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Renee Butler

 
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  • Expect Home Depot Share Price To Drop As Fed Raises Rates
    Fri, Sep. 19 HD 6 Comments

    Summary

    • The Federal Reserve announced Wednesday that it would not raise the Federal Funds rate for a "considerable time."
    • Home improvement company Home Depot saw a modest gain on the news, but don’t expect that to last. Increases on the Fed Fund rate could come next year.
    • Home Depot is dealing with the aftermath of security issues. Add this to a higher Fed Funds rate, and Home Depot's share price is likely to fall.
  • Update: Home Depot Data Breach Affected 56 Million Payment Cards
    Fri, Sep. 19 HD 1 Comment

    Summary

    • Home Depot said Thursday that the recent data hack affected 56 million payment cards.
    • In a previous article, I said that Home Depot’s share price will decline if it follows the same course as Target after its data breach.
    • Target’s data breach affected just 40 million payment cards. Since Home Depot’s data issues affected more cards, the effect could be even greater.
  • What Does An Anheuser-Busch InBev Acquisition Of SABMiller Mean For Molson Coors?
    Thu, Sep. 18 TAP Comment!

    Summary

    • Heineken rejected SABMiller’s offer to purchase the company. The move leaves SABMiller vulnerable to acquisition by another company Anheuser-Busch InBev.
    • If AB InBev is able to buy SABMiller, it would be forced to divest itself of SABMiller’s stake in MillerCoors, its joint venture with Molson Coors.
    • Molson Coors would be in a good position to require the remaining stake and even has some groundwork in place to facilitate the purchase.
  • Update: Family Dollar Rejects Dollar General Again, Advises Shareholders Against Offer
    Thu, Sep. 18 FDO 1 Comment

    Summary

    • Family Dollar recommended that shareholders reject Dollar General’s tender offer and reiterated support for Dollar Tree’s early, and lower, offer.
    • In a previous article, I predicted that there would be some back and forth that could push Family Dollar’s share price higher.
    • Wednesday’s event confirms that opinion. Expect continued volatility.
  • 3 Reasons Amazon Should Buy RadioShack
    Wed, Sep. 17 AMZN, RSH 57 Comments

    Summary

    • Amazon has been inching towards physical locations for years - introducing package pickup locations within brick-and-mortar stores - but the push has been met with some setbacks.
    • Right now, RadioShack, with its 4,400-plus stores, is on the brink of bankruptcy and trading at only $1 per share.
    • Amazon could buy the struggling retail chain and introduce physical locations, which would expand delivery options and showcase popular items.
  • Update: Target CEO Announces Plans To Prioritize Departments, Focusing On Trend Over Price
    Wed, Sep. 10 TGT Comment!

    Summary

    • Target CEO Brian Cornell is prioritizing investment within the company, opting to focus on delivering on-trend offerings in design and style.
    • In a previous article, I said that Target was missing its sales forecasts because it lacked this focus.
    • Cornell’s new strategy is a step in the right direction, but investors should hold back to make sure Target is delivering enough value.
  • Home Depot Shares Slip Slightly After Breach, But There Is More Room To Fall
    Tue, Sep. 9 HD 3 Comments

    Summary

    • Home Depot’s share price only dipped slightly after the data breach was confirmed.
    • But, that doesn’t mean that Home Depot will be so robust when the company announces earnings in November.
    • Expect the company’s sales to dip as consumers lose confidence in data security.
  • Update: GE Sells Its Appliance Business To Electrolux, Narrows Focus On Industry
    Tue, Sep. 9 GE 11 Comments

    Summary

    • General Electric is getting out of the appliance business, allowing the company to focus on its industrial segments.
    • In a previous article, I discussed GE’s efforts in industrial technology, particularly in power and grid technology.
    • While I did not predict GE would sell off its appliance division, the move is in line with the strategy I identified then.
  • CVS: Betting On Health Is Good For Business
    Fri, Sep. 5 CVS 6 Comments

    Summary

    • CVS removed tobacco products from its stores, risking a loss in the $2 billion in revenue those products generated.
    • But the move is a strategic one. It allows CVS more aggressively focus on expanding its role as a healthcare provider.
    • CVS is taking a risk but the company is fundamentally strong and should generate strong returns going forward, even without tobacco.
  • Tesla: Soaring On Momentum, But Still Risky
    Fri, Sep. 5 TSLA 205 Comments

    Summary

    • Tesla hit a new all-time high Tuesday after Stifel Nicolaus set a $400 price target on the company.
    • However, despite strong efforts towards expansion and decent fundamentals, Tesla is facing weak demand.
    • Telsa may eventually move past these issues but wait on opening a long position until improvements in demand are clear.
  • iCloud Hacks Could Damage Apple Ecosystem, Sales May Suffer
    Tue, Sep. 2 AAPL 132 Comments

