Two companies high on my list for accumulation in the upcoming year are Corcept Therapeutics and Exelixis. Both companies have strong estimated earnings this year, next year and for the next five years into the future. In addition, they have strong quarter over quarter sales and earnings. Unfortunately on a Price per Earnings basis neither one of these is cheap but with the expected rate of earnings increases, their price suddenly seems reasonable. This can easily be seen by their PEG ratio.
I currently have small positions in both of these companies but I intend to increase those positions significantly over the next few months. I believe both companies will produce a significant return over the next year.
Corcept Therapeutics Incorporated, a pharmaceutical company, discovers, develops, and commercializes drugs for the treatment of severe metabolic, oncologic, and psychiatric disorders in the United States. It offers Korlym (mifepristone) tablets as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing syndrome, who have type 2 diabetes mellitus or glucose intolerance, and have failed surgery or are not candidates for surgery. The company is also developing Korlym in combination with eribulin, which is in Phase I/II clinical trial to treat patients with metastatic triple-negative breast cancer; Korlym in combination with drug Abraxane that is in Phase II clinical trial to treat patients with triple-negative breast cancer; and Korlym combined with the androgen deprivation agent enzalutamide, which is in Phase II clinical trial to treat patients with metastatic castration-resistant prostate cancer. In addition, it develops CORT125134 for the treatment of patients with Cushing's syndrome and solid-tumor cancers; and CLIA-validated assay to measure expression of the gene FKBP5, which is stimulated by cortisol activity at glucocorticoid receptor. Corcept Therapeutics Incorporated was founded in 1998 and is headquartered in Menlo Park, California.
Exelixis, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of new medicines with the potential to enhance care and outcomes for people with cancer. The company's products include CABOMETYX for the treatment of patients with advanced renal cell carcinoma, who have received prior anti-angiogenic therapy; and COMETRIQ for the treatment of patients with progressive, metastatic medullary thyroid carcinoma. Its CABOMETYX and COMETRIQ are derived from cabozantinib, an inhibitor of multiple tyrosine kinases, including MET, AXL, and VEGF receptors, which has shown clinical anti-tumor activity in approximately 20 forms of cancer and is the subject of a broad clinical development program. It also offers COTELLIC (cobimetinib), a selective inhibitor of MEK, in combination with vemurafenib for the treatment of patients with BRAF V600E or V600K mutation-positive advanced melanoma in the United States; and in combination with vemurafenib in other territories, including the European Union, Switzerland, Canada, Australia, and Brazil. Exelixis, Inc. has collaboration and license agreements with Ipsen Pharma SAS, Genentech, Inc., GlaxoSmithKline, Bristol-Myers Squibb Company, Sanofi, Merck, and Daiichi Sankyo Company Limited for the development and commercialization of various compounds and programs. The company was formerly known as Exelixis Pharmaceuticals, Inc. and changed its name to Exelixis, Inc. in February 2000. Exelixis, Inc. was founded in 1994 and is headquartered in South San Francisco, California.
Summit Materials is one of the fastest growing construction materials companies in the United States, with a 76% increase in revenue between the year ended Dec 2012 and the year ended Dec 2016, as compared to an average increase of approximately 39% in revenue reported by competitors. Materials include aggregates and cement. Within their markets they offer customers a single-source provider for construction materials and related downstream products through vertical integration. In addition to supplying aggregates to customers they use internally owned materials to produce ready-mix concrete and asphalt paving mix, which is sold externally or used in paving and related service businesses. This vertical integration creates opportunities to increase aggregates volumes, optimize margin at each stage of production and provide customers with efficiency gains, convenience and reliability, which gives the Company a competitive advantage over its competitors.
Summit Materials, Inc., together with its subsidiaries, produces and sells construction materials and related downstream products. Its products include aggregates, cement, ready-mixed concrete, asphalt paving mixes, and concrete products. The company also provides paving and related services to private and public infrastructure sectors. In addition, it operates municipal waste, construction, and demolition debris landfills; and liquid asphalt terminal. The company was founded in 2009 and is headquartered in Denver, Colorado. (Summary) (Company) (Chart)
10 December 2017 Price $32.43 1yr Target $35.34 Analysts 12 Dividend $0.00 Payout Ratio 0.00%
1yr Cap Gain 8.97% Yield 0.00% 1yr Tot Return 8.97%
P/E 47.34 PEG 1.59 Beta ---
EPS (ttm) $0.69 EPS next yr $1.51 Forward P/E 21.43 EPS next 5yr 29.84% 1yr Price Support $45.05
Market Cap $3.48 Bil Revenues $1.87 Bil Earnings $76.30 Mil Profit Margin 4.06%
Quick Ratio 1.90 Current Ratio 2.60 Debt/Equity 1.53
1yr RevGR 13.54% 3yr RevGR --- 5yr RevGR ---
1yr EarnGR 2.58% 3yr EarnGR --- 5yr EarnGR ---
1yr DivGR --- 3yr DivGR --- 5yr DivGR ---
ROA 2.30% ROE 7.30%
Operations and History Since the Company's first acquisition more than seven years ago, Summit Materials has rapidly become a major participant in the U.S. construction materials industry. By volume they are a top 10 aggregates supplier, a top 15 cement producer and a major producer of ready-mix concrete and asphalt paving mix. Revenue in 2016 was $1.6 billion with net income was $46.1 million. The Company's proven and probable aggregates reserves were 2.7 billion tons as of December 31, 2016. In the year ended December 31, 2016 they sold 36.1 million tons of aggregates, 2.4 million tons of cement, 3.8 million cubic yards of ready-mix concrete and 4.4 million tons of asphalt paving mix across our more than 300 sites and plants.
The Company's rapid growth over the last seven years has been due mostly to acquisitions which were funded through equity issuances, debt financings and cash from operations. Over the past decade the Company has witnessed a cyclical decline followed by a slow recovery in the private construction market and nominal growth in public infrastructure spending. However, the U.S. private construction market has grown in recent years. The Company believes they are well positioned to capitalize on any recovery, grow the business and reduce leverage. As of Dec 2016 total indebtedness was approximately $1.5 billion.
