Continued from part 1
3M (MMM) is up +0.8%, since the March 11 close. In 2010, revenues increased 15% to $26.66 B, and GAAP EPS rose by 24.6% to $5.63. With a net margin of 15.3%, MMM is able to keep a higher percentage of its revenues than most other companies in the Industrial Conglomerates industry. The next earnings release is on April 26. For the Q1 2011, analysts estimate MMM will earn $1.45 per share, an increase of 12.65% over Q1 2010, and revenues of $7.0 B, an increase of 9.61% over Q1 2010.
3M trades 9% below our fair value estimate, and we place a $101 price target. Buy more MMM shares in this most recent pullback. 3M is a member of the Dow 30.
Motricity (MOTR) is up by 5%, since the March 11 close. Cramer told viewers to take a look at MOTR again on March 22. In 2010, revenues increased 17% to $133.4 M, and GAAP EPS became less negative to -$0.88 from -$6.85. Compared to the Software industry median, with a cash flow margin of 5.7%, the company is among the lowest in its industry at being able to convert sales into cash. The next earnings release is on May 3, when analysts expect MOTR to earn $0.01 per share compared to -$1.38 in Q1 2010 and revenues of $32.6M, an increase of 12.12% over Q1 2010.
According to projections from Informa Telecoms & Media, mobile telecom revenues will reach US$1.1 trillion by 2015, with 40% of this figure ($440 B) coming from data services. The pressure on carriers to maximize returns from data revenues is therefore becoming intense. With this backdrop, we encourage risk seekers to buy MOTR.
Men’s Wearhouse (MW) is down by 2.9% since the March 11 close. In FY 2011 through January, revenues increased 10% to $2.10 B, and GAAP EPS went up by 45% to $1.27. With a net margin of 3.2%, MW is profitable and in line with other companies in the Specialty Retail industry. The next earnings release is on June 8. For Q1 2012, analysts estimate MW will earn $0.28 per share, an increase of 10.82% over Q1 2011, and revenues of $540.5M, an increase of 14.15% over Q1 2011.
MW shares trade slightly below our fair value estimate with a price target of $30.50. The company is relatively successful in attracting business, and so we recommend that investors take a long position.
Nike (NKE) is down by 10.2%, since the March 11 close. Cramer put out a buy on March 14, but changed his mind to sell on March 17 and 18. He returned to a buy recommendation on March 22. He finally settled on a sell on March 25, and reiterated it on March 29. For the nine months ended 28 February 2011, NKE revenues increased 8% to $15.1B, and non-GAAP EPS grew by 12.4% to $3.16. With a net margin of 10.0%, NKE is able to keep a higher percentage of its revenues than most other companies in the Textiles, Apparel & Luxury Goods industry. The next earnings release is on June 23. For Q4 2011, analysts estimate the company will earn $1.16 per share, an increase of 9.58% over Q4 2010, and they also expect revenues of $5.5B, an increase of 8.62% over Q4 2010.
We expect healthy sales growth driven by international, retail, and apparel segments. Longer term, we respect Nike’s global presence, and expect steady revenue and earnings growth. After all, analysts expect 2012 non-GAAP EPS to grow 10.8% to $4.80. NKE shares trade below our fair value estimate, and we expect it to reach $105 by the end of 2012. This is a buy for long-term investors.
Northern Oil and Gas (NOG) is down by 20.1%, since the March 11 close. Cramer covered NOG again on April 4, and told us to buy it. In 2010, the company reported GAAP EPS of $0.14, which was an increase of 75%, after +14.29% in 2009. Revenues jumped by 213.32%, after +301.40% in 2009. The EBT margin in 2010 was 25.44%. In 2011, analysts expect non-GAAP EPS to be between $0.99 and $1.26. In 2010, the actual non-GAAP EPS was $0.31. The next earnings release is on May 2, with analysts seeking between $0.16 and $0.23. In comparison, Q1 2010 produced a non-GAAP EPS of $0.04. NOG shares trade with a P/S multiple of 26.8, with 2009 and 2010 also having multiples in the low 30s. If the company continues this aggressive revenue growth in 2011, expect capital appreciation of at least 10% to 15%. This is a company for risk seekers, we would not encourage risk averse investors to take a long position.