    Summary

    • Several individual users of Apple iCloud were hacked and nude photos released.
    • It is not clear how hackers were able to gain access to the accounts, which included several celebrities.
    • Apple’s products already lack several features offered by its rivals. If the company loses its perception of security, sales could suffer.
  • Update: Dollar General Raises Bid For Family Dollar, Threatens Hostile Takeover
    Tue, Sep. 2 FDO, DG 1 Comment

    Summary

    • Dollar General has raised its bid for Family Dollar, moving to $80 per share, up from its original offer of $78.50 per share and over Dollar Tree’s earlier offer.
    • In a previous article, I predicted that Dollar General’s efforts could push Family Dollar’s share price higher.
    • Today’s event confirms that opinion and the deal isn’t settled yet.
  • Who Wins If Burger King Acquires Tim Hortons? Everyone
    Wed, Aug. 27 BKW 5 Comments

    Summary

    • Burger King is set to purchase Tim Hortons in a deal worth over $11 billion. The deal will combine the two entities into the third largest quick service restaurant worldwide.
    • Such a deal would allow Burger King to move its headquarters to Canada and enjoy tax savings, as well as free up shares and introduce synergetic savings.
    • Shares in both Burger King and Tim Hortons swelled over 19% in trading the day news of the deal broke. Buy in once they contract for a long position.
  • Amazon Wins The Race To Live Streaming TV, Expect Big Things
    Mon, Aug. 25 AMZN 62 Comments

    Summary

    • Amazon will buy live video service Twitch in a deal valued at over $1 billion. Twitch had been in talks with Google, but they appear to have fallen through.
    • This acquisition gives Amazon the ability to launch a live streaming service, and capitalize on its existing ecosystem.
    • Go long now. Things could move quickly for Amazon.
  • Update: Gap Earnings
    Fri, Aug. 22 GPS Comment!

    Summary

    • Gap surprised analysts on Friday, topping 2Q14 earnings estimates and sending its share price up nearly 5%.
    • Despite the bullish market response, Gap still posted shrinking margins and flat comps - an issue I had predicted in a previous article.
    • Friday’s results confirm my opinion that investors need to be aware of Gap’s margins.
  • Update: Family Dollar Rejects Dollar General Acquisition
    Thu, Aug. 21 FDO 1 Comment

    Summary

    • Family Dollar announced Thursday that it would reject Dollar General’s $9 billion takeover offer and reiterated support for Dollar Tree’s $8.5 billion offer.
    • I had predicted that there would be difficulties in a Dollar General bid, including Family Dollar CEO Levine and Trian Management’s support of Dollar Tree.
    • However, there are those on Family Dollar’s board who do not support the Dollar Tree bid and this only confirms my opinion that volatility is on the horizon.
  • Update: Target Earnings
    Wed, Aug. 20 TGT 2 Comments

    Summary

    • Target reported earnings Wednesday morning of 78 cents per share, in line with the revised outlook Target released earlier this month.
    • While Target’s sales showed some improvement, the company’s margins are shrinking and its earnings are low, which I predicted.
    • Wednesday’s reports confirmed my opinion that Target is not “delivering enough value to justify its price points”.
  • Did Justin Bieber And Taylor Swift Really Kill Elizabeth Arden?
    Wed, Aug. 20 RDEN 2 Comments

    Summary

    • Stock in Elizabeth Arden took a steep fall on Tuesday after the company announced major decreases compared to previous performance and a new private equity investor.
    • Elizabeth Arden blamed the decline on weaker than expected fragrance sales, particularly the Justin Bieber and Taylor Swift fragrances.
    • The company is promising to manage costs going forward but weak demand is difficult to overcome, especially when there is no innovation.
  • Ruby Tuesday: Sell While Momentum Is High
    Wed, Aug. 20 RT 3 Comments

    Summary

    • Ruby Tuesday has seen large gains this week after CEO Buettgen purchased 50,000 shares of the company.
    • Insider purchases can point to go things, but not always. Ruby Tuesday is expecting flat revenue, has low profit margins, a low current ratio, and isn’t effectively harnessing its market.
    • As the economy contracts, Ruby Tuesday will end up facing hard times. Investors would be wise to sell now while momentum is high.
  • Update: Sprint Planning New Low-Cost Strategy
    Mon, Aug. 18 S 15 Comments

    Summary

    • Sprint is planning to offer low price plans and lower cost smartphones while featuring larger data allotments.
    • The move seems to me like a Hail Mary pass, designed to help the struggling company retain subscribers and compete against larger rivals.
    • I predicted that Sprint would have to do something to retain subscribers or risk being acquired by a larger company, but I thought the company would acquire smaller carriers.
    • Trying to compete on cost against larger companies is a risky move. It could leave Sprint with smaller margins, less profit, and more vulnerable than ever to takeover.
  • Update: Dollar General Makes Bid For Family Dollar
    Mon, Aug. 18 FDO, DG 1 Comment

