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  • M&T Bank - A Neutral Stance After Weighing The Pros And Cons
    Tue, Jan. 27 MTB 1 Comment

    Summary

    • M&T Bank delivers solid results with revenues being pressured by compression in net interest margins.
    • The company anticipates some headwinds on this front in 2015, as pending deal uncertainty creates additional headwinds.
    • This is offset by strong historical growth and solid operational loan growth, which is already applauded by a premium valuation.
    • Weighing the pros and cons, I am fairly neutral on the prospects for the shares.
  • Hexcel: Long-Term Guidance Offers Support And Appeal
    Tue, Jan. 27 HXL Comment!

    Summary

    • Hexcel's shares rise to new highs following solid results, and a promising multi-year outlook.
    • I like the shares given the high visibility of the business and significant anticipated earnings improvements.
    • This makes shares worthwhile at dips despite a premium valuation on current earnings.
  • Alaska Airlines - Momentum Run Continues, But I Am Cautious
    Tue, Jan. 27 ALK 5 Comments

    Summary

    • Alaska Airlines ends 2014 on a strong note.
    • Solid growth, high earnings and moderate multiples appear to create a nice opportunity.
    • The shares have already reflected a great deal of good news in recent months and years.
    • Little competition and low oil prices create fat margins now, something which I do not anticipate will be sustainable.
    • While I am very optimistic about the long-term potential of the company, I am only a buyer on significant dips following the momentum run seen already.
  • Huntington Bancshares - After A Relatively Strong Quarter, The Bank Is Fairly Valued
    Tue, Jan. 27 HBAN 1 Comment

    Summary

    • Huntington shows relatively strong growth, with past growth being aided by dealmaking.
    • Shares have recovered in recent years, now trading at a premium to their book value on hopes for strong returns on equity.
    • While this appears attractive, I am not too impressed with the bank. Long-term shareholders have still suffered a lot following disastrous dilution during the financial crisis.
    • Given the fairly aggressive strategy of the bank to grow the business I am worried about the performance of the bank in a future recession.
  • Kansas City Southern - Great Growth And Potential, Wait For A Better Entry Level
    Tue, Jan. 27 KSU Comment!

    Summary

    • Kansas City Southern reports relatively soft fourth quarter results.
    • The railroad has grown revenues and earnings at an aggressive pace in recent years.
    • While the prospects for future growth remain great, a lot of good news has already been priced into the shares.
    • For these reasons I am only a buyer on significant dips going forwards.
  • Rockwell Collins: Great Long-Term Investment; Wait For A Pullback
    Mon, Jan. 26 COL Comment!

    Summary

    • Rockwell Collins reports solid first-quarter results.
    • The company benefits from the retro-active extension of R&D tax credits.
    • Shares offer long-term appeal. Despite this, I would be cautious to buy shares at current levels.
    • Recent momentum amidst a strengthening dollar is the main reason for the caution.
  • BB&T - Despite Solid Deals Appeal Is Limited Unless Interest Rates Start To Rise
    Mon, Jan. 26 BBT Comment!

    Summary

    • BB&T reports solid results, driven by cost savings and modest compression in net interest margins.
    • The bank is focusing on growth again after it made a few important deals in 2014.
    • Shares trade at a modest premium now, raising expectations.
    • I feel appeal only becomes apparent in case net interest margins start to increase again.
  • Kimberly-Clark - Lots Of Headwinds, Dividend Provides Support
    Mon, Jan. 26 KMB 4 Comments

    Summary

    • Kimberly-Clark reports soft results, and issues a disappointing 2015 outlook.
    • The strong dollar hurts the business a great deal, while Huggies faces a lot of pressure at home.
    • While the valuation is very high, I continue to believe shares will be supported by the world-class dividend.
    • The 3.0% dividend yield, with a further dividend hikes anticipated in 2015, looks attractive given the low interest rates.
  • SanDisk - More Weakness Ahead, Don't Pull The Buy Trigger Yet
    Sat, Jan. 24 SNDK 23 Comments

    Summary

    • SanDisk reports very soft fourth quarter results, as has been pre-announced.
    • The weakness is now seen for the current quarter and for 2015 as well.
    • Investors therefore took another hit, after shares have lost 25% of their value in just a month's time.
    • With more pain anticipated in the coming year, I think it is still too early to buy into the shares now.
  • eBay - Mixed Results And News Show, Shareholder Value Creation Is Uncertain
    Sat, Jan. 24 EBAY 1 Comment

    Summary

    • eBay's results were solid, as the outlook is weak driven by the headwinds resulting from dollar strength and weakness at the marketplace business.
    • PayPal continues to perform well, as the company is cutting costs and aiming to sell the enterprise business unit.
    • I like the orientation on shareholder value creation, although I am uncertain how much value can really be created for shareholders.
  • Fifth Third Bancorp - Little Long-Term Appeal, Even At Book Value
    Fri, Jan. 23 FITB 1 Comment

