B Riley conference call. PCTI mgt made two projections that caught my attention.
1)Services revenue will increase in 2017 to the $17-$20 million range up from $13 million in 2016.
2)Revenues will double in the next 5 years.
According to my calc, that would be CAGR of 14%. Obviously, the proof will be in the performance over time. Still, PCTI is in attractive businesses that are growing and will continue to grow as wireless applications grow. If PCTI does grow revenues to $200 million, over the next 5 years, the "market" would most likely assign a 2 PSR valuation. Price implication for the stock-close to $20.
Chinese Transport Ministry reported RR car loadings for April were down 4.5% y/y. In the 1st Q RR car loadings were down 9.4%. In my view, their economy is still having trouble, which increases the odds that China will continue to devalue their currency vs the $.
RR car loadings of vehicles, for the week end 5/21, up 2.1% y/y-1st upweek after 2 down y/y weeks.
On the other hand, Markit PMI (services for May) was 51.2 vs expectations of 53 and vs 52.8 for April. Commentary was that weak Markit PMI data for both mfg and svs implied 2nd Q GDP of less than 1%-current consensus is around 2.5%.
DY is evidence of wireline and wireless broadband build out-good for MRVC, ADTN and PCTI as well as optical component suppliers-OCLR, FNSR, LITE, NPTN and VIAV. This is a theme that should last a couple years as cable competes against phone companies that are both competing against newcomer GOOG.
Also, China fixed their currency just below 6.7 to the $ a new 5 year low. As the DXY goes higher, now at a 2 month high, China will weaken their currency. Weak Yuan "exports" deflation to the world which will force central banks to "ease" to counter deflationary forces-one the reasons stocks are going higher.
Combine tightening credit with excessive supply and the auto business could fall off a cliff quickly. On the other hand, my brother works for GM in KS. His plant was recently shut down for two weeks due to inability to get parts from Japan due to a recent earthquake. They're back up and running now and working weekends to make up the lost production.
A friend of mine in the car business tells me that sub-prime borrowers are having a tougher time getting financing-at least in the Jacksonville FL area. If this is true nationwide, new and used cars will take a hit at sub prime paper has accounted for 20-33% of sales range the last couple years. We will learn more the 1st week of June when May vehicle sales come out. RR car loadings will be out Wednesday afternoon.
Speaking of which...I visited the area Carmax lot a little while back to see what they'd offer for my 2012 Tundra Pickup (nothing wrong with the truck, I just tired of driving it). Salesperson informed me that they normally keep 250 cars/trucks on the lot, but were currently at nearly 500. They offered me $13k for the Tundra. I politely declined and sold it myself for $20k (still a good deal for the buyer IMO) in less than two weeks using Craigslist. Carmageddon approacheth.
rolling over. Lets see if YHOO picks up this post as 1/3 of my posts just don't get through. RR car loadings for vehicles down two weeks in a row y/y-last week down 5.7%, 2 weeks ago down 3.5%. The implication is vehicle sales are slowing down so dealers are ordering less inventory.
Also, DXY, above 95, is now at 2 month highs, all the while China has been weakening their currency to 2016 lows-6.5550. Basically China is telling the FED as the $ get stronger, we will weaken our currency. Since the UUP 200 day MA is 25.13, that implies the DXY equiv is close to 97. So the momentum traders may push the DXY up closer to 97 before a reversal happens. Therefore, I'm waiting to buy back into gold/silver stocks until the momentum DXY trade is close to ending.
My hunch about retail sales for April was validated by Stephanie Pomboy, as reported by Bloomberg TV on Friday, (CNBC did not report) that the government "tweaked" the numbers by using a 3X vs past Aprils seasonal adjustment. So, if the historical seasonal adjustment was used, then retail sales would have been down .9% vs up 1.3%. She also commented that March retail sales were manipulated higher as well.
This is why bonds rallied so strong on Friday was because retail sales were weak-very week vs reported by the government, and many talking heads, as strong. Two conclusions: beware of CNBC happy talk and the government is consistently lying to the public about the state of the economy.
Also of note, read over the weekend, DB is offering 5% 3 month CDs in Belgium. This, if true is a desperate attempt to bring in money. It suggests to me DB will have to take a charge of such magnitude, in the 2nd Q that they may need a bail-out or bail in by depositors.
I was a buyer of regional banks on Friday-now I will be looking to exit as soon a possible, and still make a little profit, to preserve capital.
up 1.3%, but won't sustain this "high" level. One off factors will not repeat:
1)Auto sales up 3.2% mostly because of fleet sales and huge discounts to get rid of 2015 inventories
2)Gas sales up 2.2% all because of higher prices
3)4/16 had five weekends vs the normal 4 weekends
As a consequence, 10yr/2yr bond spread narrowed from 100 BPS to as low as 95-yield curve is flattening. 95 BPS is as low since the 7 year low of 93 BPS the end of February. Since the 10yr/2yr spend has been falling since its recent high of 108 BPS the end of April/early May, regional banks have been selling off.
Today and for the immediate future, I'm a buyer (if I can get my prices) of regional banks with the expectation that the 2yr/10yr spread will widen sometime in the future.
Hopefuly, VIRT just went through its selling climax today with just under 800,000 shares traded.
I think Marty is giving himself one more year to get PCTI up substancially from the current low levels. If he does not pull it off, he will put the company up for sale and go full time at the Univ of Ill. In any case, whether he engineers the turnaround or puts the company up for sale-the stock will be much higher than it is now.
Small investors are mostly out of the market, but it is my view they will be back bigtime starting no later than Sept/Oct. as current soft macro-data will have the FED and Washington "easing" and stimulating respectively.
Four sellers of PCTI on Level 2 at $4.60...they must not know that the CEO Singer purchased $119T worth pps of $4.78 yesterday. Largest Insider Buy of PCTI that I have seen for awhile.