Our Reports on Stocks in the Electrical Equipment Industry
February 25, 2020
Image Source: Emerson Structure of the Electrical Equipment Industry The fragmented electrical equipment industry includes firms that primarily provide flow control and electrical components. Order trends and backlog are largely driven by the overall health of the economy, while all constituents must deal with volatile raw material prices. Most operate high fixed-cost business models, where operating leverage should be monitored closely, and face intense global competition. Still, we like the group’s exposure to recurring maintenance, repair, and overhaul (MRO) revenue and its large and growing emerging-market opportunities. We’re generally neutral on the industry’s structure. We’ve optimized our industrials coverage. For industrial reports, please click here.
Our Reports on Stocks in the Communication Equipment Industry
February 25, 2020
Image Source: KÄÂrlis DambrÄÂns Structure of the Communications Equipment Industry The communications equipment industry continues to undergo rapid change, as network traffic expands, new service offerings are introduced, and end user demand shifts. Competition among communication network solution vendors remains intense, as securing new opportunities often requires agreeing to less favorable commercial terms and pricing. Rivalry among constituents will only increase in coming years, as Chinese equipment vendors gain entry into the US market and incumbent competitors strive to retain share. We don’t think such conditions are favorable to generating long-term economic profit. We’ve optimized our tehnology coverage. To access the reports, please select here.
ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG
February 24, 2020
Image source: Centers for Disease Control and Prevention. ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today. — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a
Is a Stock Market Crash Coming? — Coronavirus Update and P/E Ratios
February 22, 2020
Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report — 32 We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates–estimates that are likely too high given the evidence we are seeing with respect to a slowdown due
Realty Income Closes Out 2019 With a Solid Earnings Report and Promising Guidance
February 21, 2020
Image Shown: Shares of Realty Income Corporation, a holding in our Dividend Growth Newsletter portfolio, have taken off year-to-date. By Callum Turcan On February 19, the commercial property focused real estate investment trust (‘REIT’) Realty Income Corporation (O) reported fourth quarter and full-year earnings for 2019. Its results beat market expectations for both its GAAP revenues and non-GAAP funds from operations (‘FFO’), which saw shares continue to march higher after performing quite well year-to-date. We include shares of O in our Dividend Growth Newsletter portfolio and continue to like the name. Please note that when we update our Retail REIT Industry models, it’s likely Realty Income will receive a nice boost to its fair value estimate and fair value estimate range.
MLPs Hit 52-Week Low
February 21, 2020
Enterprise valuation is paramount. In June 2015, Valuentum released its bearish case to Barron’s on Kinder Morgan (KMI) and the MLPs. This was no small call. Since then, on a price basis, the MLP ETF (AMLP) is down more than 50%, while the S&P (SPY) is up roughly 60% (orange line). Read more about this story in Value Trap. Award-winning book that recently earned acclaim from the prestigious Next Generation Indie Book Awards! Blue Ink Review Notable Book and Readers’ Favorite 5 Stars! Wall Street doesn’t know it has a problem. Index and quantitative investors have been free-riding on the backs of active managers for years, but growth in price-agnostic trading may finally have reached the tipping point. Brian Nelson,
Cole Haan Files to Go Public
February 21, 2020
By Callum Turcan Maker of footwear, handbags, sunglasses, and various other accessories Cole Haan Inc (TBD:CLHN) has filed to go public. One thing that makes this planned IPO particularly interesting is that Cole Haan was free cash flow positive in both fiscal 2018 (period ended June 2, 2018) to fiscal 2019 (period ended June 1,2019), generating $35 million and $38 million in free cash flows, respectively. The firm plans on trading on the NASDAQ Global Select Market, run by Nasdaq Inc (NDAQ), under the ticker CLHN. Additionally, please note that after the planned IPO, funds advised by British private-equity firms Apax Partners LLP and Apax Partners are expected to continue to own a “majority… of the shares eligible to vote
Newmont Posts a Great Earnings Report
February 20, 2020
Image Shown: A look at Newmont Corporation’s asset base, which is heavily centered on the Americas and Australia, with some exposure to West Africa as well. Image Source: Newmont – Fourth Quarter and Full-Year 2019 IR Earnings Presentation By Callum Turcan On February 20, gold miner Newmont Corporation (NEM) reported a fourth quarter and full-year earnings report for 2019 that pleasantly surprised, with shares of NEM up sharply after the report during the trading session that Thursday. Back on January 13 (link here), we added a modest weighting of NEM shares to our Dividend Growth Newsletter portfolio as part of our pivot to more defensive names given rising exogenous headwinds to the global economy. While Newmont’s top-line marginally missed consensus
Our Reports on Stocks in the Personal Services Industry
February 20, 2020
Image Source: Mike Mozart Structure of the Personal Services Industry The personal services industry is composed of a variety of firms, including those catering to man’s inescapable certainties: death and taxes. The funeral home/cemetery industry is charaterized by a large number of local-owned, independent operators, and pricing competition is intense. Death service firms sell fixed-price pre-need funeral contracts, which add uncertainty to operations if future costs are higher than expected. Tax service firms face price competition from independent tax preparers and CPAs, and initiatives to simplify tax-return preparations could hurt future performance. We’re neutral on the group. We’ve optimized our coverage. For related reports, please click here.
SmileDirectClub Comes Under Fire
February 20, 2020
Image Shown: SmileDirectClub Inc has come under tremendous regulatory fire of late, which has aggressively pressured shares of SDC. By Callum Turcan We covered SmileDirectClub Inc (SDC) back in September 2019 shortly after its IPO in this article here. Since going public at $23 per share (the unconventional orthodontics company’s shares fell aggressively during their first day of trading), shares of SDC have tanked with an eye towards growing regulatory concerns and related obstacles. In our conclusion we noted that: While SmileDirectClub’s growth trajectory is quite intriguing, we prefer to wait until we get a better idea of the regulatory landscape the start-up faces and what its financial performance will look like now that it’s a public entity in the
