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Global Stocks Trending in the News for May 20th, 2019

May 20, 2019

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) is becoming one of the biggest investors in UK delivery company Deliveroo.  Amazon led the most recent $575 million round of financing.  Deliveroo competes with Uber’s (UBER) Eats delivery service in London and a number of other European markets.  Deliveroo has raised a total of $1.53 billion but did not disclose a valuation.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  Uber is not yet rated on our Global Top Stock Ideas.
  • Clorox (CLX) was downgraded to hold from buy at Argus Research.  Clorox is up 25% over the last year and Argus points out competition is growing for many of its most popular items.  Clorox saw decelerating revenue growth in the third quarter and it was a sign of that competition.  Clorox is expected to deliver slower revenue growth, a main reason for the downgrade.  Clorox is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas
  • Dillard’s (DDS) reported first quarter net sales that trailed consensus.  Dillard’s posted first quarter net sales of $1.47 billion while consensus was for $1.5 billion.  First quarter EPS of $2.99 beat consensus of $2.89.  Dillard’s delivered same store sales growth of 0%, behind the 2% expected, while total sales grew 1%, also trailing consensus of 2%.  Dillard’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
  • Just Eat Plc. (LSE: JE) shares slid following reports that tech giant Amazon (AMZN) is leading the charge of a $575 million investment in Deliveroo, a fast growing startup also in competition with Uber Technologies (UBER). To date, Deliveroo has raised $1.53 billion in funding. According to Bloomberg, the recent news of Amazon’s investment in the food delivery space will heighten pre-existing concerns of Just Eat shareholders. Just Eat is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Uber is not yet rated in our Global Top Stock Ideas.
  • Luckin Coffee Inc. (LK) shares climbed in its debut trading day after the newly public Starbucks (SBUX) rival in China raised $561 million in an expanded US IPO. Shares of Luckin climbed as high as 51% above its IPO price in trading in Asia on Thursday. Earlier in February, analysts had only projected Luckin Coffee to raise $300 million through a public offering. Luckin is not yet rated in our Global Top Stock Ideas.
  • Pinterest Inc. (PINS) shares fell by the most intraday ever after the company announced a disappointing outlook. Still, analysts were urging investors against selling off the stock. Mark May of Citi, for example, told clients that Pinterest’s results, “reflect the strong momentum in the business and the opportunities to drive future growth in several ahead.” RBC Capital Markets analyst Mark Mahaney, meanwhile, praised the firm’s monthly active user growth and “solid” trend in average revenue per user. Pinterest is not yet rated in our Global Top Stock Ideas.
  • Sony Corp. (TSE: 6758) shares surged to their highest level since December after CEO Kenichiro Yoshida announced a record share buyback just months after the company finished a program of similar magnitude. The repurchase period for Sony shares began on Friday and will continue until March 31st, 2020. Sony just recently completed the repurchase of 1.5% of its common shares for 100 billion yen. Sony Corp. is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) CEO Elon Musk sent an email to all Tesla employees saying that he and its new CFO will now personally examine all expense in a “hardcore” effort to cut costs.  The aggressive moves come in the wake of huge losses last quarter.  Musk noted that the $2.2 billion cash balance Tesla has will only last 10 months at its current burn rate requiring a focus on containing costs like never before.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  Uber is not yet rated on our Global Top Stock Ideas.
  • Uber Technologies' (UBER) debut was hampered by some large investors not buying additional shares at the last minute.  The WSJ highlights how hyped the Uber IPO was and how, just before the IPO was placed, a number of large investors did not opt to buy more shares.  Uber was priced at $45 but immediately traded lower and closed Friday at $41.91.  Uber has been the most disappointing IPO in a long time.  Uber Technologies is not yet rated in our Global Top Stock Ideas.
  • Under Armor (UAA) shares surged after JPMorgan’s Matthew Boss upgraded the stock from neutral to overweight. Boss explained to clients that meetings with Under Amour's CEO, COO, CFO, and CDO revealed a, “controlled confidence,” among management. Boss expects Under Armor’s mix of product, innovation, and marketing to drive growth acceleration through FY2020 in the firm’s top and bottom line. Under Armor is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Walmart (WMT) was upgraded to accumulate from hold at Gordon Haskett.  Walmart’s price target was raised to $115 from $99.  Walmart is executing well with an e-commerce strategy that is showing results.  Walmart is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.  Uber is not yet rated on our Global Top Stock Ideas.
  • Wynn Resorts (WYNN) has had preliminary talks with MGM Resorts International (MGM) about selling its soon to be opened casino just outside Boston in a surprise bit of news.  Wynn recently was approved to keep the casino in the wake of a sexual assault allegations against its CEO.  The Wynn project is a $2.6 billion endeavor that is slated to open shorty.  MGM already owns a casino in the state, where no company can own 2 so any deal would require it to sell the casino it owns outside Springfield.  Wynn Resorts is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  MGM Resorts International is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas

Global Information Technology and Communication Services Stocks Trending in the News

