Anyone like pet companies?

WOOF is one example...

Who wouldn't? Three-quarters of Americans have pets. The industry is recession proof. Even in the great recession (depression) pet spending stayed the same or increased. From the link,

In 2011, households spent more on their pets annually than they spent on alcohol ($456), residential landline phone bills ($381), or men and boys clothing ($404).

Despite the recession, families continued to spend consistently on their pets between 2007 and 2011. Spending on pets stayed close to 1 percent of total expenditures per household, despite the recession that occurred during this time.

Spending on pet food stayed constant or increased during the recession, even while spending at restaurants fell. Married couples without children living at home spent the most on their pets out of any household configuration in 2011.

http://www.bls.gov/opub/btn/volume-2...ng-on-pets.htm

Best ones I know of are PETS WOOF BUFF FRPT

I think pets.com is going to be huge

Check out a book called "The Everything Store" by Brad Stone.

I'm about half way through. It's not written by Bezos but it's pretty comprehensive.

CF has a pretty good floor cf of 1.50 share just from transportation cost differentials. With Pot and AGU merging, new nitorgen supply in NA should be pretty rational. Also a trump victory would be interesting. Massive tarrifs on chinese imports would probably just redirect them to europe or south america but it cant hurt

LXU looks much cheaper now that it dropped to 8.5$? If you go by production capacity , book value, 2017 FCF multiple, EV/ebitda. Seems like they have very similar assets as CF, LXU is just smaller.

CXRX going to $0 or what?

http://www.gurufocus.com/stock/CXRX

doesnt LXU not make its own ammonia?

metrics dont look similar at all. LXU TTM EBITDA 7mm, 500mm of debt.

The stock cratered after their el dorado facility had to be rebuilt. I think this is the first quarter where that facility will run at nameplate. So then net sales of Ammonia will be 150k tons (somewhere in that area).

By my estimate (referring to presentation where they get ebitda estimates based on ammonia prices), they will do roughly 120-150m in ebitda at current depressed prices. Or about 40-50m in FCF, depending on cost savings what refinanced interest rate will be on their debt etc. If they turn into a MLP it will be higher.

So EV/ebitda is about 5.5x at current depressed prices. FCF yield on market cap about 18-23%. And they are suing the company who built the El Dorado facility because cost overruns were 160m$.

For CF I get around 650 million in FCF at current prices or a 12% FCF yield. But I am not sure about earnings going forward, so that is why I am putting it out here. Also I basically added back the one time charges, and multiplied net income by 0.57x to get net income to CF shareholders.

But it appears CF industries has less leverage now. But I am confused about the 2 billion in cash and the minority interests. Is net debt 3.5 billion$?

by my estimate LSB at 14$ is comparable to CF at 25$. So with a catalyst (LSB showing it's earning power in Q4), it could be worth to trade between the two, whichever would be cheaper at the time. On top of that it seems LSB could be an interesting M&A target for a larger company like CF. Since buying the company in it's current state is much much cheaper than adding capacity. Im currently holding a position with 8.8$ cost basis.

CF has the cash because they sold capacity to CHS coop for 80 years (effectively selling a piece of themselves) at market prices. This was back in Feb. They also have accelerated dep that gets them a tax refund next year so cash position should grow much more than normalized fcf. All that said they have manageable debt.

CF also trading around 5.5x ebitda, maybe less. When comparing cash flows you need to adjust for leverage. companies that are over levered should have extra fcf yield, doesnt mean its cheaper.

Here is an interesting one for you guys. Hope you're fine with super illiquid names.

http://www.nonamestocks.com/2016/09/...ck-i-know.html

ok here is a list of companies i think are interesting right now, hopefully this will be the start of getting me to share some thoughts on all of them eventually. Wasn't sure if i should start my own thread so just posting in this one. I probably won't get to doing full write ups on these like i did for PDEX except for maybe ELXS and DYNT.

Warning: If you thought PDEX was illiquid, some of these are even worse.

