Service Stocks

Towerstream Corporation TWER Stock News

Towerstream Corporation (NASDAQ: TWER)

Towerstream Corporation has been an incredibly interesting stock to follow as of late, and for good reason. The company recently released a company update that excited investors. However, shortly after the update, we started to see more declines. Nonetheless, we’re seeing big gains today, and it seems as though investors have renewed faith in the company. Today, we’ll talk about the update that was released a couple of weeks ago, what we’re seeing in the market today, and what we can expect to see from TWER moving forward. So, let’s get right to it…

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The Update That Caused The Excitement Around TWER

For quite a while now, investors have been concerned about Towerstream’s business and ability to sell their product. Nonetheless, on June 14th, the company released an update that shows that they are headed in the right direction. Here’s what they had to say…

The update was a multi-part update that offered quite a bit of good news. In the update, we found out that 52% of On-Net contracts in the months of April and May were secondary customer contracts. This means that TWER had already installed its systems on the buildings, making these the most profitable contracts the company offers. This helped to boost revenue per On-Net contract by 35% from April to May.

Another key piece of data surrounded the sales-to-installation cycle. On active On-Net buildings, the cycle from sales to installation shortened significantly. In the past, the process would take months. Now, the process takes weeks.

Finally, the company is looking to add new properties to its already-installed buildings list. With the update, we learned that TWER reached an agreement with a large commercial property owner in New York City. The new agreement surrounds providing On-Net high speed internet services to the property’s tenants. Following the overwhelmingly positive news, Towerstream Founder and CEO, Philip Urso, had the following to say:

On-Net is a win for the company and the customer… For Towerstream, it is capital efficient, focuses our sales staff and dramatically lowers customer churn. The customer gets fiber-quality in terms of speed and reliability, priced at about 40% below market rates.”

What We’re Seeing In The Market Today

While recent movement in the market surrounding TWER hasn’t been great, it seems as though investors have renewed faith in the company. This is shown in the incredible gains we’re seeing in the stock today. Currently (12:17), the stock is trading at $0.17 per share after a gain of $0.02 per share, or 15.65%, thus far today.

What We Can Expect To See moving Forward

Moving forward, I have a relatively bullish opinion of what we can expect to see from TWER. The reality is that, while it may have an uphill road to follow, the company is making the right moves. With a clear focus on adding new properties to its list of installed systems, the company is laying the foundation for strong profits in the future. The recent update shows that Towerstream has done a great job expanding profits and selling its services to building tenants. With a strong product that offers a great solution at nearly half the normal cost, demand is likely to climb as new installations are completed. All in all, I’m expecting to see gains in the long run.

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What Do You Think?

Where do you think TWER is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!

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Walt Disney Co DIS Stock News

Walt Disney Co (NYSE: DIS)

Walt Disney, the land of happiness, isn’t so happy at the moment. Like most stocks on the open market, this one is having a rough time. The declines are for good reason. Recently, the British people voted to leave the European Union. As a result, we’re seeing major concerns with regard to global economic effects associated with the decision. One of the companies that’s likely to be hit incredibly hard is DIS. Today, we’ll talk about why it’s likely to take such a big hit, why that hit is going to present an opportunity, and what we can expect to see from the stock moving forward.

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Walt Disney Gears Up For Declines

When it comes to stocks that are susceptible to global economic concerns, there are few that are as deep in the category as Walt Disney. The reason for this is simple. At the end of the day, DIS is an entertainment-focused company. The company makes its money from movies, cartoons, theme parks, television networks, and more.

Now, let’s think about it here. When economic conditions are a concern, where is the first place that consumers look to save money? If you answered entertainment, you’re right! Any time consumers are worried about finances, they tend to stop spending so much on entertainment. For DIS, that’s a very bad thing right now.

The truth is that with the Brexit vote showing that the UK will leave the EU, there’s quite a bit up in the air at the moment. As a result, consumers have already started to hunker down and brace for the worst. This means that less people around the world will be visiting Disney theme parks, spending money on their movies, and upgrading to ESPN in their cable packages. All of this will likely hit the company’s revenue incredibly hard.

