Palo Alto Networks is a cybersecurity company protecting enterprise, government and service provider customers. Their security platform  brings together all key network security functions, including advanced threat protection, firewall, IDS/IPS, and URL filtering. As such,  organizations can safely enable the use of all applications, maintain complete visibility and control and at the same time protect themselves from internal or external attacks.

The company has currently more than 17,000 customers in over 120 countries across multiple industries, including 70 of the Fortune 100 companies. IT research firm  Gartner ranked them a enterprise firewall market leader in 2011, 2012 and 2013 (published April 2014).

We sell our platform through a high touch, channel fulfilled sales model. Our business is geographically diversified, with 63% of our total revenue from the Americas, 23% from Europe, the Middle East, and Africa (EMEA), and 14% from Asia Pacific and Japan (APAC) in fiscal 2013. As of July 31, 2013, we had over 13,500 end-customers in more than 120 countries.

The company was fighting a long battle with rival Juniper Networks over infringement of it's patents, but that was settled in May for $175 million, in addition, both companies agreed not to sue each other for the next 8 years. The founder of PANW Nir Zuk, used to work at Juniper and of the pioneers in cybersecurity and firewall development,  a knowledge which he later used to create Palo Alto Networks.

They currently have only 4% of the firewall market, but have grown 50% in the recent quarter, outpacing all competition. It is estimated, that security leaks and attacks cost companies and governments over 400 billion USD annually. As a result, major security companies are jumping over one another to develop the best solutions for their clients. But Palo Alto Networks has already done it, and is far ahead of the crowd. As of 2013, they held 19 patents, with 55 additional applications expiring in years 2017-2029

Here is a snapshot of PANW 3 year financials:

Palo Alto has grown steadily over the years, with gross margins around 72%. The company has not achieved a profit during the last year, due to an increase in R&D and sales expenses of 62% and 73%.

VALUATION

The company is not expected to turn a profit next year, so I can only value it based on sales. They are currently trading at a P/S ratio of 11.7. However the company is growing by 50%, which would translate to a P/S of only 5.8. Their closest competitor Checkpoint Software (CHKP) trades at a ratio P/S of 9, but is growing a measly 5%, which is only a fraction of PANW growth.

I believe Palo Alto Networks has significant upside, based on their competitive advantage and future industry growth. Software companies like this usually achieve exploding profitability once they main R&D is over, after which they just collect service payments at no extra cost. 

1. Interactive Brokers

The undisputed leader in online trading, Interactive Brokers offers the best and cheapest solutions for investors and traders worldwide. Commissions get as low as $1 per trade, depending on the exchange and product you are trading. IB offers stocks, options, warrants, bonds, futures, forex, funds, etfs and many others, on exchanges in US , Europe (almost all countries), Asia (Japan, India, Hong Kong, Singapore, Korea) and South America. The catch is, that you need a minimum of 10 000 USD to open an account.

The company also offers master account solutions for hedge funds and advisors , through which they can manage their clients. I myself have an account with IB simply because they are the best and cheapest. I also manage some of my clients through here, as it offers a safe and convenient way for funds management.

2. Charles Schwab

Schwab is a relatively old company, which offers online trading for stocks, options, bonds and mutual funds. Their fees are sometimes higher, but you can open an account with as low as 1000 USD. The good thing is, that they also offer stock markets in Hong Kong, Japan, Canada, UK and the rest of Europe.

3. Saxo Bank

The Danish bank emerged as a leader for European retail investors, offering a lot of exchanges at affordable prices. You can trade all European and North American stocks, plus Singapore, Hong Kong, Australia, Tokyo. The company offers stocks, bonds, forex, futures, options, CFDs and funds. You also get lower commissions if you trade more frequently or deposit a large sum in the account.

4. Fidelity Investments

One of the largest investment companies in US, Fidelity has a wide range of products in nearly 25 countries and 16 currencies. You can trade stocks, funds, options and bonds in North America, Europe, Hong Kong, Japan, Singapore and South Africa. Fidelity is definitely one of the cheapest brokers out there, beaten only by Interactive Brokers.

Each broker has different commissions, and they might not accept customers from certian countries. So check individually before you open an account, to find the best one that suits you.

Cadila Healthcare is an Indian pharmaceutical company headquartered in Ahnedabad, Gujarat. Currently, it is the fifth largest pharma company in India, with a significant presence in generic drugs. It was founded in 1952.

