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1. KOL vs. UNG
By Don Dion
6:44 a.m. EST
Not all energy ETFs are created equal. Gas prices are falling as supply swamps the market, but demand for coal continues to rise. The oversupply of global gas is predicted to last until 2015 while coal demand is predicted to rise about 2% until 2030, according to the International Energy Agency. Coal is the backbone of global energy and it will continue to benefit from demand in emerging markets like China. Consider the Market Vectors Coal (KOL) ETF rather than the U.S. Natural Gas (UNG) ETF to play this long-term trend between these two commodities.No positions.
2. Skystar Bio-Pharmaceutical Continues to Deliver
By Ephraim Fields
8:31 a.m. EST Yesterday, Skystar Bio-Pharmaceutical (SKBI) announced strong third-quarter results, with revenue up 27% and non-GAAP EPS of 61 cents, well above the analysts' consensus estimate of 42 cents. Today the company completed a 2-for-1 stock split, which will increase the stock's liquidity. Also helping the stock is that Rodman & Renshaw increased its earnings estimates for the company. Rodman is now projecting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be $11.8 million in 2009 and $18.0 million in 2010, which means that at $11 per share, the stock is trading at very attractive multiples of 5.2 times adjusted 2009 estimated EBITDA and 3.4 times adjusted 2010 estimated EBITDA estimates. Rodman is now projecting adjusted net income to be $9.5 million in 2009 and $15.3 million in 2010, which means that the stock is trading at 8.1 times adjusted 2009 estimated net income and 5.0 times adjusted 2010 estimated net income. These net income multiples are relatively low for a company such as Skystar but are even lower when you consider that the company has over $2.30 per share of cash on its books. While the stock has traded up significantly since I first mentioned it last month, I remain very bullish on the stock. (Note that as a result of the stock split, the stock is temporarily trading under the ticker SKBID.) Long SKBI.
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