The Company anticipates continued growth in their primary end markets, public infrastructure and the private construction market. Public infrastructure, which includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure projects, has been a relatively stable portion of government budgets providing consistent demand to the industry and is projected by the Portland Cement Association to grow approximately 10% from 2017 to 2021. With the nation’s infrastructure aging, there is increasing momentum to grow federal infrastructure spending among certain legislators and the U.S. President. The Trump administration’s infrastructure stimulus plan is estimated to be close to $1 trillion. The public infrastructure market represented 37% of our revenue in 2016.
The private construction market includes residential and nonresidential new construction and the repair and remodel market. According to the Portland Cement Association, the number of total housing starts in the United States, a leading indicator for our residential business, is expected to grow 29% from 2017 to 2021. In addition, the PCA projects that spending in private nonresidential construction will grow 13% over the same period. The private construction market represented 63% of our revenue in 2016.
In addition to the anticipated growth in our end markets, I expect higher pricing in the core product categories. The PCA estimates that cement consumption will increase approximately 19% from 2017 to 2021, reflecting rising demand in the major end markets. I believe that the increased demand will drive higher cement pricing as production capacity in the United States tightens. The PCA projects consumption will exceed domestic cement capacity by 2019.
Summit Materials operates in 21 U.S. states and in British Columbia, Canada and has assets in 20 U.S. states and in British Columbia, Canada through their platforms that make up the operating segments: West, East, and Cement. The platform businesses in the West and East segments have their own management teams that report to a segment president. The segment presidents, including the cement division president, are responsible for overseeing the operating platforms, developing growth opportunities, implementing best practices and integrating acquired businesses. Acquisitions are an important element of the Company's strategy to enhance value through increased scale and cost savings within local markets.
West Segment: The West segment includes operations in Texas, the Mountain states of Utah, Colorado, Idaho, Wyoming and Nevada and in British Columbia, Canada. Summit Materials supplies aggregates, ready-mix concrete, asphalt paving mix and paving and related services in the West segment. As of December 31, 2016, the West segment controlled approximately 0.8 billion tons of proven and probable aggregates reserves and $459.8 million of net property, plant and equipment and inventories (“hard assets”). During the year ended December 31, 2016, approximately 50% of our revenue and 41% of adjusted EBITDA were generated in the West segment.
East Segment: The East segment serves markets extending across the Midwestern and Eastern United States, most notably in Kansas, Missouri, Virginia, Kentucky, North Carolina, South Carolina and Nebraska where the Company supplies aggregates, ready-mix concrete, asphalt paving mix and paving and related services. As of December 31, 2016, the East segment controlled approximately 1.4 billion tons of proven and probable aggregates reserves and $522.5 million of hard assets. During the year ended December 31, 2016, approximately 33% of revenue and 31% of adjusted EBITDA were generated in the East segment.
Cement Segment: The Cement segment consists of the Hannibal, Missouri and Davenport, Iowa cement plants and 10 distribution terminals along the Mississippi River from Minnesota to Louisiana. These highly efficient plants are complemented by an integrated distribution system that spans the Mississippi River. The Company processes solid and liquid waste into fuel from the plants which reduces the plants’ fuel costs by 50%. The Hannibal, Missouri plant is one of only 12 facilities in the United States that can process both hazardous and non-hazardous solid and liquid waste into fuel. As of December 31, 2016, the Cement segment controlled approximately 0.5 billion tons of proven and probable aggregates reserves, which serve its cement business, and $614.7 million of hard assets. During the year ended December 31, 2016, approximately 17% of revenue and approximately 28% of adjusted EBITDA were generated in the Cement segment.
I.D. Systems produces wireless asset management systems for companies with industrial trucks, rental vehicles, and transportation assets. The Company uses wireless communication technologies - RFID, Wi-Fi, UHF, satellite, and cellular—as well as sensor technology and proprietary software to manage high-value corporate assets, such as forklifts, airport ground support equipment, rental vehicles, dry van trailers, chassis, refrigerated trailers, flatbeds, railcars, and intermodal containers.
The Company's sells hardware, software, maintenance, support, and consulting services. The Company's solutions are divided into three categories: industrial vehicle management, transportation asset management, and rental fleet management.
I.D. Systems, Inc. develops, markets, and sells wireless machine-to-machine solutions in the United States and internationally. The company offers integrated wireless solutions that utilize radio frequency identification, Wi-Fi, satellite or cellular communications, sensor technologies, and software to control, track, monitor, and analyze industrial vehicles, rental vehicles, and transportation assets. It provides industrial and rental fleet asset management products, including on-asset hardware with mounting and user-interface options that provide an autonomous means of asset control and monitoring; wireless asset managers that link the mobile assets being monitored with the customer's computer network or to a remotely hosted server; server software, which manages data communications between the system's database and wireless asset managers or on-asset hardware; and client software. The company also offers transportation asset management products comprising on-asset hardware configurations to address various remote asset types; VeriWise Intelligence Portal, a hosted Website that provides Internet access to client asset information; and a direct data feed through XML or Web services. In addition, it provides hosting, maintenance, and customer support and consulting services, as well as software as a service. The company markets and sells its solutions directly to commercial and government sectors in automotive manufacturing, retail, shipping, freight transportation, heavy industry, wholesale distribution, aerospace and defense, homeland security, and vehicle rental markets, as well as through original equipment manufacturers and industrial equipment dealers. I.D. Systems, Inc. was founded in 1993 and is headquartered in Woodcliff Lake, New Jersey. (Summary) (Company) (Chart)
1 January 2017 Price $6.94 1yr Target $8.20 Analysts 3 Dividend $0.00 Payout Ratio 0.00%
1yr Cap Gain 18.15% Yield 0.00% 1yr Tot Return 18.15%
P/E --- PEG --- Beta 0.05
EPS (ttm) $-0.38 EPS next yr $0.37 Forward P/E 18.76 EPS next 5yr 30.00% 1yr Price Support $11.10
Market Cap $119.23 Mil Revenues $39.00 Mil Earnings $-5.10 Mil Profit Margin ---
Quick Ratio 1.30 Current Ratio 1.50 Debt/Equity 0.00
Vehicle Management Systems.ID Systems' industrial vehicle management systems are used by manufacturers, distributors, retailers, government entities, and other organizations with powered industrial trucks (forklifts, tow tractors, pallet jacks, etc.) to monitor and evaluate fleet operations, track vehicle movement, and manage vehicle operators. The system consists of four elements: a wireless computer installed on the vehicle, wireless communication nodes placed within the facility, system software hosted either on site or in a remote data center, and user software configured in either a client-server or thin-client architecture. Data may be transmitted by any combination of Wi-Fi, cellular or UHF wireless technologies.
