Media Alert – Join me tonight on Fox Business – The Willis Report 6 PM EST
Silica (SLCA) – The WSJ has a positive article on Frac sand company Silica (SLCA) this morning. The company is a focus for investors who believe the U.S. is on track to achieve energy independence in the next decade. SLCA is a young company and doesn’t rank that well in my Alpha Select Model since there isn’t a lot of history however, consensus shows the company growing top and bottom line at 26% and 36% respectively. Chart also looks ready to breakout to the upside. 31.50 is support. At 16 x next year’s numbers it doesn’t seem expensive trading at half its growth. (Not involved but looking)
China Japan update – Vice President Joe Biden lands in Tokyo at the beginning of his Asia trip. He is going to have to walk a fine line regarding the ongoing dispute between China and Japan over the Senkaku Islands and China’s establishment of an ADIZ (Air Defense Identification Zone) The Japanese Government believe the U.S. is sending mixed signals recently advising U.S. Airlines to abide by the Chinese demands to contact them regarding any flights through their zone.
The New York Times writes; for Mr. Biden, the dispute has been a distraction on a trip that he hoped would cover a range of issues, from a trans-Pacific trade agreement to the nuclear threat in North Korea.
VALE – Goldman reiterates their Buy this morning after the company’s investor day. Like other bulls they point out the cheap valuation as reason to be bullish. My biggest concern with VALE and other commodity names in Latin America is the following. Government continues to use them as an ATM machine. When their fortunes turn and they start generating growth and earnings for their shareholders government authorities will likely step in with all sorts of taxes. I’m not involved and until I see meaningful reform I have no intention of putting capital south of the border. The chart of EWZ (Brazil ETF) below is worth 1000 words.
-David Nelson, CFA