    Summary

    • Fifth Third Bank suffers like the rest of the sector from narrowing interest margins.
    • Unlike many competitors the cost of deposits is creeping up, so are loan loss provisions.
    • The average performance and poor track record in risk management, makes me cautious despite the fact that shares trade at their book value.
  • U.S. Bancorp - Best-Of-Breed, Long-Term Value Creator
    Thu, Jan. 22 USB 4 Comments

    Summary

    • U.S. Bancorp has reported solid earnings, as net interest margin compression was not as bad as was feared.
    • The bank is an excellent operator and a great risk manager.
    • This values shares at a big premium compared to the book value, unlike the vast majority of its peers.
    • Given the strong performance and cash flows returned to investors, I would prefer the bank over any peer.
    • That said, the shares are no screaming buy at all, although they could still be held in the long run.
  • Baker Hughes - Strong Quarter, Reconfirms Solid Risk/Reward Opportunity
    Thu, Jan. 22 BHI Comment!

    Summary

    • Baker Hughes ends 2014 on a very strong note.
    • 2015 looks to become a difficult year, with US rig count expected to drop 15% on a sequential basis.
    • The strong execution, pro-active job cuts and potential huge break-up fee limit the downside in case the Halliburton deal falls apart, while upside remains.
  • Cree - Optimistic Undertone Is Supportive For The Shares
    Thu, Jan. 22 CREE 7 Comments

    Summary

    • Cree reported a small earnings beat on low expectations.
    • A cautious optimistic undertone, somewhat comforting outlook and share buybacks create enthusiasm among investors.
    • A long term investment can pay off given the industry growth; just realize that an investment carries above-average risks.
  • Jarden: Premium Valuation And Leverage Limits Appeal
    Thu, Jan. 22 JAH 7 Comments

    Summary

    • Jarden reports strong preliminary results for the final quarter of 2014.
    • While the strong historical growth is attractive, the acquisition trajectory has resulted in high leverage.
    • Given the premium valuation following the multi-year run up, the leverage and lack of dividends, I would not touch shares at these levels.
  • Lennar - Another Homebuilder To Warn About The Housing Recovery In 2015
    Wed, Jan. 21 LEN Comment!

    Summary

    • Lennar posts solid results for the fourth quarter of 2014.
    • These results were aided by higher purchase incentives, as the company warns for its gross margins in 2015 after competitor KB Home did the same thing.
    • Following aggressive inventory lots built up, the company has essentially used its balance sheet to bet on the housing recovery.
    • Given the leverage employed and dire consequences of a housing downturn, I continue to shun investing in the housing sector and Lennar.
  • Comerica - Worries About Texas And Long Interest Exposure Creates Long Term Opportunities
    Wed, Jan. 21 CMA 1 Comment

    Summary

    • Comerica reports fourth quarter results which are in line with expectations.
    • The bank which has significant operations in Texas does not see a big impact from falling oil prices, reassuring investors.
    • A return to higher net interest margins and higher dividend payouts could improve the valuation of the stock which only trades at its book value.
    • Don't expect a quick rebound amidst narrowing net interest margins and still low dividend payouts.
  • Smith & Wesson: A Large Jump Following A Modest Guidance Hike
    Wed, Jan. 21 SWHC 2 Comments

    Summary

    • Smith & Wesson surprises the market by raising its full year guidance.
    • The raise in the guidance mostly reflects on the current third quarter, with the fourth quarter guidance being relatively untouched.
    • Given the big jump in the shares, the fair valuation multiples and high usage of debt, I am cautious and will stay neutral at current levels.
  • Goldman Sachs - Transformation Efforts Should Be Awarded In The Long Run
    Wed, Jan. 21 GS 1 Comment

    Summary

    • Goldman's revenues take a hit across the board.
    • The strong cost control and shareholder returns limit the fall in earnings per share.
    • The bank becomes less risky, focusing on less volatile and less capital intensive businesses.
    • This could result in a re-rating of the stock in the long term as the market starts to award this shift.
  • SunTrust Banks - Solid Results, Few Triggers Ahead
    Wed, Jan. 21 STI Comment!

    Summary

    • SunTrust reports solid earnings results, driven by strong cost control.
    • Narrowing net interest margins are offset by loan growth, resulting in flattish revenues.
    • Despite fair multiples, I am neutral on the shares as I see few triggers ahead.
  • PPG Industries: Caution As All The Good News Has Already Been Priced In
    Wed, Jan. 21 PPG 1 Comment

    Summary

    • PPG continues to show solid growth, partially masked by a stronger dollar.
    • Lower oil prices and a focused strategy allows for higher margins going forwards.
    • Shares have already priced in all the good news, and some more.
  • Mohawk Industries - Words Of Caution After A Great Run
    Tue, Jan. 20 MHK 2 Comments

    Summary

    • Mohawk announces the acquisition of IVC Group, in a fair deal.
    • Shareholders like the deal given the anticipated accretion and a stronger market position.
    • Following a big momentum run shares trade at elevated multiples, as the company has quite some debt outstanding.
    • Given these observations and cyclical margins over time, I would not buy into the shares at current levels.
  • Fastenal - Great Growth And Dividends Come At A Steep Price
    Tue, Jan. 20 FAST Comment!

