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roundtable posts

Rental car market ready to roll

Posted Jan 29th 2007 8:15AM by Eric Buscemi (RSS feed)
Filed under: Good news, Newspapers, Magazines, Ford Motor (F)

We blogged in November to invest in the Hertz (NYSE: HTZ) IPO and those who suffered through the initial volatility are up close to 20%.

Avis Budget Group (NYSE: CAR) is also a good play on the rental car business. Hertz was acquired by private equity from Ford (NYSE: F) and recently came public. Avis was spun off from Cendant last year. Now the two largest rental car companies are publicly traded.

The mere fact that the two largest players are publicly traded should impose pricing discipline. This should translate into higher earnings and higher stock prices for both players over time.

According to Oscar Schafer in this weekend's Barron's Roundtable (subscription required), he expects the company to earn $3.00 this year. With the stock at $24, that is just 8x earnings.

This stock has rallied a bit most likely on Barron's whispers since the interview was held a few weeks ago and only published this weekend. I'd wait for a little pull back and then jump into this stock.

Lyondell's got it all: earnings, cash flow and a huge refinery

Posted Jan 23rd 2007 7:31AM by Eric Buscemi (RSS feed)
Filed under: Forecasts, Good news

Lyondell Chemical (NYSE: LYO) was mentioned twice as a stock to buy in this past weekend's Barron's Roundtable (subscription required), recommended by both Archie MacAllaster and John Neff. At $25, the stock is selling for 6.25x earnings, versus the S&P 500 which is selling for 15x to 16x earnings.

What is particularly attractive about Lyondell is that it bought out its Venezuelan partner's 41% stake in the Citgo refinery and now fully owns this sizable refinery. This asset should generate a lot of cash flow for Lyondell's shareholders for years to come.

Lyondell put a good chunk of debt on its balance sheet to purchase the Citgo refinery stake, but has already reduced debt by $2 to $3 billion, according to MacAllaster, who put a $40 price target on the stock.

Start looking at select commodity stocks

Posted Jan 22nd 2007 7:30AM by Eric Buscemi (RSS feed)
Filed under: Industry

TheFly blogged to avoid commodity stocks back in the spring. Our timing was quite good. However, a lot of these stocks have corrected significantly and are beginning to represent good value.

Pioneer Natural Resources (NYSE: PXD) was mentioned by Archie MacAllaster in this weekend's Barron's Roundtable (subscription required). Pioneer is the third largest independent oil and gas producer in the U.S. and its stock has come down from a high of $54 to $38 -- a big correction.

According to MacAllaster, Pioneer had forward sold a lot of its output considerably below today's prices. Therefore, as these contracts come off, Pioneer can sell their gas at much high prices and earn greater profits, despite the recent natural gas price pullback. Pioneer's reserves are all domestic, so they will benefit from better prices due to the inevitable decline in U.S. reserves.

Also, Pioneer has shrunk it shares outstanding from 145 million to 125 million and is supposedly on its way to 100 million shares outstanding.