So, Where’s The Opportunity?

At the moment, it may seem like DIS is a losing bet, and if you’re looking at the short term, you’re probably right. However, in the long term, there’s a tremendous opportunity in the making here.

You see, no other company on the planet seems to be able to capture the imaginations of consumers young and old like Disney. Not to mention, we’ve seen things like this in the past. Any time global economic conditions are called into question, DIS generally takes a dive.

Nonetheless, it’s not the end of the world or the end of the company. As economic conditions around the world improve, history shows that Disney recovers incredibly quickly. As a result, when economic concerns start to fade, we can expect to see big gains in DIS in the long run.

With all of that said, declines at the moment may be concerning to some. However, I see them as an opportunity. By watching DIS closely, making note of support and finding a strong entrance point, you could realize huge long-run gains.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from Walt Disney. In the short run, the stock is likely to see further declines as global economic concerns weigh heavy. Nonetheless, in the long run, I do believe the stock will recover. Based on the history of DIS, there’s no reason to think anything else. So, getting in on the trends once a bottom is found might just be your best bet at generating profit from DIS.

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What Do You Think?

Where do you think DIS is headed moving forward and why? Join the discussion at TalkTRENDZ from CNA Finance!

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Amazon AMZN Stock News

Amazon.com, Inc. (NASDAQ: AMZN)

Amazon has something very interesting going on at the moment. The company recently made the decision to launch what is being called “Dash Buttons.” Today, we’ll talk about what Dash Buttons are, the argument revolving around them, and whether or not they will prove to be a profitable venture for AMZN.

What Are Dash Buttons From AMZN?

Dash Buttons are an incredible new concept put together by Amazon.com. The new buttons are designed to stick to your wall, toilet, washing machine, or, really, any other surface. When the buttons are clicked, orders are automatically placed.

Imagine, you’re doing your laundry and realize that you’re starting to run low on laundry detergent. So, you push a button on your washer that automatically orders your detergent from Amazon for you. Once the button is pressed, you get an alert on your cell phone letting you know that the order has been placed, and, shortly, you get your detergent in the mail. That’s a whole lot easier than running down to Wal-Mart to get simple household goods, and that’s what AMZN is banking on with the idea.

The Argument Surrounding Dash Buttons

At the moment, there’s a big argument among investors surrounding Dash Buttons. Some investors see it as a great thing, while others see it as a waste of money. Here’s what the bears and bulls are saying…

  • The Bears – The bears argue that consumers aren’t going to want buttons from AMZN all over their homes. They believe that this will take away from the look and feel of homes. They also argue that few members are going to find the offer appealing, since they have to purchase the buttons. As a result, the bears argue that the massive amount of money spent on this project was likely spent in vain, and that Dash Buttons will lead to a loss for the company.
  • The Bulls – The bulls argue that this is a great idea. They believe that Dash Buttons will likely take off like a rocket. With Amazon.com finding another way into the daily lifestyles of consumers, this is going to generate massive amounts of sales for the company, leading to stronger revenue and larger profits.

Will This Be A Strong Play For Amazon.com?

This is the million dollar question my friends. I have a relatively mixed opinion of what we can expect to see from Dash Buttons from AMZN. At first glance, I don’t like the idea, and I mean I really don’t like it. I’ve looked at the buttons, and I wouldn’t have them in my house. The design just isn’t what it could be. However, I’ve also learned my lesson with regard to down playing the potential that Amazon.com has. You see, when Prime first came out, I saw that as a losing endeavor. While the company may lose money on the Prime service directly, indirectly the service leads to massive amounts of purchases through the company’s retail website. These purchases increased revenue and led to profits. Now, this is something different entirely, and it may work out to be a loss. However, I’m excited to see how AMZN spins it, as they have proven me incorrect in the past.

What Do You Think?

Do you think Dash Buttons will be a hit? Join the discussion at TalkTRENDZ from CNA Finance!

