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Money Center Banks

5/10/2015

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In the world of banking, these are the big boys. They're the leaders in lending and setting rates for the smaller banks. They are those larger banks located in major cities around the globe that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Typically money center banks borrow from and lend to governments, corporations, and other banks, and to a lesser extent consumers. As a result they are often subject to extensive government oversight. 

Most of the fundamentals of these companies were the cause/result of the financial meltdown that occurred during 2008/2009 and many slashed their dividend at the time. As a consequence, many of the dividend growth rates listed below seem high but in reality they are just trying to quickly return to levels prior to 2009.  

Below are just a few of the money center banks that deserve further analysis. Hopefully the information and links below are a good starting point.

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1. Wells Fargo & Company provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. Its Community Banking segment offers checking, savings, market rate, individual retirement, and health savings accounts, as well as time deposits and remittances; and lines of credit, auto floor plan lines, equity lines and loans, equipment and transportation loans, education and residential mortgage loans, and debit and credit cards. This segment also provides equipment leases, real estate and other commercial financing, small business administration financing, venture capital financing, cash management, payroll services, retirement plans, and merchant payment processing and private label financing solutions, as well as purchases retail installment contracts. Its Wholesale Banking segment offers commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection, foreign exchange, treasury management, investment management, institutional fixed-income sales, interest rate, commodity and equity risk management, insurance, corporate trust fiduciary and agency, and investment banking services, as well as online/electronic products. This segment also provides construction, and land acquisition and development loans; secured and unsecured lines of credit; interim financing arrangements; rehabilitation loans; affordable housing loans and letters of credit; loans for securitization; commercial real estate loan servicing; and real estate and mortgage brokerage services. The company’s Wealth, Brokerage and Retirement segment offers financial advisory, wealth management, brokerage, retirement, trust, and reinsurance services. As of February 25, 2015, it operated through approximately 8,700 locations and 12,500 ATMs; offices in 36 countries; and wellsfargo.com Website. The Company was founded in 1852 and is headquartered in San Francisco, California.
(Summary) (Company) (Daily Chart)
10 May 2015
Price $56.05
1yr Target $57.42
Analysts 29
1yr Cap Gain 2.44%
Dividend $1.40
Yield 2.49%
1yr Est Tot Return 4.93%
1yr DivGR 17.39%
2yr DivGR 14.31%
3yr DivGR 33.41%

P/E 13.70
PEG 1.41

Market Cap $288.41 Bil
Beta 1.07
EPS (ttm) $4.09
Payout Ratio 34.22%
EPS next yr $4.49
Forward P/E 12.49
Debt/Equity 1.10
ROA 1.30%
ROE 13.20%
ROI 9.10%
Sales $47.90 Bil
Income $21.68 Bil
Profit Margin 45.26%


2. JPMorgan Chase & Co. operates through four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset Management. The Consumer & Community Banking segment offers deposit and investment products and services to consumers; lending, deposit, and cash management and payment solutions to small businesses; and residential mortgages and home equity loans, as well as provides credit cards, payment services, payment processing services, and auto and student loans. The Corporate & Investment Bank segment provides investment banking, market-making, prime brokerage, and treasury and securities products and services to corporations, investors, financial institutions, and government and municipal entities. The Commercial Banking segment offers financial solutions, including lending, treasury, investment banking, and asset management to corporations, municipalities, financial institutions, and nonprofit entities, as well as finances real estate investors and owners. The Asset Management segment provides investment and wealth management services across various asset classes, such as equities, fixed income, alternatives, and money market funds; multi-asset investment management services; retirement products and services; and brokerage and banking services comprising trusts and estates, loans, mortgages, and deposits. The company was founded in 1799 and is headquartered in New York, New York.
(Summary) (Company) (Daily Chart)
10 May 2015
Price $65.49
1yr Target $70.05
Analysts 28
1yr Cap Gain 6.96%
Dividend $1.76
Yield 2.68%
1yr Est Tot Return 9.64%
1yr DivGR 14.70%
2yr DivGR 16.46%
3yr DivGR 24.65%
P/E 11.99
PEG 1.57


Market Cap $243.19 Bil
Beta 1.70
EPS (ttm) $5.46
Payout Ratio 32.23%
EPS next yr $6.49
Forward P/E 10.09
Debt/Equity 1.31
ROA 0.80%
ROE 9.80%
ROI 6/60%
Sales $51.30 Bil
Income $20.64 Mil
Profit Margin 40.23%