  • Alphabet’s (GOOGL) Google said it is banning some services for smartphones from China’s Huawei Technologies.  The ban follows the US decision to deny Huawei access to US technology.  The move is sure to dent Huawei strong consumer technology business.  Existing phones are expected to function normally though some functions could be hampered.  The US has added Huawei to its “Entity List” on national security grounds.  Alphabet is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas
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  • Applied Materials (AMAT) was upgraded to buy from neutral at B. Riley FBR.  Applied Materials saw its price target hiked to $54 from $46 as well.   B. Riley sees increased confidence that near-term stability for Applied Materials has arrived and that the overall situation is improving.  Applied Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Baidu (BIDU) reported its first quarterly loss since its IPO in 2005.  Baidu posted a 327 million yuan loss in the quarter.  Baidu also provided guidance that trails consensus, saying it expects revenue in the coming quarter to be 25.1 billion to 26.6 billion yuan, well below consensus of 29.3 billion yuan.  Baidu is facing multiple headwinds as it faces a slowing China.  Baidu is rated “neutral” in our China All-Cap Global Top Stock Ideas
  • Dish Network (DISH) announced it signed a deal to buy Echostar’s (SATS) Broadcast Satellite Service business in an all-stock deal valued at $800 million.  Dish said it expects the addition to improve free cash flow and ebitda.  The deal is structured to be tax free and should close in the second half of 2019.  Dish Network is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Echostar is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Hewlett Packard Enterprise (HPE) announced it agreed to acquire Cray Inc in a $1.4 billion deal.  Cray (CRAY) shareholders will receive $35 per share, a 17% premium to yesterday’s close.  Cray is a maker of supercomputers that Hewlett Packard Enterprise is acquiring to bolster its position in the market as it focuses on artificial intelligence and distributed computing.  This is Hewlett Packard Enterprise’s biggest deal since it was created in 2015 from the breakup of Hewlett Packard.  Hewlett Packard Enterprise is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Cray Inc is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Netease (NTES) announced it will work with Disney’s (DIS) Marvel Entertainment on developing games, comics and TV shows.  The partnership in China will be exclusive.  Netease expects to develop new products using the vast stable of Marvel characters.  The companies will reveal more specifics about the tie-up later in the year.  Netease is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.  Walt Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Nvidia (NVDA) continues to struggle with its data center sales even as its video gaming business grows strongly.  Nvidia reported its first miss in data center focused sales for the first time in four years.  Nvidia is seeing operators of data centers take a pause after years of rampant growth.  Nvidia said it expects the weakness to persist into the present quarter.  Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas
  • Qualcomm (QCOM) has suspended shipments of its chips to Huawei Technologies in the wake of the US government adding the company to the “Entity List” for national security reasons.  Qualcomm has told its employees not to speak to Huawei, the WSJ is reporting.  Huawei uses Qualcomm chips in a number of its phones.  Qualcomm or any other company that wants to exports technology to Huawei would need to apply to the US government for a license that it has indicated will be denied.  Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas

 

 

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Global Industrials Stocks Trending in the News

  • Air Canada (TSX:AC) announced that it is in exclusive talks to acquire Transat Airlines (TSX:TRZ) for $387 million.  Air Canada said it is offering a 23% premium for Transat.  Air Canada’s offer is over twice the price that Transat was trading at on April 30th when it announced it was in talks with a potential suitor.  Air Canada is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.  Transat Airlines is not rated in our Global Top Stock Ideas.
  • Boeing (BA) has completed the software development and updated the software used on the 737 Max.  Boeing has flown 207 flights for a total of 360 hours of flight time.  Boeing is providing the FAA with additional requested data as the FAA reviews updated training materials.  Boeing is hoping to schedule certification flights soon with the FAA.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • Deere & Co. (DE) reported earnings that missed consensus and cut its guidance as trade tension starts to be felt further.   Fiscal second quarter EPS of $3.52 trailing consensus of $3.62.  Deere net sales in the second quarter was $11.34 billion, ahead of $10.18 billion.  Deere provided full year sales growth guidance of 5%, a cut from previous 7% guidance.  Deere sees full year net income of $3.3 billion, down from $3.56 billion.  Deere & Co. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  
  • Ryanair (ISE:RY4C) gave a profit warning, saying profit will be hurt by the grounding of the 737 Max.  Ryanair said it is facing higher than expected costs in the wake of the global grounding of the 737 Max.  Ryanair is the largest customer of the 737 Max in the region.  Ryanair was due to receive its first delivery of the 737 Max this spring.  The newer plane is more fuel efficient and seats more passengers than the aircraft presently being used.  Ryanair is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • Bayer (DB:BAYN) is now worth less than the $63 billion it paid for Monsanto barely a year ago.  Bayer has suffered $2 billion in losses in court over its RoundUp weed killer.  Bayer has seen its market cap fall by over 40% since it acquired Monsanto in the wake of its losses in court.   A number of large investors have withdrawn their support for management in the wake of the problems, as the 155-year old company struggles to adapt.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas
  • Bristol-Myers Squibb (BMY) was cut to neutral from buy at Argus Research on concern over its Celgene (CELG) acquisition.  Argus has very serious concerns about the deal and does not think Celgene can deliver the revenue that Bristol-Myers Squibb thinks it can.  Argus notes that the combined company will have a $45 billion debt load to contend with, a potential limit to its ability to fund further growth.  Bristol-Myers Squibb is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  Celgene is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Vale (VALE) alerted authorities that another of its tailings dams could collapse as soon as next week.  Vale informed that a tailings dams at a mine in Barao de Cocais in southeast Brazil could collapse due to instability at a nearby inactive mine.  Vale said residents in the vicinity of the 280-foot high dam have been evacuated.  This comes in the wake of Vale’s dam collapse a few months ago in which 270 people were killed.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas. 

 

 

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