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Gevo GEVO Stock News

Gevo, Inc. (NASDAQ: GEVO)

Gevo has been an incredibly interesting stock to watch as of late, and for good reason. The company has released several updates, all of which have been positive. However, recently, we’ve seen downward movement on the stock. Nonetheless, I’m expecting that this one will become huge. Today, we’ll talk about why GEVO could become the next big thing.

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New Views On Fuel Could Give GEVO A Big Boost

Gevo is a company that, for lack of a better way to say it, has the right product at the right time. The company is focused on creating green fuels as well as other chemicals. The big value here is in renewable fuels. Think about it – the world is going green. Governments around the world are working to reduce their country’s carbon footprint on the planet.

When we look toward consumers and businesses, we’re seeing the same. At the moment, solar panel installations in new homes are outpacing natural gas installations for the first time in history. More and more businesses are working to go green. While solar panels aren’t going to directly affect GEVO or its products, the movement to green energy will.

These days, consumers all want to use the latest and greatest in green energy. Some are even willing to pay more for their energy to reduce their carbon footprint. GEVO seems to have unlocked the key to high performance – green fuels.

Airlines Could Lead To Huge Profits

We all know that Gevo fuels were recently tested in 2 Alaska Airlines flights. That’s huge news. Think about it – the renewable jet fuel had to make it through stringent regulations to even get to this point. While we haven’t heard the results of the test flights quite yet, given the regulatory process the fuel had to make it through, I’m expecting these test flights to yield positive results. This is where things get interesting.

At this point, there’s a strong chance that the Alaska Airlines tests went pretty well. If the reports from the tests show positive data, chances are that Alaska Airlines will start to fly a series of its passenger jets using GEVO fuels. In return, Alaska Airlines will be able to market itself as the first green airline.

The implications of this could be huge for both Alaska Airlines and, of course, GEVO. Think about it – being able to promote an airline as green will likely lead to increased sales for the airline. On the other end of the equation, to keep up this reputation, the airline would need to purchase more and more renewable jet fuel from Gevo. It’s a match made in heaven.

And it could mushroom even further from here. As other airlines notice the success of Alaska Airlines associated with green jet fuel, they will want to get their piece of the pie. To do so, they’ll likely head to GEVO and sign their own agreements. At the end of the day, if this test proves to be successful, it could also prove to be overwhelmingly profitable for all involved.

Off Road Product Applications

Aside from the incredible profits that Gevo could realize from the Alaska Airlines tests, there’s another reason to be bullish on the stock. The company recently signed an agreement for the use of its isobutanol in a gasoline blend.

The agreement was signed with Musket Corporation, a very important distributor in the Love’s Family of Companies. The new gasoline blend will be designed for the marine and off road markets, creating another area for GEVO to excel in. In a statement, Dr. Patrick Gruber, GEVO CEO, had the following to offer:

We believe Musket is an excellent partner to expand the use of isobutanol in gasoline blends, as our isobutanol production at Luverne builds. Musket and Love’s are significant players in the fuel distribution and retail in the U.S., so they have great reach to get our isobutanol into the market…”

Where GEVO Is Headed From Here

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Gevo. As mentioned in the beginning of this article, the company has the right product at the right time. With renewable jet fuel and an agreement surrounding isobutanol, GEVO is positioned to skyrocket.

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What Do You Think?

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Towerstream Corporation TWER Stock News

Towerstream Corporation (NASDAQ: TWER)

Towerstream has been a very interesting stock to watch as of late. After big gains following updated guidance, the stock took a plunge on a new offering, only to recover again. Now, we’re seeing more declines. This is leading to a big question: “Where is TWER headed next?” Today, we’ll talk about the positive guidance, the new offering, today’s declines, and what we can expect to see from the stock moving forward.

