Our Reports on Stocks in the Financial Tech Services Industry
October 27, 2019
Image Source: frankieleon Structure of the Financial Tech Services Industry The financial tech services industry is primarily composed of firms that generate revenue by charging fees to customers for providing transaction processing and other payment-related services. Constituents operate in a rapidly-evolving legal/regulatory environment, particularly with respect to interchange fees, data protection, and information security. Several participants benefit from a significant competitive advantage – the network effect. As more consumers use credit/debit cards, more merchants accept them, thereby creating a virtuous cycle. The industry is one of the most attractive in our coverage. We’ve optimized our tehnology coverage. To access the reports, please select here.
Amazon Contends with Rising Operating Expenses and Shrinking Gross Margins
October 25, 2019
Image Shown: Shares of Amazon Inc have stumbled so far in 2019 as the headwinds from rising tariffs, largely a product of the US-China trade war, combined with a competitive cloud computing landscape put downward pressure on its profitability levels. By Callum Turcan Amazon (AMZN) reported third quarter 2019 earnings after the market close on Thursday October 24 that underwhelmed investor expectations and saw shares plummet after-hours. However, shares of AMZN recovered somewhat throughout the trading session on Friday October 25. While GAAP revenues climbed 24% year-over-year to $70.0 billion in the third quarter, GAAP operating income declined 15% year-over-year to $3.2 billion due in part to rising operating expenses (growth in marketing, technology and content, and G&A expenses outpaced
We’ve Dropped Coverage of the Aerospace Supply Chain
October 25, 2019
Image Source: Kevin Structure of the A&D Supplier Industry The aerospace supply chain will benefit from the multi-year backlogs at the airframe makers, Boeing and Airbus. Though the current upswing looks robust, commercial aerospace has historically been cyclical and remains influenced by airline profits, passenger traffic, credit-market health, and geopolitical conditions. Participants generally operate under contracts with significant long-term price concessions, so cost-containment remains critical. The strongest suppliers are those that have long-standing customer relationships, technical expertise, and state-of-the-art manufacturing facilities. We like the group. We’ve dropped coverage of the A&D Supplier Industry.
Portfolio Holdings Intel and Visa Hit It Out of the Park
October 25, 2019
Image Shown: Shares of Intel Corporation leapt higher on Friday October 25 as the market digested its solid earnings report and guidance for this quarter. By Callum Turcan Intel One of our favorite Dividend Growth Newsletter and Best Ideas Newsletter portfolios holdings, Intel Corporation (INTC), posted third quarter fiscal 2019 earnings (period ended September 28) on October 24 that handily beat consensus top and bottom line estimates. Revenue in the third quarter on a GAAP basis came in at $19.2 billion, flat year-over-year, which management noted was $1.2 billion higher than guidance issued out in July. This outperformance was driven by Intel’s ‘data-centric’ offerings, with sales up 6% year-over-year, as Intel Xeon processors for data centers sold well. Additionally, Intel
Our Reports on Stocks in the Prime Aerospace & Defense Industry
October 25, 2019
Image Source: Robert Sullivan Structure of the Aerospace and Defense Industry The global commercial aerospace duopoly is being challenged by encroaching international competitors who are intent on increasing market share, but Boeing and Airbus continue to dominate the large commercial aircraft segment. Long-term demand for commercial aircraft is cyclical and depends on the health of the credit markets, airline customers, and lessors, but massive backlogs and a strong multi-decade demand outlook are reasons for confidence. The defense industry has strong competition in all market segments and remains dependent on government funding decisions and competing budget priorities. We’ve optimized our industrials coverage. Our reports can be found here.
We’ve Dropped Coverage of the Business Services Industry
October 25, 2019
Image Source: Franz Conde Structure of the Business Services Industry Firms in the business services space primarily focus on management consulting, technology/data-integration services/software and outsourcing solutions. Participants generate high returns on invested capital, but the business services marketplace is very competitive, and firms can often face pressure from off-shore service providers in lower-cost locations (India, Philippines and China). Such competition may inhibit firms’ ability to obtain sufficient pricing for services, and economic conditions may hinder the capability of clients to pay for such services. Still, we’re generally neutral on the group. We’ve dropped coverage of the Business Services industry.
Weyerhaeuser Faces Deteriorating Financials While Trying to Manage a Monstrous Debt Load
October 25, 2019
Image Shown: Weyerhaeuser Company – Second quarter 2019 IR Presentation By Callum Turcan One very interesting space of the REIT investing world includes the timber industry. Weyerhaeuser Company (WY) is a Seattle-based timber REIT that controls and owns ~12 million acres of timberland in the US, along with managing ~14 million acres in Canada via long-term licenses. The company commenced operations way back in 1900, and shares of WY yield 4.6% as of this writing. Most of Weyerhaeuser’s adjusted EBITDA comes from its ‘Timberlands’ and ‘Wood Products’ segments; however, its ‘Real Estate, Energy, and Natural Resources’ segment has become more relevant of late. Our fair value estimate for WY stands at $30 per share, roughly where Weyerhaeuser is trading at
Dividend Growth Newsletter Portfolio Holding Microsoft Posts a Nice Quarter
October 24, 2019
Image Source: Mike Mozart By Callum Turcan On Wednesday October 23, Dividend Growth Newsletter portfolio holding Microsoft Corporation (MSFT) reported first quarter results for fiscal 2020 (period ended September 30) after the market close that saw shares of MSFT move higher the next day. The tech giant beat consensus estimates on both the top and bottom line due to sustained momentum at its cloud offerings, with growth led by Azure and Office 365. During the first quarter, Microsoft’s Office 365 commercial monthly active users passed 200 million. We continue to like Microsoft’s free cash flow growth potential and see the firm sporting a great dividend growth trajectory given its pristine balance sheet and quality cash flow profile. Shares of MSFT yield
Our Stock Reports on Companies in the Distributors Industry
October 24, 2019
Structure of the Industrial Distributors Industry Though consolidating, the industrial distributors industry remains fragmented and highly competitive. Delivering cost savings, convenience, and product availability are the major competitive factors. Some rivals use vans to sell products in markets away from their warehouses, while others rely on mail order, websites or telemarketing sales. Still, others operate stores and use centralized distribution centers to supply their networks. The industry is economically-sensitive and exposed to the threat of aggressive pricing strategies, but we generally like the group’s massive distribution platforms that are difficult to replicate. We’ve optimized our industrials coverage. Our reports can be found here.
