Three High Flying Performers From 2012
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It has been a mixed bag for some of the equities featured over the past year. The underperformers had their review last week, but what of the achievers?
Top of the pile was Tesoro Petroleum (NYSE: TSO). It first featured at the end of March when it was trading at $23 a share. It has since risen into the $40s and is threatening to break past the Fall high of $44.57. Tesoro's ascent was driven by a double catalyst of events. The first of which were earnings: Year-on-year quarterly profits rose a staggering 78% to $387 million from $218 million. Q2 earnings came in ahead of expectations at $2.87 a share. It then added to the feel good factor later in the month, with the acquisition of BP's California oil refinery and 800 gas stations plus inventory, for $2.5 billion. This added another 10% to the share price.
The acquisition will allow for further cost savings within Tesoro's California network, as mentioned in its earnings conference call (prior to the deal's announcement). The impact of the BP deal on earnings is unlikely to show until next year, but this could prove a steal for Tesoro. In addition, the North Dakota refinery expansion, which came online, is set to add $80 million annually in EBIDTA. Price action has understandably mellowed since the July/August run, but the stock still looks to offer value. The stock is trading at multi-year highs, and is well on its way to challenging all-time highs of $62 from 2007. The company remained "optimistic" on U.S. refinery conditions, and mentioned returning cash to shareholders through a regular dividend.
Another solid mover was Krispy Kreme Doughnuts (NYSE: KKD). The stock had already enjoyed a solid rally, after emerging from a period of relative price dormancy when it featured back in September. November's earnings piled on this upward momentum, sending the stock more than 20% higher in a massive one-day move. Since this gain, the stock has stubbornly held to the upper level of its price advance. Aggressive restructuring, with strong international growth, have helped turn the company's fortunes around. This was apparent in its most recent report. CEO, James Morgan, said it well when he described Krispy Kreme "as an affordable indulgence."
Same store sales were up a very strong 6.8%, the 16th consecutive quarterly increase, and accomplished without raising prices. The company signed a new international agreement with Singapore, but its pipeline agreements for India and Moscow which could really benefit. However, international same store sales fell 8%, offset by currency effects, which resulted in a net gain of 13%. The drop in same store sales is a little concerning as reference was made to cannibalization, which is a little early to be happening at this stage of their growth cycle. There are talks of domestic expansion, so it's hoped they have learned the lessons of their past, and don't overextend as they did in the past. The company also made particular reference to its enhanced coffee options; can it succeed in adding to revenue?
Another stock to handily beat its feature price, despite losing over 10% from its 2012 high, is Randgold Resources (NASDAQ: GOLD). The stock featured in April when it traded at $87 a share, but managed to jump to the heights of $127 a share before falling back to current levels. The Randgold Resource story has been driven more by commodity, than stock pricing. In broad terms, the company reported it's on track to reach its 1.2 million ounce target in 2015, although recent performance was a "mixed bag." Production was in line with the comparable quarter of 2011, but down on Q2 of this year. Without going into details on a project by project basis, there were more excuses than successes. Conditions remain difficult for projects influenced by instability in the region, e.g. Mali. In addition to hires of inexperienced workers, lead to safety concerns and production inefficiencies. The company is looking for significant production increases in Q4 from its Loulo and Gounkoto projects, with collective expectation of breaking the 150 K ounce production barrier.
Of the three stocks, Randgold has the greatest number of uncertainties. In addition, the underlying performance of gold may overshadow - or intensify - selling pressure on Randgold's stock price. Tesoro looks best placed to continue its good form, with the acquisition of B.P. assets an important boost for revenue in the latter part of 2013.
fallond has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!