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.
Alliance Resource Partners (NASDAQ:ARLP)
Stop me if you've heard this one before: Coal master-limited partnership Alliance Resource Partners reported record coal sales and production in its most recent quarter. How many years in a row have we been using the word "record" next to its earnings reports? That'd be 11 now!
Coal companies were slammed when President Obama was re-elected, as Gov. Mitt Romney was seen as incorporating coal into the United States' energy independence plan more so than Obama. However, I feel that clean coal will continue to play a large part in America's energy independence as it still accounts for greater than 40% of all electricity generation. It's also noteworthy that exports of coal have been increasing, something I noted recently with Arch Coal (NYSE:ACI), which has recently signed multiple export agreements.
But, what makes Alliance Resource Partners stand out -- other than its exemplary 7.8% dividend yield and streak of 18 consecutive quarters where its payout has moved higher -- is its ability to secure long-term contracts without exposing itself to short-term price volatility movements. According its latest quarterly results, it has 28.7 million tons committed through 2018 (keep in mind, Alliance Resource usually produces between 34 million and 39 million tons annually), and, as I noted in September, it has just a fraction of its production exposed to current coal prices. Alliance Resource really is head and shoulders above its peers, and I've got my eye closely on this stock.
Valero Energy (NYSE:VLO)
As my Foolish colleague Jeremy Bowman noted earlier this month, there's no way of shuffling the cards without coming up with the conclusion that Hurricane Sandy wasn't good for the U.S. economy. Even though refiners felt the brunt of the storm in terms of shutdowns, they may wind up being some of the biggest long-term beneficiaries from the recovery effort.
One reason I have my eye on Valero Energy and countless other refiners is the prospect that Superstorm Sandy and the looming fiscal cliff will drag on U.S. economic growth. Refiners often perform their best and rake in their highest margins when oil prices are lower and trade within a range. If U.S. GDP growth comes in consistently below 2% over the next couple of quarters, refiners could be in for a field day, especially if export demand remains strong.
It's also worth paying attention to Valero's peers. Tesoro (NYSE:ANDV), for instance, missed EPS projections by $0.22 in its latest quarter, yet estimates for its upcoming quarter and the full-year only continue to move higher. Perhaps this is a bit of overzealous guessing on the part of analysts, but I think it has more to do with overall refiner trends and margins improving.
At just six times forward earnings, Valero is a company that you'll want to keep a close eye on in 2013.
Bloomin' Brands (NASDAQ:BLMN)
Despite being down on my CAPScall, I'm still referring to this as the worst Bloomin' IPO of 2012. I'm not quite sure what sort of smoke-and-mirrors campaign the owner of Outback Steakhouse and Carrabba's Italian Grill is pulling, but its most recent quarterly report showed an adjusted profit of $0.08, a clean $0.09 better than analysts were expecting. Revenue also squeaked by estimates as same-store sales rose 3.6% because of better consumer traffic and higher prices on its menus .
That may seem like a rosy forecast, but include those one-time charges related to its IPO and early debt extinguishment and you've got a $0.31 quarterly loss! Bloomin' also predicted that commodity inflation would rise by 3%-5% in 2013. Furthermore, the company ended the quarter with just $168.3 million in cash (down from $482.1 million nine months ago) and $1.57 billion in debt that's most coming due within the next three years. How Bloomin' is expecting to pay down its debt with same-store sales growth in the ballpark of 3% just doesn't add up, and neither does its current share price.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by adding these companies to your free, personalized watchlist to keep up with the latest news on each company.
- Add Alliance Resource Partners to My Watchlist.
- Add Valero Energy to My Watchlist.
- Add Bloomin' Brands to My Watchlist.
Domestic coal and oil are obviously going to go a long way to ensure America's energy independence, but one company in the energy sector has been singled out by our analysts as the only one you need to own before 2014. Click here to get your copy of this latest special report, for free, and find out which company our team at Stock Advisor is buzzing about.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
Motley Fool newsletter services have recommended buying shares of Alliance Resource Partners. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency comes first.