TWER Produces Solid Q2 Guidance

As mentioned above, Towerstream recently saw big gains in value following the release of a guidance update. On June 14th, the company provided an update with regard to Q2 expectations. Here are the details from the release:

  • Highly Profitable Contracts – The company said that 52% of all 145 On-Net contracts in April and May were secondary customer contracts. This just so happen to be the company’s most profitable offering.
  • Revenue Is Up – TWER also said that the average revenue realized per On-Net contract is up 35% from April to May.
  • Cycle – The sales cycle to installation on active On-Net buildings has shortened significantly. The time has dropped from months to weeks.
  • New Property – Finally, TWER said that it reached an agreement with a large commercial property owner in New York City. The agreement surrounds providing On-Net high speed internet services to the property tenants.

As you can see, the update was overwhelmingly positive. It was followed by Towerstream Founder and CEO Philip Urso. Here’s what he had to say:

“On-Net is a win for the company and the customer… for Towerstream, it is capital efficient, focuses our sales staff and dramatically lowers customer churn. The customer gets fiber-quality in terms of speed and reliability, priced at about 40% below market rates.”

As a result of this update, we saw dramatic gains in the value of TWER.

Recent Declines Caused By A Secondary Offering

While TWER recently excited investors with guidance, the company also caused concern with a new offering. On Monday, the company announced that it entered into a fund raising agreement. In order to raise funds, Towerstream offered a registered direct offering.

Under the terms of the agreement, 15,000,000 shares of common stock were sold. Each share was sold at a price of $0.152 per share, for a total value of $2.28 million. On top of that, each share came with 5-year warrants, exercisable at $0.25 per share.

As a result, the stock saw incredible downward movement Monday. Nonetheless, we saw a quick recovery that brought the value back up yesterday.

Should We Be Concerned About Today’s Declines?

Today, more questions are being raised than answered as the stock declines. Currently (10:41), TWER is trading 1.36% down. So, should you be worried about the declines?

In my opinion, the answer is no. In fact, buying the dip may be a great move. The reality is that things are looking up in a big way for the company. You see, Towerstream is focused on installing its systems in high rise towers and other commercial buildings. While the cost of installing their systems may be high, the company makes plenty of profit on the back end when services are sold.

At the moment, TWER is focused on expanding its reach by installing its services in more towers. The new offering was designed for the company to raise funds to do just that! So, it was actually a great thing that the company was able to raise so much money.

At the end of the day, TWER is seeing better customer adoption rates, larger margins, and is doing great overall. As the company continues to go down its current path, we’re likely to see big gains in the value of the stock.

What Do You Think?

Where do you think TWER is headed moving forward and why? Join the discussion at TalkTRENDZ from CNA Finance!

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Carmax KMX Werner Enterprises WERN Stock News

CarMax, Inc (NYSE: KMX) | Werner Enterprises, Inc. (NASDAQ: WERN)

Today is proving to be a rough day for two big service stocks. Both of these companies recently reported earnings, and both of them seemed to have missed the mark. Today, we’ll take a look at earnings and talk about what we can expect to see from KMX and WERN moving forward. So, let’s get right to it…

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KMX Misses Earnings

First and foremost, we have CarMax. Early this morning, the company reported earnings, missing expectations and upsetting investors. Here’s what we saw:

  • Earnings Per Share – In terms of earnings per share, KMX missed the mark. During the quarter, analysts expected that the company would generate earnings in the amount of $0.92 per share. However, the company actually produced earnings in the amount of $0.90 per share.
  • Revenue – While revenue saw a year-over-year increase, it still missed expectations. During the quarter, analysts expected that the company would generate revenue in the amount of $4.19 billion. However, KMX only generated revenue in the amount of $4.13 billion. This represents year-over-year growth in the amount of 2.8%.

According to the company, the rising comparable sales were the result of a combination of improvement in conversion that offset a decrease in store traffic. With that considered, investors are concerned that fewer people are buying cars at the moment, which will hurt CarMax in the long run.

The poor report has ultimately sent KMX diving downward in the market. Currently (10:15), the stock is trading at $48.47 per share after a loss of $2.16 per share, or 4.27%, thus far today.

Moving forward, I have a relatively mixed opinion of what we can expect to see from KMX. The reality is that, in the short run, poor economic conditions are likely to lead to reductions in car sales. So, I’m expecting further short-run losses. However, as the economy improves as a whole, CarMax is likely to see improved sales and long-run gains.

