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CUI OMIB, BGC 3Q18 and new picks +1

20:06 10-Oct-18


CUI Global's CEO bought another 2500 shares on the open market at $2.1255.  At this point, I don't expect the market to pay any attention, but evidence of the decoupling of natural gas continues to build.  I referenced some of the reasons with the UN's IPCC report, with the Covanta 3Q18 announcement last night.  That was followed by another day where oil fell almost 3% across the globe, but natural gas stayed up and close to new highs above $3.30.  This can only be good for CUI, and even more so for Golar.

BGC Partners has also officially scheduled its third quarter report for the morning of October 25th.  We already knew the date from business update at the end of last month, but here are the average analyst projections: EPS of 45 cents on $971M in revenue with that figure touching the $1 billion mark in the current quarter.  I note that these are slightly higher than the guidance that management just gave.

BGCP was down with rest of the market today, but market action like this should help the financial services business, which is certainly planning for long-term growth with its just-announced new London headquarters.  I remain confident in that progress, as I continue to see signs of a shift toward more global finance.  Thus I still see BGCP as an increasingly good destination for some of the capital I suggested raising, along with CTL, VOD, GLNG and GMLP, depending on your risk tolerance and investment horizon.

For those who need more diversification, be aware that I am looking at Nokia as a new 5G pick.  It also reports on the 25th, with analysts projecting earnings of 6 cents per share on $6.4b in revenue, which is expected to climb to $7.7b in the current quarter.  The dividend comes once a year in late May or early June and is respectable at 4% yield on a trailing basis.  The same goes for the balance sheet with over €1 per share and minimal debt, which makes for limited downside versus the coming wave of 5G spending in 2019.  Qualcomm is set to get the most in device royalties, followed by Ericsson, which is where Verizon's new CEO comes from.  Nokia comes in third in that department.  However, IDT's license-free approach makes me think that open standards, inter-operable solution, and comprehensive service offerings are the soundest approach, all of which are Nokia's strengths.  Consequently, I see Nokia as a similar opportunity to AES, where safety makes up for limited yield and less uncertain growth.  The latest hire at AES empahsizes this approach, as my conversations with related execs indicate that the push toward 5G and IoT is all about increased service revenue.  Timing of the ramp will be key, but again, as with AES, Nokia's global connections are what I want for the long term.  I will listen to the conference call and add a NOK section to the website depending on what I hear.

Finally, I also see ABB as finally being back down to buyable levels.  Its exposure to so many growth markets and geographies, particularly India make it attractive, especially when new business segments are set to begin contributing.  Neither ABB or Nokia are necessarily better values than the other options that I mentioned above, and given my view that we may have a several more days of volatility left, entry points should be chosen carefully and possibly staggered.  However, both look to be viable options for diversification and limiting downside risk.