Archive for February, 2014

Republic Airways Holdings ($RJET) – Stock pick for 2-27-14

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Republic Airways Holdings Inc., through its subsidiaries, provides scheduled passenger services. It offers scheduled passenger service on approximately 1,300 flights daily to approximately 110 cities in the U.S., Canada, and the Bahamas through fixed-fee flights operated under airline partner brands, including American Eagle, Delta Connection, United Express, and US Airways Express.

Today they reported fourth quarter 2013 income from continuing operations of $16.5 million, or $0.30 per diluted share, compared to $8.8 million, or $0.17 per diluted share from continuing operations in the prior year. Net income increased 23.8% to $15.6 million for the fourth quarter of 2013, compared to $12.6 million in the same period in the prior year. Operating revenues for the quarter increased 5.8% to $346.5, million compared to $327.4 million for the fourth quarter of 2012.

Full year income from continuing operations increased 54.3% to $48.3 million, or $0.92 per diluted share, compared to $31.3 million, or $0.63 per diluted share for the full year 2012.

They did report, due to weather issues across the country in January and February, they had a dip in revenue for the current quarter. However, that should be just a temporary dip as they have been growing quite well, as the numbers above show.

According to analysts following the stock, they expect the stock to rise to anywhere from $12.50 – $15. Options activity show calls being bought at a 4 to 1 clip over puts which is a bullish sign. Their price to book ratio sits below 1 at .81 which means they are undervalued in share price. Institutional investors also bought up 1.8 million shares in the previous quarter.

Checking with my Prophet tool from TD Ameritrade, a bullish chart pattern is showing and it expects a future price range from $12.65-$14.14 in the near future as seen below.

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If the price does meet the targets predicted by the tool, that would be an expected gain of 32% to 47% in that range at a current price of $9.58. Per the analysts range, you would look at a 30% – 57% gain at the same current price.

As long as Republic Airways can continue to build on the business and continue to do a great job like they did last quarter, they should have no problem in growing share price. With that sort of upside, I see them as an excellent pick.

Casey’s General Stores – ($CASY) Stock pick for 2-18-14

Casey’s General Stores ($CASY) has a unique business model that keeps them protected from the price wars of the larger chains. Many of its stores are in regions with a population of 5,000 or less which aren’t profitable for the bigger retailers, so they have a better handle on their market.

According to a survey, the convenience store market size was around $575.6 billion in 2010. It is expected to grow at a compound annual growth rate of 11% during the period 2011-2014 to reach a market size of $856 billion. Total convenience store sales include fuel as well as in-store sales. These stores are very popular with consumers who are pressured for time, as they have to spend less time shopping.

Gas stations are a highly competitive and low-margin business. During the second quarter, Casey’s did very well on its fuel margin environment, resulting in an average margin of $0.167 per gallon compared to $0.149 per gallon in the same period the previous year. For 2014, the fuel margin is ahead of their annual target, at $0.194 per gallon

They partnered with Hy-Vee in a fuel-saver program. Same-store gallons sold in stores that participated in the fuel-saver program increased about 7% in the second quarter, resulting in overall same-store gallons sold in the quarter climbing 4.2% versus the previous year’s quarter.

The grocery and other merchandise sales grew 10.2%, and this was more than what the company had hoped for. The prepared food and drink category continued its strong performance and grew 12.3%.

On the back of strong performance across all segments, and 5.5% revenue growth versus the previous year’s quarter, Casey’s second-quarter earnings per share soared 24% to $1.06 compared to $0.85 a year ago.

Right now they are 12% off their most recent 52- week high back in December (Price as of 3:38pm is $67.13). I expect you will see them making a run back at the high of $77.58 in the next 3 to 6 months. This is supported by options trades in the market that suggests folks are looking for this level. Also, using Thinkorswim’s Prophet tool (as seen below), it sees the chart for Casey’s in a bullish pattern and is looking for a price in the range of just under $73 to almost $79 in the next several months.

casy think
The stock has a P/E ratio of 19 which makes them fairly inexpensive. Plus, it has a dividend yield of 1.10% so it makes it a bit sweeter for you. They have been doing well in the convenience-store space and has outperformed peers. Looking at the company’s expansion moves, it can grow further and bring long-term benefits to your portfolio.