The company offers three systems for industrial vehicle management. didBox is a non-wireless system for driver identification. PowerBox™ and PowerFleet® are wireless systems with functions ranging from operator access control, electronic safety checklists, and impact management to location tracking, battery management, maintenance scheduling, and task dispatching.
The company's customers in the industrial vehicle management market include Ford Motor Company,Nestlé North America,Procter & Gamble,Toyota, and Walmart (which accounted for 15% of the company's 2012 revenues).
I.D. Systems provides a variation of its industrial vehicle management system designed specifically for ground support equipment (pushback tractors, baggage tugs, cargo loaders, catering vans, fuel trucks, etc.) and other vehicles that operate in and around airports.
This system, branded AvRamp®, was developed with funding from the U.S. Transportation Security Administration (TSA) and tested by the TSA at Newark Liberty International Airport and the JAXPORT seaport in Jacksonville, Florida. The company's customers in the airport vehicle management market include Envoy Air and American Airlines.
Transportation Asset Management. I.D. Systems' Asset Intelligence subsidiary provides asset management solutions for the freight transportation industry under the VeriWise brand. The VeriWise product line includes a range of telematics solutions for tracking the location and monitoring the condition and status of dry van trailers, refrigerated trailers, flatbeds, chassis, containers, and railcars.
For managing fleets of dry van trailers and containers, the company offers a product called VeriWise Track and Trace for location tracking, a cargo sensor to monitor load status, and a motion sensor to detect trailer movement. The company also offers a temperature sensor to monitor the condition of reefers and an impact sensor to track collisions of railcars.
To manage these transportation assets, VeriWise™ products leverage satellite and cellular communications and web-based data processing technologies. Users access the information about their assets through a remotely hosted website called VeriWise™ Internet Portal (VIP), which generates reports and displays tabular data and a Google map interface. The company's customers in the transportation asset management market include FAB Express, Forward Air, Freymiller,National Retail Systems, and Royal Freight.
Rental Vehicle Management.In 2011, I.D. Systems and Avis Budget Group signed an exclusive agreement to deploy I.D. Systems' wireless vehicle management technology on more than 25,000 Avis Budget vehicles, enabling Avis customers to self-manage their rentals by computer or smartphone. The technology can also automate and expedite the rental and return process, track vehicle mileage, measure fuel consumption, and remotely control a vehicle's door locks.
My Approach to this I.D. Systems
This is a rather small company and one I wouldn't normally invest in. Looking at the company's fundamentals and its stock chart, IDSY suddenly becomes a little more interesting. I realize that sales haven't been trending higher these last few years, but suddenly this year they are. And the stock chart is reflecting that. So there's something going on inside this company that is going to make this a nice investment.
Earnings are also turning positive next year telling me that the company can support a higher valuation than it currently has. In fact, based on its estimated 5 year earning growth these shares could easily move up into double digits next year resulting in a greater than 50% increase in market capitalization. Those are great numbers and the kind that fuel portfolios higher.
I expect to accumulate a small position in this very small company but I'll have to monitor it rather closely. In fact I always monitor my smaller companies closer than normal. They just need extra attention.
Penumbra is a global healthcare company focused on interventional therapies. The Company designs, develops, manufactures and markets innovative devices and has a broad portfolio of products that address challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. The conditions that the Company's products address include ischemic stroke, hemorrhagic stroke and various peripheral vascular conditions that can be treated through thrombectomy and embolization procedures.
The Company develops, manufactures and markets products for use by physician specialists, including interventional neuroradiologists, neurosurgeons, interventional neurologists, interventional radiologists and vascular surgeons. They design their products to provide these physicians with the means to drive improved clinical outcomes.
Since the Company's founding in 2004, Penumbra has had a strong track record of organic product development and commercial expansion that has established the foundation for a global organization. Their accomplishments include:
launching their first product, for neurovascular access, in the United States in 2007
establishing a direct neuro salesforce in the United States and Europe in 2008
launching the first U.S. Food and Drug Administration (FDA)-cleared, aspiration catheter for the treatment of ischemic stroke patients in 2008, and launching five subsequent generations of that product
launching their first neurovascular coil for the treatment of brain aneurysms in 2011
launching their first peripheral vascular product in 2013
establishing their direct peripheral vascular salesforce in the United States and Europe in 2014
launching their first peripheral thrombectomy products for the treatment of venous disease in 2015.
The Company attributes theyr success to their culture of cooperation, highly efficient product innovation process, disciplined approach to product development, a deep understanding of target end markets and a relationships with physicians.
Penumbra sells their products to hospitals primarily through a direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. The Company generated revenue of $263.3 million, $186.1 million and $125.5 million for the years ended December 31, 2016, 2015 and 2014. This represents annual increases of 41.5% and 48.3%. The Company generated an operating loss of $1.4 million for the year ended December 31, 2016 and operating income of $4.2 million and $3.0 million for the years ended December 31, 2015 and 2014.
