Research

Investment Ideas of the Week 10-15-12

Top 5 ideas of the week:

 SUPERVALU (SVU)

SVU Merger Rumors: In our September 6th report, we covered thereports from Bloomberg that SUPERVALU’s (SVU) advisers asked potential buyers to tender bids for the entire company even though suitors have inquired about individual parts of the grocery company. We reiterate that SVU should certainly not rule out bids for individual grocery store chains because we believe that SVU would be more likely to realize greater value by selling off the individual chains rather than trying to sell off the whole enterprise. READ MORE

  Descartes Systems Group (DSGX)

We were recently asked to take a look at Descartes Systems Group (DSGX) pursuant to a special request. Descartes is a logistics technology platform headquartered in Waterloo Ontario and has over 7900 customers in over 60 countries worldwide. Descartes seeks to meet the needs of global trade and transportation organizations that want to differentiate their  businesses through effective logistics strategies and processes, or need to improve existing logistics processes to compete in a variety of markets. READ MORE

 SHORT: Splunk Inc (SPLK)

We are initiating coverage of Splunk Inc (SPLK). Although we are impressed with the company’s revenue growth, the company has been persistently losing money since it was founded in 2006. Even in its IPO prospectus, it admitted that it is plowing back the majority of its pro forma operating income into sales and marketing expenses and as such it will not be profitable in the short term. READ MORE

 Exelon Corporation (EXC)

We have been pleased that our reports on Exelon Corporation (EXC) have generated much interest from the investment community and we have been able to continually find new ways to analyze and evaluate our thesis on the company. We noticed that because of the weakness in the unregulated power generation market and the solid performance of regulated utilities, Morningstar Investment Research assigns 4 and 5 star ratings to the power generation utilities like Exelon and 2 and 3 star ratings to regulated utilities like Wisconsin Energy (WEC) because it believes that power generators will roar back to life soon. READ MORE

 Dunkin’ Brands (DNKN)

Despite the weak U.S. recovery and a global economic slow-down, Dunkin’ Brands (DNKN) delivered strong results for Q2 2012. The company generated $37.3 million in free cash flow in Q2 2012, and ended the quarter with $218.7 million in cash. Comparing Q2 2012 financial results with Q1 2012, revenue increased by 9.8%; adjusted operating income increased by 14%; and adjusted net income increased by 63%. Diluted EPS for Q2 2012 were $0.33, a 32% increase from $0.25 for Q2 2011. READ MORE