The global pharmaceutical market is estimated to have expanded at the rate of 3-4% during 2012 and reached the size of over US$ 980 bn. The growth in 2012 was lower compared to the earlier years, especially in developed markets.

The Indian pharmaceutical market, which had been continuously growing at around 15% for the last few years slowed down, registering a growth of 11.9% during the financial year 2012-13, and crossed Rs. 70,000 crores. The key reasons for this slow growth was the strong base of the previous year, lower discretionary spending and defering of treatments. 

Chronic segments registered a higher growth as compared to the acute segments. Diabetics, urology, anti-malarial and CVS therapeutic areas registered a higher growth during the year (Source: AIOCD AWACS report).

Manufacturing is done in 4 formulation plants, 2 technical centers and 20 depots spread across India. The company has also more than 4000 distributors and 50 000 dealers for it's products.

According to Insecticides, the Indian agrochemicals market is expected to grow to $1.95 billion in 2014, and $3.5 billion in 2015, presenting a lot of opportunities for growth. The reason for it is, that India's consumption of agrochemicals per hectare is one of the lowest in the world - 0.58/ha, compared to 4.5 kg/ha in US or 11 kg/ha in Japan. This suboptimal usage translates to crop losses of 20-30% per year.

The average 5 year sales growth rate is 24%, profit growth rate is 14%, which means there has been a decline in margins, as can be seen on the chart above.

VALUATION

I did a three stage DCF valuation, with the following assumptions:
- discount rates of 8,10 and 12%
- terminal growth of 2%
- Growth for next 5 years (1st stage) of 15% and 5 years thereafter 7.5% (2nd stage)
- Growth for next 5 years (1st stage) of 10% and 5 years thereafter 5% (2nd stage)

The company seems undervalued even under pessimistic conditions (10% discount rate and only 5% growth), giving a price of 511 Rs., giving a 19% upside from it's current levels of 430 Rs.

RISKS
- the main risk here seems to be competition, which is bigger and better capitalized: Bayer Cropscience, Atul, PI Industries, Monsanto, Dhanuka Agritech, Rallis India and others.

Overall, it's a very solid and fast-growing business in a competitive field. The shares seem undervalued a bit, but it all depends on the future growth they can achieve. I believe the Indian agrochemical industry is still in early stages, and the number of companies in the field demonstrates it's future potential.

10. Terra Nitrogen

Terra Nitrogen Company, L.P. is engaged in the production and sale of nitrogen fertilizer products.

Market cap: $2.6 billion
Dividend yield: 8.54%
Payout ratio: 91%
P/E ratio: 10
P/S: 3.8

Almost 20 years, fund manager and expert on quantitative finance James O'Shaugnessy published his book "What works on Wall Street." In it he argued, that buying stocks with low price to sales, price to book and price to cash flow ratios outperforms a stock index significantly. So let's take a look at some of India's biggest companies selling for low price to sales multiples:

10. Union Bank of India

Market cap: 13866 Rs. Cr.
Price to Sales: 0.47
P/E ratio: 8.1
Dividend yield: 1.48%
Sales growth: 16.8%
Promoter holding: 60%

Insider buying is many times a good indicator if the future direction of a stock. After all, insiders know the most about their company and as such can usually estimate it's value. Let's take a look at biotech stocks bought by insider in the past year (min. market cap 300 million):

10. Incyte Corporation

Incyte Corporation, a biopharmaceutical company, focuses on the discovery, development, and commercialization of proprietary small molecule drugs primarily for oncology and inflammation.

Market Cap: $9.4 billion
Insider buying: 51.35%
Shares float: 150 million
Insider ownership: 0.8%
P/B: -

I have looked at UK stocks paying the highest dividend, the minimum is a market cap of 300 million GBP to qualify.

10. Balfour Beatty

Balfour Beatty plc is engaged in infrastructure business primarily in the United Kingdom and the United States.

Market cap: 1.6 billion
Dividend yield: 5.93%
Payout ratio: 70%
P/E ratio: 12

Agile Therapeutics is a specialty pharmaceutical company focused on the development and commercialization of new prescription contraceptive products.

Their product candidates are designed to provide women with contraceptive options that offer greater convenience and facilitate compliance. The lead product candidate, Twirla™, also known as AG200-15, is a once-weekly prescription 
contraceptive patch currently in Phase 3 clinical development. Twirla is based on a proprietary transdermal patch technology, called Skinfusion®, which is designed to provide advantages over currently available patches and is intendedto optimize patch adherence and patient acceptability.