Penumbra, Inc. designs, develops, manufactures, and markets medical devices in the United States, Europe, Canada, Australia, Japan, and internationally. The company offers neurovascular access systems designed to provide intracranial access for use in a range of neurovascular therapies under the Neuron, Neuron MAX, Select, BENCHMARK, DDC, PX SLIM, and Velocity brands; aspiration based thrombectomy systems and accessory devices under the Penumbra System brand; and revascularization device for mechanical thrombectomy under the 3D brand. It also provides neurovascular embolization coiling systems to treat patients with various sizes of aneurysms and other neurovascular lesions under the Penumbra Coil 400 and Penumbra SMART Coil brands; and neurovascular stents for stent-assisted coiling in large and wide-neck aneurysms under the LIBERTY Stent brand. In addition, the company offers neurosurgical aspiration tools for the removal of tissue and fluids under the Apollo System brand; and detachable embolic coil systems for peripheral embolization under the RUBY Coil brand, as well as microcatheter for the delivery of detachable coils and occlusion devices under the Lantern brand. Further, it provides detachable, microcatheter-deliverable occlusion devices designed primarily to occlude peripheral vessels under the POD (penumbra occlusion device) brand; and aspiration-based thrombectomy systems for peripheral applications under the Indigo System brand, as well as POD Packing Coil, a device for use with RUBY Coil and POD for vessel occlusion. The company sells its products through direct sales organizations and distributors to hospitals in neuro and peripheral vascular markets. Penumbra, Inc. was founded in 2004 and is headquartered in Alameda, California. (Summary) (Company) (Chart)
28 November 2017 Price $105.60 1yr Target $116.40 Analysts 5 Dividend $0.00 Payout Ratio 0.00%
1yr Cap Gain 10.22% Yield 0.00% 1yr Tot Return 10.22%
P/E 507.60 PEG 7.58 Beta ---
EPS (ttm) $0.21 EPS next yr $0.05 Forward P/E 1955.56 EPS next 5yr 67.00% 1yr Price Support $3.35
Market Cap $3.59 Bil Revenues $310.80 Mil Earnings $10.50 Mil Profit Margin 3.37%
Quick Ratio 5.50 Current Ratio 7.30 Debt/Equity 0.00
1yr RevGR --- 3yr RevGR --- 5yr RevGR ---
1yr EarnGR --- 3yr EarnGR --- 5yr EarnGR ---
1yr DivGR --- 3yr DivGR --- 5yr DivGR ---
ROA 2.60% ROE 3.00%
Penumbra concentrates on improving treatment outcomes for patients with certain forms of vascular disease. Vascular disease refers to any condition that affects the circulatory system and typically manifests as a blockage or rupture of an artery or a vein. When the treatment for vascular disease is performed from within a vessel, it is referred to as an endovascular procedure. Endovascular device markets are conventionally classified according to the anatomic location of the disorder, and are generally divided into neurovascular, peripheral vascular and cardiovascular. The Company currently operates in the neuro and peripheral vascular markets. In both of these markets, the main product technologies include thrombectomy devices to remove clots and embolization devices to treat aneurysms and to occlude vessels.
Sales and Marketing
Penumbra sells products directly in the United States, most of Europe, Canada and Australia. They have complemented their direct sales organization with distributors in Japan and most other international markets. The Company has regulatory clearance/approval to sell certain neurovascular access, ischemic stroke, neurovascular embolization, peripheral embolization and peripheral thrombectomy products in two of three major markets, the United States and Europe, with the exception of Penumbra’s 3D device which has been approved in Europe but not cleared in the United States. In the third major market, Japan, the Company has regulatory approval to sell ischemic stroke, neurovascular embolization and peripheral embolization products. Specifically, Penumbra Coil 400 products are used for peripheral embolization in Japan, and have received regulatory approval for that use in that market.
The Company currently sells products to hospitals in the United States through a dedicated salesforce in their two major markets, neuro and peripheral vascular. Sales representatives and sales managers generally have substantial medical device experience and market their products directly to a variety of physicians engaged in the treatment of neurovascular and peripheral vascular disorders, who are the end users of the products. They also significantly influence hospital buying decisions relating to medical devices. Penumbra is focused on developing strong relationships with physicians and devote significant resources to training and educating physicians in the use and benefits of their products. The principal physicians in the two target end markets include:
Neuro: Interventional neuroradiologists, neurosurgeons and interventional neurologists.
Peripheral vascular: Interventional radiologists and vascular surgeons.
My Path Forward
This is an interesting company that obviously fills a desperate need within the medical community. But they also have competition, which is what would be expected. It's also extremely overvalued at this level but it's because investors are looking at that extremely high growth rate going forward. It's also something that caught my eye. I also became intrigued when I noticed virtually no debt and plenty of liability coverage to keep this company growing for and extended period.
My expectation is to put a buy in for these shares somewhere near the 20 and 40 week moving average. Looking at the price chart it appears that the stock often bounced off these moving averages and since there's no hurry to buy, I believe this would be a great place to start. Hopefully over time share price growth will correspond to the estimated earnings growth rate. At 67%, that would be a very nice growth rate.
Q2Earth, Inc. focuses on the manufacture and sale of compost and engineered soils from recycled waste for the agriculture, horticulture, construction, and infrastructure sectors. The company was formerly known as Q2Power Technologies, Inc. and changed its name to Q2Earth, Inc. in August 2017. Q2Earth is based in Palm Beach, Florida.
Q2Earth seeks to become a leading manufacturer of compost and engineered soils through a plan of acquisitions, strategic alliances, smart development and organic growth. All of this is focused on creating and marketing quality beneficial reuse end products. The Company seeks to build the preeminent compost and soil company in North America.
Q2Earth (aka Q2Power Technologies) was previously in the business of developing waste fuel-to-power systems based on a unique engine technology. The Company has recently completed the first phase of financing that will expedite their business plan and operational transition, and simultaneously, have wound-down their previous R&D operations.
Organizational History and Merger with Q2P
The Company, formerly known as The Anpath Group, Inc. was organized pursuant of the laws of the State of Delaware on August 26, 2004, under the name “Telecomm Sales Network, Inc.”. On January 10, 2006, the Company completed the acquisition of EnviroSystems Inc. (ESI) which became a wholly-owned operating subsidiary of the Company. The Company conducted all its business through ESI, and on January 12, 2007, changed its name to Anpath.
On November 12, 2015, the Company's newly formed and wholly-owned subsidiary, AnPath Acquisition Sub and Q2P consummated an Agreement and Plan of Merger. As a result Q2P became the surviving company and a wholly-owned subsidiary of AnPath.
As a result of the Merger, all outstanding shares of Q2P were exchanged for 24,034,475 shares of the Company’s common stock, representing approximately 93% of the total issued and outstanding common stock of the Company, excluding stock options, warrants and convertible notes outstanding at such time. In addition, the Company assumed both the Q2P 2014 Founders Stock Option Plan and the 2014 Employees Stock Option Plan and 1,095,480 options outstanding thereunder. Also pursuant to the Merger, the officers and directors of Q2P took over the management and Board of Directors of the Company.
