Xi robotic surgery systems for upgrades as well as new business.

This the third additional tool to be approved for the Xi since April of this year after inclusion of the EndoWrist One vessel sealer and the EndoWrist Stapler (see Intuitive Surgical: Buying into robotics).

The stock is up 8.5% from its $US440.70 lows in August to current levels around $US473.

Xilinx (XLNX US)

Xilinx received an upgrade to “buy” at Argus Research on July 24 and the stock is “marking time” in the low 40s. Xilinx reports second-quarter earnings for 2014-15 on October 16 and consensus estimates are 55 cents a share.

As I said in my piece my first coverage of the stock, Xilinx has huge upside opportunity as the world’s largest supplier of programmable logic devices.

Schlumberger (SLB US)

Not a lot to say here. Sclumberger stock has been drifting down from $US110 to $US104 over the past few weeks on no news.

Oil prices have been weak with WTI (West Texas Intermediate) trading down to $US92 and Brent moving below $US100 – a 17 month low – in spite of ongoing instability in the Middle East. Predictions of an ample supply of crude globally have pressured prices.

Commodity prices tend to over shoot the highs and lows so I’m not making any oil price predictions here other than to say Schlumberger remains a compelling buy at these levels (see Schlumberger: energised for growth). Use the volatility in the oil price to your advantage.