WERN Concerns With Poor Guidance

While Werner Enterprises has not yet released its earnings for the second quarter, the company has released guidance, which is proving to be overwhelmingly concerning. Here’s the data that was released:

  • Earnings Guidance – During the second quarter, analysts are expecting that WERN will generate earnings in the amount of $0.40 per share. However, the company released expectations that were about half that. During the second quarter, the company is expecting to report earnings in the range between $0.21 and $0.25 per share.
  • Revenue – In terms of revenue, WERN is expecting to generate a total pre-tax gain on the sale of real estate in the amount of $3.4 million. No other data was offered.

Werner Enterprises said that there were 3 factors that are likely going to drive the poor second quarter performance. Those factors include:

  1. Sluggish freight market conditions. These sluggish conditions are expected to result in decelerating rates per mile.
  2. Driver pay increases have been implemented, increasing costs.
  3. Used truck market is weighing heavy on the company’s ability to sell its used trucks for a decent price.

As a result of the poor guidance, we are seeing declines in the value of WERN stock. Currently (10:32), the stock is trading at $22.71 per share after a loss of $1.97 per share, or 7.98%, so far today.

Moving forward, WERN is another stock on which I have a relatively mixed opinion. The truth is that poor economic conditions are weighing on this company as well. As economic concern grows, we’re likely to see further declines. However, when we start to see economic growth again, we will likely see strong growth in WERN as a result.

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What Do You Think?

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Gevo GEVO Stock News

Gevo, Inc. (NASDAQ: GEVO)

Gevo is having an incredible time in the market at the moment. However, I believe that the gains that we’re seeing on the stock are nothing more than a drop in the bucket compared to the gains we’re likely to see moving forward. Today, we’ll talk about three reasons why it’s a good idea to get in on GEVO before it’s too late.

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Reason #1: Alaska Airlines Tests GEVO Jet Fuel

First and foremost, the biggest story that’s revolving around Gevo at the moment is its agreement with Alaska Airlines. Recently, this agreement took hold in a big way. Alaska Airlines made the decision to run two test flights using renewable jet fuel created by the company.

If these test flights go well, Alaska Airlines will likely continue to use the renewable fuel in future flights. This will likely send GEVO earnings skyrocketing. Not to mention, if things do go well, other airlines will want to be able to advertise the use of clean jet fuel. So, the sky really is the limit at the moment.

Reason #2: Marine And Off Road Indications

As if bringing their jet fuel to the market wasn’t enough GEVO recently announced another agreement that has the potential to send the company’s sales skyrocketing. Late last week, the company announced that it had entered into an agreement with Musket Corporation.

Under the new agreement, Gevo will be providing isobutanol to the company for blending with gasoline. Musket is a major fuel distributor and is part of the Love’s Family of Companies. According to the announcement that was made last week, the initial uses of the blended fuel will likely include marine and off-road markets. In a statement, Dr. Patrick Gruber, CEO at GEVO, had the following to say with regard to the agreement:

We believe Musket is an excellent partner to expand the use of isobutanol in gasoline blends, as our isobutanol production at Luverne builds. Musket and Love’s are significant players in the fuel distribution and retail in the U.S., so they have great reach to get our isobutanol into the market…”

Reason #3: How We Look At Fuel

I have to say that I’m not in the least surprised that we’re seeing so much positivity when it comes to GEVO at the moment. The reality is that, as consumers, the way we look at fuel is changing. Over the past several years, we have been hearing about the dangers of burning fossil fuels. As a result, we look to cleaner forms of manufactured energy.

Gevo is a company that is focused on the development of chemicals and clean fuels. So, the company is right in line with consumer sentiment when it comes to fuels. As a result, as the world continues to shift away from the burning of fossil fuels and toward cleaner options, GEVO will likely continue to see growth in revenue and earnings as its products prove to be one of the go-to options for clean fuel. All in all, things seem to be going well for the company, and I’m expecting the stock to continue reflecting this positivity.

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What Do You Think?

