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Global Stocks Trending in the News for May 21st, 2019

May 21, 2019

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Global Consumer Stocks Trending in the News

  • AutoZone (AZO) reported fiscal third quarter same store sales and earnings that beat consensus.  AutoZone reported fiscal third quarter EPS if $15.99, ahead of $15.11 consensus.  Same store sales grew 3.9%, beating 2.9% consensus.  AutoZone is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary 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 and “Neutral” in our US Consumer Staples Global Top Stock Ideas
  • Ferrari NV (RACE) shares slid after the company announced its Chinese dealership will recall more than 2,000 cars imported from the US to China due to security risks posed by the vehicles’ airbags. The vehicles affected were made between April 8th, 2013 and November 28th, 2017. Ferrari is not rated in our Global Top Stock Ideas.
  • Ford (F) will eliminate about 10% of its workforce, or 7,000 employees, in its latest restructuring effort.  Ford is trying to stem years of declining profits in an industry that has seen massive changes recently.  Some of those layoffs have already occurred and the entire process should be complete by August.  The cuts are due to save $600 million annually.  Ford is rated “Neutral” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Home Depot (HD) reported first quarter earnings that beat with same store sales that trailed consensus.  Home Depot reported first quarter EPS of $2.27 beating consensus of $2.18.  First quarter revenue of $26.38 billion came in line with $26.4 consensus.  Same store sales in the first quarter grew 2.5% trailing consensus of 4.3%.  Home Depot reaffirmed full year EPS guidance of $10.03, a touch below consensus of $10.09.  Home Depot is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • JC Penny (JCP) reported a loss that was wider than expected.  JC Penny first quarter adjusted loss of 46 cents came worse than the 38 cents expected.  First quarter same store sales fell 5.5%m worse than the 3.8% drop expected.  JC Penny first quarter net sales of $2.44 billion came in line with consensus of $2.47 billion.  Inventory dropped 16% in the quarter.  JC Penny is rated “Unattractive” in our US SMID-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Kohl’s (KSS) reported first quarter same store sales that came well below consensus.  Kohl’s first quarter same store sales fell 3.4%, much worse than the 0.1% fall that was expected.  First quarter EPS of 61 cents trailed 67 cents consensus.  Total sales of $3.82 billion also trailed consensus of $3.93 billion.  Kohl’s cut full year EPS guidance to $5.15 to $5.45, down from $5.80 to $6.15 while present consensus is of $6.04.  Kohl’s is rated “Top Buy” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Pinduoduo Inc (PDD) shares fell after the Chinese e-commerce upstart announced quarterly financials that contained a seven-fold surge in spending on promotions and advertisements. Pinduoduo’s net loss for the quarter also ballooned to 1.9 billion yuan ($275 million) from 282 million yuan a year prior. Pinduoduo’s revenue in the quarter of 4.5 billion yuan was ahead of analyst expectations of 4.14 billion yuan. Pinduoduo is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • Tata Motors (BSE: 500570) shares surged after the company announced its Jaguar Land Rover Automotive unit expects a turnaround in China during the upcoming months. In the first quarter, Jaguar Land Rover Automotive generated net income of 119 million pounds ($151.6 million), up from a 3.1-billion-pound loss in the prior quarter. Jaguar Land Rover Automotive expects its China business to return to the growth, “a quarter from now”. Tata Motors is not rated in our Global Top Stock Ideas.
  • Tesla (TSLA) received some unpleasant news yesterday from Morgan Stanley when it laid out its bear case scenario with a $10 price target.  Tesla’s main problem is demand and Morgan highlights the fear that the market could be saturated with its main product.  The previous bear case for Tesla was $97.  Morgan writes, “Tesla has grown too big relative to near term demand.”  Tesla is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • TJX Companies (TJX) reported first quarter same store sales that beat consensus.  TJX first quarter sale store sales grew 5% while consensus was for 3.5%.  First quarter EPS of 57 cents beat 55 cents consensus.  TJX boosted full year EPS guidance to $2.56 to $2.61.  TJX is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary 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.
  • 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 shortly.  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 and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  MGM Resorts International is rated “Unattractive” in our US Large-Cap 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 and “Top Buy” in our US Information Technology Global Top Stock Ideas
  • Broadcom (AVGO), Xilinx Inc. (XLNX) and other global chipmakers’ shares are falling after the Trump administration blacklisted Huawei products and threatened to cut the company off from US software and semiconductor suppliers it needs to make its products. Huawei is currently under fire for accusations of aiding the Chinese government with espionage. Broadcom is rated “Top Short” in our US Large-Cap Global Top Stock Ideas. Xilinx is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology 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 and “Attractive” in our US Information Technology Global Top Stock Ideas.  Echostar is rated “Attractive” in our US SMID-Cap 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 and “Attractive” in our US Information Technology Global Top Stock Ideas.  Cray Inc is rated “Neutral” in our US SMID-Cap 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 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 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 and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Sony’s (SNE) CEO laid out his full long-term vision for the company at the company’s investors day.  Sony is working on a successor to the PS4.  The new console with permit remote-play on cell phones and tablets and will have load times 10 times faster than the present console.  Sony is not investing aggressively in China given the country’s uncertain censorship scenario.  Sony is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas. 
  • T-Mobile US Inc. (TMUS) and Sprint Corp. (S) shares both soared after Federal Communications Commission (FCC) Chairman Ajit Pai announced that he will recommend his agency approve the $26.5 billion merger of the two telecommunications companies. The next hurdle for the deal will be to clear through antitrust regulators. According to Paul Gallant of Cowen & Co., however, approval from the US Justice Department “seems likely” as it has never diverged from the FCC’s decision. T-Mobile is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas. Sprint is rated “Top Short” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas.

 

 

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Global Industrials Stocks Trending in the News

  • Crane Co. (CR) is making a hostile bid for rival Circor International (CIR).  Crane is making an all-cash offer valued at $1.7 billion, according to press reports.  Crane tried to privately acquire Circor earlier in the year but was rebuffed by management.  Crane is not taking the offer directly to shareholders.  Crane is rated “Top Buy” in our US SMID-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas.  Circor International is rated “Neutral” in our US SMID-Cap and “Neutral” in our US Industrials Global Top Stock Ideas.  
  • Lockheed Martin (LMT) is locked in a battle with the Pentagon that is jeopardizing funding for spare parts for the F-35.  The Pentagon want Lockheed Martin to sell it technical data related to the spare parts, data that will allow it to have other manufacturers make the parts as it attempts to contain costs.  Lockheed has yet to sign an agreement relating to this and without one, half of the funding for spare parts is being withheld.  Lockheed Martin is rated “Attractive” in our US Large-Cap 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.
  • United Airlines (UAL) saw its price target hiked to $110 from $101 at Morgan Stanley.  It buy rating on United Airlines was reiterated.  Morgan said of United, “…United has done a solid job executing on its mid-continent strategy” and expects the strong performance to continue.  United will have significant competition near-term in those new markets.  United Airlines is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas.  

Global Financials Stocks Trending in the News

  • Westpac Banking Corp. (ASX: WBC), Australia Bank Group (ASX: ANZ), and other large Australia-based banks closed significantly higher after Scott Morrison’s center-right government succeeded in pulling out an election win. The win surprised most and will result in the elimination of plans by the opposition to roll back tax breaks for property and stock market investors. Westpac Banking Corp. is rated “Unattractive” in our Australia Large-Cap Global Top Stock Ideas. Australia Bank Group is rated “Unattractive” in our Australia Large-Cap Global Top Stock Ideas.

Global Health Care 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.

 

 

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