3. Bank of America Corporation provides banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, large corporations, and governments worldwide. The company operates through Consumer & Business Banking; Consumer Real Estate Services; Global Wealth & Investment Management; Global Banking; Global Markets; and Legacy Assets & Servicing segments. It offers traditional and money market savings accounts, CDs and IRAs, checking accounts, and investment accounts and products, as well as credit and debit cards; and lending related products and services, working capital management, and treasury solutions. The company also provides consumer real estate products comprising fixed and adjustable-rate first-lien mortgage loans for home purchase and refinancing needs, home equity lines of credit, and home equity loans. In addition, it offers investment and brokerage, estate and financial planning, fiduciary portfolio management, cash and liability management, and specialty asset management services; and retirement and benefit plan, philanthropic management, and asset management services. Further, the company provides various commercial loans, leases, commitment facilities, trade finance, and real estate and asset-based loans; treasury management, foreign exchange, and short-term investing options; and debt and equity underwriting and distribution, and merger-related and other advisory services. Additionally, it offers sales and trading services for securities and derivative products in primary and secondary markets; market-making, financing, securities clearing, settlement, and custody services to institutional investor clients; and risk management products. The company provides its products and services through 4,800 banking centers, 15,800 ATMs, call centers, and online and mobile banking platforms. Bank of America Corporation was founded in 1874 and is based in Charlotte, North Carolina.
(Summary) (Company) (Daily Chart)
10 May 2015
Price $16.45
1yr Target $18.24
Analysts 27
1yr Cap Gain 10.88%
Dividend $0.20
Yield 1.21%
1yr Est Tot Return 12.09%
1yr DivGR 200.00%
2yr DivGR 73.20%
3yr DivGR 43.69%
P/E 24.55
PEG 2.89


Market Cap $172.76 Bil
Beta 1.66
EPS (ttm) $0.67
Payout Ratio 29.85%
EPS next yr $1.60
Forward P/E 10.28
Debt/Equity 1.04
ROA 0.30%
ROE 3.30%
ROI 7.60%
Sales $49.91 Bil
Income $7.28 Bil
Profit Margin 14.58%


4. Citigroup Inc. provides various financial products and services for consumers, corporations, governments, and institutions worldwide. The company operates through two segments, Global Consumer Banking (GCB) and Institutional Clients Group (ICG). The GCB segment offers traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards, and Citi retail services. This segment provides various banking, credit card lending, and investment services through a network of local branches, offices, and electronic delivery systems. As of December 31, 2014, it operated 3,280 branches in 35 countries. The ICG segment offers various banking, and financial products and services to corporate, institutional, public sector, and high-net-worth clients. This segment provides wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance, and securities services. Citigroup Inc. was founded in 1812 and is based in New York, New York. 
(Summary) (Company) (Daily Chart)
10 May 2015
Price $54.02
1yr Target $62.46
Analysts 26
1yr Cap Gain 15.62%
Dividend $0.20
Yield 0.37%
1yr Est Tot Return 15.99%
1yr DivGR 0.00%
2yr DivGR 0.00%
3yr DivGR 9.95%
P/E 21.69
PEG 0.85


Market Cap $163.95 Bil
Beta 1.91
EPS (ttm) $2.49
Payout Ratio 8.03%
EPS next yr $5.92
Forward P/E 9.13
Debt/Equity 1.04
ROA 0.40%
ROE 3.70%
ROI 8.00%
Sales $60.93 Bil
Income $7.56 Bil
Profit Margin 12.40%


