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Archer Daniels Midland: Underperforming On A Comparative Basis
- The company is acquiring WILD Flavors which will enable Archer to provide food and beverage clients a complete range of systems to facilitate them in offering improved products.
- WILD Flavors is the world’s leading provider of natural flavor systems to the food and beverage industry.
- On a per share basis, the EBITDA per share is anticipated to go up by $0.58.
- However, on a comparative basis, it is better to invest in other players in the industry who are performing a lot better rather than this stock.
Uncertainty Prevails For Coach
- Coach’s revenue pummeled by 9.73% during the first quarter of the fiscal year 2015 and reported absolute revenue of $1,038.8 million as North American sales were down by 18.60%.
- Similarly, the same pattern flowed downwards and the company’s operating margin has plunged by 10.60% to reach 17.30%.
- To combat this problem Coach is shutting down its inefficient stores in North America. It also intends to inaugurate new stores or refurbish major stores in 12 main markets.
- The company is centering its efforts on four main initiatives in order to revive and maintain future growth.
- I do not share the opinion that the company’s key growth initiatives are likely to bring about a drastic shift in its financial returns anywhere in the immediate term.
PepsiCo: Promising Shareholders Higher Returns
- PepsiCo has been able to expand internationally and has been one of the largest fast-moving consumer goods company.
- The company experienced an increase in its top line, and tightening up of its expenses relative to sales illustrates a positive side of the company.
- The company has a diversified stream of products and is not depending only on one product line like its competitor, Coca-Cola.
- PepsiCo’s stock is undervalued relative to the industry and offers a superior dividend yield as well.
- Studying the progressing extensions of PepsiCo, investing in the company would result in higher promised returns to the shareholders in the years ahead.
Kellogg: Grappling Through Hard Times
- Despite being the market leader, the company is facing headwinds in its cereal business which contributes nearly 23% of the total revenue.
- Top line pummeled by 2.10% in the third quarter of the fiscal year 2014. To revive demand for its products, the company continues to actively invest in category-building programs.
- The net profit margin shrinked by 271 basis points to reach 6.16% in the most recent quarter.
- Project K is being implemented which aims to achieve annual cost savings in the range of $425 million to $475 million by the fiscal year 2018.
- The stock represents an upside capital return potential of nearly 48%. Moreover, the company is also paying out an active dividend yield return of 1.18%.
Phillips 66: Should You Buy It?
- The recent decline in crude oil prices has benefited refiners like Phillips 66.
- Phillips 66 is heavily investing in growth projects in order to capitalize on the growth in US oil production.
- Phillips 66’s Midstream and Chemicals businesses will drive the future growth of the company.
Priceline: Fighting Against Adverse Currency Movements
- Gross bookings shot up by 28.4% in the third quarter of fiscal year 2014 which culminated into a staggering top line gain of nearly 25%.
- Top line growth trickled down to the bottom line and the company’s net profit margin witnessed an improvement of 75 basis points to reach 37.45%.
- On a per share basis, EPS for the fourth quarter is anticipated to be reported in the range of $22.48 to $23.89.
- Priceline is trying on its part to make things favorable by taking a number of active steps to achieve future growth.
- The stock represents an upside potential of approximately 50%. On the flip side, it is not a regular income providing stock.
Broadcom Well-Positioned For Growth
- Broadcom's share price surged 5.5% on Wednesday, after the chipmaker reported better-than-expected Q3 2014 results.
- The company recorded top-line growth of 5.3%, and clocked in absolute revenue of $5.26 billion for Q3 2014.
- Broadcom's wind-down of its cellular base-band business will allow the company to focus on its core and key growth areas.
- The launch of the WICED sense development kit will contribute to the future growth of the company's Broadband and Connectivity business.
American Express: Direct Beneficiary Of Growth In The Credit Card Industry
- American Express reported a growth of 5% in its top line in the most recent quarter and clocked in absolute revenue net of interest expense of $8,329 million.
- The company has increased its net profit margin to 17.73% in the third quarter of the fiscal year 2014, an improvement of 127 basis points.
- On a per share basis, the EPS is projected to go up by $0.49 due to the growth in the credit card industry in 2014.
- With the addition of American Express to provide Apple Pay service, this is expected to provide an additional source of top line growth for the company in upcoming quarters.
- The company’s improved financial and credit performance coupled with the forthcoming industry growth where American Express has a significant market share, the stock provides a good opportunity for investment.
Energy Transfer Partners Is Well Positioned For Growth
- The decision of Susser’s shareholders to opt for the Energy Transfer Partners shares indicates their belief in the company and the positive effects of the merger.
