Member Articles

Consumer Staples Earnings Roundup

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Image Source: Mike Mozart Let’s take a look at the earnings reports of some of the largest consumer staples companies. Margin performance left a good deal to be desired across the space as transportation and raw material costs are largely on the rise, and organic growth trends could be better. Companies included: Kellogg, Kraft Heinz, Kimberly-Clark, and Colgate Palmolive. By Kris Rosemann Macroeconomic uncertainty stemming from geopolitical tensions and potentially slowing economic growth in emerging markets have played a role in stagnant top-line growth for consumer staples entities of late, and ongoing pricing and promotional battles are not likely to go away anytime soon as the proliferation of the convenience of online shopping has brought about a new era in … Read more

Retail Margins Weighed Down by Labor, Transportation Costs

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Image Source: Mike Mozart Selling pressure across retail came after several notable operators reported earnings November 20. Let’s take a look at what is driving investor reaction within the space. By Kris Rosemann A number of high profile retailers (XRT) reported earnings before the open November 20, and selling pressure ensued due in large part to margin weakness across the space. Higher transportation and wage costs were common themes, but top-line performance held solid for the group, generally speaking. A number of retailers from a variety of segments within the sector are feeling the damage to sentiment from the flurry of reports as the implications of the margin pressures are not expected to be unique to those specific retailers that reported … Read more

In The News: Oil, Housing, and Cryptocurrency

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Let’s take a look at some market-impacting headlines from the morning of November 19, including volatile oil prices, pressure in the housing market, and the sustained decline in Bitcoin. By Kris Rosemann Speculation in the global crude oil market (USO) that Saudi Arabia would be able to lead OPEC and Russia to cut supply appears to have taken a hit as Russian Energy Minister Alexander Novak stated his views that producers need to monitor supply and demand levels in the coming weeks before deciding on a course of action. Saudi-led OPEC is looking to strike a similar production cap agreement to those seen in recent years with the goal of reducing output by 1 million barrels per day to 1.4 … Read more

Plenty of Reasons for Prudence in Today’s Market

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Image shown: SPDR S&P 500 ETF (SPY) share price performance since early 2016. Source: TradingView.  Market volatility looks to be here to stay. Let’s take a look at some of the recent developments that have market observers concerned. Let’s also dissect recent commentary from Fed Chairman Jerome Powell. By Kris Rosemann Volatility in US equities (SPY) is back in a notable way and is not likely to disappear anytime soon. Market participants continue to weigh the pros and cons of a number of factors, including 1) rising interest rates and their impact on asset prices, 2) the massive corporate debt loads found across the landscape (global debt to GDP ratios are at all-time highs), 3) a seemingly strong and steady US economy, … Read more

Encana Adds Attractive Assets with Purchase of Newfield Exploration

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Image Source: Encana third-quarter presentation Encana already holds a nice presence in some of the most attractive oil-producing regions in North America, and its merger agreement with Newfield Exploration should only add to its appealing portfolio of unconventional plays. By Callum Turcan Encana Corporation (ECA) is a growing upstream oil & gas producer with operations in Canada and the United States. The firm’s two biggest targets in Canada are the Duvernay and Montney shale plays, and in the US, Encana is primarily focused on developing the Permian Basin and Eagle Ford plays. What all four of these regions have in common is they yield wells with a high-liquids production mix, allowing Encana to directly capitalize on the uneven and wobbly … Read more

Dividend Increases/Decreases for the Week Ending November 16

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Below we provide a list of firms that raised their dividends during the week ending November 16. 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 Acadia Realty Trust (AKR): now $0.28 per share quarterly dividend, was $0.27. Acme United (ACU): now $0.12 per share quarterly dividend, was $0.11. Agilent (A): now $0.164 per share quarterly dividend, was $0.149. American Equity (AEL): now $0.28 per share annual dividend, was $0.26. Anadarko Petroleum (APC): now $0.30 per share quarterly dividend, was $0.25. Aramark (ARMK): now $0.11 per share quarterly dividend, was $0.105. Brown-Forman … Read more

Cisco Off to Strong Start in Fiscal 2019

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Image Source: Ecole polytechnique Simulated newsletter portfolio idea Cisco turned in a strong fiscal 2019 first quarter report November 14 as it continues to transform its business model towards one with a greater focus on subscription-based revenue. By Kris Rosemann Networking giant Cisco (CSCO) is off to a strong start in its fiscal year 2019 as its first quarter report, released November 14, revealed total revenue growth of 8% on a year-over-year basis amid its ongoing business model transformation. The transformation to a greater focus on software subscription revenue has been in part accelerated by inorganic growth such as the recent $2.35 billion acquisition of Duo Security, which brings cloud-based identity solutions for unified access security, a focus consistent with Cisco’s … Read more

Facebook Reportedly Seeking Major Cybersecurity Acquisition

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Image Source: Book Catalog After criticism surrounding its user safety and security practices, social media giant Facebook is reportedly actively pursuing a cybersecurity company to acquire.  By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea Facebook (FB) has struggled of late with public perception of the both the security and policing of its user base, and management appears seriously concerned with assuaging public pressure as it ramps up spending on such initiatives, which will continue to eat into operating margins and weighed on free cash flow generation. Mid-October reports of users’ personal data being exposed via a security flaw may have been a tipping point for the company, which came months after the widely-publicized Cambridge Analytica scandal, but public and political … Read more

In The News: Oil Price Slump Continues, GE Cutting Baker Hughes Stake, and Home Depot’s Outlook

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Let’s take a look at some of the top stories from around the markets, including a number of energy-related headlines and what Home Depot sees in its near-term outlook. By Kris Rosemann Crude oil prices (USO) continue their recent slide as oversupply fears creep back into the fore. OPEC recently cut its forecast for 2019 global oil demand growth for the fourth consecutive month, and the cartel expects supply growth from non-OPEC countries to exceed demand growth in the year. OPEC noted that its expectations for oil demand growth to slow relative to prior forecasts goes hand in hand with recent downward revision in the IMF’s recent reduction in global economic growth estimates. President Trump continues to target Saudi Arabia … Read more

In The News: Market Volatility, iPhone Unit Concerns, Wildfire Liabilities Piling Up

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Let’s take a look at some top stories from around the markets including headlines in the biotech and tobacco spaces, some household names facing material selling pressure, and the significant impact of massive wildfires in California. By Kris Rosemann Market volatility persists as of the November 12 trading session. Concerns surrounding global trade disputes and a stronger dollar are weighing on investor expectations, and multiple big name companies facing selling pressure only add to less than rosy outlooks. The biotech space (XBI) remains under pressure with future price uncertainty providing a material overhang, and big tobacco is under pressure as a result of the potential for a ban on menthol cigarettes from the FDA. Simulated newsletter portfolio holding Altria (MO) … Read more