ASML - Lithography equipment (ASML)
One of the last natural monopolies out there, ASML provides the equipment that creates the chips that power every electronic device in the world. As Moore's law has shrunk the size of these chips every year, the machinery required to draw them (lithography) has become more and more complex meaning that there is now only one company in the world providing the next generation EUV tools that allow lithography to 14nm (currently 28mm base). The key items here were an upgrade to guidance in sales and a shortage in DRAM supply. It's also of good news to OEMS that their new EUV technology remains on track for delivery next year.
This stock is a strong leading indicator as the time difference from ordering to operating is quite considerable but if companies have upped their demand for DRAM equipment, they too must feel confident about future demand.
L'oreal - beauty conglomerate (OTC:LRLCF)
The beauty products company reported slowing growth and a slowing outlook for the beauty market in general with growth downgraded to 3.75%. This effect was seen particularly acutely in North America.
The stock has a strong read across with Procter & Gamble (PG) and Colgate Palmolive (CP). The worst performing sectors in L'oreal were dermatology and high end cosmetics and since PG and CP tend to focus on mass-market, the effect between the two will be limited.
Transport & Leisure
Accor - Hotel Conglomerate (OTC:ACRFF)
Accor are present in 92 countries and operate 3,500 hotels and 450,000 rooms. Their Portfolio in the Americas represent 8% of their total rooms and concentrations remain in Europe (62%).
There was a clear continuation of growth in upscale hotels where revenue grew 3.7% LfL compared with economy hotels which grew only 2.4% in the same period. Occupancy rates were also clearly superior in Up & Midscale accommodation, showing a 1.3% LfL improvement compared with a drop in Economy occupancy of 0.3%.
This occupancy trend is good news for international brands such as Marriot (MAR), Hyatt (H) and Wyndham (WYN) as we could see this REVpar and Occupancy trend push these upmarket hotel chains to higher valuations
Concluding, it seems that ASML's strong results give me plenty of confidence in the SOX constituents and expect foundries such as Intel (INTC) to see stronger capacity utilisation on the back of this.