5. The PNC Financial Services Group, Inc. operates through six segments: Retail Banking, Corporate & Institutional Banking, Asset Management Group, Residential Mortgage Banking, BlackRock, and Non-Strategic Assets Portfolio. The Retail Banking segment offers deposit, lending, brokerage, investment management, and cash management services to consumer and small business customers through branch network, ATMs, call centers, online banking, and mobile channels. This segment operates 2,697 branches and 8,605 ATMs. The Corporate & Institutional Banking segment provides secured and unsecured loans, letters of credit, equipment leases, cash and investment management, receivables management, disbursement and funds transfer, information reporting, trade services, foreign exchange, derivatives, securities, loan syndications, mergers and acquisitions advisory, equity capital markets advisory, and related services for mid-sized and large corporations, government, and not-for-profit entities. It also offers commercial loan servicing, and real estate advisory and technology solutions for the commercial real estate finance industry. The Asset Management Group segment provides investment and retirement planning, customized investment management, private banking, tailored credit solutions, and trust management and administration for individuals and their families; and institutional asset management services. The Residential Mortgage Banking segment offers first lien residential mortgage loans. The BlackRock segment provides a range of investment and risk management services to institutional and retail clients. The Non-Strategic Assets Portfolio segment offers consumer residential mortgage, brokered home equity loans, and lines of credit, as well as commercial real estate loans and leases. The PNC Financial Services Group, Inc. was founded in 1922 and is headquartered in Pittsburgh, Pennsylvania. 
(Summary) (Company) (Daily Chart)
10 May 2015
Price $93.65
1yr Target $97.22
Analysts 23
1yr Cap Gain 3.81%
Dividend $2.04
Yield 2.17%
1yr Est Tot Return 5.98%
1yr DivGR 9.30%
2yr DivGR 10.13%
3yr DivGR 17.60%
P/E 12.88
PEG 1.96


Market Cap $48.76 Bil
Beta 1.06
EPS (ttm) $7.27
Payout Ratio 28.06%
EPS next yr $7.77
Forward P/E 12.05
Debt/Equity 0.64
ROA 1.10%
ROE 8.70%
ROI 9.40%
Sales $9.34 Bil
Income $3.88 Bil
Profit Margin 41.54%


6. SunTrust Banks, Inc. operates in three segments: Consumer Banking and Private Wealth Management, Wholesale Banking, and Mortgage Banking. The Consumer Banking and Private Wealth Management segment offers deposits, home equity lines and loans, credit lines, indirect auto loans, student loans, bank cards, and other lending products, as well as various services. This segment also provides wealth management products and professional services, including brokerage, professional investment management, and trust services; and family office solutions. The Wholesale Banking segment offers corporate and investment banking solutions, such as advisory, capital raising, and financial risk management, as well as lease financing solutions; cash management services and auto dealer financing, as well as corporate insurance premium financing solutions; and construction, mini-perm, and permanent real estate financing, as well as tailored financing and equity investment solutions. This segment also provides treasury and payment solutions, including operating various electronic and paper payment types, such as card, wire transfer, automated clearing house, check, and cash; and offers clients to manage their accounts online. The Mortgage Banking segment offers residential mortgage products in the secondary market. The company serves individuals and families, businesses, institutions, and governmental agencies through its network of traditional and in-store branches, automated teller machines, Internet, and mobile banking channels. As of December 31, 2014, it operated 1,445 full-service banking offices in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and the District of Columbia. SunTrust Banks, Inc. was founded in 1891 and is headquartered in Atlanta, Georgia. 
(Summary) (Company) (Daily Chart)
10 May 2015
Price $42.36
1yr Target $44
.54
Analysts 27
1yr Cap Gain 5.14%
Dividend $0.96
Yield 2.26%
1yr Est Tot Return 7.40%
1yr DivGR 100.00%
2yr DivGR 87.08%
3yr DivGR 78.95%
P/E 12.91
PEG 2.21


Market Cap $22.11 Bil
Beta 1.67
EPS (ttm) $3.28
Payout Ratio 29.26%
EPS next yr $3.53
Forward P/E 12.01
Debt/Equity 0.59
ROA 0.90%
ROE 8.00%
ROI 11.50%
Sales $5.32 Bil
Income $1.74 Bil
Profit Margin 32.70%