In connection with the Merger, the Company sold the former operating entity of Anpath, ESI, to three former officers and shareholders of Anpath in exchange for the return of 470,560 shares of common stock of the Company and ESI retaining all of the old liabilities of ESI including a litigation judgment.
In December 2015, the Company officially changed its name to Q2Power Technologies, Inc. to reflect the new business direction of the Company after the Merger. In February 2016, the Company changed its fiscal year end from March 31 to December 31 and up-listed its common stock to the OTCQB.
Q2P’s Waste-to-Power Business
Q2P was originally formed as a Florida limited liability company by Cyclone Power Technologies, Inc. to pursue development and commercialization of its patented waste heat recovery engine. In July 2014, Q2P commenced operations as an independent company after receiving its initial round of funding and signing a formal Separation Agreement with Cyclone. From then until recently, the business of Q2P was the development of waste heat and waste fuel-to-power systems based on core technology licensed from Cyclone on a worldwide exclusive basis for 20 years, with two 10-year renewal terms.
Q2P’s prime target market for its waste-to-power technology was small-scale Waste Water Treatment Plants, whereby the Q2P Technology could capture methane produced from the WWTPs and convert it into power and usable heat. The Q2P Technology was comprised of a unique external heat engine as well as waste fuel burners, controls and other subcomponents. The Company developed the CHP System from proof-of-concept to a working “pilot stage” product between 2014 and 2015.
The pilot program operated in central Ohio for approximately six months, during which time the Company collected significant information about the technology itself, and the operations and cost structures of WWTPs generally. A large portion of a WWTP’s operating expenditures are spent removing the residual sludge from digesters, that vast portion of which is either combusted, landfilled or applied directly to the land. Technologies and processes that can convert biosolids to other useful products, such as compost and engineered soils could provide additional value to agricultural and construction sector customers and new revenue streams for this waste value chain. In mid-2016, along with the addition of two new Board of Director members with vast experience in the waste water, biosolids and waste recycling sectors, the Company started pursuing synergistic alliances with companies that have both technology and business networks for the manufacturing and sale of such beneficial re-use products. This led us to the composting industry.
New Business Model: Compost and Engineered Soils
According to the U.S Composting Council, one-third of the world’s arable land has been lost to soil erosion. In the United States, 99 million acres (28% of all cropland) are eroding above soil tolerance rates, meaning the long-term productivity of the soil cannot be maintained and new soil is not adequately replacing the lost soil. This erosion reduces the ability of the soil to support plant growth and store water, making food production more difficult, reducing the earth’s ability to filter out carbon and produce oxygen, and adding significant pressure on water resources.
Management believes that soil health may be one of the most important issues facing our planet, affecting the food we eat, water we drink, and air we breathe. Composting is a critical process for recycling organic wastes for beneficial uses to replenish top soil, conserve water and reduce pollution. Composting further protects our climate by sequestering carbon in the soil, and reducing methane production from landfills by reducing the volume of organic wastes disposed in this manner.
The composting industry is highly fragmented, comprised of over 5,000 facilities throughout the United States, most of which are small in size and supplying varying product qualities. An estimated $5.6 billion in compost is sold annually in the United States, according to the U.S. Compost Council, but less than 10% of farms nationwide currently utilize compost to supplement top soil and reduce chemical and water requirements. New applications for compost such as engineered soils used in general construction, infrastructure projects, land reclamation, sod and turf farms and other green landscape projects are creating an additional business opportunities globally.
One of the most compelling business aspects of the compost industry is the trend among certain facilities to view their business less as simply a waste management solution and more as a manufacturing process to produce higher end compost and soil products that can be sold at higher margins and have beneficial uses for our planet.
The Company believes that the composting industry in the United States is prime for consolidation, operational and technological efficiency improvements, and comprehensive sales and marketing strategies to increase demand and usage. They intend to build the Company over the next years by acquiring strategic compost facilities and established distribution channels and brands, and developing procedures and programs to foster organic growth.
Acquisition and Funding Strategy
The Company seeks to acquire companies and assets in the compost and soils sector. These targets include both operating compost facilities and independent sales companies with established distribution and product brands. Through a mixture of these acquisitions located in key regions, management believes we can grow rapidly but prudently utilizing a relatively “capital light” strategy.
The Company is currently in discussions with multiple potential acquisition targets, which it may acquire solely or in connection with strategic partners. Initial acquisitions include leaders in the industry with well-run facilities focused on end product (i.e., compost and soil) production and sales, and established brands. Future acquisition targets may include undervalued facilities in key locations that, through better management and more focus on end product production, management believes can become profitable in a short period of time.
Business Plan and Value Appreciation Strategy
The Company believes that by creating a nationwide footprint of composting facilities that can manufacture consistent, quality product, combined with strong sales and marketing strategies, they can create substantial added value from acquired assets. When combined with a solid acquisition plan backed by the proper financial partners and executed by an experienced team, management believes there is great potential for building a dominant company in this sector over the next two to three years, with further significant growth opportunities in the following years.
Product Focus.The Company plans to achieve organic growth by maximizing sales of high end compost and soils through a network of distribution channels. Part of this strategy would include transitioning facilities that are more reliant on tipping fees to better manufacturing processes that can achieve higher quality products. For those facilities that already have these procedures in place, the Company plans to introduce new branded and blended soils products into their regional markets that command higher prices and margins.
Sales Channels/Distribution.Current sales of compost and soils predominately involve selling to one farm at a time/one project at a time. The trend in farmland is moving towards PE and REIT owned assets, which creates the ability to negotiate long-term compost sales with corporate customers, and acquire composters strategically located where these large customers control land. The Company will seek to develop nationwide marketing and sales channels with large corporate customers, government agencies, etc. Marketing is a major component of compost sales that seems to be lacking in the industry, and can result in significant strides in organic growth in management’s opinion.
The engineered soils market is generally in its early growth stages. Management believes there are substantial opportunities to promote these products for construction, federal/municipal infrastructure programs, and land reclamation/mining projects. As infrastructure projects increase nationwide so will the soils market. The Company plans to invest in sales and marketing to attract nationwide landscape engineering firms, state and municipal planning agencies and other customers that can benefit from and place large orders for engineered soils. To the extent that they can divert more compost to construction and infrastructure projects, they can better grow revenue and margins organically, while always being cognizant of cyclical changes in this market.
