Hale Stewart

Bonds, commodities, etf investing, long/short equity
Hale Stewart
Bonds, commodities, ETF investing, long/short equity
Contributor since: 2010
Company: The Law Office of Hale Stewart
Patriot II: you may very well be right. Also bolstering your argument is the extremely oversold condition of the marker.
But, my reference frame is much longer than 1-week. At minimum, I think a month ahead, it not a quarter or 2.
Mr. Wilds:
Seeking Alpha will gladly accept your writing. In the future, please do not use my articles as a way to promote your own. This is referred to as "thread hijacking," and it is greatly frowned on in the internet community.
Thanks. We're fine. The main problem has been intermittent internet connections.
From your comment: "Counter-intuitively, this may be the best time to buy."
My thoughts exactly. The weekly chart first got may attention.
That's not to say there aren't issues. But, I think that as China and Australia cool down the EU will pick up. And as that region has had low capital investment over the last 5 years, a new market for Cat's goods will emerge.
You are welcome, and thanks for your comments as well.
@Greg: Technically you are correct. However, please take a closer look at the second line of the net cashed used in investment for 2014. You will see a positive entry for ~5.7 billion, which gives the company a positive FCF. Also note that, as I noted in the article, the dividend payout ratio is 41%. We'd have to see huge drop in gross revenue before the dividend would be negatively impacted.
Good information on the Phillips 66 spin off. Thanks.
@ Jerry: while I don't have exact numbers for the negative impact of the dollars advance, I do note it will be a problem. See this:
Consider this situation in relation to the high level of the dollar, and the negative impact that will have on earnings. Many multi-national companies have stated that the strong dollar is seriously impacting their financial performance, don't expect anything different from PM.
@Uncle Pie: your statement is one of the main issues I wrestled with for some time in writing this. And it is a very valid issue. However, using that logic, it's possible to eliminate a wide swath of companies. For example, you could eliminate all health insurance companies because they work against some insureds when claims come in. Pepsi and Coke derive most of their profits from sweetened drinks, which, when consumed in excess lead to weight problems.
I should also add that I'm a former smoker who struggled for several years trying to quit (in fact, it wasn't until I was a few months away from my wedding that I did so).
Very nice work. This one popped up on my "look into it more deeply" list recently. Your article highlights a very attractive buying proposition.
@Harm: investors may be concerned about the overall growth prospects in both countries.
Lares and Tom
You are correct; my analysis was flawed. Chalk it up to writing when I was in fact too distracted to write something.
@ Rohitt: blind luck on my part.
@hneumann: practically all stores have an online presence. All have had severe problems integrating online into their store operations. Plus, consider the advantage Amazon has in that area. When you go to shop anything online, where do you go?
Respectfully, we simply disagree on this point.
@ hneumann: Please note the overall macro-environment in which the store is operating. The US consumer is simply not buying as much as before. This has been the case since the end of the recession. It's just not a sector conducive to barn burning news right now. In that environment, there is only so much you can do; it's a bit like bailing out a boat with a teaspoon.
@ Volte: you raise good points. However, central to my thesis is this is an extremely competitive sector operating in a very weak macro environment. Overall shopping is down as shown in the PCE numbers, income growth is weak (as is GDP growth) brick and mortar retail is falling out of favor (especially with millennials who going more and more online) and competition is intense. Also note the stock has tried to rally twice in the last 18 months, only to fall back to the 9-10 area.
WMT has a huge publicity problem that they are not handling well.
TGT has two big risks:
1.) They've got about 80 cases outstanding regarding the data breach. They do have a good insurance policy, but, there is the potential for a big payout.
2.) A slow atrophy like that of Sears caused by the management culture's problems.
See this chart:
As a follow-up to the article, I was obviously wrong about oil not dropping. As I like to say, the markets will make an idiot out of you whenever possible.
It doesn't get any better than hockey and economics