Where do you think GEVO is headed moving forward and why? Join the discussion at TalkTRENDZ from CNA Finance!

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Lumber Liquidators LL Stock News

Lumber Liquidators Holdings Inc (NYSE: LL)

Lumber Liquidators is having an incredible day in the market today, and for good reason. The company has announced that it has settled a crucial case, exciting investors. Today, we’ll talk about the case that was settled, how the market reacted to the news, and what we can expect to see from LL moving forward. So, let’s get right to it…

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LL Settles CPSC Case

As mentioned above, Lumber Liquidators is having an incredible time in the market today after announcing that it has settled a key case. The case against the company was filed by the Consumer Product Safety Commission, also known as CPSC. The case in question revolved around laminate flooring that was made in China, and a big concern among investors was that LL would be forced to recall this flooring. Of course, a recall would cost the company a massive amount of money.

The issues for LL started more than a year ago. This was when the popular television show 60 Minutes reported that laminate flooring products sold by Lumber Liquidators contained excessively high levels of formaldehyde. However, the company was able to avoid a recall by agreeing that it would no longer sell the products, including its existing inventory of the laminate flooring in question. Also, LL agreed to continue to test the homes of consumers who had previously purchased the product. In a statement, the CPSC made it clear that the flooring that is currently installed in homes should not be of concern. Here’s what they had to say:

Today’s announcement is not intended to cause consumers to pull up Chinese-made laminate flooring installed in their home…”

How The Market Reacted To The News

As investors, we know that the news moves the market. When positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the company’s stock as a result. Adversely, when negative news is released, we can expect to see declines. The news that was released today surrounding Lumber Liquidators was overwhelmingly positive. After all, investors have been fearful that the company would have to recall products that were sold to the masses, which would cost a massive amount of money. Because the case was settled, investors are excited, leading to gains in the value of the stock. Currently (10:35), LL is trading at $15.61 per share after a gain of $2.38 per share, or 17.99%, thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion with regard to what we can expect to see from Lumber Liquidators. While the news that was released was positive and will likely lead to short-run gains, the long-run view on the stock simply doesn’t seem so positive. Currently, the company is dealing with several issues, including weak operating cash flow, poor profit margins, horrible return on equity, and, with these combined, deteriorating net income. The bottom line is that, financially, LL simply isn’t doing well. This could lead to declines in the stock moving forward.

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What Do You Think?

Join the discussion at TalkTRENDZ from CNA Finance!

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Whole Foods Market WFM Stock News

Whole Foods Market, Inc. (NASDAQ: WFM)

Whole Foods market is having an incredibly rough day in the market, following up on declines that we saw on the stock yesterday. The reason for the drop is clear; the company received a warning letter from the United States FDA with regard to one of its largest plants. Today, we’ll talk about the warning letter, how the market reacted to the news, and what we can expect to see from WFM moving forward.

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WFM Receives Concerning Letter From FDA

As mentioned above, Whole Foods Market has had a rough time in the market over the past two trading sessions, and for good reason. The company has been declining as a result of a United States Food and Drug Administration letter that was issued to warn the company. According to the release, the letter cited serious violations when it comes to regulations associated with packaging, manufacturing, and storing food at one of the company’s largest plants.

At the Massachusetts WFM plant, the FDA found severe food-safety violations, along with listeria. The letter said that it had found ready-to-eat pesto pasta and ready-to-eat mushroom quesadillas mixed and prepared in areas of an assembly room. It noticed that, in these areas, condensation from ceiling joints fell directly onto the surfaces below, including the ready-to-eat foods.

On top of that, the FDA said that it saw an employee spraying ammonium sanitizer near an open colander of salad, as well as other worker infringements. For example, one employee was seen packaging ready-to-eat foods without washing their hands or changing gloves. In their letter, the FDA gave WFM 15 days to fix the safety issues found in the plant, offering the following comment:

The FDA has serious concerns that our investigators found your firm operating under these conditions…”

How The Market Reacted To The News

One of the first things we learn as investors is that the news moves the market. When positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. However, the news that was released with regard to Whole Foods Market was anything but positive. As a result, we’re seeing an overwhelmingly negative reaction in the market. Following up on dramatic declines seen during yesterday’s trading session, WFM continues to fall. Currently (12:32), the stock is trading at $31.16 per share after a loss of $1.36 per share, or 4.17%, thus far today.

