Greenbrier Companies Inc. , a manufacturer of railcars and related aftermarket parts and services, is poised to benefit from a robust tank car upgrade, resulting from increased safety standards by regulators in the U.S. and Canada. Although Greenbrier has been heavily tied to the Energy sector, it serves multiple non-energy endmarkets, where it carries a record-high backlog made up of orders from a diverse group of railcars. We believe Greenbrier has exceptional growth prospects and rate the stock Outperform, under our North American Shale theme.
Author: Cornelio Ash
Cornelio Ash is a senior equity analyst and member of the U.S. Focus List and the Global Focus List Committees, which approves all equity recommendations for developed, emerging, and frontier markets. He is also a lead for the Technology sector and specializes in the Americas region. Cornelio joined the firm in 2005 and received his B.A. in Finance from California State University, Northridge. He holds a Series 65 securities license.
Despite Oil’s Volatility, Frac SandDemand Remains High
For only the second consecutive time in the last 29 years, the production
of crude oil in the U.S exceeded imports. The International
Energy Agency projects that by 2017 the U.S. will surpass Russia and
Saudi Arabia to become the world’s top oil producer. The accelerated
production of oil and other hydrocarbons, often referred to as
the U.S. Energy Renaissance, has been the result of unconventional
drilling technologies, primarily hydraulic fracturing, in fossil fuel–rich
shale regions across North America. This controversial drilling method
is highly dependent on silica sand, commonly referred to as frac
sand, which is a natural proppant found in limited locations across
the Midwest.
Silica sand has revitalized the long-term growth prospects of sand
producers, oil exploration and production companies, along with a
host of related industries, including oil field services, pipelines, railroad,
trucking, cement, and steel. Despite the recent sell-off in shares of
silica sand producers, after months of appreciation, our long-term
outlook remains bullish on both silica sand and its tangent industries.
Gemalto Ready to Ride Next Waveof EMV and Mobile Payment
Gemalto (GTO.NL; GTO:NA), the Netherlands-based company known primarily for providing secure identity authentication via SIM cards in smart phones, has grown to become the global trusted identity provider across multiple digital platforms. As outlined in our theme report on the Digital Wallet, secure authentication is key to expanding
mobile activities of all kinds, but particularly mobile payments. As the secure identity leader, Gemalto has a multiyear plan in place to further increase its market share. The results look promising as the next wave of EMV (a global security standard for cashless transactions) implementation is under way, and the Company is already leveraging its preexisting relationships within an array of mobile payment platforms. We believe Gemalto has exceptional growth prospects and rate the stock as Outperform.
Keeping an Eye on the Digital Wallet
Mobile technology has quickly become an agent in accomplishing daily tasks more quickly and efficiently, such as depositing checks in the bank via your phone. Much of this mobile technology falls under the umbrella of the Digital Wallet, as it will ultimately replace all “paper” wallet items with digital solutions. Mobile payments covered in our previous report, play a large role in the progress of the Digital Wallet. And key to that progress are advances in secure identity authentication. Announcements by Visa and Mastercard to migrate away from credit card magnetic strips to EMV chips in the U.S. by late next year will make migration to the newest forms of mobile payments easier and more secure— and will likely speed adoption of various forms of mobile payment.
Waiting for China’s Biggest Player inVideo-Streaming to Monetize onMobile
The shift from PCs to mobile devices (smart phones and tablets) is a global phenomenon that offers tremendous potential advertising revenue earned via mobile platforms. China’s sheer size makes its mobile ad revenue potential enormous, especially because the country’s shift to mobile devices has been so rapid and decisive. In June of this year, the number of Chinese users accessing the Internet from mobile devices surpassed those accessing the Internet via personal computer. On the heels of that shift from PC to mobile device has been the shift from traditional TV to video streaming, driven especially by young viewers. In the U.S. we’ve seen advertising gradually fill the streamed video content in Hulu and Google’s YouTube, but who is best positioned to do the same in China? Leading Chinese internet companies such Baidu and Alibaba have partnered with smaller companies to strengthen their mobile streaming content, but Youku Tudou
remains the only pure-play internet television company to capitalize on China’s growing mobile video content. More important, Youku Tudou has more unique mobile users per day than its two largest competitors—iQiyi and PPS (both owned by Baidu)— combined. Although the Company has yet to have an EPS-positive quarter, here’s why the analysts at O’Neil Equity Research will be keeping close tabs on its progress.
Proto Labs Challenges the 3D PrintingPlayground
The days of sketching your idea with a pencil and compass or molding it out of clay to form a prototype are quickly vanishing. Prototype manufacturing has continually evolved over decades, boosted by machine automation and computeraided design (CAD) software. However Proto Labs Inc. has taken the next leap forward, making low-volume prototype manufacturing a fast, efficient, and cost-effective alternative to more popular new processes, such as 3D printing.
Although Proto Labs indirectly competes with the broader 3D group, which includes Stratasys , 3D Systems, and the recently IPO-ed ExOne , it is in a different subcategory (see our 3D watch list under Themes in PANARAY Lists). Proto Labs is an online and technology-enabled quick-turn manufacturer that provides the actual part or prototype itself (using a subtractive manufacturing process, see page 2 sidebar). 3D printing companies primarily supply equipment only. The prototypes created by 3D printers (which use an additive manufacturing process) can’t compare with the engineering grade quality—durability, flexibility, dimensional accuracy—of the prototypes available through Proto Labs. Nor can they compete with the turnaround. Proto Labs can deliver 10 or fewer custom parts, made from a choice of 40 materials, in three days or less through its “FirstCut” service, which uses CNC machining to produce prototypes. That takes a week or more off traditional small-quantity prototypes of this quality. A much larger production (10,000 custom parts) can be delivered
in 15 days through Proto Labs’ “Protomold” service, which makes injection-molded plastic parts.
