Global Partners: Niche in Northeast Downstream with Solid Upside

A Boston presenter likes Global Partners' (NYSE: GLP, $22.29) established position in the Northeast downstream market. This MLP has a network of terminals covering most of New England, New York, New Jersey and Pennsylvania. GLP, led by a highly experienced management team, has been expanding and upgrading its existing assets ,and acquiring new facilities. The company has just completed an offering to pay down its long-term debt. GLP stands to benefit from the shakeup in the space. The company can quickly ramp up its operations with majors getting rid of their downstream assets. The 8.7% yield should appeal to prospective investors.

Roulston Expert on Changes in Prescriptions Mix and Cost Sustainability

Dr.Randy Vogenberg, a recognized opinion leader to Fortune 500 employers, executive director of Biologic Finance & Access Council Program at Thomas Jefferson University's School of Population Health, and a member of our healthcare expert group, shared his thoughts on an ongoing shift in prescriptions mix. Two key trends are the move of precription drugs to over-the-conunter status and the increasing share of expensive biologic therapies, which is projected to increase 10-fold in the next 10 years, from 5% to 50% of the total mix. Biologics will raise the pressure on the country's ability to afford coverage. It's not clear even with the reform how we can accomplish it. In the typical benefit design, these higher costs are unsustainable. Dr. Vogenberg believes we'll see a continued shift to high-deductible plans combined with more traditional catastrophic coverage.

Tatum/Roulston Report

The Tatum survey this month was a breakout. Although we have seen steady improvement over the last year from the cliff drop in late 2008 and 1q 09, this month was unarguable and most importantly it seems we have finally reached a point where Fed easing is finally leading to banks loosening the reins. With the prospects of financing now seemingly becoming available the prospects of improvement in backlogs, capital spending and employment now seem much more probable and are now more widespread in improvement being recognized across more regions and industries. The fact is that once visibility is perceived in financing it creates a domino effect on overall growth prospects. When the backlog trend becomes more lasting more companies start considering how they are going to grow.

We still take an approach that this downturn had a more significant psychological impact as corporations in general saw a sudden double digit drop when the slowdown hit, banks halted virtually all forms of lending and the consumer was shocked into near panic. This emotion and memory from this shock is not going to go away easily or lightly. The effect is like touching the hot stove and not forgetting the valuable lessons of our painful experience. We feel the slow recovery will continue to be challenged by political instability and the international effects. Investing into many industries and even small business investment in general is affected by Health Care concerns, potential tax implications and a general cloudiness of future predictability. We have stated very often before that market confidence has a direct correlation to visibility. As we now see banks seemingly opening the lending window the clouds clear slightly more. Now the future has one more positive variable but we still find when we talk to companies nobody wants to project trends past the next few months. The last few months nobody wanted to go past 30 days. So there is improvement.

To read the full Survey click here.

Overstock: Controversial, but Finally Profitable and Well-Positioned

A San Francisco presenter admits Overstock (NASDAQ: OSTK, $20.38) is a highly controversial name, but is confident the company has finally turned the corner. Last year was the first time OSTK showed a profit. The company is one of the leading forces in the online liquidation merchandise retail. Overstock has strong relationships with manufacturers of brand-name merchandise and gives them a great platform to efficiently get rid of their excess inventory without poluting their sales channels. The company aggregates a vast variety of items in different categories on its site, providing consumers with easy access to discounted merchandise without having to hunt for it in remote outlets. Overstock has a well-recognized brand and is ranked second among domestic retailers for the quality of its service. With online retail continuing to expand, OSTK is well-positioned for significant upside.

GLP: In a Good Spot to Gain from a Shake Up in Downstream

Our Boston presenter likes Global Partners at this level (NYSE: GLP, $22.55). This wholesaler of refined petroleum products is trading at the same level it did when the company went public in 2005, but it is a much larger operator and positioned better than ever before. GLP stands to benefit as majors try to get rid of their underperforming downstream assets. The presenter believes the company is on a verge of making a sizable acquisition. The company just did an offering to pay off its long-term debt. The stock yields 8.7%.

Zoran: Cash Limits Downside, Significant Upside as Profitability Recovers

A San Francisco presenter believes Zoran (NASDAQ: ZRAN, $10.85) is poised for a substantial upside at this level. The company designs chips for TV's, DVD's, set-top boxes, printers, and digital cameras. Addressable markets are projected to grow from $2 billion to $4 billion in the next three years. The transition to digital and HD in Europe and emerging markets is a big opportunity. Zoran's frame rate conversion technology for high end TV's is industry-first and there is a good possibility Samsung may become a customer. ZRAN did $1.30 in earnings in 2007 and if the company gets back to $500 million in revenues, there is no reason it can't regain profitability shown three years ago. The company has no debt. $8/share in cash limits the downside. The upside is $20, based on cash and $1.00 EPS in 2011.

Syniverse: Positive Trends Across All Segments

Our Dallas presenter continues to recommend Syniverse (NYSE: SVR, $19.53). The stock is up close to 20% since late September when it was originally discussed. The presenter's $24 target is based on a discounted earnings multiple relative to peers. This provider of wireless and data services has been seeing a pick-up in roaming volumes with travel metrics improving. Management gave a low guidance for roamings and the presenter believes there is a substantial upside to be realized. The messaging business acquired from Verisign last year has been performing well above the company's estimates. Operations in emerging markets are showing positive signs as well. The big overriding driver for SVR is the proliferation of smartphones, the trend that will only strengthen going forward.