An that's exactly what the buzz is about. Yesterday, the company announced a new patent for it's Skinfusion transdermal delivery service. The stock eventually closed up 35%.

The company went public in June, and has increased almost 100% since then. With a market cap of 192 million and share float of 18 million, the stock might still be a buy. Insiders have bought more than 5 million shares since it's IPO.

"The granting of this patent further strengthens the patent protection of our proprietary Skinfusion® transdermal technology used in our contraceptive patch, Twirla currently in Phase 3 clinical development," said Agile president and CEO Al Altomari. "The issuance of this patent demonstrates our commitment to protecting our intellectual property in our proprietary transdermal technology and is expected to provide protection into 2028."

Buying stocks below book value is a very old strategy. Benjamin Graham used it extensively during various market panics to get hold of cheap stocks. You may find a lot of bargains in this area, but beware, because some of them have real reason for selling so low.

11. Mitsubishi UFJ (MTU)

Mitsubishi UFJ Financial Group, Inc., through its subsidiaries, provides financial services in Japan and internationally. The company also engages in the wholesale and retail securities businesses.

Market cap: $85 billion
Price to book: 0.74
Dividend yield: 1.9%
Forward P/E ratio: 16

Many investors and researchers agree, that short sellers are smart money, more often than not, stocks with high short interest experience negative returns in following months or years. Here is a list of the most shorted stocks on LSE:

9. AMEC plc (AMEC.L)

Short float: 5.4%
Market cap: 3.2 billion GBP
Dividend: 0%


The company provides consultacny, engineering and project management services to many industries including: oil and gas, mining, clean energy and various infrastructure markets. AQR Capital and Oxford Asset Management are among hedge funds holding shorts.

Dividends are an important part of shareholder's return. Some companies do not pay them and reinvest all their earnings, there are usually smaller businesses in rapidly growing industries. Mature companies pay out most of their earnings in dividends, as growth opportunities are depleted and markets saturated. Look for companies which can grow their dividends and maintain a stable payout ratio.

10. NTPC

Market cap: 125043 Rs. Cr.
Dividend: 3.79%
Payout ratio: 37.7%
Industry: Utilities
P/E: 11.39

9. Multi Commodity Exchange of India 

Market cap: 3150 Rs. Cr.
Dividend: 3.89%
Payout ratio: 40%
Industry: Commodity exchange
P/E: 20

Short-selling is one of the most debated subjects in stock investing. Some people say it damages companies, others say it brings equilibrium to the markets. However, research has shown, that short sellers many times accurately predict the problems in a business and do it much sooner than Wall Street or the general public. 

The hardest part about shorting is timing, a bad stock can go up much longer than you can stay solvent. I have taken only companies with a market cap of 2 billion and higher, so they might still provide short opportunities.

13. Solarcity (SCTY)

The company designs, installs, and sells or leases solar energy systems to residential, commercial and government entities in the United States.

Market cap: $6.3 billion
Short float: 28%
Short interest: 2.2
Shares float: 44 million
Dividend: 0%

Dividend stocks in Hong Kong are usually property companies, which have valuable real estate and rent it for fixed income. Prices of these stocks have recently gone down, pushing the yields up and creating interesting opportunities. Here are the top 13 dividend stocks in Hong Kong:

13. China Aluminum International Engineering Corp (2068)

China Aluminum International Engineering Corporation Limited is a China-based technology, engineering service and equipment provider in the nonferrous metals industry.
Market cap: 7.5 billion HKD
Dividend yield: 5.13%
Payout: 20%
P/E: 3.2

12. Industrial and Commercial Bank of China (1398)

The company provides  banking and related financial services, including commercial banking, investments, insurance, fund management and various other services.

Market cap: 1.5 trilion HKD
Dividend yield: 5.96%
Payout: 34%
P/E: 5.2

I like to buy stocks which are growing very fast, they more often than not compensate for the risk inherent in them. As you can notice, these companies mostly don't pay any dividends and are small to mid-caps. I took only those with a market cap of 1000 Rs.Cr. and higher and sales greater than 100 Rs.Cr.

9. SKIL Infrastructure Ltd

Market Cap:  1144.73 Rs.Cr.
Industry: Construction
Trailing 12-month growth: 81%
Dividend: 0%