Efficiencies.Management expects that consolidating composting companies can lead to better operational and sales efficiencies. Activities such as safety, accounting, legal, advertising, lobbying, training and others can be done at the corporate level, thus reducing overlapping personnel and efforts. To create greater efficiencies, the Company’s employee base is expected to include operational experts with successful track records of consolidating operations and cultures in a merger strategy.
Size and Composition.According to research conducted by the U.S. Composting Counsel, there are approximately 5,000 commercial composters in the United States diverting an estimated 19.4 million tons of organics from landfills. These organic waste streams primarily consist of yard trimmings, food scraps, biosolids (from waste water treatment plants) and some agricultural waste streams, including manure.
Of the approximately 5,000 composting sites in the U.S., most are small producers generating under $1 million per year in revenue. Less than 400 composters in the U.S., by the Company’s count based on industry data, generate more than $5 million in revenue per year, and even few over $10 million.
Compost manufacturers can also be segmented by the types of waste they collect for processing. The three main feedstocks are biosolids from waste water treatment plants, yard (or “green”) waste from commercial or municipal waste collection firms, and pre or post-consumer food waste. The largest number of composters utilize green waste, however, the largest volume of compost in the U.S. comes from biosolids.
The largest segments for the application of compost and engineered soils include the following:
Applications/Sectors for Compost Sales. The applications for agricultural compost and engineered soils are wide and growing. Engineered soils (sometimes called manufactured soils) are blends of soil, soil components and soil-like material used in horticulture, landscape, construction and site restoration applications. Using engineered soils allows for “tailoring” of soil properties to specific needs. Soil blending is performed at a production scale across the United States, generating millions of cubic yards of product annually. Compost is a primary component of engineered soils, typically comprising 1/3 of its volume.
Agriculture. Making farmland more productive and sustainable is the largest application of compost. Compost improves infiltration rates, water holding capacity and soil tilth; and fertilizes the soil to supplement nitrogen, phosphorus and potassium. Use of compost can save farmers money by decreasing water, chemical fertilizer and pesticide uses by up to 80%. Despite the utilization of compost on farmland being an age-old practice, the market for this in the U.S. is still largely untapped, estimated at only a 10% utilization rate relative to all farmable land, according to the U.S. Composting Council.
Construction. For both traditional construction and LEED certified projects, use of engineered soils for control of erosion, water retention, sedimentation and pollution can result in cost savings and easier compliance with permitting. Further, Low Impact Development (LID) approaches – maintaining and enhancing pre-development watershed regimes – have become critically important, especially in urban settings. Engineered soils play a major role in green roofs, bio- retention cells, rain gardens, infiltration trenches and open grid pavement systems. The goals of these systems are to reduce the flow rate, volume and contaminant level of storm water runoff (compost can retain 20X its weight in water).
Silviculture and Land Reclamation (Mining). Engineered soils are being used to repopulate forests (silviculture) and other land where heavy use, industry or other activities such as mining have decimated the vegetation. This is an important area to help control water conservation and climate change.
Sod and Turf. Engineered soils are being used to improve sod and turf quality, produce a lighter material, and enhance growth efficiency. They are being used for college and high school athletic fields (especially to replace synthetic turf fields), and for golf course construction and maintenance.
The composting industry is highly fragmented with no clear leader on a national basis. As composting is very much a localized business constrained by the costs of transporting soils over long distances, each region or community that we may enter in the future will have a dominant market player. The Company views these local leaders as potential acquisition targets or partners; however, there is no assurance that the Company will be able to acquire or build a dominant business in each location it chooses to enter.
Large waste companies such as Waste Management and Republic Industries own compost facilities in their respective portfolios. WM in particular owns over 40 compost facilities, typically connected to a landfill property. Management believes that these compost sites are under-utilized and not geared to creating the highest value end-products for sale into multiple markets. As a result, the Company believes there is an opportunity to work with large companies like WM to help them expand their sales and marketing operations.
My Path Forward
This really is an evolving, early stage company that's recently changed from a company that sells a waste to power conversion plant to a compost and engineered soils company. It also plans to expand through acquisition and consolidation. To that extent, the management team they're putting together appears to have the knowledge and experience to pull this all together.
This is also a penny stock and it's probably not for everyone. The risk of bankruptcy on these early stage companies is high so a risk strategy must always be a part of investing in these. That said, I believe it's worth the risk to me to take a piece of this company and add it to my portfolio. I expect that acquisitions mean dilution over time so I need to be aware of the effect that will have on the shares.
I believe there's almost unlimited potential for this company to grow in this fragmented industry. It may just be ripe for consolidation and this management team may just be the right mix of individuals to make this happen. I think this could be a fun ride.
Celgene doesn't need any introduction to investors dabbling in BioTech stocks. It's an established large cap pharmaceutical company with a nice track record of profitability. Management is top notch and has a proven track record of bringing new drugs to market. Companies like Celgene are mature companies with a long list of drugs bringing in multiple streams of revenue into the company. Revlimid brings in billions of dollars of revenue per year while Pomalyst, Imnovid, Otezla, and Abraxane are also on track to clear the billion dollar threshold in 2017.
Celgene also has a series of drugs it's investigating for treating several diseases from multiple sclerosis to blood cancer. Celgene also is involved with other companies developing early stage drugs. History tells us that not all of these investments will work pan out but the opportunities are usually structured in a way that the funding comes through milestone payments allowing Celgene to only pay if the drug succeeds. None of this guarantees that Celgene is entirely without risk. Celgene's stock has lost a third of its value in the past month due to a single pipeline setback combined with weak quarterly earnings. But I believe that a long term investor like myself sees this as a buying opportunity. Celgene is a successful company with strong cash flow, a solid balance sheet, and plenty of upside in the years to come.
