- why the price of natural gas may have bottomed; and
- why Allison Transmission is the IPO from this past week that you should be revved up about.
The Switch to Nat Gas Is in the Air Posted at 3:27 p.m. EDT on Friday, March 16. It's happening. It's in the air. And we all know it. With oil up huge, with the threat of an embargo or a war that would halt oil from the Strait of Hormuz, this country is switching fuels. We are adopting natural gas as a cheaper way to power our trucks and ultimately our cars.
The Switch to Nat Gas Is in the Air Posted at 1:18 p.m. EDT on Thursday, March 15. Slow and steady will win the aftermarket race. I am talking about two deals that came today, two very different IPOs. One made you a lot of money if you got in, and one could make you a lot of money if you didn't. This morning Demandware ( DWRE), cloud play on Internet commerce, and Allison Transmission Holding ( ALSN) came public. I had told you to do your best to get into Demandware because the space is hot and this could be the next Salesforce.com ( CRM) of Internet commerce. The price talk was $12 to $14 and I said that it seemed reasonable, even though it is losing money, to pay up to $16 because then it would be at 5 to 7 times sales, which is as the high end of the range of similar IPOs in the space. Today it was priced at $16 and opened at $25, more than 10 times sales, an absurd level, immediately the most expensive stock in the sector. Allison Transmission, a company that is cash-flow positive on the other hand, came public at $23, opened around there and then fell a dime below it. Here's a company, spun out of General Motors ( GM) and purchased by a private equity firm that has a tremendous franchise in automatic truck transmissions, a growing area in a growing cohort. Don't forget we like Cummins ( CMI), a truck titan that hit a 52-week high today and we know that the truck cycle is very robust. When I interviewed Lawrence Dewey, the truck industry veteran CEO for Allison, he said that despite the tremendous revival in the truck business, the turn's only in the fifth inning, not of a preseason game but of the real deal.