McDonald’s US Comparable Sales Fall
December 9, 2013
On Monday, McDonald’s (MCD) reported lackluster November comparable sales. European comparable sales (comps) were solid, up 1.9%, but comps in the APMEA (Asia/Pacific, Middle East and Africa) and US weighed on expansion, falling 2.3% and 0.8%, respectively. Performance in the APMEA was weighed down by weakness in Japan, while US comps suffered from heightened competitive activity and relatively flat industry demand trends that were only partially offset by strength in breakfast, chicken menu choices and expanded value offerings. Systemwide sales advanced 3.1% in constant currencies during the month. The news from McDonald’s is unique in that it runs counter to a report from the National Restaurant Association, released December 2, that the Restaurant Performance Index, RPI (1), hit a four-month
PC Shipments Expected To Stabilize
December 9, 2013
According to data released by the International Data Corporation (IDC) Worldwide Quarterly PC Tracker on December 2, personal computer (PC) shipments are now expected to drop more than 10% in 2013, slightly below the previous projection of -9.7%. Though 2013 will be the most severe yearly contraction on record, this news wasn’t the key takeaway. Instead, it was expectations for stabilizing demand by 2015 that provided a shot of optimism to the PC supply chain (see image below). Image Source: IDC The commentary provided by IDC was not terribly exciting, but market expectations are closer to the PC going the way of the dodo than stabilizing at just over 300 million units (roughly 2008 levels). We continue to believe that
Share Buybacks in Vogue for Portfolio Holdings
December 6, 2013
Showcasing strong cash flow generation, portfolio holdings Union Pacific (UNP) and Phillips 66 (PSX) have issued new buyback programs recently. On November 21, Union Pacific announced a new share repurchase authorization of up to 60 million common shares by 2017. The new four year authorization allows for the repurchase of roughly 13% of current shares outstanding. On December 6, Phillips 66 approved a new $2 billion share repurchase program. Since the third quarter of 2012, Phillips 66 has authorized a total of $5 billion in share repurchases and has increased dividends from $0.20 per share to $0.39 cents per share on a quarterly basis. Though we tend to prefer immediate dividend growth instead of buyback initiatives for most dividend growth portfolio
Surveying the Retail Landscape: Dollar General, Kroger, and Costco
December 6, 2013
On Thursday, Dollar General (DG), Kroger (KR) and Costco (COST) reported quarterly results. Dollar General’s third-quarter report showed same-store sales advancing 4.4%, which propelled total sales 10.5% higher during its third quarter (ending November 1). Kroger’s third-quarter report showed 3.5% identical supermarket sales growth, without fuel, during the period ending November 9, while Costco’s fiscal first-quarter results (ending December 1) revealed same-store sales expansion of 3% during the quarter. Dollar General’s quarterly performance not only bested that of Kroger and Costco, but it also stood head-and-shoulders above that of Wal-Mart (WMT), which reported a comparable store sales decline in Walmart US and only a 1.1% increase at Sam’s club, and Target’s (TGT) third-quarter performance, where US comparable store sales advanced only
Valuentum Members Are Reminded of the mREITs
December 5, 2013
“I am the advisor you referenced in the July newsletter who sold AGNC. Your timely article made me re-look at all of the mReits we owned, and we sold off nearly all of them over the following month after your article. I just calculated where we sold (because of your article) compared to where the mReits are today. Your article, which influenced the selling saved our clients over $1.1 million in equity price drops. That translates into $11,000 per year of fee income to the firm. You can bet that we will be re-subscribing when the time comes. Thank you for your hard work, and bringing additional value that was not owed or expected.” — Tim A. (source: Valuentum testimonials),
Apple Up on News of China Mobile Deal and Icahn Request
December 5, 2013
Apple (AAPL) continues to be a holding in the portfolios of our Best Ideas Newsletter and Dividend Growth Newsletter. Since we added the firm to our actively-managed portfolios, its Valuentum Buying Index rating has hovered between a 3 and an 8 (the equivalent of a ‘consider hold’ rating), and we have been quite pleased with the informative nature of the index. In what is typical of the Valuentum process, we add firms to our actively-managed portfolios when they register a 9 or 10 (the equivalent of a ‘consider buy’ rating) on the Valuentum Buying Index and hold them until they register a 1 or 2 (the equivalent of a ‘consider sell’ rating). However, just like a value investor doesn’t add all undervalued
Ford Shines Bright in November; Potential Channel Stuffing By GM; Toyota Suggests Industry Sales at Fastest Pace Since 2007; Nissan Sets November Record; Honda’s Second-Best November Performance
December 4, 2013
On Tuesday, Best Ideas portfolio holding Ford (F) put up its best November US auto sales performance in almost a decade. US sales at the automaker advanced 7% in the month, exceeding the mid-5% consensus forecast, while retail sales were up 9% for the period. The F-Series topped 60,000 sales for the seventh consecutive month (it sold 65,501 F-Series trucks in the month, up 16% on a year-over-year basis), and passenger car strength was led by Fusion and Fiesta sales, which jumped 51% and 26%, respectively. Total passenger car sales achieved the best sales result since 2002. November was a month to remember for Ford! The automaker announced that it would build 770,000 vehicles in the first quarter of 2014
Lampert May Be Bailing on Sears; J.C. Penney’s November Comps Showed Life
December 4, 2013
A Schedule 13D filed by Sears (SHLD) Monday showed that CEO Eddie Lampert had cut his equity stake in the beleaguered retailer to 48.5% from a prior 55.4%. Certainly this is not reassuring the markets as recent channel checks showed further deterioration in the company’s comparable store sales trends during November. Sears is struggling to remain relevant in today’s retail environment, and Lampert’s recent selling isn’t sitting well with us about the retailer’s sustainability as an entity. The firm’s third-quarter results were atrocious, and the holiday shopping season appears to be shaping up as equally poor for Sears. J.C. Penney (JCP) made headlines Tuesday on what initially seemed to be positive news: the company’s comparable store sales grew more than
Kinder Morgan Energy Partners’ 2014 Outlook Reveals Distribution Growth
December 4, 2013
On Tuesday, Kinder Morgan Energy Partners (KMP), one of the largest midstream (pipeline) energy companies in North America and a core Dividend Growth portfolio holding, announced expectations for 2014. Kinder Morgan Energy Partners expects to: Declare cash distributions of $5.58 per unit for 2014, an approximate 6 percent increase over its 2013 budget target of $5.28 per unit and an approximate 5 percent increase above its current expectation of $5.33. Generate approximately $6.4 billion in business segment earnings before DD&A (adding back KMP’s share of joint venture DD&A), an increase of approximately $750 million over the 2013 forecast. Distribute over $2.5 billion to its limited partners. Invest approximately $3.6 billion in expansions (including contributions to joint ventures) and small acquisitions.
Cyber Monday Online Sales Rocketed Higher; Mobile Growth Spectacular
December 3, 2013
On Monday, Channel Advisor (ECOM), a leading provider of cloud-based e-commerce solutions, released its assessment of Cyber Monday: Amazon and eBay are trending over 30% compared to last year. Google Shopping continues its gains as well. Search and CSE slowed down through the day with Search currently trending ~6% and CSE 14%. Overall it looks like Cyber Monday is (still) on track to be up over 30% compared to last year from a SSS basis, which would make it a new record day for e-commerce! Today, the firm followed up with a few additional anecdotes and its thoughts about the Cyber Five, the five days from Thanksgiving to Cyber Monday: Amazon – Amazon is off to a strong holiday. The
