In The News: Oil Price Slump Continues, GE Cutting Baker Hughes Stake, and Home Depot’s Outlook
November 13, 2018
Let’s take a look at some of the top stories from around the markets, including a number of energy-related headlines and what Home Depot sees in its near-term outlook. By Kris Rosemann Crude oil prices (USO) continue their recent slide as oversupply fears creep back into the fore. OPEC recently cut its forecast for 2019 global oil demand growth for the fourth consecutive month, and the cartel expects supply growth from non-OPEC countries to exceed demand growth in the year. OPEC noted that its expectations for oil demand growth to slow relative to prior forecasts goes hand in hand with recent downward revision in the IMF’s recent reduction in global economic growth estimates. President Trump continues to target Saudi Arabia
In The News: Market Volatility, iPhone Unit Concerns, Wildfire Liabilities Piling Up
November 12, 2018
Let’s take a look at some top stories from around the markets including headlines in the biotech and tobacco spaces, some household names facing material selling pressure, and the significant impact of massive wildfires in California. By Kris Rosemann Market volatility persists as of the November 12 trading session. Concerns surrounding global trade disputes and a stronger dollar are weighing on investor expectations, and multiple big name companies facing selling pressure only add to less than rosy outlooks. The biotech space (XBI) remains under pressure with future price uncertainty providing a material overhang, and big tobacco is under pressure as a result of the potential for a ban on menthol cigarettes from the FDA. Simulated newsletter portfolio holding Altria (MO)
Alphabet’s Operating Margin Shrinks in Third Quarter; Free Cash Flow Still Robust
November 9, 2018
The company formerly known as Google continues to invest for long-term growth, which is impacting its operating margin and free cash flow, but the two measures remain solid, particularly the latter of the two. The company retains a level of financial flexibility that is matched by few other firms. By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea Alphabet (GOOG, GOOGL) continues to pour resources back into its long-term growth opportunities while generating robust levels of free cash flow, but the market was disappointed with its top-line growth in the third quarter of 2018, results released October 25, despite the figure coming in at 21% on year-over-year basis. The company’s revenue growth was strong across all geographies, and mobile search
Our Reports on Stocks in the Solar Industry
November 9, 2018
Structure of the Solar Industry The solar industry is extremely competitive and continually evolving as constituents strive to differentiate themselves to better compete within the broader electric power industry. Significant price reductions (per watt), reduced margins, and drastic market share shifts have become commonplace for participants. Profitability can be negatively impacted from government subsidies and sovereign capital that allow firms to operate unprofitably for extended periods of time. Production overcapacity is another major concern and will likely persist for some time. We think the structure of the solar industry is very poor. We have dropped coverage of stocks in the Solar industry. First Solar (FSLR) has been reassigned to the Broadline Semiconductors industry.
Dividend Increases/Decreases for the Week Ending November 9
November 9, 2018
Below we provide a list of firms that raised their dividends during the week ending November 9. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Aaron’s (AAN): now $0.035 per share quarterly dividend, was $0.03. Air Lease (AL): now $0.13 per share quarterly dividend, was $0.10. AmerisourceBergen (ABC): now $0.40 per share quarterly dividend, was $0.38. Assurant (AIZ): now $0.60 per share quarterly dividend, was $0.56. Atmos Energy (ATO): now $0.525 per share quarterly dividend, was $0.485. Atlantica Yield (AY): now $0.36 per share quarterly dividend, was $0.34. Black Hills (BKH):
Comps Accelerate and Margins Expand in Chipotle’s Third Quarter
November 8, 2018
Image Source: Mike Mozart The once beaten down fast casual restaurant chain Chipotle is back to delivering solid comparable restaurant sales growth thanks to menu price increases, and restaurant level operating margin expanded significantly as lower marketing and promotional spending was required to appease cautious consumers. By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea Chipotle (CMG) reported 8.6% year-over-year revenue growth in the third quarter of 2018, results released October 25, driven by new store openings and a 4.4% increase in comparable restaurant sales. Average check moved higher from the year-ago period due in part to a 3.8% effective menu price increase but was partially offset by a 1.1% decline in comparable restaurant transactions. This weakness in traffic was
Visa’s Free Cash Flow Charges Forward
November 8, 2018
Image Source: Visa Payment processing giant and simulated Best Ideas Newsletter portfolio holding Visa turned in an impressive level of free cash flow generation in its fiscal year 2018, and the company continues to grow at a double-digit rate while boasting robust operating margins. By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea Visa (V) reported a solid finish to its fiscal year 2018, results released October 24, and management’s fiscal 2019 outlook remains solid despite a number of risks facing the company, including exchange rate shifts, the potential for a hard Brexit, economic disturbances in select markets as seen in Turkey in Argentina, and geopolitical uncertainty such as trade disputes. Visa remains a tremendous free cash flow generator, and
Booking Holdings Delivers Solid Results in Seasonally Busy Third Quarter
November 7, 2018
Image Source: Luca Conti Simulated Best Ideas Newsletter portfolio idea Booking Holdings delivered results ahead of expectations in a number of measures in the third quarter, which is a seasonally busy quarter for the company. By Kris Rosemann Shares of simulated Best Ideas Newsletter portfolio idea Booking Holdings (BKNG) received a nice boost from the release of its third quarter report November 6, which followed a second quarter report that drove shares lower as a result of disappointing guidance issued. In its third-quarter earnings call, management stated that the lower third-quarter guidance was a result of it being in a period of relatively high uncertainty due to the impact of the World Cup and unusual weather in Europe during the
PayPal Person-to-Person Volume Growing Rapidly
November 6, 2018
Image Source: PayPal third-quarter earnings presentation PayPal continues to benefit from secular trends away from cash and towards mobile, and its free cash flow generation and balance sheet strength remain impressive. Person-to-Person volume growth has been robust. By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea PayPal (PYPL) continues to ride the secular trend away from cash, and nothing may be more exemplary of this than its continued rise in Person-to-Person volume, which advanced 50% in the third quarter from the year-ago period to roughly 25% of its total payment volume (TPV). PayPal’s third quarter report, released October 18, also revealed a 15% increase in active accounts added in the period on a year-over-year basis, and the 9.1 million active
Apple Turns in Solid Quarter; Will Stop Reporting Unit Sales Figures
November 5, 2018
Image Source: John Jones Apple’s fiscal fourth quarter report was one of ongoing momentum in many areas, but the investing community has taken great issue with its decision to stop reporting quarterly updates on unit sales of iPhones, iPads, and Macs. By Kris Rosemann Simulated newsletter portfolio holding Apple’s (AAPL) fiscal fourth quarter report, released November 1, has been a subject of even greater attention than usual for the largest company by market cap after it announced it would no longer disclose quarterly unit sales data for the iPhone, iPad, and Mac. We can’t say that we are fans of transparency levels declining, but we will not be joining the masses in blasting Apple for the move. Nevertheless, investors are