7. Comerica Incorporated operates through three segments: Business Bank, Retail Bank, and Wealth Management. The Business Bank segment offers various products and services, such as commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services, and loan syndication services to middle market businesses, multinational corporations, and governmental entities. The Retail Bank segment provides small business banking and personal financial services, including consumer lending, consumer deposit gathering, and mortgage loan origination. This segment also offers a range of consumer products consisting of deposit accounts, installment loans, credit cards, student loans, home equity lines of credit, and residential mortgage loans. The Wealth Management segment provides products and services comprising fiduciary services, private banking, retirement services, investment management and advisory services, and investment banking and brokerage services. This segment also sells annuity products, as well as life, disability, and long-term care insurance products. The company operates in Texas, California, and Michigan, as well as in Arizona and Florida, the United States; Canada; and Mexico. Comerica Incorporated was founded in 1849 and is headquartered in Dallas, Texas. 
(Summary) (Company) (Daily Chart)
10 May 2015
Price $48.11
1yr Target $47.78
Analysts 27
1yr Cap Gain -0.69%
Dividend $0.84
Yield 1.68%
1yr Est Tot Return 0.99%
1yr DivGR 16.17%
2yr DivGR 19.84%
3yr DivGR 25.18%
P/E 15.22
PEG 1.65


Market Cap $8.56 Bil
Beta 1.38
EPS (ttm) $3.16
Payout Ratio 26.58%
EPS next yr $3.45
Forward P/E 13.97
Debt/Equity 0.36
ROA 0.90%
ROE 7.80%
ROI 13.40%
Sales $1.75 Bil
Income $581.00 Mil
Profit Margin 33.20%


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0 Comments

Tractor Supply

5/6/2015

0 Comments

 
If you live in a medium sized city or larger, you may have never heard of the Tractor Supply Company. But if you live in the country you're as familiar with this company as you are with Walmart, Home Depot and Lowe's. For the Farmer and the Rancher, this store has everything they need and more.  

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Tractor Supply Company operates rural lifestyle stores in the United States. It offers a wide selection of merchandise for equine, livestock, pet, and small animals necessary for their health, care, growth, and containment. They also offer hardware, truck, towing, and tool products; seasonal products, such as heating products, lawn and garden items, power equipment, gifts, and toys; work/recreational clothing and footwear; and maintenance products for agricultural and rural use. As of December 27, 2014, the company operated 1,382 retail stores under the names of Tractor Supply Company, Del’s Feed & Farm Supply, and HomeTown Pet in 49 states and operates the Website at TractorSupply.com. The company targets its products to recreational farmers, ranchers, tradesmen and small businesses. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee. (Summary) (Company) (Daily Chart)
5 May 2015
Price $85.89
1yr Target $97.61
Analysts 22
1yr Cap Gain 13.64%
Dividend $0.80
Yield 0.93%
1yr Est Tot Return 14.57%
1yr DivGR 24.48%
2yr DivGR 30.17%
3yr DivGR 42.17
P/E 31.35
PEG 2.02

Market Cap $11.72 Bil
Beta 1.20
EPS (ttm) $2.74
Payout Ratio 29.19%
EPS next yr $3.55
Forward P/E 24.19
Debt/Equity 0.05
ROA 17.70%
ROE 29.80%
ROI 28.70%
Sales $5.86 Bil
Income $380.10 Mil
Profit Margin 6.48%

My Perspective

I've looked at this stock for quite a long time now. It never shows up on my screeners simply because of its low yield. But since I often frequent their stores and their parking lots are always full, I follow it anyway. In the last five years Tractor Supply stock has moved five fold, from around $16 to $85 per share. By any measure that's an excellent increase in the value of the company over a relatively short period of time. This company is also a perfect example of why any investor should keep his eyes open for those unique situations and those one of a kind companies that may be outside the investor's normal sphere of interest. 

I expect to initiate a small position in Tractor Supply in the near future and then build on that position over time, despite the company's low dividend yield. While the dividend track record is short, the dividend growth has been spectacular. The company tends to raise their dividend in the spring each year and this year once again they raised their dividend 25% to $0.20 per quarter. I have no reason to believe that this will end anytime soon and I'd like to own any stock that growing its dividend that fast. Because I'm a Dividend Growth Investor!

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0 Comments

Proppant Companies

5/4/2015

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When discussions turn to proppants, three companies are always part of the conversation. The first company discussed is usually Hi-Crush Partners because it's a pure play on monocrystalline sand proppants. Another company that enters the conversation is US Silica Holdings which offers whole grain commercial silica for use in hydraulic fracking but also offers products for the industrial and special chemicals industry. A third company often mentioned is Emerge Energy Services that offers various grades of industrial sands used in hydraulic fracking but also has fuel operations that operates two petroleum fuel terminals and two transmix processing facilities.

