Our Reports on Stocks in the Dollar Store and Department Store Industries
February 4, 2020
Structure of the Multiline Retail (discount) and Department Store Industries The retail discount store industry provides consumable basic needs to customers primarily in the low- and middle-income brackets. More than one third of the industry’s customers live in households that earn less than $20,000 per year, making the group’s results counter-cyclical–as more households generate lower income due to poor economic conditions, store growth and same-store-sales opportunities increase. Still, competition is fierce among constituents and with many other retailers, including grocery stores. But given the niche low-price strategy of participants and their counter-cyclical nature, we like the group. The department store industry faces intense pressure from online retail and fierce competition from smaller retailers and discounters. Firms in the industry tend
Microsoft Continues to Outperform After a Great Earnings Report
January 31, 2020
Image Source: Microsoft Corporation – Second Quarter Fiscal 2020 IR PowerPoint Presentation By Callum Turcan A mid-weighted holding in our Dividend Growth Newsletter portfolio, Microsoft Corp (MSFT) continues to fly higher after reporting second-quarter earnings for its fiscal 2020 (period ended December 31, 2019) on January 29. Microsoft beat on both the top- and bottom-line versus consensus estimates, and shares of MSFT yield ~1.2% as of this writing. Outperformance at its cloud computing operations were largely responsible for the beat and nice forward-looking guidance. Newsletter Portfolio Commentary We continue to like Microsoft in our Dividend Growth Newsletter portfolio even though shares have run up above the top end of our fair value estimate range. The strong performance of Microsoft’s stock
AT&T Continues to Follow Through With Its Mission
January 30, 2020
Image Source: AT&T Inc – Fourth Quarter and Full-Year Earnings Presentation By Callum Turcan One of our holdings in the High Yield Dividend Newsletter portfolio, AT&T Inc (T), reported full-year and fourth quarter results for 2019 on January 29. Shares of T sold off modestly on the mixed report (adjusted non-GAAP EPS beat consensus estimates but revenues fell short of expectations), and now shares of T yield ~5.6% as of this writing. We continue to like what we see in AT&T as management is delivering on major value creating initiatives: deleveraging, margin expansion, and ultimately free cash flow growth. More information on the High Yield Dividend Newsletter >> Free Cash Flow Giant AT&T generated almost $48.7 billion in net operating
Debt-Free Facebook’s Free Cash Flow Surges 38%, Adds to Buybacks
January 30, 2020
Image Source: Facebook Q4 2019 slides. Revenue growth at Facebook remains solid, if not impressive. By Brian Nelson, CFA On January 29, Facebook (FB) reported better-than-expected fourth-quarter 2019 results. In the quarter ending December 31, total revenue advanced 25%, but total costs and expenses leapt 34%, translating to operating-income expansion of just 13%. This was better than the full-year number, which showed operating income fall 4% as costs ballooned. We don’t think the market liked the full-year numbers which were weighed down by a weak first half of the year. The fourth quarter, itself, was solid, and Facebook continues to plow ahead. Image Source: Facebook Q4 2019 slides. The company’s operating margin has bounced back significantly. While we expect the
Latest Write-ups, Our ALA Excursion and Apple
January 30, 2020
— Latest Write-ups, Our ALA Excursion and Apple — Find links to our latest research in this note. Value Trap continues to gain traction in the public domain. We’ll talk Apple and let you know what we’re watching after the close January 29. — Hi everyone, — We’re back from a three-day retreat at the American Library Association (ALA) Midwinter conference, and I must say I was mighty impressed with the response we received from sharing Value Trap. We handed out copies to librarians around the country, from professional to academic to public and beyond. I fully expect that Value Trap will be in most databases around the country, and I think it makes for nice exposure for advisors and industry participants that submitted a
The Great Guyanese Oil Boom
January 29, 2020
Image Shown: A drill ship floating in open waters. Image Source: Exxon Mobil Corporation – 2019 IR Presentation By Callum Turcan We’re going to get into the potential opportunity for energy producers in Guyana, but first, one thing that often gets lost in the noise surrounding press releases and presentations announcing new upstream projects coming online is that Exxon Mobil Corp (XOM) and its peers are contending with serious base decline rates. Decline rates are around 3-5% per year for conventional fields depending on the level of investment made in base maintenance (along with recovery rates and the quality of the rock), which includes such things as gas/water injection projects (this entails drilling injection wells to maintain reservoir pressure and often involves
Why *NOW* Do You Care About Boeing’s Stock?
January 23, 2020
Image Source: Robert Sullivan In no, way shape or form should you *now* be interested in Boeing’s stock. Let’s explain. By Brian Nelson, CFA I used to cover Boeing (BA) full-time when I worked as a senior equity analyst at Morningstar many moons ago. I remember pounding the table on the name to many a buyside shop in Chicago when it must have been trading well under $100 at the time (now more than 10 years ago). I remember posting an old video of me with Pat Dorsey, who now runs his own shop in Chicago, Dorsey Asset Management. That video used to be here, but as in what usually happens on the Internet, the darn thing doesn’t exist anymore.