- The Expansion Open Season plan will increase the transport capacity of the Dakota Access Pipeline from 320,000 barrels per day to 450,000 barrels per day.
- Energy Transfer Partners is operating at a healthy distribution coverage ratio of 1.10x, which makes the company an intriguing choice for investors.
Nike: Growth Story Continues
- Nike’s share soared to an all-time high of $89.99 followed by the terrific first quarter results.
- The sports gear giant reported an increase of 15% in revenues and a 27% increase in earnings per share beating analysts’ estimates.
- In the wake of its strong earnings report, analysts raised their target price forecast of the company.
- In Western Europe, Adidas’s home turf, Nike’s sales growth outpaced Adidas’s sales growth.
- The Olympics are set to take place in Brazil in 2016 and Nike is looking for another year of excellent performance.
Campbell Soup Company: Well Positioned To Continue The Growth Trajectory
- Campbell registered top line growth of 3% during the fiscal year 2014 and reported absolute revenue of $8.3 billion on the back of healthy acquisitions and new product launches.
- Operating margin shot up to 14.42% during 2014 compared to 13.41% in the corresponding period last year due to higher operational efficiency.
- The company has set aside $400 million funds to spend on capital projects in 2015.
- In the wake of the company’s recent acquisitions and divestitures to streamline its business and its long term growth strategy, Campbell is well positioned to continue the growth trajectory.
- The stock upholds a capital return potential of 43%. Also, it is offering a superior dividend yield of 2.96%.
Regeneron Pharmaceuticals Has A Bright Future Ahead
- Regeneron's shares went up by more than 30% year-to-date, despite the tumbling performance of the entire biotechnology sector.
- According to analysts at UBS, Regeneron's blockbuster drug EYLEA's sales are expected to hit $3.7 billion by 2020.
- Regeneron received Breakthrough Therapy designation for EYLEA for the treatment of patients suffering from diabetic retinopathy.
- Once approved, Regeneron and Sanofi's drug, Alirocumab, could hit more than $4 billion in annual sales.
Continental Resources' Recent Share Price Dip Creates A Buying Opportunity
- Continental Resources’ share price has fallen due to the company’s announcement of an increase in drilling costs.
- Continental’s unrisked resource potential in the Bakken region is approximately 4.1 billion BOE (barrels of oil equivalent) in addition to the company’s proved developed reserves of 240 million BOE.
- The company has announced a new oil discovery, the Springer Shale, in the heart of the SCOOP region.
- The CEO of Continental Resources bought 72,000 of the company’s shares for a total of more than $4.85 million.
Celgene Has A Very Bright Future Ahead
- The U.S. Food and Drug Administration authority approved the expanded use of Celgene's drug Otzela as an oral treatment for patients with moderate-to-severe plaque psoriasis.
- According to analysts' estimates compiled by Bloomberg, Otzela expects to generate $1.03 billion in sales by 2017.
- Celgene is consistently expanding its existing blockbusters labels to fuel the future growth of the company.
- Based on future growth expectations, Celgene seems to be undervalued.
Bed Bath & Beyond: Heading Towards A Brighter Future
- BBBY recorded a positive growth of 4.3% in its top line on the back of higher comparable store sales and new store openings.
- The company was able to report an EPS of $1.17 for the quarter, surpassing analyst estimates by 3 cents.
- The company has replaced equity with cheaper debt during the quarter, resulting in a net benefit of $0.03 per share as it moves towards the optimal capital structure.
- BBBY is planning on further expanding its retail network by inaugurating 22 new stores domestically and one in Mexican City during the remaining year.
- The stock upholds an upside potential of 26.47% based on PE valuation.
Union Pacific Is Well Positioned For Growth
- The recent boom in oil and gas production in North America has boosted the performance of the US railroad industry.
- Union Pacific’s stock went up by 28% year-to-date led by the record performance reported in the second quarter.
- The new energy sector reforms in Mexico are anticipated to expand Union Pacific’s industrial and chemical shipments.
Hormel Foods Corporation: Successfully Fighting The Obstacles Coming Its Way
- The company recorded top line growth of 5.8% and clocked in absolute revenue of $2.28 billion for the third quarter of the fiscal year 2014.
- Total segment margin improved to 9.80% from 8.48% during the third quarter due to higher margin derived from robust export of pork, growth in retail and foodservice products etc.
- The acquisition of CytoSport is anticipated to increase the company’s earnings by 5 cents on a per share basis from the fiscal year 2015 onwards.
- The company plans to increase the investment to $3 billion by 2016 to fund the development and launch of unique product lines and offerings.