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So what exactly are proppants? They're different sized particles mixed with fracturing fluid to hold fractures open after a hydraulic fracturing treatment. They can be made of naturally occurring sand grains or man-made or specially engineered proppants, such as resin-coated sand or high-strength ceramic materials like sintered bauxite. Proppant materials are carefully sorted for size and sphericity to provide an efficient conduit for the production of fluid from a trapped petroleum reservoir to the well bore for extraction.

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Hydraulic fracturing is a petroleum extraction process in which fracturing fluid is pumped into a well bore at a rate sufficient to increase pressure at the target depth to exceed that of the fracture (pressure) gradient of the rock. The fracture gradient is defined as pressure increase per unit of depth relative to density, and is usually measured in pounds per square inch, per foot, or bars per metre. The rock cracks, and the fracture fluid permeates the rock extending the crack further. Fractures are localized as pressure drops off with the rate of frictional loss, which is relevant to the distance from the well. Operators typically try to maintain "fracture width", or slow its decline following treatment, by introducing a proppant into the injected fluid – a material such as grains of sand, ceramic, or other particulate, thus preventing the fractures from closing when injection is stopped and pressure removed. Consideration of proppant strength and prevention of proppant failure becomes more important at greater depths where pressure and stresses on fractures are higher. The propped fracture is permeable enough to allow the flow of gas, oil, salt water and hydraulic fracturing fluids to the well.

The use of hydraulic fracturing ultimately increases the rate at which fluids can be recovered from subterranean natural reservoirs that are typically porous sandstones, limestones or dolomite rocks, but also include
 "unconventional reservoirs" such as shale rock or coal beds. Hydraulic fracturing enables the extraction of natural gas and oil from rock formations deep below the earth's surface (5,000–20,000 ft) which is greatly below typical groundwater reservoir levels. At such depth, there may be insufficient permeability or reservoir pressure to allow natural gas and oil to flow easily from the rock to the well bore to make the process economically feasible. As a result, creating conductive fractures in the rock is instrumental in extraction from naturally impermeable shale reservoirs. Fractures are a conductive path connecting a larger volume of reservoir to the well. In some cases "Super Fracking," is a process that creates larger cracks deeper in the rock formation to release even more oil and gas with greater efficiency. 

According to the International Energy Agency, the remaining technically recoverable resources of shale gas are estimated to amount to 208 trillion cubic metros (208,000 km3), tight gas to 76 trillion cubic metres (76,000 km3), and coalbed methane to 47 trillion cubic metres (47,000 km3). As a rule, formations of these resources have lower permeability than conventional gas formations. Therefore depending on the geological characteristics of the formation, specific technologies (such as hydraulic fracturing) are required. Although there are also other methods to extract these resources, such as conventional drilling or horizontal drilling, hydraulic fracturing is one of the key methods making their extraction economically viable. The multi-stage fracturing technique has facilitated the development of shale gas and light tight oil production in the United States and is believed to do so in the other countries with unconventional hydrocarbon resources.

The yield for typical shale bores generally falls off after the first year or two, but the peak producing life of a well can be extended to several decades.


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Hi-Crush Partners LP produces and supplies monocrystalline sand in the United States. The monocrystalline sand is a mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. It owns, operates, and develops sand reserves and related excavation and processing facilities, which include a 751-acre facility with integrated rail infrastructure, located in Wyeville, Wisconsin; and the Augusta facility located in Eau Claire County, Wisconsin. The company offers raw frac sand used in hydraulic fracturing operations for oil and natural gas wells. It primarily serves pressure pumping service provides. Hi-Crush GP LLC operates as the general partner of the company. Hi-Crush Partners LP was founded in 2012 and is based in Houston, Texas. (Summary) (Company) (Daily Chart)

HI-Crush Partner's reserves consist primarily of Northern White sand predominately found in Wisconsin and limited portions of the upper Midwest region of the US. This particular sand is highly valued as a preferred prop pant due to its favorable physical characteristics. From this source Hi-Crush Partners produces a range of frac sand sizes used in all the major U.S. shale basins. It's also one of the few Northern White sand producers with onsite rail capacity. Substantially all of their frac sand production is sold to leading investment grade-rated pressure pumping service providers under long-term, take-or-pay contracts that require their customers to pay a specified price for a specified volume of sand each month.