When I’m looking at stock charts with several indicators displayed, one of the indicators I like to see multiple (3) moving averages (MA). Generally my favorite moving averages are the 5, 10 and 20 period moving averages. On a daily chart that would be 5 days, 10 days and 20 days. On a weekly chart that would be 25 days (5 weeks), 50 days (10 weeks), and 100 days (20 weeks). I prefer this orderliness of having the 10 period twice as long as the 5 period, and the 20 period twice as long as the 10 period. It seems balanced and proportional to me and I like how the relationships between these moving averages develop over time. Fortunately the Bollinger Bands includes the 20 period moving average, so by using Bollinger Bands I get both the 20 period moving average as well as the bands themselves.
“If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it's coming in, it'll never happen. The market is always right.” --- Sunny J Harris, Author and Professional Trader.
In a strong up market I’d ideally like to see the stock price above the 5 period MA which would be above the 10 period MA which would be above the 20 period MA. In a strong down market I would like to see just the opposite type of movement. Unfortunately this rarely happens this neatly and the price and the MAs are often in some phase of total disarray. The key is to figure out whether this is simply the volatility of the marketplace, the less than desirable strength/weakness of the underlying equity, or the fact that the equity may be moving from a period of trending into an area of consolidation. This is often not an easy thing to determine.
Being a chart reader rather than a price predictor, I tend to let trends (whether up, down, or sideways) develop on their own first before I make a decision or take a position on whether it’s trending or consolidating. As a result, I get into most of my trades late on purpose. I don’t have a problem with this strategy because I’d rather be late than wrong.
One of my favorite entry points is after a stock’s price has moved down and all of the above three MAs have moved down in the right order along with it. I usually find these situations while looking at charts for an MACDs that are below zero, an MACD Histogram that is moving upward, and an MACD that is about to cross its signal line. When I see this occurring, I look at the stock chart to see if the stock’s price and MAs are doing what is expected of them.
As the MACD Histogram crosses zero and the MACD crosses the signal line I expect to see the price surge through the three MAs. As the price pierces those averages they will begin to twist and turn on each other and hopefully reverse their order completely. As the price moves up I simply hold on for the ride while watching the MACD and the relationship of the three MAs as they interact with each other. (I use just the opposite information to determine exit points).
Two other indicators I usually like to plot along with the ones above are the ADX and the RSI. I use the ADX to let me know the strength of the movement and whether the pressure is coming from the buying or the selling side. I use the RSI to provide me with a heads up on whether the stock is being overbought or oversold. I use these two indicators as confirmation of the first two indications identified above (the MACD and the MA Crossover), and I use the two above as confirmation of the price movement of the stock. Sounds simple, right?
When everything above is moving in the same direction (up, down, or sideways) I invest appropriately. My investing philosophy is based upon probabilities and trends. If a stock price is moving in a direction that is confirmed by all of the indicators above (whether up, down, or sideways) then that stock is moving in a trend. Probability says that the trend will most likely continue for some time. In fact, as dumb as this sounds, the trend will continue until it doesn’t. And I will stay in sync with that trend until the trend changes. If it’s trending up I want to be long. If it’s trending down I want to be short. If it’s trending sideways I want to maintain my position (in or out) until I can determine whether an uptrend or downtrend is being established. When the chart tells me things have changed then I change also to remain in sync with the market.
Here's the reason. Being in sync with the market is how an investor makes money. Being out of sync with the market is how an investor loses money. For me, making money is what investing is all about.
“I’ve been rich and I’ve been poor. Rich is better.” -- Sophie Tucker.
“From birth to age 18, a girl needs good parents, from 18 to 35 she needs good looks, from 35 to 55 she needs a good personality, and from 55 on she needs cash” -- Sophie Tucker
A long time ago when my son was a little boy he asked me what was the difference between capitalism and socialism. I thought about his question for a few moments and told him that capitalism was how I got my money, socialism was how he got his.
At a very early age we teach our kids how to spend money but rarely do we teach them how to earn it. Even in school kids learn how to budget money but learn very little about how to acquire it, retain it, and grow it. Making money is eventually taught to most people by their first boss on their first job when the boss he gives them their first tasking and tells them that they’ll be fired if they don’t do it well. Most of us sort of stumble into how to make money.
The strategy above may make you money but it will not make you wealthy. You are simply selling your life for a mediocre lifestyle and it’s probably not the lifestyle you wanted or thought you were going to eventually have in life. It’s only later after the realization that you can’t do it by yourself that the lightbulb finally comes on. You need to begin to live within your means and start to put any excess income to work making money. Make your money work for you as hard as you work for your money. Even during the deepest depressions of years past smart people saved for the possibility of even harder times in the future. They wanted to attain that financial security that only comes with the freedom associated with wealth. It’s this idea of doing without today in order to have a better future that guides me even today. It's what truly creates wealth. And the sooner you get started the sooner you’ll be wealthy.
I’ve discussed compound investing in an earlier article and it might even be worth reading again (most of my stuff is worth reading several times!). Even Albert Einstein recognized the value of compound interest. He talked about compound interest being man’s greatest invention and possibly the most powerful known force in the universe. I've always been interested in applying this concept to my stock investing. My idea was to find companies that increased their sales and earnings by at least 8% (more is better) and watch the value of my investment increase (compound) at that same rate. It was a simple idea that’s been my guiding light for all these years.
Consistency and patience are the keys here. You don’t have to have a lot to start but you have to start and the sooner you start the better. Your income may vary from year to year but you should continue to save and invest whatever you can, regardless how little that amount is. Hopefully it will grow at that magical 8% (or better) compounded rate throughout your life and your golden years will truly be golden. Good Luck and Good Trading.
There's no doubt General Electric has been in trouble for a very long time. Even if you don't know the story behind the fall, one look at the price chart and it's obvious. It hit a high of $31.66 in the summer of 2016 and has fallen ever since. I can't imagine any shareholder that's happy.
Today the CEO is gone and there's been a management shake up. Talk now is of a dividend cut. All that's bad news for current shareholders but it's great news for those on the sidelines with cash. All an investor has to do now is wait for the bottom and it's got to be near. Management insists they'll maintain the dividend but all managements say that just before the cut the dividend. And it most likely will happen with GE.