- The stock is trading at a discount based on its PE valuation. Moreover, its leverage status is superior to the industry leading to higher ROE generation for the shareholders.
Sysco Corporation: The Impact Of The Mega Deal Quantified
- Sysco is looking forward to acquire US Foods against a consideration of $3.5 billion. The combination will enhance the company’s market share domestically.
- Afterwards, Sysco will be representing 25% of the total market and rake in total revenue of $231 billion.
- On a per share basis, the net incremental revenue and cost synergies are projected to uplift Sysco’s EPS by $1.06 annually in the upcoming years following the acquisition.
- Being a regular income provider, the company is offering a superior dividend yield of 3.09% to its investors.
- Apart from the acquisition of US Foods, the company is offering a higher ROE of 17.81% whereas the peers are on average generating 12.31% for the shareholders.
V.F. Corporation: Timberland To Bring In Healthy Returns
- Timberland is working on its plan to increase total revenue from currently $1.7 billion to $3.1 billion by 2019, translating into a CAGR of 12.77%.
- It is focusing on US, EMEA and Asia to derive future growth by coming up with innovative products, further enhancing its product range offered, distribution network expansion, etc.
- Moreover, the company plans to enhance its global retail network by opening 130 additional stores on top of the 230 stores already in operation.
- On a per share basis, the Timberland brand is projected to uplift VFC’s earnings by $0.35 by the end of fiscal year 2019.
- Based on the company’s healthy expansion plans and growth in its brand, Timberland, I believe VFC is a good investment choice. VFC also generates a higher ROE of 23.18%.
Best Buy Is Still A Good Buy
- The company’s restructuring program “Renew Blue” has achieved $900 million in annualized savings compared to the target of $1 billion; it also achieved $40 million in cost savings.
- The online segment sales of Best Buy increased 22% in the recently-ended quarter driven by the company’s “buy online – ship from store” and marketing endeavors.
- The bankruptcy of RadioShack will be a positive boost for Best Buy as it can capitalize on $341 million of Radio Shack’s lost sales.
- The company’s shares went up 3.5% last week on strong volume following the launch of the iPhone 6 and news that Apple had witnessed a record number of preorder sales.
Lululemon Athletica Is Back In Shape
- Lululemon’s share price surged as much as 18% last week as the company reported better than expected second quarter fiscal year 2014 results.
- The company’s revenue climbed 13% topping the company’s projection and leading to earnings beating the Street’s estimates.
- I believe that the company’s margin pressure will begin to ease because of the cleaner inventory heading into the second half of fiscal year 2014.
- Lululemon is planning to open a standalone men’s store to drive growth from this segment and is also planning to have 20 stores in Europe and Asia by 2017.
CVS Health Corporation: Adapting To The Shifting Market Dynamics
- The company’s top line witnessed a double digit growth of 10.7% during the second quarter of 2014 and reported absolute revenue of $3.4 billion.
- Revenue growth was achieved as revenue per mail choice claim rose by 29.7%, pharmacy claims processed increased to 230.9 million, revenue per pharmacy network claim processed increased by 8%.
- The company’s generic sourcing venture with Cardinal Health prepares it to seek full advantage of the increasing generic drug usage trend.
- The company’s net profit margin had remained flat at 3.6% which means that the top line increase had trickled down to the bottom line causing a similar increase in net.
- The drug store company has delivered a higher return on assets and equity of 7.05% and 12.71%, respectively, compared to peers.
Gilead Sciences: The Recent Dip In Share Price Creates A Buying Opportunity
- Gilead Sciences's stock has been on a rocket ship trajectory ever since the launch of its blockbuster drug, Sovaldi.
- Gilead Sciences is planning to launch a generic version of the Sovaldi drug for more than 90 developing countries.
- Sovaldi's sales are expected to further increase in the US, despite being expensive.
- The company recently announced the positive results of its AMBITION study conducted in collaboration with GlaxoSmithKline.
- Based on its fundamentals and earnings growth rate, Gilead appears to be relatively undervalued.
Clorox: A Value Stock
- Clorox formulated its strategic growth plan which aims to grab value opportunities in the long run in order to derive future bottom line growth and deliver solid stockholder returns.
- It plans to achieve sales growth target by developing its “3D” demand-creation model, product innovation, reviving its product categories and increasing market share by escalating investment in demand-building programs.
- Margin expansion is likely to be achieved by cutting down inflation exposure, curtailing growth of selling and administrative expenses by eliminating low-value activities and restoring margin in international businesses.
- On a per share basis, the EBIT is anticipated to increase to $7.11 in 2015 as compared to $6.67 in 2014.
