GE Continues Move to Industrial Focus
March 18, 2015
General Electric (GE) continues to make moves to reduce its dependence on GE Capital, the company’s financial segment. The firm signed an agreement March 15 with global investment firms Värde Partners and KKR, along with Deutsche Bank (DB) to sell GE Capital’s Australia and New Zealand Consumer Lending Business at a value of A$8.2 billion. The division of GE provides personal loans, credit cards, and retail finance services and has a solid customer base in both personal and retail finance in Australia and New Zealand. Though we have no issues with GE Capital’s financial position (the company’s Tier I capital ratio stood at a healthy 12.7% at the end of 2014), management will continue to scale back the division to
Transaction Alert: Saying Goodbye to Chevron…For Now
March 16, 2015
The bottom continues to fall out of crude oil prices. The price of West Texas crude oil hit six-year lows during the trading session Monday dipping just below $43 per barrel. The world is drowning in a crude oil, and OPEC continues to produce to drive marginal US operators to the brink. The dollar is strengthening, which is exacerbating the decline in the price of this dollar-denominated commodity. The news is not “new.” We’ve been commenting on the fall of crude oil for months, and the lack of energy positions in the newsletter portfolios coupled with the bearish calls on the offshore drillers speak to how far ahead of the market we positioned readers. Remember Seadrill (SDRL)? It’s trading at
Visa’s Outlook for 2015 Is Solid
March 15, 2015
This article first appeared in the February edition of the Best Ideas Newsletter, February 15. Visa (V), a holding in the Best Ideas portfolio, is one of our favorite companies. The credit card giant benefits from a fantastic network effect, a dynamic that occurs as a result of more users swiping its cards driving more merchants to adopt the company’s network, which drives more users and so on. Visa’s operating margin is among the best in our coverage universe, and the company’s recently-reported fiscal first-quarter results showcase such strength. In the report, Visa reported currency-neutral operating revenue growth of 9%, which it levered into an 11% increase in net income and a 15% jump in earnings per share, to $2.53
Republic Services Looks to Strong 2015
March 15, 2015
Best Ideas portfolio holding Republic Services (RSG) is a dominant player in the US non-hazardous solid-waste services industry. For those that may not be as familiar with the trash taker, the company is a powerful force within the industry thanks to its significant landfill ownership, the value of which continues to increase over time due to a variety of structural factors from citizen’s group opposition (Not-In-My-Back-Yard) to increasing regulatory and environmental hurdles. Waste Management (WM) and Waste Connections (WCN) round out the solid-waste industry’s oligopolistic, landfill ownership structure. During the fourth quarter, results released February 12, Republic Services generated annual revenue of $2.23 billion, up 3.9%, and exceeded consensus expectations by a couple pennies per share on an adjusted basis.
Intel Looks to Mobile to Overcome PC Weakness
March 13, 2015
Intel (INTC) reduced its revenue guidance March 12, dropping expectations for the first quarter to $12.8 billion from $13.7 billion. The world’s largest semiconductor chip maker pointed to weaker-than-expected PC demand, as well as lower inventory levels in the PC supply chain. As far as Intel is concerned, management cited a lack of Windows XP refreshes from small and medium businesses, along with worsening macroeconomic conditions and currency headwinds as main factors in the decline. Despite the reduction in revenue guidance, the mid-point gross margin expectations remain at ~60% for the period due to higher average selling prices offsetting any profit deleveraging caused by the lower expected volume of PC sales. The firm’s R&D and MG&A spending and depreciation expectations
When “Bad” News Is “Good” News…Take A Euro Trip?
March 13, 2015
Pack the bags, kiss the grandkids, it’s time to do some traveling!!! Maybe to Europe? From a global perspective, for those whose wealth and income is generated in US dollars, you can arguably buy more with one US dollar today than at any other time in the past 12 years, according to a popular index that measures the value of the dollar versus a basket of other currencies. Expectations are being ratcheted up for impending interest rate hikes by the Fed, and this means that assets are flying into US greenbacks from all over the world. The dollar is strengthening against the euro, the pound, the loonie, the aussie, the rand, and the list goes on and on. This decade
Dividend Increases for the Week Ending March 13
March 13, 2015
Below we provide a list of firms that raised their dividends during the week ending March 13. 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 Children’s Place Retail Stores (PLCE): now $0.15 per share quarterly dividend, was $0.1325. Discover Financial Services (DFS): now $0.28 per share quarterly dividend, was $0.24. Equity Lifestyle Properties (ELS): now $0.375 per share quarterly dividend, was $0.325. Equity Residential (EQR): now $0.5525 per share quarterly dividend, was $0.50. General Mills (GIS): now $0.44 per share quarterly dividend, was $0.41. Goldman Sachs (GS): now $0.65 per share
The Apple Watch
March 10, 2015
Apple (AAPL) hosted a special event Monday, March 9, to show off its latest products and developments. The headliner of the event was the brand new Apple Watch, one of the most talked about gadgets in recent memory. Other topics for the recent addition to the Dow Jones Industrial Average index included iPhone momentum, growth in China, Apple TV updates, and the new MacBook development. Apple’s new MacBook Pro with Retina display looks to improve on the already solid foundation of Apple’s MacBook line. With several innovations, the lightest MacBook model has received solid reviews thus far. Despite the PC market being under pressure, Mac notebooks continue to experience growth. Another popular Apple product receiving an upgrade was Apple TV.
Dividend Increases for the Week Ending March 6
March 9, 2015
Let’s take a look at dividend increases for the week ending March 6.
