Brian Nelson

Markets Collapse: Economic Sanctions on Russia, Argentina Defaults…Again

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Dow Jones falls over 300 points Thursday on Argentina default and economic sanctions on Russia. The very idea that we don’t know which hedge funds will be hurt by recent global economic activity, how leveraged these hedge funds are to global currencies and equities, and whether Russian president Vladimir Putin will respond in kind to economic sanctions means conservative investors are taking money off the table. Is it finally time to lock in profits after one of the best stock-market runs of all time from the March 2009 lows? First, the EU and US impose economic sanctions on Russia. Next, Argentina defaults on its debt for the second time in 12 years, bringing back memories of the infamous collapse of … Read more

Union Pacific Still on Track

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Union Pacific (UNP) reported solid second-quarter results July 24 and raised its quarterly dividend 10% today. The headline to the railroad’s second-quarter results said it best: All-Time Quarterly Records. The firm’s operating revenue advanced 10%, operating income increased 17%, and diluted earnings per share leapt 21%, to $1.43, all over the same period a year ago. Union Pacific’s operating ratio—the inverse of the operating margin in railroad speak—advanced 2.2 points, to 63.5%, as efficiency improvements and price increases drive the higher levels of profitability. Ongoing improvement to the firm’s operating ratio is core to our fundamental thesis on the company. Railroads simply have fantastic business models, and we think the group is on the cusp of a multi-year cycle of … Read more

Teva: Progressing As Expected; US Generic Revenue Reveals Strength

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On Thursday, Teva (TEVA) reported in-line second-quarter results. For followers of the Best Ideas portfolio, the firm had a rough start shortly after it was added to the portfolio, but recent performance has put holders well into the black. For those interested in the background on the investment thesis on shares of Teva, please have a read of ‘Teva Pharma: Underpriced and Misunderstood.’ Teva’s revenue during the second-quarter nudged 3% higher, while non-GAAP operating income jumped 8%. Non-GAAP diluted earnings per share of $1.23 came in 3% higher than the same period a year ago. The company delivered organic growth in revenue and all profit lines over the comparable quarter last year. Though the results were solid, the thesis on … Read more

PPL Beats Expectations and Raises Guidance

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We recently wrote up a relatively extensive piece on ‘Utilities Are Safe Income Vehicles…Most of the Time,” that we think is worth reading before diving into PPL’s (PPL) solid second quarter results, released Thursday. For many income investors, dividends aren’t everything, they are the only thing, and we understand how important it is for us to focus on sustainable dividend growth in any idea that we present within the Dividend Growth portfolio, a collection of equities that we think will continue raising their dividends long into the future. We think PPL is one such company. The company’s second-quarter and first-half earnings from ongoing operations increased 15% over the corresponding periods from 2013. Management couldn’t have said it better: “Strong performance … Read more

Big Pharma Round Up

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Though much has been made about the patent cliff—shorthand for the expiration of the patents of a large number of drugs over a short period of time—we continue to believe that pipelines across much of the pharmaceutical space are flush with new drugs and therapies. Readers may have an individual favorite or two (or three) within the space (and there’s nothing wrong with that), but we think one of the best ways for investors to play the strong pipelines across the healthcare sector—and ongoing consolidation—is through the Health Care Select SPDR ETF (XLV), a holding in the Best Ideas portfolio. The ETF boasts Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), Gilead Sciences (GILD), and AbbVie (ABBV) as its top … Read more

Buffalo Wild Wings’ Pizza Rev Is a Hidden Gem

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Buffalo Wild Wings (BWLD) has been one of the best performing restaurants during the past few years. We credit the restaurant’s strong multi-year run to a solid concept, continued strong same-store sales expansion, and excellent cost containment (via serving size innovation). The restaurant’s second-quarter results, released Tuesday, were solid. Total revenue increased 20% during the quarter, while same-store sales increased 7.7% at company-owned restaurants and 6.5% at franchised restaurants. Net earnings increased nearly 44% to $23.7 million from $16.5 million, and earnings per diluted share increased at a similar pace, to $1.25. The company benefited from lower costs thanks in part to a decrease in the price-per-pound for traditional chicken wings. From the same period in 2013, the company had … Read more

Quick Tip: Keep Things in Perspective

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Best Ideas portfolio holdings Visa (V) and Precision Castparts (PCP) recently reported relatively disappointing calendar second-quarter results (here and here). Share prices of both portfolio constituents sold off a few percentage points following their respective earnings releases. Though growing more concerned when share prices drop is natural (and perhaps rightly so in some cases), one of the most effective approaches to staving off behavioral and psychological pitfalls (e.g. selling at the bottom, truncating gains, etc.) is to keep things in perspective. In situations where a company’s stock has doubled or tripled, for example, a 5%-10% pullback should be viewed as “normal” trading activity, resulting from the concept of ‘profit-taking,’ or when some shareholders take some of their profits off the table … Read more

Dividend Increases/Decreases for the Week Ending July 25

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Below we provide a list of firms that raised/lowered their dividends during the week ending July 25. 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 Alliance Bancorp (ALLB): now $0.06 per share quarterly dividend, was $0.05. Altera (ALTR): now $0.18 per share quarterly dividend, was $0.15. BancorpSouth (BXS): now $0.075 per share quarterly dividend, was $0.05. BankFinancial (BFIN): now $0.02 per share quarterly dividend, was $0.01. Bar Harbor Bankshares (BHB): now $0.23 per share quarterly dividend, was $0.223. BBCN Bancorp (BBCN): now $0.10 per share quarterly dividend, was $0.075. BorgWarner (BWA): … Read more

Defense Industry Round Up

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The ongoing conflict in Ukraine, Israel’s offensive in the West Bank, North Korea calling a US movie an act of war, the latest in Iran, and US troops going back to Iraq suggest there may finally be upside to a defense budget that has experienced nothing but pressure since peak spending at $691 billion in 2010 (see grey bar in image below, from left to right). Image Source: US DoD Fiscal Year 2015 Budget Request With the markets making new highs seemingly every week, bargains have become more difficult to find. We point members to ideas in the Best Ideas portfolio and Dividend Growth portfolio, but an increasingly more uncertain geopolitical backdrop–where defense spending upside is growing more and more … Read more

Baidu Continues to Impress

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For the sake of not repeating the investment thesis on Baidu (BIDU) in this article, we’ve provided the link to ‘Baidu’s Internet Presence in China Is Phenomenal’ for background. Also, please don’t forget to access the company’s 16-page report, if desired. On Thursday, the Chinese Internet search giant reported excellent second-quarter results. Total revenue surged an impressive 58.5% from the same period a year ago, while operating profit advanced 22.5%. Baidu has a clear lead in mobile in China, with mobile revenue now as much as 30% of total revenue. Net income attributable to Baidu leapt more than 34%, to $571.7 million. The growth rates were fantastic, and we think Baidu is now trading more consistently with its blockbuster performance … Read more