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Credit Suisse Says These Stocks are Top Buys – Are They Really?

Apr 12, 2019

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

 

Credit Suisse Top Buy Ideas with Quantamize Model Rankings

Ticker Name Sector Industry Primary Rating Sector Rating
BURL Burlington Stores, Inc. Consumer Discretionary Specialty Retail Attractive Attractive
CMCSA Comcast Corporation Communication Services Media Neutral Top Buy
COMM CommScope Holding Company, Inc. Information Technology Communications Equipment Unattractive Attractive
EAF GrafTech International Ltd. Industrials Electrical Equipment Attractive Neutral
ECA Encana Corporation Energy Oil, Gas and Consumable Fuels Not Rated Not Rated
IBM International Business Machines Corporation Information Technology IT Services Neutral Attractive
KR The Kroger Co. Consumer Staples Food and Staples Retailing Neutral Neutral
LH Laboratory Corporation of America Holdings Health Care Health Care Providers and Services Attractive No Rating
MNST Monster Beverage Corporation Consumer Staples Beverages Top Buy Neutral
NOC Northrop Grumman Corporation Industrials Aerospace and Defense Attractive Attractive
NTAP NetApp, Inc. Information Technology Technology Hardware, Storage and Peripherals Neutral Neutral
VLO Valero Energy Corporation Energy Oil, Gas and Consumable Fuels Top Short No Rating

 

  • Of the four we highlighted above, we think Monster Beverage (MNST) is one our readers should really consider.  While it is trading at a rich P/E of 26.3x versus 2019 EPS, earnings is expected to grow 12% per annum over the next 2 years with returns on invested capital reaching north of 26%.  Monster Beverage (MNST) has an implied earnings yield of 5.2% which is fairly healthy for a “growth” consumer staples stock.
     
  • While it isn’t a conviction Top Buy, Burlington Stores (BURL) is another interesting name for you to check out.  Burlington Stores (BURL) trades at P/E of 22.5x versus 2019 EPS but earnings is expected to grow slightly more than 14% per annum over the next 2 years.  What really stands out to use is that Burlington’s return on invested capital is north of 32%!  That is pretty amazing for a “boring retailer”.  Burlington Stores (BURL) has an implied earnings yield of 5.8% which is warranted for a discretionary retailer with returns on invested capital north of 30%.
     
  • Valero Energy (VLO) is a Top Short idea this month with mediocre factor score across the board except for technicals.  Yes, our technicals factor argues that Valero Energy (VLO) is oversold, but our factor categories like Quality Value and Low Volatility & Momentum say it has more room to fall.  Valero is a play on the downstream energy sector.  While unleaded regular gasoline prices are up 24.5% for the year, WTI Crude is +40%!  The price differential between the two would suggest the refiner margin is narrowing, which will materially impact Valero’s bottom-line.  While the P/E of 6.9x versus 2019 EPS is cheap, we just aren’t convinced with a Trailing 12-month P/B of 1.7x and a return on invested capital which will be compressed by higher input costs

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS