Member Articles

We’ve Dropped Coverage of the Business Services Industry

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Image Source: Franz Conde Structure of the Business Services Industry Firms in the business services space primarily focus on management consulting, technology/data-integration services/software and outsourcing solutions. Participants generate high returns on invested capital, but the business services marketplace is very competitive, and firms can often face pressure from off-shore service providers in lower-cost locations (India, Philippines and China). Such competition may inhibit firms’ ability to obtain sufficient pricing for services, and economic conditions may hinder the capability of clients to pay for such services. Still, we’re generally neutral on the group. We’ve dropped coverage of the Business Services industry.

Weyerhaeuser Faces Deteriorating Financials While Trying to Manage a Monstrous Debt Load

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Image Shown: Weyerhaeuser Company – Second quarter 2019 IR Presentation By Callum Turcan One very interesting space of the REIT investing world includes the timber industry. Weyerhaeuser Company (WY) is a Seattle-based timber REIT that controls and owns ~12 million acres of timberland in the US, along with managing ~14 million acres in Canada via long-term licenses. The company commenced operations way back in 1900, and shares of WY yield 4.6% as of this writing. Most of Weyerhaeuser’s adjusted EBITDA comes from its ‘Timberlands’ and ‘Wood Products’ segments; however, its ‘Real Estate, Energy, and Natural Resources’ segment has become more relevant of late. Our fair value estimate for WY stands at $30 per share, roughly where Weyerhaeuser is trading at … Read more

Dividend Growth Newsletter Portfolio Holding Microsoft Posts a Nice Quarter

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Image Source: Mike Mozart By Callum Turcan On Wednesday October 23, Dividend Growth Newsletter portfolio holding Microsoft Corporation (MSFT) reported first quarter results for fiscal 2020 (period ended September 30) after the market close that saw shares of MSFT move higher the next day. The tech giant beat consensus estimates on both the top and bottom line due to sustained momentum at its cloud offerings, with growth led by Azure and Office 365. During the first quarter, Microsoft’s Office 365 commercial monthly active users passed 200 million. We continue to like Microsoft’s free cash flow growth potential and see the firm sporting a great dividend growth trajectory given its pristine balance sheet and quality cash flow profile. Shares of MSFT yield … Read more

Our Stock Reports on Companies in the Distributors Industry

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Structure of the Industrial Distributors Industry Though consolidating, the industrial distributors industry remains fragmented and highly competitive. Delivering cost savings, convenience, and product availability are the major competitive factors. Some rivals use vans to sell products in markets away from their warehouses, while others rely on mail order, websites or telemarketing sales. Still, others operate stores and use centralized distribution centers to supply their networks. The industry is economically-sensitive and exposed to the threat of aggressive pricing strategies, but we generally like the group’s massive distribution platforms that are difficult to replicate. We’ve optimized our industrials coverage. Our reports can be found here.

Our Reports on Stocks in the Restaurants – Fast Food & Coffee/Snacks Industry

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Structure of the Restaurants – Fast Food & Coffee/Snack Industry The restaurant industry has benefited from a long-term trend toward eating out, but the space has become increasingly more competitive as new concepts are introduced and successful chains expand. Not only are there pricing pressures and trade-down threats, but rising costs for commodities and labor have pressured profits. Barriers to entry are low, and many constituents have a difficult time differentiating themselves. We tend to like larger chains that benefit from scale advantages and international expansion opportunities, though niche franchises can be appealing. We’re neutral on the structure of the group. For our coverage of firms in the Restaurants – Fast Food & Coffee/Snack industry, please click here.

Biotech and Pharma Roundup

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Image Source: e-Magine Art Some big news in the world of biotech and pharmaceuticals has come out this week, starting Monday October 21, that we want to get out in front of our members. In alphabetical order by ticker symbol: BIIB, BMY, MRK, NVS. By Callum Turcan Biogen Inc (BIIB) reported third quarter 2019 earnings on Tuesday October 22 that easily beat both top and bottom line estimates. That was partially due to strong sales at its SPINRAZA offering, which is used to treat spinal muscular atrophy. Shares of BIIB rocketed higher during the trading session as investors priced in the upside that Biogen’s Aducanumab treatment could generate, with the company announcing that it was going to ask the US … Read more

Our Reports on Stocks in the Computer Hardware Industry

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Structure of the Computer Hardware Industry The computer hardware space, which spans the personal computer to the iPhone and iPad, is highly competitive. The industry is characterized by frequent product introductions and rapid technological advances that can cause dramatic market share shifts. Though some firms benefit from a strong brand, participants often price aggressively, pressuring margins. Firms are also subject to potential component shortages/disruptions, which can punish performance. Obsolescence may be an eventuality for some, and services revenue has become critical for others. We’re neutral on the space. We’ve optimized our tehnology coverage. To access the reports, please select here.

Ford Provides an Update on Its Self-Driving Plans

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Image Source: Ford Motor Company – 2018 Annual Report By Callum Turcan On October 21, Ford Motor Company (F) published a blog post on Medium providing an update on its self-driving ambitions. Jim Farley, who was promoted to president of Ford’s ‘New Businesses, Technology & Strategy’ division effective May 2019 (previously Mr. Farley worked at Ford’s ‘Global Markets’ division), authored the Medium blog post. The company reiterated that the goal was to begin commercializing its autonomous driving investments starting in 2021 via a self-driving service, likely something akin to a fleet of taxi cabs with built-in autonomous driving equipment and software. Self-driving taxi cab services could in theory create substantial recurring revenue streams that are less cyclical than demand for … Read more

Morgan Stanley Could See Lower Capital Requirements

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“…the Wealth Management and Investment Management segments…are the crown jewels at Morgan Stanley with returns on tangible equity of 37% and 36%, respectively, in the quarter. Flows are positive and market levels have been friendly, though that can change on a dime.” — Matthew Warren By Matthew Warren On October 17, Morgan Stanley (MS) reported third-quarter results. The bank posted revenue of $10.03 billion, which was up 1.62% versus last year and $405.3 million ahead of consensus. Earnings came in at $1.27 per share, up 9% from last year, and were 15 cents ahead of consensus. The bank’s efficiency ratio worsened to 73% from 71% last year, and it posted a return on equity (ROE) of 11.2% and return on … Read more

Coca-Cola Posts a Nice Quarter But Shares Too Pricey

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By Callum Turcan The Coca-Cola Company (KO) reported third-quarter earnings for fiscal 2019 (period ended September 27) on October 18, which were positively received by the market as the beverage giant showed signs that there’s strong demand worldwide for its offerings. Coca-Cola’s GAAP net revenues jumped 8% year-over-year while its non-GAAP organic revenues increased 5%, supported by higher prices and a favorable product mix that offset the negative impact from reduced concentrate sales. Management noted that Coca-Cola continued to “gain value share” in the ready-to-drink non-alcoholic beverage market. Shares of KO yield 2.9% as of this writing and ended up over 2% during normal trading hours on Friday October 18. Coca-Cola As an aside, it’s important to remember that Coca-Cola … Read more