OUTLINE:
*Each target price is (1) computed using CGFS' proprietary valuation and simulation approach and (2) adjusted within 3 standard errors of the estimate. Assumption and computation details are inserted at the end of each write-up.
This Week's Picks:
- Our Weekly Stock Picks*
- Macro Environment
- The Bond Report, What's next, & Key Earnings
*Each target price is (1) computed using CGFS' proprietary valuation and simulation approach and (2) adjusted within 3 standard errors of the estimate. Assumption and computation details are inserted at the end of each write-up.
This Week's Picks:
AMC Entertainment Holdings is the largest theater exhibitor in the United States, in Europe, and in the World. The movie industry in North America has consistently had record box office years and the line-up of upcoming movie releases should ensure that trend. AMC’s 4th quarter earnings resulted in all-time records for all of its revenue segments. AMC has a competitive advantage due to its well located and highly productive theaters and substantial operating cash flow. The company’s enhanced food and beverage strategies like the MacGuffins Bars, Dine-In-Theaters, and revamped menus with margins of 86% are areas of value creation. The AMC Stubs are a highly successful marketing strategy, which contains the highest customer membership in the industry. AMC’s acquisitions of Odeon, Carmike, and Nordic will allow its operations to reach suburban and rural United States, western and southern Europe, and Scandinavia, Nordic, and the Baltic Region. With these acquisitions, AMC is able to implement its highly successful strategy of a premium movie experience to its customers around the globe.
Dycom is on a hot streak and has continued to beat earnings. The stock has been able to create significant value for its investor through its ability to create new opportunities in a growing industry. 2016 was a great year for Dycom and the company shows that they are on their way to finish 2017 on a positive note as well. A positive earning call for Q3 could potentially spike the stock price like it did when they beat Q2 earnings. For the long run, Dycom has been able to lock down major players such as AT&T and CenturyLink to service their switch from 4G LTE to 5G. According to the CEO, Steven Nielson, Dycom is expected to increase wireless revenues significantly over the next few years. In comparison with competitors, Dycom has been able to create more value for their investors. Dycom has been able to increase revenue growth, EBITDA growth, NI growth, and ROE better than their competitors.
Currently Manchester United sits in 6th in the English premier league. They are currently in the quarter finals of the Europa League, this being said Manchester United have a chance to capitalize on these two opportunities to reach the UEFA Champions league which will have a substantial impact on club overall. Potential superstar players are set to join the club such as Antoine Griezmann and Neymar Jr. This will add to United revamped squad as they continue to make their way to the top, like the glory days when Sir Alex Ferguson was still the coach.
It is tough to navigate in times where markets are fluctuating around all-time highs. The reason being that investors using past and historical data see their metrics becoming obsolete. Yet, it remains obvious that investments opportunities are there somewhere. Hence the reason why, it is always good to look at consumer staples suppliers, in other words companies that sell products with an inelastic demand and see if they are planning at becoming better. Newell Brands appeared to me as a good bet in this period due to fact that the company acquired multiple strategic acquisition and will see the payoffs rather soon. The company has been doing good over the last 10 years and is set to perform even better in the coming years. The company showed impressive sales CAGR well above 30% in the last decade. P/E is currently high at 38 which is due to the several acquisition the company made recently, the forward P/E is standing at 14 which is below industry average. Even though P/E is high the company is still a good value.
Louisiana-Pacific is a leading manufacturer of building products throughout North and South America with 20 modern facilities in the U.S. and Canada, two facilities in Chile with one under construction, and a single facility in Brazil. In both the short and long term, the home building products industry presents significant growth opportunities, and LP seeks to deliver innovative, high-quality commodity and specialty building products to retail, wholesale, home building, and industrial customers. LP will be positively impacted by many economic factors affecting the housing industry. Recently there has been an increase in housing demand due to the availability of lots and labor. The reasonable credit environment coupled with employment and job growth further make the case. So far in 2017, the existing new home sales are up and builder confidence is rising along with the number of housing formations. LP also competes in the repair and remodeling industry, which is recovering since 2008. LP is the leading producer of OSB in North America and the only producers of OSB and OSB siding in South America, mainly fueled by their competitive delivery cost. Drivers of the demand of OSB are new residential construction, repair and remodeling, industrial / light commercial needs, and opportunistic exports. LP is positioned for upside as the housing market continues to recover. LP is a leading participant in the upturn of the housing market shown by strong sales and marketing, and enhanced operational productivity. LP is an important supplier to industrial, non-residential, and R&R markets and look to diversify geographically. LP’s strategy is to grow their OSB business further, continue to offer superior quality and service to customers, maintain their competitive delivery costs to meet the needs of their customers.
Vail's exceptional ability to acquire various properties and resorts has catapulted them above the competition within their niche and has generated some serious value. Their most recent quarterly performance proves their ability to achieve year-round growth in an industry that is heavily dependent on seasonal weather. Vail's strategic hedging techniques, access to capital, organic growth, and earnings performance constitute their valued position in any long-term growth portfolio. In addition, catalysts maturing within two years will strengthen their financial abilities to acquire resorts and strategically offset slow performance caused by seasonal effects in the weather. Although Vail may be on the pricey side (especially with a PE multiple of roughly 40), we expect the stock to grow according to company guidance and overall industry outlook. Long position, entry-range $180-$185.
Since inception, TransDigm Group has perfected the strategy of debt fueled acquisitions followed by aggressive price increases, lay-offs, and avoiding cost transparency that ultimately inflated margins. Not only is their strategy unsustainable, but TransDigm is believed to be engaging in illegal business tactics to keep prices that, if publicized, could effectively bring their “value driving” strategy to an end.