I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and see what's really moving the market. Even worse, I'd be lost when the time came to choose which stock I'm buying or shorting next.
Today is Watchlist Wednesday, so I'm discussing three companies that have crossed my radar in the past week -- and at what point I may consider taking action on these calls with my own money. Keep in mind that these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Gran Tierra Energy (NYSEMKT: GTE )
Are you looking for ways to reduce your reliance on natural gas while also gaining international exposure without buying some debt-riddled multinational oil and gas company? Then Gran Tierra Energy might be the perfect energy company for you.
Gran Tierra operates wells in Colombia, Argentina, and Brazil, and has drilling partnerships, as my Foolish colleague Dan Caplinger noted in October, with giants Statoil (NYSE: STO ) and Petrobras (NYSE: PBR ) off the coast of Brazil. Shareholders were dealt a pretty disappointing hand for much of this year after two key drilling wells came up empty in December 2011. But that could be about to change.
Even with a key pipeline down for 36 days in Gran Tierra's most recent quarter, it still boosted production by 6%. Furthermore, its holdings consist of 99% oil and liquid natural gas -- two energy components that still command high prices and are less vulnerable to economic fluctuations than U.S. natural gas prices. Yet the most attractive aspect of this oil and gas exploration company is that it's completely debt-free and is expecting to fund its drilling programs completely from its free cash flow. At less than 10 times forward earnings, investors seem content in discounting future finds -- and I think that's a big mistake!
SanDisk (NASDAQ: SNDK )
I consider much of the memory sector to be an intriguing value at the moment... sans SanDisk, that is. Don't get me wrong, it's easy to pile onto a sector when things look bad across the board, and I do actually feel SanDisk can offer investors value over the extreme long run, but its peers are simply much cheaper and throwing up far too many yellow flags to consider SanDisk at these levels.
Micron Technology (NASDAQ: MU ) wowed Wall Street in a bad way last week when it reported a much wider-than-expected loss for the first quarter. At the heart of Micron's miss is an 11% decline in computer-memory chip prices and a dip in overall PC sales. While SanDisk and Micron aren't clamoring over the exact same customers, they do suffer the same price commoditization of their memory chips during tough economic times. At 1.5 times book value and 13 times forward earnings, SanDisk may not seem expensive, but relative to Micron, and based on the expectation of lower memory prices, I can't help but think SanDisk might make an excellent short-sell candidate here.
Intuitive Surgical (NASDAQ: ISRG )
Another day, another disagreement with short-selling specialist Citron Research.
Last week, Citron suggested that five recent, key data points, including potential legal implications due to botched surgeries, insider selling, and a loss of confidence in management, could remove the premium from Intuitive Surgical's share price. I've disagreed with this assumption for the past few days, and today I'll briefly lay out my case.
To begin with, there's little competition for and innumerable benefits to the precision of robotic surgery offered by Intuitive Surgical. The simple fact that few alternatives exist gives the company incredible pricing power for its da Vinci surgical systems and has allowed its procedural growth to track in the mid-20% range for years. Secondly, if these lawsuits were truly a concern, we'd probably have heard about it from Intuitive Surgical during a conference. Since we haven't, I'm inclined to believe that physicians are receiving the proper training and these surgery snafus are mere aberrations. Finally, the forward P/E of 28 is easily supported by Intuitive's growth rate and lack of competition. I'm not hitting the buy button in my personal portfolio just yet, but Intuitive is clearly on my buy radar.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using these links to add these companies to your free personalized Watchlist to keep up on the latest news with each company:
- Add Gran Tierra Energy to My Watchlist.
- Add SanDisk to My Watchlist.
- Add Intuitive Surgical to My Watchlist.
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