In June 2013 HCLP acquired D&I Silica, LLC, the largest supplier of frac sand servicing the Marcellus and Utica shale regions. As part of that acquisition the company not only supplies frac sand, they also now provide a variety of trainload services for their customers including terminal storage and railcar storage and handling.

3 May 2015
Price $34.88
1yr Target $45.25
Analysts 12
1yr Cap Gain 29.73%
Dividend $2.70
Yield 7.74%
1yr Est Tot Return 37.47%

1yr DivGR 16.75%
2yr DivGR N/A
P/E 10.38
PEG 1.37

Market Cap $1.29 Bil
Beta UNK
EPS (ttm) $3.36
Payout Ratio 80.35%
EPS next yr $3.42
Forward P/E 10.20
Debt/Equity 1.14
ROA 32.60%
ROE 78.20%
ROI 35.60%
Sales $386.50 Mil
Income $123.10 Mil
Profit Margin 31.85%


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U.S. Silica Holdings, Inc. produces and sells commercial silica in the United States. It operates through two segments, Oil & Gas Proppants, and Industrial & Specialty Products. The company offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery, as well as sells its whole grain silica products in various size distributions, grain shapes, and chemical purity levels for manufacturing glass products. It also provides ground commercial silica products for use in plastics, rubber, polishes, cleansers, paints, glazes, textile fiberglass, and precision castings; and fine ground silica for use in premium paints, specialty coatings, sealants, silicone rubber, and epoxies. In addition, the company offers other industrial mineral products, such as aplite, a mineral used to produce container glass and insulation fiberglass; calcined kaolin clay, a mineral primarily used as a functional extender in paints, plastics, specialty coatings, and rubber; and adsorbent made from a mixture of silica and magnesium for preparative and analytical chromatography applications. It serves oil and gas recovery markets; and building products, fillers and extenders, foundry products, chemicals, recreation products, and filtration products industries, as well as container glass, fiberglass, specialty glass, and flat glass products industries. As of December 31, 2014, the company had approximately 363 million tons of proven and probable recoverable mineral reserves. The company, formerly known as GGC USS Holdings, Inc., is headquartered in Frederick, Maryland. (Summary) (Company) (Daily Chart)

The company is a leading producer of industrial minerals, including sand proppants, whole grain silica, ground silica, fine ground silica, calcined kaolin clay and aplite clay. In addition to offering over 250 products in these categories, U.S. Silica also operates as a research and development specialist for customized products and solutions utilizing the same raw materials. The wide variety of industries and applications served by U.S. Silica includes oil and gas, glass, chemicals, foundry, building products, fillers and extenders, recreation, industrial filtration and treatment, and testing and analysis. 

3 May 2015
Price $37.67
1yr Target $41.77
Analysts 13
1yr Cap Gain 10.88%
Dividend $0.50
Yield 1.32%
1yr Est Tot Return 12.20%

1yr DivGR 33.33%
2yr DivGR N/A
P/E 16.89
PEG 0.56

Market Cap $2.01 Bil
Beta UNK
EPS (ttm) $2.23
Payout Ratio 22.42%
EPS next yr $1.86
Forward P/E 20.30
Debt/Equity 1.25
ROA 13.60%
ROE 37.90%
ROI 15.30%
Sales $876.70 Mil
Income $121.30 Mil
Profit Margin 13.83%


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Emerge Energy Services LP acquires, owns, operates, and develops a portfolio of energy service assets in the United States. The company operates in two segments, Sand and Fuel. The Sand segment is involved in the production and sale of various grades of industrial sand primarily used in the extraction of oil and natural gas, as well as in the production of building products and foundry materials. The Fuel segment operates two terminals and two transmix processing facilities located in the Dallas-Fort Worth, Texas area and Birmingham, Alabama. This segment also engages in the sale of wholesale petroleum products; provision of third-party terminaling services; blending of renewable fuels; and provision of reclamation services, such as tank cleaning services, as well as other complementary products and services. Emerge Energy Services GP, LLC operates as a general partner of the company. Emerge Energy Services LP was founded in 2012 and is based in Southlake, Texas. (Summary) (Company) (Daily Chart)

Sand. Emerge Energy Services’ sand subsidiary produces silica sand that is a key input for the hydraulic fracturing of oil and gas wells. While the Company is able to produce sand suited for the stimulation of both oil and gas wells, the Company has developed a strong reputation in the industry for producing sand that meets the strict requirements for use in oil wells. Their sand facilities are located in New Auburn, WI, Barron County, WI and Kosse, TX, with headquarters in Fort Worth, TX.