    Summary

    • Dollar General has entered the bidding war for Family Dollar, as I predicted a few weeks ago, offering $9 billion to buy its rival.
    • The deal is considerably higher than Dollar Tree’s offer of $8.5 billion, indicating that Dollar General sees more benefit to an acquisition of Family Dollar than Dollar Tree does.
    • As I wrote previously, a Dollar General-Family Dollar merger makes sense, and the higher bid offer from Dollar General confirms that, but wait and buy once the momentum settles.
  • Coca-Cola: Look For Long-Term Growth As Company Diversifies
    Mon, Aug. 18 KO 5 Comments

    Summary

    • Coca-Cola spent $2.15 billion for a 16.7% stake in Monster Beverage.
    • The deal marks the latest in a series of purchases designed to help the iconic soft drink maker diversify its holdings and expand its presence in emerging areas.
    • These investments will position Coca-Cola to take advantage of current market conditions and allow shareholders to expect long term growth.
  • Estee Lauder: Poised For Long-Term Growth
    Sat, Aug. 16 EL Comment!

    Summary

    • Estee Lauder reported earnings Friday. The company saw massive growth year over year, but missed on analyst estimates.
    • News of the company’s earnings pushed the stock lower during the day before it rebound to roughly even by market close.
    • Estee Lauder is exhibiting a pattern of growth in fundamentals and its strategic initiatives are aligned towards maximizing its markets efficiently, making it a good candidate for long term growth.
  • Cisco: Take Advantage Of The Sell-Off To Open A Long Position
    Fri, Aug. 15 CSCO 5 Comments

    Summary

    • Cisco’s share price has slid on market reaction to job cuts and flat revenue growth.
    • The company is strong and growing. The job cuts will allow the company to reallocate toward its strengths.
    • Take advantage of the sell off to open or expand a long position.
  • Gap Limited On Upside By 'Clothing Commodity'
    Fri, Aug. 15 GPS Comment!

    Summary

    • Gap is priced low relative to its earnings, but the pricing is fair based on its growth prospects.
    • The company has to manage the clothing commodity, and there are several hurdles.
    • Gap has several strengths but the company needs to better address its demographic before a longer term position can be justified.
  • Sell J.C. Penney, Before The Market Corrects
    Fri, Aug. 15 JCP 25 Comments

    Summary

    • J.C. Penney stock soared on Thursday after the company reported its third improved quarter in a row.
    • But the company is weak on fundamentals and the retail industry appears to have plateaued.
    • Investors would be wise to take advantage of the current price increase and sell now.
  • Priceline: Underpriced After Strong Earnings, Disappointing Outlook
    Tue, Aug. 12 PCLN 1 Comment

    Summary

    • Priceline surprised on earnings Monday, bringing in earnings of $12.51 per share over analyst estimated of $12.04 for the quarter.
    • The company lowered its outlook for 3Q14 based on expansion costs.
    • Weak economic conditions going forward could have a negative effect, but Priceline is still priced well for its growth, making the company a good long position.
  • Amazon Declares War On Profit Margins, Takes On Disney
    Mon, Aug. 11 AMZN 33 Comments

    Summary

    • Amazon halts pre-orders on Disney movies, making the Walt Disney Company the most recent to experience Amazon’s strong arm tactics.
    • The Seattle-based company has used this technique successfully in the past but never against a company as large as Disney.
    • If Disney calls Amazon’s bluff, and Hachette joins in, the company could be in trouble.
  • Ralph Lauren: Undervalued And Poised For Long-Term Gains
    Mon, Aug. 11 RL 1 Comment

    Summary

    • Ralph Lauren has consistently beat analyst estimates lately and has been aligning its strategy with its strengths.
    • The company is positioning itself to take advantage of the market and that combined with strong fundamentals points to good things on the horizon.
    • Ralph Lauren is a bargain for investors looking to invest in the luxury retail market.
  • Encrypted Websites Mean More Revenue For Google
    Mon, Aug. 11 GOOG, GOOGL 5 Comments

    Summary

    • Google has started to use encryption as a preference in search engine rankings.
    • The move gives Google a competitive advantage against other search engines and may help the company retain its user base.
    • By bolstering the company’s search engine numbers, Google will be able to attract more advertisers.
  • Target: Lower Outlook, Missing Demographic
    Sat, Aug. 9 TGT 9 Comments

    Summary

    • Target lowered its outlook for the current quarter, citing disappointing sales as a reason for the change.
    • The company has a new CEO in place and is focusing on becoming an omnichannel retailer.
    • Smart retail is a good opportunity but Target needs to better define its demographic.
  • Molson Coors: A Good Company Currently Priced Too High For Entry
    Fri, Aug. 8 TAP 1 Comment

    Summary

    • Molson Coors has a range of popular product offerings and the company is strong on fundamentals.
    • The company is trying to reinforce brand loyalty and cut costs, but the market for beer is shrinking.
    • Molson Coors is a good company, but it is currently priced too high to justify buying in at this level.