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*
- 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:
This upcoming year Nike is well-positioned to execute on their new long term growth plan. Considering the industry conditions and global uncertainty, the stock price does not reflect the certainty of success in the growth strategy.
Brookline Bancorp, Inc. is a banking and lending institution, as such its everyday activities are contingent on federal funds rate. With the loss of the LIBOR rate, the spotlight has increasingly grown on the federal funds rate. The rate has been so low for so long I believe that rate hikes will not adversely affect banks as they have done in the past.
Alaska Air Group’s acquisition of Virgin America in December 2016 has resulted in a reduction in share price over the last year due to integration difficulties. However, Alaska Air Group is an industry leader in cost strategy and historically has led the industry in sales growth and operating margins. As the operational difficulties of the Virgin America acquisition cease, full annual efficiency benefits are expected in 2018. Along with continued United States economic growth and expansion in to the growing California market, Alaska Air Group should continue to grow at a rate faster than industry averages, while keeping operating costs stable.
In just a couple years, XPO has transformed itself from a company with an 800 million market cap to a major player in global freight and logistics. Through acquisitions in 2015, XPO has fostered a diverse product pac kage that meets the many needs of their customers. The benefits of these acquisitions have just started to effect the stock price this year. We can continue to see these effects through out the rest of the year and into 2018. While management is still lo oking into acquisitions for long - term growth, the company will maintain focus on internal operations . Cutting costs across the company will lead to a higher EBITDA margin that will offset any chance of stagnant sales. XPO’s global share of their industry is growin g fast and their strategy moving forward will be imperative to their future success.
As confidence continues to gain for the future housing industry, the Toll Brothers corporation will continue to increase revenues as the group diversifies its’ portfolio into new housing markets. The company will enter new, high demand housing markets while continuing to complete work within their strong pipeline of backlog. Taking advantage of a newly incorporated business segment the company is prepared for demand from an emerging market with high value. Maintaining strong operating margins will contribute to the Toll Brother’s ability to outperform its competitors in a “bottom line” analysis.
Chipotle is a quick serve restaurant chain that has been able to do well since 1993. Chipotle has seen controversy in the news especially in 2016 with the e-coli outbreak. Chipotle has taken a hit in the short term, but there is a positive upside for this company. This is almost the lowest point the company has hit throughout the year, the company will have a positive upside due to the fact of being able to regain their customers trust, the launch of their mobile application, and since they are looking to expand into areas such as Europe. I understand we already purchased this company, but believe it is a good time to buy more due to the fact it is near the yearly low, and I do not see it as a restaurant people will stop going.
American States Water Company will continue to increase their revenue through both of their segments. Golden State Water Company will continue to increase their revenue through new water and electric contract agreements that will be implemented January 1, 2018. American States Utility Services will continue to increase their revenu e by adding more United States M ilitary bases to their management portfolio. With both segments set for an increase in revenue, AWR’s stock price will increase in the short and long term.
This company has been showing the world for the past 7 years (almost 27 quarters) that they were a company not to mess around with when it came to growth, but during the past year, and last quarter of 2016, they seemed drop off, but still came away with growth around 13%. Analysts may blame the major drop that this stock has seen due to the very big drop in growth in a short time. Also, they may blame that retail companies are losing because everyone is riding the wave that Amazon has created in this industry. The CEO said in their Q2 2017 Earnings Call that there needs to be restructuring of the company and that they need to stop growing to points and then hitting pivots. So with this, he decided to welcome Patrik Frisk to the team at Under Armour and make him the new President and Chief Operating Officer. This is a position where they believe needed improvements to help make the company more efficient and to jump the hurdle that they keeping hitting, and enter their next chapter of major growth.
Lear Corporation (LEA) is the leading global supplier of automotive seating and electrical systems to automakers around the world. The company's was able to expand its CAGR to 8.8% from 2010-2015, while the global vehicle production grew by a nominal rate of 4% during the same period. Lear's revenue growth has continued outpaced the global vehicle production due to its well-diversified portfolio of customers around different markets around the globe and for its ability to increase revenue per unit vehicle across both of its operating segments, seating and electrical systems. Lately, the company has managed to integrating its production and growing faster than the global vehicle production, and they will continue to gain market share across all major car manufacturers. Strong financial performance, benefits from share repurchase program, lower tax rates and consistent annual growth in both segments have influenced the increase of 24% in Q3’s EPS compared to the previous year.
Thor will capitalize on economic and demographic trends, which currently place the company in a scenario of potential exponential grow. An elevated capital expenditure in production facilities, along with the improvement in operating efficiencies and the rising demand for RV’s and Motorhomes has allowed the company to undertake an impressive CAGR on both Revenue and EBITDA. The faster growth of the towable segment will allow the company to increase its profitability as such segment currently demonstrates the highest operating margin. The company has also invested in delevering its balance sheet, decreasing the amount of debt by 75% in the last two fiscal years, reducing substantially its interest expense and driving up its net income. Greater returns are forecast ahead as the company will successfully secure a portion of this new wave of first time buyers through its expanded capacity and therefore will capitalize on its increased profitability.