    Summary

    • Fastenal ends 2014 on a strong note, with sales growth accelerating in the end of the year.
    • The company's business model, pro-active attitude and past performance is great.
    • High cash flow conversion allows for quick growth and high dividend payouts as well.
    • A premium valuation is warranted. I am a buyer at a 3% dividend yield, which translates into a targeted entry level at $37 per share.
  • Dana - Anticipating A Re-Rating Of The Stock If 2016 Targets Can Be Met
    Mon, Jan. 19 DAN 2 Comments

    Summary

    • Dana issues a relatively solid guidance for 2015, as sales are pressured by dollar strength.
    • Shares trade at just 10 times projected earnings, a discounted multiple given the troubled past of the company.
    • If the company can deliver on its fairly aggressive 2016 targets, I believe a re-rating of the stock might take place.
    • With earnings power forecasted at over $2.50 per share in 2016, shares could trade at $30 if the company can deliver on its targets.
    • Even if Dana misses on its 2016 targets, current profitability levels should provide sufficient support to justify the current valuation.
  • Precision Castparts - Stock For Sale, Take The Opportunity
    Sun, Jan. 18 PCP 3 Comments

    Summary

    • Precision Castparts issues a big profit warning for the current quarter.
    • PCP's end markets have been soft, while customers have been destocking as well.
    • This is message is actually comforting as it indicates execution issues are not the main driver behind the revenue and earnings shortfall.
    • The strong track record, solid balance sheet, stable margins and appealing valuation offer a great entry point.
  • Schlumberger - Adjusting The Cost Structure, As Shares Have Held Up Relatively Well
    Sat, Jan. 17 SLB 4 Comments

    Summary

    • Schlumberger reports solid results for the quarter but takes drastic steps as a result of plunging oil prices.
    • As the company fires 9,000 workers it is hiking its dividend payout at the same time, potentially creating some public backlash.
    • Given the relative limited fall in the shares versus the oil prices and the expectations for a very difficult year ahead, I remain very cautious.
  • BlackRock - Fair Valuation, Steady Operator, High Shareholder Payouts
    Sat, Jan. 17 BLK 7 Comments

    Summary

    • BlackRock's fourth quarter results are solid, with strong inflows resulting in higher assets under management.
    • Revenues were flat despite growth in assets under management, partially the result of lower performance fees.
    • Shares offer appeal given the fair dividend yield, share repurchases and high cash flow conversion at fair valuation multiples.
  • Clarcor: Steady Business Worth Acquiring On Dips
    Fri, Jan. 16 CLC Comment!

    Summary

    • Clarcor reports fourth quarter results in line with expectations, as the 2015 outlook is disappointing.
    • While the company has some short-term headwinds, long-term trends remain favorable, including its stable revenue base and margin profile.
    • This stability should be awarded with premium valuation multiples, as the company's forward multiples start to fall toward those of the general market.
    • Consequently I am a buyer on dips which value the company at average forward multiples.
  • Stryker - Small Dollar Headwinds As Shares Become Attractive At Market-Equivalent Multiples
    Fri, Jan. 16 SYK Comment!

    Summary

    • Stryker updates the market with fourth quarter earnings and sales missing expectations as a result of the strong dollar.
    • The company has an excellent track record in terms of organic growth and dealmaking in attractive end-markets which are supported by long term tailwinds.
    • While I worry about the discrepancy between GAAP and non-GAAP earnings, I am willing to pay market-equivalent multiples based on the strong growth profile.
    • This makes me a buyer if share re-test levels in the mid-eighties.
  • Genesee & Wyoming: Premium Valuation Vs. Peers Is Compressing, Creating Relative Appeal
    Thu, Jan. 15 GWR 1 Comment

    Summary

    • Genesee & Wyoming reports healthy December traffic numbers, although monthly numbers tend to be volatile.
    • The company has grown aggressively over the past decade by focusing on deals to expand its network.
    • The multi-year momentum run results in premium multiples and left investors with disappointing returns over the past year or two, while the peer group continued to show healthy returns.
    • Consequently the premium versus the peers has been coming down rapidly, creating relative appeal at current levels.
  • Chuy's - Lower Oil Prices Provide A Benefit, At Least For Now
    Thu, Jan. 15 CHUY 2 Comments

    Summary

    • Chuy's updates the market, reporting stronger comparable sales growth than expected.
    • Lower discretionary income has aided the company outweighing the impact of potential job losses in ¨home¨ state Texas.
    • Growth, margin expansion and low sales multiples can result in a better year ahead despite poor current margins and premium earnings multiples.
  • Valmont Industries - Troubles Continue, As I Am Waiting To Pull The Buy Trigger
    Thu, Jan. 15 VMI 10 Comments

    Summary

    • Valmont Industries has disappointed investors early into 2015 after a difficult and disappointing 2014.
    • Part of the disappointment is outside of the company's control, although some problems are self-inflected.
    • Reflecting for the new earnings reality, I am only buying at market equivalent multiples, being a buyer on further dips.