Fuel Processing and Distribution. Emerge Energy Services’ Fuel Processing and Distribution subsidiary is focused on acquiring, re-refining and selling transmix (transportation mixture). Transmix is received by the business from a number of common carrier pipelines that include the Explorer, Plantation, and Colonial pipelines, as well as via truck and private pipeline from independent refinery and terminal operators. Additionally this subsidiary includes wholesale, terminal and biodiesel operations.



3 May 2015
Price $39.85
1yr Target $59.13
Analysts 8
1yr Cap Gain 48.38%
Dividend $5.64
Yield 14.15%
1yr Est Tot Return 62.53%

1yr DivGR 273.65%
2yr DivGR N/A
P/E 10.80
PEG 0.26

Market Cap $945.24 Mil
Beta N/A
EPS (ttm) $3.69
Payout Ratio 152.84%
EPS next yr $3.52
Forward P/E 11.31
Debt/Equity 1.51
ROA 22.50%
ROE 55.20%
ROI 25.00%
Sales $1.11 Bil
Income $89.10 Mil
Profit Margin 8.01%


My Perspective

Although hydraulic fracking has been around for about 65 years, it wasn't applied effectively to the oil and gas industry until around 1947, but at the time the technology of fracking was just too expensive to be practical. The current processes became economically viable in 2004 as the price of oil rose above the $60 per barrel threshold. Once that level was breached, an entire industry was created almost over night in North Dakota and South Texas. And that continued until the Saudi's realized they were losing market share and flooded the market with cheap  OPEC oil. The result was both the fall in the price of oil and the end to hydraulic fracturing. And that greatly affected the sale of proppants. This can easily be seen in the price charts of the three companies above.

Since proppants are tied to hydraulic fracking and that is tied to the price of oil, then proppants are tied to the price of oil. I believe the price of oil bottomed a month ago near $45 per share and is now on the way up. Granted it won't be a straight line upward, but as oil pushes above $60 per barrel hydraulic drilling suddenly makes since. And the demand for proppants explodes.


While this is not the simple buy and hope strategy that most investors find themselves in after the buy is made, and it's not a buy based on an historical growing dividend since the track record on these are just not there. This is an investment that needs a little more monitoring. But it's also one that could be explosive as the price of oil moves higher. 

It must be remembered that Hi-Crush is a pure play proppant company and is price will be the most dependent on the price of oil. US Silica Holdings and Emerge Energy Services have additional subsidiaries that will insulate its stock price on both the upside as well as the downside possibly making them a better investment as the price of oil falls and a worse investment as the price of oil rises. 

I plan to monitor the price of these three companies and use cash secured puts and covered calls, as well as my usual momentum indicators, to slowly swing into and out of these shares. I think trading these stocks could provide both good money and good entertainment.    

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Do I Sell in May and Go Away?

5/1/2015

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We’ll all be hearing this phrase a lot over this next month as well as throughout the entire summer if the market retreats during this period. It’s a well-known trading adage attributed to that famous author “Anonymous”. The entire quote is actually “Sell in May and go away, don’t come back 'til St. Leger day”. Unfortunately hardly anyone in the US knows when, or even what, St Leger day is. It’s the day that a very special horse race occurs in the United Kingdom and it's considered part of England's “Triple Crown” of races. The race is run on the second Saturday in September so it actually occurs on a different day each year.

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The Ladbrokes St. Leger, Doncaster Racecourse

The intent of the phrase is to warn all investors to sell all their securities in May and avoid the seasonal decline that often occurs during the long summer months. The idea is that by doing this an investor would be much better off than staying in equities throughout the entire year.

This strategy is based on the historical performance of securities during the May to September timeframe. According to the Stock Trader's Almanac, since 1950, the Dow Jones Industrial Average has had an average return of only 0.3% during the May-October period, compared with an average gain of 7.5% during the November-April period.

While no one knows exactly why this seasonal trading pattern occurs, it’s assumed that lower trading volumes that usually occur during the summer vacations is the reason for the discrepancy in performance during this period.

As for me, I’m not going anywhere.
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