Member Articles

Our Reports on Stocks in the Communications Equipment Space

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Image Source: Seth Stoll Structure of the Networking Equipment Industry Firms in the networking equipment industry provide products for transporting data, voice, and video within businesses and around the world. Participants must adapt to address virtualization/cloud-driven needs in the enterprise data center market; the convergence of video, collaboration, and networked mobility technologies; and the move toward programmable, virtual networks. The industry is characterized by low barriers to entry, rapid technological change and significant pricing competition. Gross margins can be volatile and should be watched closely. We don’t like the structure of the group. We’ve optimized our tehnology coverage. To access the reports, please select here.

GameStop’s Problems Continue

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Image Source: GameStop Corporation – Fourth Quarter Fiscal 2018 Earnings IR Presentation By Callum Turcan On December 10, video game retailer GameStop Corp (GME) reported third quarter earnings for its fiscal 2019 (13-week period ended November 2, 2019) that were simply terrible. Shares of GME were down big after-hours on December 10. GAAP net sales were down 26% year-over-year last quarter, hitting $1.4 billion, while the company’s GAAP operating loss came in at ~$0.05 billion, an improvement versus an operating loss of $0.5 billion (due to a large goodwill impairment charge) in the same period last fiscal year. GameStop halted its common dividend program in the middle of 2019, which freed up substantial cash flow for share buybacks and deleveraging … Read more

Our Reports on Stocks in the Pollution Controls Industry

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Image Source: Daniel Lerps Structure of the Pollution Controls Industry The pollution controls industry spans firms that make air/liquid filtration systems to those that focus on nitrogen oxide (NOx) reduction and sulfur abatement systems. The filtration markets are highly competitive requiring significant R&D expenses, and both pricing and margin pressure are present. Though certain patents offer advantages, success of participants in the air pollution control market is dependent on the continued enforcement of pollution regulations across the globe, especially in China where pollution control has become a top priority. We’re neutral on the structure of the group. We’ve optimized our industrials coverage. For their reports, please click here.

Our Reports on Stocks in the Financial Exchanges Industry

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Image Source: Matt Griffin Structure of the Exchanges Industry The exchanges industry consists of firms that deliver trading, clearing, exchange technology, and regulatory securities listing. Industry constituents operate some of the most well-known exchanges including the NASDAQ, Chicago Board Options Exchange, and the Chicago Mercantile Exchange. Firms carve out competitive advantages via scale (operating the largest market for a given financial instrument) and via technological superiority (transaction speeds and reliability). The securities markets are intensely competitive, but new entrants tend to have limited liquidity/capability. We like the industry structure. We’ve reallocated our resources to cover other companies.

Visa Operates a Great Business

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Image Shown: Shares of Visa Inc have shot upwards over the past year and we continue to like the name as a top holding in our Best Ideas Newsletter portfolio. By Callum Turcan One of our favorite companies out there is Visa Inc (V). The company generates robust free cash flows, its outlook is supported by powerful secular growth tailwinds, the firm doesn’t take on credit risk as it doesn’t issue out credit cards (making Visa a “pure play” on the shift from cash to card around the world), and generally speaking, the company has been very shareholder friendly. We continue to like Visa as a top holding in our Best Ideas Newsletter portfolio, a position it has been for … Read more

Apple Charging Higher

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Image Shown: Shares of Apple Inc continue to climb higher and we like the name in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. This is a long-term holding with substantial potential capital appreciation and dividend growth upside. By Callum Turcan Apple Inc (AAPL) is a top holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, with shares of AAPL yielding ~1.1% as of this writing. The top end of our fair value range estimate for shares of AAPL sits at $280, decently above where shares are trading at as of this writing. Considering the favorable technicals Apple has experienced of late, we see substantial room for shares to move higher still. Please keep in … Read more

Health Care Sector Remains Hot

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Image Shown: The Health Care Select Sector SPDR ETF, a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has been on an upward tear over the past several years. Strong macro tailwinds combined with the ability for industries within the health care sector to generate meaningful shareholder value have been key to supporting strong capital appreciation of equities operating in the area of late. By Callum Turcan The Health Care Select Sector SPDR ETF (XLV) is a top holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. We like the exposure and diversification to health care equities that XLV provides. XLV yields ~1.5% as of this writing. State Street Corp (STT) acts as … Read more

Intel’s Resilient Free Cash Flows and Improving Outlook

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Image Shown: Shares of Intel Corporation have resumed their upward climb after stumbling during the middle of 2019. We continue to like the name in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. By Callum Turcan Intel Corp (INTC) is another one of our favorite companies and is included in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. After coming under fire during the middle of 2019, INTC is back on a nice upward trajectory. The top end of our fair value range estimate sits at $61 per share of INTC, indicating there’s plenty of room for Intel to run higher. Shares of INTC yield 2.2% as of this writing, and we view the company’s dividend … Read more

Our Reports on Stocks in the Tobacco Industry

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Image Source: Altria Structure of the Tobacco Industry The oligopolistic tobacco industry is attractive in a number of ways. Firms sell an “addictive” product (cigarettes and/or smokeless tobacco), have significant pricing power, generate high margins, and strong returns on invested capital. Still, declining trends in smoking in the US, threats of tobacco-related litigation, new tobacco regulation (labeling) that discourages tobacco use, and excise tax price shocks that may impact demand will always be concerns. In any case, we tend to like the structural characteristics of the tobacco industry and the shareholder-friendly policies of constituents. We’ve reallocated our resources to cover more recession-resistant stocks. See here.

Dollar General Remains in Command

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Image Source: Mike Mozart By Brian Nelson, CFA Dollar General (DG) is a holding in the Best Ideas Newsletter portfolio. The company reported strong third-quarter results December 5 that showed better performance than rival Dollar Tree (DLTR). Discount retail continues to feel the ill-effects of tariffs that are raising cost of goods sold, but Dollar General is taking the headwinds in stride. During its most recently reported quarter, Dollar General posted same-store sales growth of 4.6%, helping to drive overall net sales up nearly 9%. Operating profit advanced more than 11%, diluted earnings per share nearly 13%, and year-to-date operating cash flow nearly 10%, as the firm returned more than $480 million to shareholders through buybacks and dividends in the … Read more