WMT

Unemployment Rate Falls to 5.1%! Great Times in America!

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Image Source: BLS The future is all that matters. This is a basic tenet of the stock market, where prices of equities are forward-looking discounting mechanisms. August is now over, and we learned that the job market in the United States is close to the healthiest it has been in a long time—that is, if you buy into the data calculations behind the national unemployment rate, which now stands at a 5.1%. The mark is the lowest level since the Great Recession of late last decade and is now roughly half the levels experienced at the “height” of the Great Recession, which drove 10% of Americans that were willing to work out of a job. The Fed has worked a … Read more

Dark Days Ahead for Walmart?

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It was widely-reported that Amazon (AMZN) had unseated Walmart (WMT) as the largest broad-based retailer by market capitalization a few weeks ago, and the latter’s second-quarter fiscal 2016 results, released August 18, spoke to the very real risks that the avalanche of social change is having on its business. From what we can gather, Walmart is at the center of a political upheaval in America that is challenging its business model. The company has become the poster child for all of what many workers believe is unfair pay, and such a tainted perception, fair or not, will be difficult to overcome as the ranks of millennials swell and demand their definition of “a living wage” after suffering through a very … Read more

eBay – PayPal Split

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Under previous but subsiding pressure from Carl Icahn and other shareholders, eBay (EBAY) announced last September that it would separate its payments business PayPal in July of this year. Now that July is here, we wanted to remind members of the split and explain what it means for the holdings in the Best Ideas Newsletter portfolio. On July 17, eBay shareholders will receive one share of PayPal under the ticker PYPL for each share of eBay owned. We will be launching coverage of PayPal shortly after it becomes an independent, publicly-traded company. The separation of eBay and PayPal will make eBay leaner and more efficient while greatly increasing the potential for expansion of PayPal within the booming mobile payments market. … Read more

Target-CVS Agreement: What It Really Means

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Image Source: Mike Mozart Target (TGT) and CVS Health (CVS) announced an agreement June 15 in which CVS would acquire, rebrand, and operate Target’s pharmacies and clinics for the price of approximately $1.9 billion. After the deal closes, CVS will operate 1,660 of Target’s pharmacies in its stores under the CVS/pharmacy brand name. The nearly 80 Target clinics involved in the deal will be rebranded as MinuteClinic, and CVS plans to open up to 20 new clinics in Target stores, part of the CVS/minuteclinic goal to operate 1,500 clinics by 2017. Target and CVS also plan to open five to ten small, flexible store formats that will be branded TargetExpress and include a CVS/pharmacy. After Target’s recent Canada debacle, we … Read more

The Under-reported Story: The Presence of Avian Influenza May Be the “New Norm”

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Source: Cal-Maine, Valuentum estimates; Urner-Barry Southeastern Regional Large Egg Market Price (per dozen eggs) Egg prices are soaring as the avian flu has run rampant across farms in Midwestern states. According to some studies, the outbreak has reduced the national flock by more than 10%, and it is the largest outbreak on record in US history. Egg prices are the highest they’ve been in some time, and investors may not be fully aware of the implications. A state of emergency has been declared in Iowa, where the impact may be the worst. Scientists believe the virus may recede as temperatures in the Midwest increase, but every company in the food products industry, big or small, is being impacted at the … Read more

Target or Walmart?

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Image Source: Steven Depolo It’s not the roaring 1990s anymore, investors! There are serious risks to the business models of Target (TGT) and Walmart (WMT), and everyone is looking the other way, consoling themselves with their steady and growing stream of dividends. These investors say, “as long as they pay the dividend, I don’t care,” as if this signals a proud achievement in some way, by which many experienced market participants will then respond, “and now we know why the individual investor is frequently blindsided.” The dividend is a symptom of the health of free cash flow, and management teams can dip into the balance sheet to support the payout. Only trends in free cash flow generation, supported by moaty … Read more

Dividend Increases for the Week Ending February 20

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Below we provide a list of firms that raised their dividends during the week ending February 20. 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 Analog Devices (ADI):  $0.40 per share quarterly dividend, was $0.37. Argo Group (AGII): now $0.20 per share quarterly dividend, was $0.18. Autoliv (ALV): now $0.56 per share quarterly dividend, was $0.54. Coca-Cola (KO): now $0.33 per share quarterly dividend, was $0.305. Colgate-Palmolive (CL): now $0.38 per share quarterly dividend, was $0.36. Corrections Corporation of America (CXW): now $0.54 per share quarterly dividend, was $0.51. CVR Partners … Read more

10 Bucks per Hour; What It Really Means

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Source: US Department of Labor, Walmart Walmart (WMT) is quite savvy. The big box retailer announced February 19 it would raise the minimum wage for all of its US workers to $9 per hour in April of this year and at least $10 per hour by next February. The move comes amid ongoing public scrutiny of its labor practices, elevated worker turnover, and general malaise among the ranks on social media platforms. At face value, the news headlines show Walmart caving to public pressure, and a win for big labor, but in reality, the retailing giant is merely doing what good businesses do – pleasing customers (which are its workers, too) and widening its economic moat. Hiking wages accomplishes both. … Read more

Speculative Euphoria Is Fading

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Alibaba (BABA) is trying our patience. The company’s performance through the first nine months of its fiscal 2015 has been solid. Revenue advanced 45% year-over-year, non-GAAP EBITDA margins were nearly 60% and adjusted free cash flow came in at ~$5 billion. Yes, that’s right – free cash flow of $5 billion, and we don’t give the company credit for changes in its loan receivables in that mark. Disappointing? Hardly. Alibaba’s EBITDA increase in its most recently-reported quarter of 34%, to $2.43 billion, was better than expectations calling for ~24% growth. In our opinion, earnings matter – and Alibaba’s were good! The company’s shares, however, have fallen into the mid-$80s from ~$120 per share, and I fear that if they break … Read more