Looking Forward: DLLR, HEV, RIGL

DLLR: Gains over 15% Today and Tops a 52-Week High

HEV: Gets Significant Coverage

RIGL: Presses Regulators for Drug Approval

Gaining over 15% this morning is Dollar Financial Corp., (DLLR) http://www.dfg.com/ which is currently trading in the $20.63 range. If DLLR can hold that price, it will set a new 52-week high, beating its previous mark of $20.42. DLLR topped its 3-Month average trading volume early in the session.

DLLR management announced after market yesterday the Company easily beat street estimates for its Q1 2010 earnings. Analysts were looking for $0.41 and DLLR delivered a pro-forma EPS of $0.66 ($0.22 fully diluted). DLLR is a short-term (6 Mo) 'Buy' for me.

Even though it's at its high, I think DLLR can make the $25 level based on two things: First of all, as a paycheck lender and pawn shop operator, DLLR serves a need for low income and no income people and I don't see that need disappearing before March and two; the Holidays are essentially here, followed up by tax time, and people will a; want to spend more and b; have to contribute to their taxes. As the economy improves in 2010, DLLR could return to this $20 level and turn into a sell. Maybe. Two sides of the street: more unemployment means fewer paychecks cashed, but more items pawned to meet expenses.      

The DLLR Q1 numbers also show a trend: EPS were down by half y-o-y when the recession and the markets bottomed out (22 cents now vs. 46 cents then). For Q1 2010, DLLR revenues fell 7% to $141.8 million. The good news was also found in DLLR's 'Provision for Loan Losses' -which is expressed as a % of gross consumer lending revenue- which improved to 14.8% from 18.7% in Q1 2009. Also good is the fact that sequentially, from Q4 09 to Q1 10, revenues increased 9.1%.

Guidance

DLLT management expects fiscal 2010 earnings between $2.10 a share and $2.30 a share, excluding items. Analysts are looking for earnings of $1.84 a share.

and just an investing note...

As of June 30, 2009, DLLR had a network of 1,206 stores, including 1,031 company-operated financial services stores and 175 franchised and agent locations in the United States, Canada, the United Kingdom, the Republic of Ireland, and Poland. A large part of DLLR's consolidated revenue is generated outside of the U.S. and U.K. and the Company's foreign subsidiaries are impacted by fluctuations in currency exchange rates when translated into U.S. Dollars. 

Sign-up for Free to Receive Future Commentary on the Financial Services Sector.

DLLR

Gaining 10% this morning is Ener1 Inc. (HEV) http://www.ener1.com/ currently trading in the $5.35 range. HEV is very heavily traded for a SmallCap. At this price, HEV is far below its 52-week high of $9.49. I believe there's money to be made here. When HEV hit that $7.50 mark in September, it was an anomaly of sorts, but I do think there is a floor to be made at the $7 level. With over 6% of its outstanding shares on the short-sellers list, I think they'll leverage out of their positions at this price point or as inches towards $7.   

Today, HEV received initial coverage from research house Deutsche Securities with a 'Buy' ranking. I agree; HEV is a long-term 'Buy' for me.   

The Battery Sector

I have a different take on this sector. I don't find the majority of car battery makers as providers, but rather as acquisition candidates (which always pumps up the price). There are a number of smaller market cap companies in this sector and as the Healthcare debate and financial regulatory debate turns back to the 2010 energy debate, BigCap companies will be looking for smaller enterprises that have made strides in the propulsion of electric cars and hybrids (for licensing revenues if nothing else). I think HEV is a prime candidate to be bought up in the long-term.    

HEV makes rechargeable lithium-ion batteries and battery systems in the United States and South Korea. It operates in three segments: Battery, Fuel Cell, and Nanotechnology. HEV will report its Q3 2009 earnings on November 9, after the market.

HEV                                                                     RIGL

Gaining 8.8% this morning is Rigel Pharamceuticals Inc., (RIGL) http://www.rigel.com/ currently trading in the $7.12 range. RIGL is also a very heavily traded stock for a SmallCap. At less than half of its 52-week high of $14.75 set on 07-21-09, RIGL is a puzzle in progress for me and I think of it as a 'Watch Closely' stock.

Here's why: RIGL is one of those stocks that displays 'Tall Mountains and Deep Valleys' in its trend lines. Now $7.12, it was at $8.50 in August and trying to distinguish the support level eludes me. $7.50? $7? The RIGL Q3 EPS loss was $0.70 vs. estimates of $0.58.      

I like the management at RIGL. They are not deterred easily and seem to know exactly the field of play they are operating in: getting a drug approved. I think the story here is tenacity. Last week, RIGL management met with representatives of the FDA to discuss the clinical profile of RIGL's R788 and RIGL's proposed Phase III development plan for patients with rheumatoid arthritis. RIGL intends on entering Phase III trails in the first half of 2010 and will meet with representatives of the European Medicines Agency (EMEA) by the end of 2009 to discuss the European approval requirements.

Another thing I really like about RIGL is their alliances and a management awareness of share value that is tied to a typical Pharma deal. RIGL has collaboration agreements with Janssen Pharmaceutica N.V.; Pfizer, Inc.; Novartis Pharma AG; Daiichi Pharmaceuticals Co., Ltd.; Merck & Co., Inc.; and Merck Serono. James M. Gower, chairman and chief executive officer of RIGL said on the release of the Q3 report, "We still expect to enter into a corporate collaboration agreement before initiation of our planned Phase III trial of R788 in rheumatoid arthritis patients in the first half of 2010." When RIGL announces that news; the stock will soar.

The RIGL Pipeline: R788 and; a Phase II clinical trial for the treatment of immune thrombocytopenia purpura, B-cell lymphoma, and T-cell lymphoma; and a preclinical stage for the treatment of lupus, R348, which is in Phase I clinical trial for Psoriasis; R763, which is in Phase I clinical trial in the area of oncology; and R343, a Phase I clinical trial product for asthma.

If you'd like to know of any changes in our opinion of DLLR, HEV or RIGL

(or if SCN officially recommends them as trades)

be sure to sign up for our free weekly newsletter today.