Looking at the numbers below, the revenues are starting to improve and earnings are starting to move higher for the first time in awhile. Those are both great signs but controlling the growth of dividends recently has helped the earnings turnaround. A dividend cut would help even more. With a forward P/E of under 14 and improving earnings, this company could quite easily hit its estimate of $28.00 next year for a nice return. But more importantly it could be the beginning of an extended move higher.
I certainly expect this to occur so I'm just waiting for that great moment to buy. I think the dividend cut will be the last shoe to fall and it's what I'm waiting for. It should be accompanied by an exhaustion pullback or capitulation and that will be the signal to begin accumulating shares.
General Electric Company operates as an infrastructure and technology company worldwide. Its Power segment offers gas and steam power systems; maintenance, service, and upgrade solutions; distributed power gas engines; water treatment, wastewater treatment, and process system solutions; and nuclear reactors, fuels, and support services. The company's Renewable Energy segment provides wind turbine platforms, and hardware and software; onshore and offshore wind turbines; and solutions, products, and services to hydropower industry. Its Oil & Gas segment offers surface and subsea drilling and production systems, and equipment for floating production platforms; and compressors, turbines, turboexpanders, reactors, industrial power generation, and auxiliary equipment. The company's Aviation segment designs and produces commercial and military aircraft engines, integrated digital components, and electric power and mechanical aircraft systems; and provides aftermarket services. Its Healthcare segment offers diagnostic imaging and clinical systems; products for drug discovery, biopharmaceutical manufacturing, and cellular technologies; and medical technologies, software, analytics, cloud solutions, and implementation services. The company's Transportation segment provides freight and passenger locomotives, and rail and support advisory services; and parts, integrated software solutions and data analytics, software-enabled solutions, mining equipment and services, and marine diesel and stationary power diesel engines and motors, as well as overhaul, repair and upgrade, and wreck repair services. Its Energy Connections & Lighting segment offers industrial, grid, power conversion, automation and control, lighting, and current solutions. The company's Capital segment provides industrial and energy financial services; and commercial aircraft leasing, financing, and consulting services. General Electric Company was founded in 1892 and is based in Boston, Massachusetts. (Summary) (Company) (Chart)
15 October 2017 Price $22.98 1yr Target $28.00 Analysts 15 Dividend $0.96 Payout Ratio 110.34%
1yr Cap Gain 21.84% Yield 4.17% 1yr Tot Return 26.01%
P/E 26.35 PEG 2.83 Beta 1.16
EPS (ttm) $0.87 EPS next yr $1.66 Forward P/E 13.87 EPS next 5yr 9.32% 1yr Price Support $15.47
Market Cap $199.26 Bil Revenues $119.57 Bil Earnings $7.77 Bil Profit Margin 6.49%
Quick Ratio --- Current Ratio --- Debt/Equity 1.81
Walmart broke out of a Darvas Box last week with support and resistance from $74 to $82. In fact it broke out of a previous $64 to $74 Darvas Box earlier in the spring as it broke through its 40 week moving average and continued to move higher. It's a classic upward trend movement and it continued higher last week. All this appears to be the result of recent acquisitions by Walmart as it attempts to compete more aggressively against Amazon. In fact it may be the only retailer large enough to compete successfully
The reason for all the excitement is Walmart's integration of JD.com which is expected to increase online sales for the retailer by 40% over the next year. And I think they can do it. In fact several analysts are estimating that the price of Walmart stock will eventually rise to $110 per share over the next 18 months. That's an almost 28% return. Add in the dividend and the total return exceeds 30%.
As a result, I'll be adding to my position in Walmart shares in the weeks and months ahead. Personally I think the time to buy these shares were last week as it broke above $82 but I'd really have to be nimble to have gotten these shares quickly. So my plan will be to put in a buy order at $83 per share to attempt to buy these shares on a pullback to support.
This often happens to companies as they get trapped into a new Darvas Box. While I can't predict the limits of any new box, a good estimate would be $82 to $90. That means for me a price of $86 is not where I'd want to buy. That would allow for a $4 profit potential and a $4 loss potential. That's not the ratio I would want. At $83 I'd have a potential loss of $1 and a potential profit of $7, and that's a great profit to loss ratio for entry. It also lowers my risk if I made a mistake and I'm wrong.
So I've placed these shares on the list of Best Ideas for this week. In fact I believe the analysts may be a little conservative and Walmart may achieve these benchmarks even earlier. Perhaps within the next 12 months.
Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates through three segments: Walmart U.S., Walmart International, and Sam's Club. The company operates discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, cash and carry stores, home improvement stores, specialty electronics stores, apparel stores, drug stores, convenience stores, and membership-only warehouse clubs; and retail Websites, such as walmart.com and samsclub.com, as well as mobile commerce applications. It offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products, which include pharmacy, optical services, clinical services, over-the-counter drugs, and other medical products. The company also provides electronics, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture, as well as fabrics, crafts, and seasonal merchandise; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, and toys. In addition, it offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers, money transfers, check cashing, and bill payment. In addition, it offers brand name merchandise, including hardgoods, softgoods, and selected private-label items, such as Member's Mark. It operates 11,593 stores under 63 banners in 28 countries and e-commerce Websites in 11 countries. Wal-Mart Stores, Inc. was founded in 1945 and is headquartered in Bentonville, Arkansas. (Summary) (Company) (Chart)
15 October 2017 Price $86.62 1yr Target $85.49 Analysts 29 Dividend $2.04 Payout Ratio 49.02%
1yr Cap Gain -1.31% Yield 2.35% 1yr Tot Return 1.04%
P/E 20.84 PEG 4.43 Beta 0.32
EPS (ttm) $4.16 EPS next yr $4.62 Forward P/E 18.77 EPS next 5yr 4.70% 1yr Price Support $21.71
Market Cap $257.71 Bil Revenues $490.01 Bil Earnings $12.73 Bil Profit Margin 2.59%
Quick Ratio 0.20 Current Ratio 0.80 Debt/Equity 0.62
I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.
DISCLAIMER I am not a licensed investment adviser, and I am not providing investment advise for you on this site. Please consult with an investment professional before you invest your money. Any opinion expressed here should not be treated as investment advice. I am not liable for any losses suffered by any party because of data or information published on this blog. Past performance is not a guarantee of future performance. Unless your investments are FDIC insured, they may decline in value.
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