Brian Nelson

Oracle Raises Internal Guidance; Share Buybacks Abound

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Image Source: May Wong Oracle’s fiscal 2019 second quarter report revealed expectations for accelerating top-line growth thanks in large part to strong momentum in bookings. The company’s technology leadership may be greater than ever before, and it continues to generate robust free cash flow. Management’s appetite for buybacks appears insatiable. By Kris Rosemann Simulated Dividend Growth Newsletter portfolio idea Oracle (ORCL) released its fiscal 2019 second quarter report December 18, and management brought with it an increase in its internal expectations for top- and bottom-line growth for the full fiscal year. On the quarterly conference call, CEO Safra Catz stated expectations for an acceleration of constant currency revenue growth in the second half of the fiscal year, and the company’s … Read more

In the News: Healthcare Uncertainty, Housing Confidence Drops, and Banks Reel in Risk

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Let’s take a look at some of the top stories impacting the markets, including the heightened uncertainty surrounding healthcare legislation, the drop in the NAHB Housing Market Index, and measures being taken by banks to limit exposure to risky counterparties. By Kris Rosemann Shares of health insurers and health care providers (XLV) are facing notable selling pressure December 17 after a federal judge in Texas ruled the Affordable Care Act is unconstitutional without the penalty for lack of insurance coverage, which was repealed by Congress last year. The ruling came on the evening of December 14, but it is almost certain to be appealed. The Affordable Care Act has been beleaguered for some time now, and the latest news casts … Read more

Repub: Johnson & Johnson’s Litigation Risk Manageable

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Image Source: Austin Kirk This article was previously published June 6, 2018. Let’s talk about how to think about the impact of one-time events on intrinsic value estimates. The magnitude of damages against J&J with respect to its talcum-powder products could be large, but we think the market has slowly factored in the risk of legal liabilities. Once J&J puts these troubles behind it, we think the market may once again warm up to the equity. Shares are trading at only a modest discount to our intrinsic value estimate, however. By Brian Nelson, CFA A member of ours passed along a number of articles discussing litigation risk at Johnson & Johnson (JNJ) with respect to the company’s talcum powder products, … Read more

Costco Sinks on Margin Pressures

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Image Source: Mike Mozart Wholesale food retailer Costco disappointed investors with its fiscal first quarter report as margin pressures outweighed strong comparable sales performance. By Kris Rosemann Shares of bulk food retailer Costco Wholesale (COST) faced material selling pressure following the release of its fiscal 2019 first quarter report December 14 as concerns over margin pressures outweighed its impressive top-line growth. Total company comparable sales, adjusted for changes in gasoline prices, foreign exchange rates and revenue recognition changes, grew 7.5% on a year-over-year basis in the quarter, and e-commerce sales leapt 26.2%. The company’s US operations led the way with 8.3% comparable sales growth, and total revenue advanced 10.2% from the year-ago period. Despite the impressive top-line growth, Costco’s GAAP … Read more

Dividend Increases/Decreases for the Week Ending December 14

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Below we provide a list of firms that raised their dividends during the week ending December 14. 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 AES (AES): now $0.1365 per share quarterly dividend, was $0.13. Albany (AIN): now $0.18 per share quarterly dividend, was $0.17. AT&T (T): now $0.51 per share quarterly dividend, was $0.50. Balchem (BCPC): now $0.47 per share quarterly dividend, was $0.42. C.H. Robinson Worldwide (CHRW): now $0.50 per share quarterly dividend, was $0.46. CenterPoint (CNP): now $0.2875 per share quarterly dividend, was $0.2775. CNB Community Bancorp (CNBB): … Read more

Marathon Oil: Riding a Rollercoaster

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Image Source: Marathon Oil Investor Presentation Let’s take a look at how Marathon Oil, a midsized oil & gas producer, is navigating capricious oil markets at a time when the industry is waiting to see what impact the OPEC+ production cut deal might have on global energy markets. By Callum Turcan Key Takeaways Marathon Oil has built its asset base around four key unconventional oil and gas plays in the US in the Permian Basin, the SCOOP/STACK, the Eagle Ford, and the Bakken. Its goal is to develop well locations within its unconventional drilling inventory that are liquids-rich, enabling the firm to grow crude production, which carries higher margins. In light of recent geopolitical events, it is possible oil prices … Read more

Facebook to Test New Ad Feature

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Image Shown: Facebook’s share price performance since late 2017. Shares may be poised to breakout of a recent downtrend. Source: TradingView.com Facebook has faced significant pressure from a number of sources in recent months, but we continue to like the stock, which may be poised for a technical breakout and appears undervalued. By Kris Rosemann It’s no secret that simulated Best Ideas Newsletter portfolio idea Facebook (FB) has been working to right the ship while under an intense level of scrutiny from a variety of sources. The company has been caught in perhaps an unprecedented culmination of social and political pressures, but these are unprecedented times. We continue to like shares of Facebook due to the robust free cash flow … Read more

Automakers Gain on Potential Tariff Easing

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Image Source: Truck Hardware A potential easing of tariffs on auto imports to China, as President Trump had previously hinted, has improved sentiment across the auto manufacturing space as investors eye up the potential for more free exchange of autos between the world’s two largest economies. By Kris Rosemann US equities continue to be quite sensitive to US-China trade talk reports, and the auto manufacturing space has been the most recent beneficiary of potentially favorable developments. China (FXI) is reportedly considering a reduction of its auto import tariff to 15% from 40%, a win President Trump had pointed to as a positive development resulting from his meeting with Chinese officials during the recent G20 summit. The month of November marked … Read more

In the News: Generic Drug Price Fixing and Apple’s Legal Battle in China

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An investigation into pricing practices in the generic drug industry has substantially expanded, and implications may be far more widespread than initially expected. Meanwhile, Apple is fighting a preliminary order that will ban the sale of its iPhones that utilize certain software. By Kris Rosemann Price fixing of generic drugs broke into the news as an antitrust lawsuit over just two drugs in late 2016, but the investigation now reportedly involves at least 16 companies and 300 drugs. The generic drug industry is one that has been lauded as a potential savior of rampant healthcare costs in the US, but Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, used evidence such as the volume of drugs and … Read more

In the News: OPEC Production Cut Agreement, Jobs and Consumer Sentiment, and Altria Gets in the Pot Game

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Let’s take a look at some major headlines. Topics include OPEC’s production cut, the recent jobs and consumer sentiment reports, and Altria’s investment in a marijuana company. By Kris Rosemann OPEC and its allies have reportedly agreed to cut crude oil (USO) production by 1.2 million barrels per day from October production levels as the baseline. The agreement will last for six months and will be reviewed once again in April. OPEC member nations, with the exception of Iran, Libya, and Venezuela, will lower output by 800,000 barrels per day, while Russia and other allies will reduce production by 400,000 barrels per day. The production cut agreement comes shortly after news broke that the US became a net exporter of … Read more