Northern Oil and Gas is an exploration and production company based in Wayzata, Minnesota. Northern Oil's core area of focus is the Williston Basin Bakken and Three Forks play in North Dakota, and Montana. The company recently provided an operational update with some guidance. Also, the company has no material long-term debt obligations.
St Jude Medical (STJ) is up by 6.8%, since the March 11 close. In 2010, revenues increased 10% to $5.16 B, and GAAP EPS grew by 21.7% to $2.75. The net margin is 17.6%, which higher than most other companies in the Health Care Equipment & Supplies industry. The next earnings release is on April 20, analysts expecting $0.78 per share, an increase of 7.75% over Q1 2010, and revenues of $1.4B, an increase of 8.83% over Q1 2010.
We share views held by optimistic analysts, and have a positive view of STJ's long-term prospects. The company has held its ground by holding or gaining share in all of its major categories, and it has implemented strategic initiatives to continue to grow each of them, with strong product pipelines. STJ shares trade above our fair value estimate, and we believe that this is a long-term play. We place a price target of $66 for the end of 2012.
St. Jude Medical develops medical technology and services that focus on putting more control into the hands of those who treat cardiac, neurological and chronic pain patients worldwide. St. Jude Medical is headquartered in St. Paul, MN, and has 4 major focus areas that include: cardiac rhythm management, atrial fibrillation, cardiovascular and neuromodulation.
Stryker (SYK) is -5.2%, since the March 11 close. In 2010, revenues increased 9% to $7.32 B, and GAAP EPS grew by 15% to $3.19. The next earnings release is on April 19. For Q1 2011, analysts estimate the company will earn $0.89 per share, an increase of 11.12% over Q1 2010, and they also forecast revenues of $2.0 B, an increase of 11.11% over Q1 2010.
SYK shares trade well below our fair value estimate, and we believe this is a good capital appreciation opportunity. Buy SYK.
Stryker is one of the world’s leading medical technology companies. The company provides innovative orthopedic implants as well as state-of-the-art medical and surgical equipment to help people lead more active and more satisfying lives. In early January 2011, Stryker purchased Boston Scientific's neurovascular unit, which had $348 million in 2009 sales.
Travelers Companies (TRV) is up +1.3%, since the March 11 close. In 2010, revenues increased 2% to $25.11B, and GAAP EPS grew by 4.6% to $6.62. With a net margin of 12.8%, TRV is not only profitable but is more profitable than the Insurance industry median. The next earnings release is on April 21. For Q1 2011, analysts estimate TRV will earn $1.55 per share, an increase of 24.44% over Q1 2010, and they expect to see revenues of $5.6 B, which is a decrease of 8.32% over Q1 2010.
TRV shares trade below our fair value estimates, and TRV is currently trading at 9.1 times the trailing twelve-month earnings per share, a price to earnings ratio that is 25.89% below the average of the Insurance industry. We place a price target of $72. We recommend TRV for investors looking to shed some losers and bores in the financial services arena. The company is generally insulated from Japan.
Whole Foods (WFMI) is up by 6.8%, since the March 11 close. In FY 2010 through September, the company made $1.43 in GAAP EPS, which was an increase of 68.24%, after +3.66% in FY 2009. For Q1 2011, non-GAAP EPS was $0.51, compared to non-GAAP EPS of $0.32 in Q1 2010. For Q2 2011, non-GAAP EPS is expected to come in between $0.40 and $0.51. In comparison, Q2 2010 produced $0.38 in non-GAAP EPS. These earnings come out on May 9. For the entire fiscal year of 2011, the Street expects from $1.70 to $1.90 for EPS. WFMI shares are overweight, dangerously above our fair value estimate, and near our price target of $64. Generally speaking, consumers in the U.S., Canada, and the U.K. will substitute Whole Food’s more expensive brands with more affordable options. Whole Foods Market is the leading natural and organic food retailer. The company has more than 300 stores in the U.S., Canada, and the U.K.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.