Member Articles

Why We Like Republic Services Over Casella

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Image Source: Republic Services Inc – 2018 Annual Report By Callum Turcan Let’s talk about the story of two garbage haulers, one that is extremely pricey and one that we just added to the Dividend Growth Newsletter portfolio. Casella Waste Systems Inc (CWST) has grown from a one truck company back in 1975, building Vermont’s first recycling facility in 1977, to a mid-sized waste disposal and recycling company as of today. The rally in shares of CWST over the past ~5 years has been stunning, with shares up over 12-fold since December 2014. We recently updated our models for Casella and the environmental services industry at-large (those reports can be viewed here), and want to caution our members that the … Read more

Bank of America Gaining Share

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We are increasing our fair value estimate of Bank of America to $40 per share, as we view the market share gains at the bank and steady loan and deposit growth to be more sustainable than we had previously envisioned. We like the bank’s solid franchise, the management team, and we like the shares here as it tries to catch up with larger peer JPMorgan. By Matthew Warren While Bank of America (BAC) put up middling results for the fourth-quarter, report released January 14 , they did come in better than analyst expectations on the top- and bottom-lines. Total net revenue was down 1% in the quarter and net income was down 4%, but large share buybacks meant that diluted … Read more

Citigroup Succeeding at Cross-Selling

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Citigroup is finally out-earning our estimate of its cost of capital with a return on tangible common equity (ROTCE) of 12.4% in the quarter, and the shares have rallied substantially more recently as a result. Management lowered expectations for the degree of return on tangible equity improvement going into 2020, but continued improvements would be welcome, nonetheless. By Matthew Warren Citigroup (C) posted impressive fourth-quarter results January 14 with revenue up 7% and earnings per share up a whopping 34% given significant share buybacks, beating analyst consensus estimates on both the top and the bottom lines. Fixed income trading grew substantially against a weak quarter last year. As you can see in the below graphic, Citi’s revenue growth accelerated in … Read more

Our Reports on Stocks in the Environmental Services Industry

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Image: Republic’s Apex landfill in Las Vegas. Structure of the Environmental Services Industry The oligopolistic US non-hazardous solid-waste services industry is dominated by Waste Management, Republic Services and Waste Connections, which collectively generate over half of industry revenue and control an equal percentage of valuable disposal capacity. Most operators boast strong returns on capital and predictable cash flow streams, buoyed in part by real pricing expansion. The landfill business has significant barriers to entry, while Stericycle’s niche in the medical-waste industry and US Ecology’s monopolistic radioactive waste disposal assets are compelling. We like the structure of the group. We’ve optimized our industrials coverage. Our reports can be found here.

Our Reports on Stocks in the Agricultural Equipment Industry

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Structure of the Agricultural Machinery Industry The agricultural machinery industry is composed of firms that make farm and construction equipment. Demand for agricultural equipment is levered to farm incomes and commodity prices, while purchases of construction equipment are dependent on global economic health. Population growth and the increasing need for food/energy are the major long-term drivers for new orders across the industry. Still, firms are competitive, capital intensive, and possess significant operating leverage. A strong/dependable brand and an expansive distribution network are keys to success. We’re neutral on the group. We’ve optimized our industrials coverage. Our reports can be found here.

Dividend Increases/Decreases for the Week Ending January 17

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Below we provide a list of firms that raised their dividends during the week ending January 17. 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 Abbott Laboratories (ABT): now $0.36 per share quarterly dividend, was $0.32. Algoma Central (AGMJF): now CAD 0.12 per share quarterly dividend, was CAD 0.11. Alliant Energy (LNT): now $0.38 per share quarterly dividend, was $0.355. Allied Properties Real Estate Investment Trust (APYRF): now CAD 0.1375 per share monthly dividend, was CAD 0.1330. Ally Financial (ALLY): now $0.19 per share quarterly dividend, was $0.17. Apogee (APOG): now … Read more

Alcoa’s Turnaround Still a Work in Progress

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Image Shown: It has been rough for Alcoa Corporation over the past couple of years as the company faces a slowing global industrial economy while trying to optimize its asset base and overall operations in a bid to save on costs. By Callum Turcan After the market close on January 15, alumina, aluminum, and bauxite product leader Alcoa Corporation (AA) reported earnings covering the fourth quarter of 2019. The company’s top- and bottom-line results missed consensus expectations, sending shares of AA lower initially during after-hours trading. Financial Updates For the full-year, Alcoa recorded $10.3 billion in GAAP sales, a GAAP operating loss of $0.4 billion, and GAAP diluted EPS of -$6.07 (negative $6.07). On a non-GAAP adjusted basis, Alcoa’s diluted … Read more

Wells Fargo Remains an Inefficient Bank Despite Regulatory Overhang

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Wells has been forced to do a lot of hiring related to remediating its problems with regulators, but the problem is simply larger than that. This is an inefficient bank, which is very odd considering the massive scale that it benefits from. By Matthew Warren Well Fargo (WFC) reported terrible fourth-quarter results January 14. The company earned 60 cents per share, down from $1.21 in the same quarter last year, missing analyst consensus estimates for both the top and bottom line. While it is a messy quarter with a large litigation write down related to previous scandals and other “one time” items, the main theme is that expenses are simply too high and going in the wrong direction at Wells … Read more

Visa Enhances Its Long-Term Outlook

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Top weighted Best Ideas Newsletter portfolio holding Visa continues to augment its long-term outlook for the betterment of its shareholders, in our view. By Callum Turcan On January 13, top weighted Best Ideas Newsletter portfolio holding Visa Inc (V) announced it was buying financial tech company Plaid for $5.3 billion. Plaid primarily offers a network that allows consumers to connect financial accounts to apps securely and safely, meaning that when a consumer downloads a mobile financial-oriented app to their phone (for example), Plaid is the company that ensures a smooth connection between app and the relevant financial institution when it comes to transferring information and ultimately money. What’s important about this acquisition is that Visa, once again, is showcasing its … Read more