What We Can Expect To See Moving Forward

Although this may surprise you, I’m seeing an incredible opportunity here. The truth is that the news surrounding WFM is indeed overwhelmingly negative. This will cause the stock to continue falling in the short run. However, I don’t see Whole Foods Market ignoring the warning letter. I’m expecting that the company will address the food-safety violations and pass the inspection with flying colors in 15 days. Buying at support and taking advantage of the overwhelmingly bullish activity that will follow will likely lead to great gains.

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What Do You Think?

Where do you think WFM is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!

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Gevo GEVO Stock News

Gevo, Inc. (NASDAQ: GEVO)

Gevo has been an incredibly interesting stock to follow as of late. Last week, the stock soared as it was announced that their renewable fuel will be used in airplanes. However, a recent announcement with regard to a secondary offering sent the value of the stock downward. Nonetheless, the secondary offering is actually good news. Today, we’ll talk about the airline that has adopted the bio fuel, why the secondary offering is a good thing, and what we can expect to see from GEVO moving forward.

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GEVO Fuels To Be Used By Alaska Airlines

Gevo is a company that is focused on the manufacturing of chemicals and bio fuels, and they recently made an announcement with regard to the use of the bio fuel. Last week, it was announced that Alaska Airlines had adopted the fuel and would start using it on some of their flights.

This is incredibly positive news. After all, think about all of the fuel that Alaska Airlines uses. This will greatly increase the demand for Gevo’s bio jet fuel. However, I don’t thing that it’s going to stop there.

You see, there has been a big movement over the past several years for the world to push to reduce their greenhouse gas emissions. To do so, a reduction in global reliance on fossil fuels is necessary. As GEVO fuels prove to be productive in the Alaska Airlines jets, more and more airlines are likely going to be contacting the company for a quote. After all, not only are bio fuels generally cheaper, but when companies go green consumers love it, so this will help other airlines to build and maintain strong brands.

GEVO Launches Secondary Offering

Shortly after the news that Gevo fuels would be used in Alaska Airlines planes, the stock climbed exponentially. However, days later, the company announced that it would be launching a secondary offering, which led to declines. After all, a secondary offering means that more people will be eating off of the same pie, making everyone’s piece a bit smaller.

The secondary offering will be of 21 million shares with an initial price of $0.45 per share. This will drive an estimated $9.5 million to GEVO. In a statement, GEVO CEO Pat Gruber had the following to say with regard to the secondary offering:

We’ve been operating on an extremely tight budget… Our back was to the walls. Having some cash is extremely useful at this stage in creating the best strategic options.”

While many see the secondary offering as a bad thing, I’m actually looking at it through more positive light. The reality is that companies generally need capital to grow. Growing production capabilities, marketing, and more all costs the company money. At this stage in the game, GEVO is likely going to need to increase its production capability for the orders that are to come. As a result, the company is in need of funding. While they could have taken out loans, that would have increased the risk to shareholders, making a secondary offering the best move!

Sure, the piece of the pie may be getting slightly smaller. Nonetheless, this pie is going to grow to be a massive one. So, everyone should eat well, regardless! Honestly, I think this move is brilliant!

Where Is The Stock Headed?

If you ask me, I see tremendous upside potential in Gevo. The reality is that the deal with Alaska Airlines is likely only the tip of the iceberg. As mentioned above, as the fuels prove to be successful in Alaska Airlines planes, we can expect to see more airlines follow suit and move toward renewable fuels. Since GEVO is one of the very few providers in that industry, and the leader on top of that, the company is likely to take the lion’s share of growth in the industry. All in all, I see incredible growth in the stock’s future.

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What Do You Think?

Where do you think GEVO is headed? Join the discussion at TalkTRENDZ from CNA Finance!

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