Favorite idea: PDEX @ $4.41
Second Favorite idea: ELXS @ $23

Others I like:
CRVP (1-2 yr hold, not long-term hold) $.85
SPNE (long-term hold, 5+ years) $10
DYNT (long-term hold, 5+ years) $2.50
AIRT (long-term hold, 5+ years) $20
MHH (long-term hold, 5+ years) $7.90
ALJJ (long-term hold, 5+ years) $4.50
TPCS (1-2yr hold, potentially long term hold) $.50
FTDL (not really sure, probably long-term hold) $6.12
MKTY (semi-speculative, has potential) $1
DTRK (semi-speculative, has potential) $7.75
ESCC (semi-speculative, has potential) $1 or less
FLL (semi-speculative, has potential, high risk with debt) $1.76
ORBT (semi-speculative, has potential) $3.60
SCIL (semi-speculative, has potential) $.46
ISIG (semi-speculative, has potential) $2.42
RWWI (semi-speculative, game theory play) $2.20

The issue with CF is that it is a commodity stock in an era when supply collusion is falling down hard. Nothing more and nothing less.

no supply collusion in nitrogen. you must be thinking of potash.

unlike other commodities nitrogen fert has incredbly steady long term demand growth

Then why aren't nitrogen prices increasing steadily?

Hint: it should be just barely profitable to produce.

Of these, i'm particularly interested in ALJJ and TPCS. I'm curious what your thoughts are on CRVP? Just at a high level.

I won't lie, a back and forth discussion between Ahnuld and Brian is about as good as it gets on this stuff. I hope it keeps going. Valuable.

30% of nitrogen in the US is imported. As long as that is true (and it takes a long time to build new capacity, and at worst 15% still needs to be imported 5-6 years from now.) So all nitrogen producers in the US have 2 advantages, transportation costs and energy costs.

Nitrogen fertilizers are made out of ammonia, and to produce ammonia you need loads of energy. I think Midwest producers cash costs for ammonia are about 120$. Tampa producers over 200$ (just because transportation costs), and middle east producers over 300$. So that is a 180$ advantage just because of proximity to the corn belt. Not accounting for the cheap natural gas advantage.

The second advantage is cheap natural gas. As marginal producers cash costs are almost 500$ per ton. So as long as the US needs to import ammonia, companies like CF LXU, UAN etc will have a massive cost advantage.

I think currently prices are at about 240$. Part of the reason is temporary oversupply which is not likely to last long at these prices, and cheap oil and coal. So this is partially a spread bet on US natural gas and oil. You want the spread to widen basically.

http://www.snl.com/Cache/1500089742....42&iid=4533245

http://investors.lsbindustries.com/p...-presentations

obviously because we are currently oversupplied.

good part about demand being so predictable and increasing is that eventually we need to build more supply. Thus in the long run prices should rise to the point where a new build is just barely profitable.

Your statement is true for the marginal new capacity and untrue for everyone below him on the cost curve.

also see dgff's post above for specifics on permanent transportation margin edge

CF's own numbers indicate that production capacity is still on the upswing. This should create continued downward pressure on prices.

I agree with your statement on the long-run, but the long-run is more like an ultramarathon than a 5k. Commodity cycles tend to be extremely long.

I don't disagree that they have some edge over their competition. However, being in the safest neighborhood in Baltimore isn't quite the same thing as being in a safe neighborhood.

final new supply from last cycle comes on by mid 2017 then there's nothing after that. by 2019 pricing should be decent again. I can wait 2.5 years for a potential 3 or 4 bagger (would bea 52% cagr)

as well, CF's own expansion (and LXU's as well I see) came in above budget. Means cost of new supply keeps increasing so no one will greenlight more supple for a long long time

Starting to look like a really great time to buy into Wells Fargo

ive been thinking to jump in Wells Fargo as well. I might jump in with a 1/2 position or hold out for $40

Spent this morning looking at CF and so far it looks like a no brainer. What's the bear thesis at this price? Did everyone just bail after the merger failed?

The way I look at it you are
1. Buying a company at the bottom or close to it on a relatively steep cost curve
2. Little to no supply growth (according to CF) for next 2 years or so
3. Attractive valuation given current nitrogen price relative to what seems to be the cycle. I haven't actually worked through the numbers on this but this sell side report I'm reading has it at 10% FCF yield to the equity using something around today's spot price (I'm using US Gulf NOLA Urea, let me know if this is a poor benchmark). This is particularly attractive given growth capex will theoretically go to 0 very soon so all the cash will probably go to delevering / buybacks.
4. Cost advantage versus global peers is structural due to natural gas feedcost.

Thats the gist of it. If I had to play devils advocate id say a lot of worlds supply comes from china, who is at high end of cost curve, and when they devalue the yuan it lowers their production costs driving down prices. That said China will always have a transportation cost disadvantage that cant be devalued away and thus all we are talking about is the level of profit above that location edge.

other bull points:

china has cut coal production (see crazy met coal price rally) which will impact their input cost on urea.

capex is done and next year they get accelerated dep so they wont pay any cash taxes and can delver faster