Author Archive

• Built Ford Tough..finally
  Chris Ciaccia, Chris Ciaccia | February 3rd, 2010 at 12:00 am

  

  

  There's been a lot of talk in the news lately about Toyota, Ford and the other car manufacturers and the quality of their products.  $TM recently announced a 2.3 million car recall due to a faulty accelerator pedal.  They've also announced the halt of 7 lines of vehicles until the problem is fixed.  Yesterday $TM announced a solution to their problem, while Honda ($HMC) which is also confronting its own issues doesn't have a solution yet.  $HMC & $TM used to be synonymous with quality and care in the eyes of the American consumer.  Not anymore.

  This reeks of opportunity for $F, GM, and Nissan ($NSANY).  As a former auto analyst (I seem to have worn many hats in my day so far) and someone whose family has worked in the business for 30+ years, I understand the auto business fairly well.  It is all about perception.  It used to be that Ford stood for Fix Or Repair Daily.  Not anymore though.   Ford's new product mix has proven to be extremely profitable as consumers like the sleek designs of the Escape, Focus and the new Taurus.  CEO Allan Mullaly has done a remarkable job turning around the companys' image.  The fact that $F didn't take government bailout money like GM and Chrysler did has also won them respect in the eyes of the American consumer and allowed them to sell more cars than their American competitors.

  $TM 's gaffe will hurt their image as a once reliable car and it will take time for them to rebound.  It used to take a generation for car companies to undo their mistakes, but due to technology, the availability of news and an ever wishy washy public, this won't hurt $TM nearly as bad as it would've say 15 years ago.  It'll take them a few years to recover their image barring any further setbacks, but not a generation.  Make no mistake though, this problem is a doosy and $TM knows it.  It'll allow $F, $NSANY and GM to gain market share back and $F may even eventually become the #2 car manufacturer in the U.S. again.  After today's 34% increase for January sales, I wouldn't put it past Mr. Mullally and the Ford company to pull that rabbit out of the hat.

• Xcellenttttt!!!
  Chris Ciaccia, Chris Ciaccia | January 20th, 2010 at 8:06 am

  

  

  "Excelllllenttttttttttttttt"-C. Montgomery Burns

  Since the beginning of November, U.S. Steel has acted that way, having nearly doubled, going from $34.49 to $64.80 as of this writing.  There are several reasons behind this and why the stock, as well as the sector still has room to run.

  read more...

• Food for thought..and profit
  Chris Ciaccia, Chris Ciaccia | December 30th, 2009 at 11:29 pm

  

  This season is about stuffing your face and drinking to your hearts content. There is nothing more American than stuffing your face. While after the holidays everyone goes on a diet and slows down their binge eating, this highlights the very real problem of a lack of food in the world.

  Where most people would see this as a problem, investors only see opportunity. Agriculture stocks and commodities have been on fire in 2009 and look for them to continue their bullish run in 2010 and subsequently beyond. Famed and noted commodity bull Jim Rodgers has one wish: for everyone to become a farmer. While this seems unlikely in anything other than Mr. Rodger's neighborhood (or make believe as I like to call it), there are certainly ways to profit off the food shortage.

  Nothing has been hotter than potash and nitrogen. The leaders in this space are $POT, $MOS, $CF, $TRA & $AGU. Potash the commodity is the one that gets the most attention out of the 3. The contract that was signed last week by Belarusian Potash Co., which is OAO Uralkali’s marketer, “creates positive momentum” for the global market that may boost global consumption and start driving prices up from 2011, Reniassance Capital analyst Marina Alexeenkova wrote in a research note the other day. Uralkali is Russia's largest potash producer. If this doesn't happen, she sees potash prices falling in 2010 to $300-350/tonne.

  

  

  I disagree with her. I see potash prices rising in 2010, due to a rising world population, natural disaster or extended drought, as well as the continuing economic recovery. 2009 was relatively quiet in terms of disruptive natural disasters, but with an increasing world population and rising temperatures around the world, 2010 should revert back to the mean. This should drive commodity prices higher, in particular potash. $POT $MOS and $AGU should benefit from the rise in prices. Look at the charts for potash and phosphate prices and you can see that they have bottomed.

  This sector should also see a bit of an M&A premium as there have been rumors in the past that $BHP might look to expand their potash operations by acquiring $POT and the ongoing love triangle between $AGU, $CF & $TRA. My two favorite names in this sector are $POT and $CF, due to the fact that their ROE's are among the highest in the industry. $CF's ROE is over 30% and $POT's is over 27%. Return on equity is the hardest number to fudge and the respective returns are significantly higher than the industry average of 19.6%. Additionally, both of these companies trade at attractive valuations for their 2010 earnings estimates. Lastly Goldman Sachs also upgraded $POT to buy recently due to their forecast for rising prices in 2010.

  I'll write periodically on the strength of the various agriculture stocks mentioned throughout 2010, so stay tuned.

• Tis the season for picks and predictions…
  Chris Ciaccia, Chris Ciaccia | December 18th, 2009 at 8:15 am

  

  In the holiday spirit, where it is better to give than receive, I figure I would combine two of my favorite columns into one with some stock picks and market predictions for 2010.

  read more...

• BHP-RTP Iron Ore Joint Venture a Game Changer
  Chris Ciaccia, Chris Ciaccia | December 7th, 2009 at 7:58 am

  

  Yesterday, BHP Billiton ($BHP) and Rio Tinto ($RTP) announced that they had agreed upon terms of a previously announced joint venture of their iron ore operations. Barring any setbacks with regulatory approval, it should be completed by the second half of 2010. They must first seek approval from Australia, as well as the European Commission, but both companies expect there to be no problems with gaining approval on this tie up.

  read more...

• Commodity complex
  Chris Ciaccia, Chris Ciaccia | December 4th, 2009 at 4:09 pm

  

  Oil and it's derivatives (gasoline, but not natural gas) will move higher in spite of somewhat weak economic growth in FY2010 because there simply is not enough supply. Shale rock, deepwater drilling, oil sands and coal based oil are much more expensive to produce because it is harder to get at them than simply putting a rig into the ground and pumping out liquid gold. It also takes much longer for these sources to come online because you need price justification and the complexity of the process to cooperate. Oil may takes its hits and seem like it is going to get hurt, but it is an inevitability that oil prices move higher next year.

  read more...