- The stock is undervalued based on its P/E and offers a regular income return of 3.33%.
China Is The Current Focus Of Johnson Controls
- Johnson has recently added ECOSS, a stainless steel evaporative condenser, to its portfolio of industrial refrigeration solutions.
- As part of its restructuring plan to align its business, the company has divested from its auto-interior business to team up with a Chinese company, Yanfeng Automotive Trim Systems.
- On a per share basis, this joint venture will uplift the bottom line by 0.15 in 2015, increasing to 0.22 by 2020.
- Johnson Controls has bright future prospects in China as the company’s high class building technologies and solutions assist the objective of the Chinese government.
- To sum up, the increased penetration in the high growth market like China is likely to add decent numbers to the company’s top and bottom line.
Eli Lilly Will Soon Emerge As A Star
- The patent expiration of two of Eli Lilly's blockbuster drugs have strangled the company's recent-quarter performance.
- The company's diabetes pipeline has many blockbuster drugs that are materializing in the massively growing diabetes market.
- Eli Lilly's acquisition of Novartis's animal healthcare segment will result in $200 million financial synergies per year, and will also give Eli Lilly control over its projects.
- Eli Lilly's recently approved cancer drug Cyramza has the potential to generate around $1 billion in annual sales.
Schlumberger: Recent Dip In Share Price Creates Buying Opportunity
- American oil production is on a roll and the best way for the investor to cash in on this black gold rush is to invest in oilfield service companies.
- Schlumberger’s topline witnessed a growth of 8% along with a whopping return on equity of 17% after a rebound in drilling activity.
- The recent increase in rig count will result in increased demand for oil and gas equipment and will translate into significant growth for Schlumberger.
- Recent sanctions on Russia regarding its dispute with the Ukraine shouldn't be a concern for Schlumberger.
Reynolds American: Adapting To The Switch Towards A Healthy Lifestyle
- The acquisition of Lorillard will add Newport cigarettes to the company’s branded cigarette portfolio, the market leader in the US menthol category.
- The combination will also provide Reynolds a dominant position in the high growth market of e-cigarettes.
- The company has recently introduced its nicotine gum, marketed under the brand name of Zonnic, throughout US which is expected to add an EPS of $0.15.
- The stock is currently undervalued based on its P/E and offers a striking dividend yield of 4.67%.
Teva Pharmaceutical Is Poised To Grow
- Teva is trying to recover the Copaxone sales loss due to patent expiration by introducing an improved version of Copaxone 40mg.
- Teva revealed positive data from the phase 3 study of its drug reslizumab for the treatment of moderate to severe asthma.
- Teva won its case against AstraZeneca in the UK High Court paving the way for the company to launch its DuoResp Spiromax inhaler in the UK.
- Recently Teva received 180-day marketing exclusivity in order to launch the generic version of Baracludes.
Progressive Corp.: All Set To Beat Competitors With Innovative Launches
- Progressive has teamed up with Zubie to encourage safe and sound driving by rewarding the customers in the form of lower premium charged.
- The customers have two options: buy the policy directly or take a test drive.
- Currently, over 1 million subscribers have enrolled into the Snapshot program. The expected growth in new applications is likely to increase the net premium written of Personal Lines segment.
- The company is trying to achieve further growth by offering a “bundle” package i.e. auto product with property insurance through its Progressive Home Advantage program.
- Based on the company’s recent program launches coupled with the trimming of expenses as exhibited by its declining combined ratio, the company has bright future prospects.
Nike's Growth Momentum Continues
- Nike cashed in on the back to school shopping spree in athletic attire.
- Nike spent 11% of its revenue on demand Creation, which includes payment to athletes and advertisements to improve brand popularity and extend the shelf life of its products.
- In order to provide cutting-edge products to its customers Nike is focused on increasing its innovation.
- Nike’s huge cash pile will enable it to continue investing in marketing and product innovation which will be the drivers of its future growth.
Baker Hughes: The Expected Outperformer
- Operating environment turns positive as oil extraction in North Dakota Bakken Shale surpassed the record level of one million barrels of oil/day due to availability of cheap crude oil.
- This puts the oilfield services’ companies like Baker Hughes in high demand as their products are used in the extraction process.
- Baker’s acquisition of the pipeline and specialty service business of Weatherford broadens its offering in pre-commissioning, deepwater and in-line inspection services across the globe.
- If Baker secures the Petrobras Drilling Contract, it will be able to add higher numbers to its bottom line compared to Schlumberger and Halliburton.
- The company is offering a higher cash flow yield of 9.35% in an industry where the prevailing yield stands to be 8.20%.