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CUI Global service contract and macro thoughts +2

09:32 22-Jul-19


CUI Global has announced that it has been awarded a contract valued at over $900K for servicing the equipment it has installed at 23 sites for a major U.K. gas company over the next year.  CUI shares were initially up by over a third to $1.10, and have spiked as high as $1.20, but has hovered around 90 cents for most of pre-market trading.

That's understandable, since the amount is fairly trivial at about 1% of annual revenue, but the hope is that the U.K. business will be able to move forward again with a new Prime Minister and government.  The announcement for Boris Johnson or Jeremy Hunt should be made around noon New York time tomorrow.  Johnson is the overwhelming favorite and he will certainly have leverage against the E.U. in Brexit talks and plenty of Trump-style media opportunities with Iran.  Even though any Brexit culmination is better than continued delay, I think both leaders need to pay more attention to finding consensus within their own borders, and only see danger of the Eurozone being dragged further down along with the U.K. 

That makes me like Ebix and Golar a bit more, despite the risk, and stocks like VOD and ABB a bit less, despite the electrification work the latter is doing.  For its part, analyst questions show that Ebix needs to execute on its EbixCash IPO plans, while Golar needs to spin-off its shipping business.  In the latter case, the shift to LNG fueled tankers makes time of the essence.  If Golar is unable to announce concrete plans in the next few months, I am likely to throw in the towel on both GLNG and GMLP.  For those seeking more safety, Halliburton's earnings this morning reinforce SLB and its 5% yield as an alternative for at least the next year so.  We'll see what tomorrow earnings season bring.