Buffalo Wild Wings Over $90
April 11, 2013
Shares of Best Ideas Newsletter holding Buffalo Wild Wings (click ticker for report: ) are trading back over $90 again today. We recently increased our fair value estimate to $92 per share, and we anticipate additional upside as the market becomes privy to the firm’s wonderful growth trajectory.
eBay Breaking Above $57
April 10, 2013
Shares of Best Ideas Newsletter holding eBay (click ticker for report: ) have recovered from a March pullback and are now hitting fresh 52-week highs. eBay looks poised to break above its all-time high of $58.
Used Cars Sales Remain Spectacular at CarMax
April 10, 2013
Used and wholesale car dealership CarMax (click ticker for report: ) reported wonderful results for its fiscal year 2013 fourth quarter. Revenue surged 14% year-over-year to $2.8 billion, easily exceeding consensus estimates. Earnings per share rose 12% year-over-year to $0.46, in-line with consensus expectations. With all of the hoopla surrounding new car purchases, CarMax continues to dominate the used car market. Comparable store unit sales increased 6% during the quarter, while total used unit sales jumped 12%. Average sales prices increased 4% year-over-year to $19,287, benefitting from increased market share in the 0-6 year old car market as well as constrained used vehicle supply. The stunning resiliency of used car prices indicates the robust level of demand for car upgrades
Intel and Microsoft Up 3% Today
April 9, 2013
Shares of Intel (click ticker for report: ) and Microsoft (click ticker for report: ) are both up over 3% today. We continue to believe both names have upside.
Rio Tinto Up Over 6%
April 9, 2013
Shares of Rio Tinto (click ticker for report: ) are spiking on the back of a strong first quarter from Alcoa (click ticker for report: ). We continue to hold the name in the portfolio of our Best Ideas Newsletter.
Good Bye Ron Johnson: JC Penney In Flux
April 9, 2013
After the market closed Monday afternoon, JC Penney (click ticker for report: ) announced much maligned CEO Ron Johnson is out, and the reins will be turned over to former CEO Mike Ullman. While we saw little chance of Johnson’s turnaround consummating in a retailing powerhouse at this point, we are shocked by the timing. If there was any chance that the JC Penney turnaround was going to work, Johnson had to be given some additional time to complete the changes. The abrupt decision indicates that the board clearly believes the Johnson’s strategy would continue to fail, and the return of Ullman suggests that JC Penney may return to its previous market position. Not everything Johnson did was necessarily bad—the
Shares of Baidu Are Just Too Cheap
April 9, 2013
Valuations for internet technology companies are literally all over the place. On one end of the spectrum sits LinkedIn (click ticker for report: ) and Amazon (click ticker for report: )—fast growing firms with sky-high PE multiples and tremendous credit given to the long-run. On the other end, we have Apple (click ticker for report: ) generating fantastic amounts of free cash flow, and trading with a single-digits forward PE. Chinese search giant Baidu (click ticker for report: ) falls closer to Apple, and we think shares look incredibly cheap at current levels. Let’s take a closer look at the search giant. Valuation Baidu’s valuation on a discounted cash flow basis looks extremely reasonable. We estimate shares to be worth
GE Pays Up For Fracking Exposure
April 8, 2013
Earlier this morning, The Wall Street Journal reported that GE (click ticker for report: ) will acquire oil pump manufacturer Lufkin Industries (click ticker for report: ) for a whopping $3.3 billion, or $88.50 per share in cash. Paramount to any acquisition is the price paid, and we think GE paid a hefty sum to gain exposure to the US hydraulic fracturing market, paying a 20% premium to the high-end of our fair value range and a price 38% higher than Lufkin’s closing price on Friday. We understand the attractiveness of the energy business, as well as the potential synergies from incorporating the business into GE’s existing portfolio, but paying over 25x 2013 earnings for a firm that hasn’t generated
March Auto Roundup
April 4, 2013
March was another strong month of auto sales in the United States. The SAAR for the month of March came in at 15.27 million units, up from 14.14 million units in March of 2012. Let’s take a look at the results by OEM. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) posted unit sales growth of 6%, driven by utilities (up 14%) and trucks (up 6%). Car sales were flat during the month, though we saw a solid increase of 6% for the redesigned Fusion, and we saw Police Interceptor sales ramp significantly with sales coming in at just under 1,000 units. Consumers flocked away from crossovers, dumping the Edge (down 13%) and the Flex (down 35%),
Tesla’s Aggressive Financing: Revolutionary or Shortsighted?
April 3, 2013
Electric vehicle maker Tesla (click ticker for report: ) stole headlines over the past several days. The firm announced that it will be profitable on both a GAAP and non-GAAP basis as its first quarter sales exceeded expectations (4,750 units versus 4,500 units estimate). Tesla also cancelled its 40 kWh battery version, which is positive, in our view, because it will raise the firm’s average selling price, likely boosting margins. We were a bit surprised to see the company have software limit the driving range to 40kWh rather than force consumers to upgrade to 60kWh batteries, but we think the decision could positively impact brand perception. More importantly, Tesla revealed what it’s calling a “revolutionary” financing plan. Tesla has partnered with
