Not Throwing Away This Garbage Hauler
July 27, 2015
It may not be a glamourous business but it is a good one. Pricing emanates from disposal operations – that’s what industry experts say. Waste has to go somewhere, and therefore whoever has the disposal operations sets the bar with respect to pricing from transfer facilities all the way through collections. After all, garbage pick-up operators won’t be in business for long if they pay more to dispose of waste than they charge to pick it up. Industry economics in the waste industry are relatively easy to understand. As for the players, Waste Management (WM) and Republic Services (RSG) have the largest disposal operations in the US. At the end of 2014, Waste Management owned or operated 252 landfill sites, the largest
Dividend Increases for the Week Ending July 24
July 26, 2015
Below we provide a list of firms that raised their dividends during the week ending July 24. 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 BancorpSouth (BXS): now $0.10 per share quarterly dividend, was $0.075. Bar Harbor Bankshares (BHB): now $0.255 per share quarterly dividend, was $0.25. Baylake Corp (BYLK): now $0.09 per share quarterly dividend, was $0.08. BBCN Bancorp (BBCN): now $0.11 per share quarterly dividend, was $0.10. B&G Foods (BGS): now $0.35 per share quarterly dividend, was $0.34. Chemical Financial (CHFC): now $0.26 per share quarterly dividend, was $0.24.
Selecting Winners
July 26, 2015
It’s hard to go wrong with exposure to the credit-card processing arena. Investors have made a lot of money in Visa (V), MasterCard (MA), Discover Financial (DFS), American Express (AXP) and Capital One (COF) during the past several years, but they’ve made the most with Best Ideas Newsletter portfolio holding Visa. Since Visa was added in November 30, 2011, the company has more than tripled, a return that is more than 50 percentage points better than MasterCard’s, more than 70 percentage points better than Discover’s, more than 120 percentage points better than Capital One’s, and about 150 percentage points better than American Express’. All have done well, but Visa has done the best. Long-time readers of Valuentum know that we’ve
Organic Growth Sweetens Nonalcoholic Beverage Industry
July 24, 2015
The nonalcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies that make various sparkling beverages, water products, juices, fruit drinks, energy and other performance-enhancing drinks. Pricing, advertising, product innovation, and the availability of in-store private-label beverages are key drivers that impact demand. Growth for nonalcoholic beverage producers has become increasingly dependent on the emerging global middle class in recent years. For example, Latin America was the most productive region for most producers in the second quarter. Consumers in developed economies have become more and more aware of the health concerns associated with sugar-sweetened beverages like soft drinks, and have therefore been more inclined to choose healthier alternatives. Industry participants are constantly innovating their products
Guide to Second Quarter Earnings; Big Pharma Experiencing Earnings Momentum
July 23, 2015
Abbott (ABT) Abbott is one of our favorites in Big Pharma. We know many of you hold the stock in your own portfolios, and frankly, the company is one of the best operators in its industry. Abbott’s second-quarter performance revealed continued strength in its global diagnostics and branded generics businesses. Foreign currency exchange headwinds have posed problems for almost every multi-national in our coverage, but on an operational basis, second-quarter worldwide sales leapt nearly 10%. Abbott kept its full-year 2015 adjusted EPS guidance range from continuing operations unchanged at $2.10-$2.20, a rarity across a pharma universe that’s experiencing fantastic earnings momentum as of late. Keys to the Quarter: We were very pleased with the traction witnessed in Abbott’s pediatric nutrition
Dividend Cushion Ratio Predicts Two More Cuts
July 23, 2015
Forward-looking, cash-flow based dividend analysis has proven its worth once again. Chesapeake Energy (CHK) recently suspended its dividend, and Hi-Crush Partners (HCLP) has significantly cut its dividend. In each case, the Dividend Cushion ratio appropriately warned members. Early in July and prior to the elimination of its dividend, Chesapeake Energy ranked near the top of our list of dividend yields to avoid. Based on its Dividend Cushion ratio of -7.7, we rated its dividend safety as VERY POOR, and its dividend growth potential rating was also VERY POOR. The firm updated its financial strategy July 21 and eliminated its common stock dividend, effective in the third quarter of 2015. A reduction in investable capital due to the weak commodity price
Guide to Second Quarter Earnings; Big Cap Tech Sets Somber Mood
July 22, 2015
Image Source: Fortune Live Media, Fortune Most Powerful Women Dinner With Yahoo CEO Marissa Mayer Apple (AAPL) There were no real surprises in Apple’s fiscal third quarter (calendar second quarter) results. The iPhone maker posted record quarterly revenue and net earnings of $49.6 billion and $10.7 billion, up ~33% and ~39%, respectively, thanks to record fiscal third-quarter sales of iPhone and Mac; its highest ever sales from services and the successful execution of the launch of the Apple Watch also buoyed performance. An “amazing quarter,” iPhone revenue advanced 59%, and customers and investors alike are looking forward to the release of iOS 9, OS X El Capitan and watchOS 2 in the fall. Apple’s gross margin expanded 30 basis points in
Keeping Both eBay and PayPal after Split
July 22, 2015
eBay (EBAY) and PayPal (PYPL) are no longer the same company. As we had previewed in the pre-split piece, once shares of eBay and PayPal started trading individually, shares of legacy eBay fell and PayPal soared. But that’s merely semantics. At the end of the day, eBay and PayPal had jumped a combined 4%+, and we continue to believe both are underpriced. The Best Ideas Newsletter portfolio will be updated to factor in the split-up upon publishing of the August edition on the 15th. We plan to update our 16-page report on eBay and launch independent coverage of PayPal following its first full quarter as a standalone entity. Let’s walk through their last quarterly results as a combined entity to
Aerospace and Automotive Demand Powering Most Industrials
July 22, 2015
Air travel growth and pent-up demand from delayed auto sales due to the Great Recession have provided a boom in spending within the commercial aerospace and automotive industries in recent years, respectively. The ever-increasing global population continues to be a driving force behind the expansion and adaptation of power end markets, and innovative solutions to meet growing global energy demand will continue to be a source of growth for industrials despite fluctuations in the energy-price markets. Such drivers in part have propelled the underlying performance of industrial giants GE (GE) and Honeywell (HON), among others. Winners and Losers Are Developing in Commercial Aerospace We expect commercial aircraft production and deliveries to continue to increase for at least the next three
