Posted: Dec 30, 2011 07:30 AM by Ryan C. Fuhrmann , CFA
Sports footwear and apparel giant Nike (NYSE:NKE) is seeing a near-term hit to its profit due to higher raw materials costs, but this is expected to inflict minimal damage to its full year results. The company’s track record over the past decade also clearly illustrates it is able to handle nearly any adverse market condition, be it a down economy or cost pressures. Unfortunately, this impressive record has not gone unnoticed by investors.
Posted: Dec 29, 2011 07:30 AM by Ryan C. Fuhrmann , CFA
Severe weather conditions, including tornadoes, hurricanes and earthquakes across the world, have meant challenging operating conditions for the insurance industry in 2011. The fact they are also financial stocks has resulted in many investors lumping them in with banks and other lenders that have exposure to the European sovereign debt crisis. Overall though, many leaders in the industry have held up quite well this year, and the outlook over the next few years supports looking at them closely for potential stock purchases.
Posted: Dec 27, 2011 07:30 AM by Ryan C. Fuhrmann , CFA
Most years, the food business is mundane as they come. Lately though, most firms in the industry have been buffeted by rising food costs and have had to take corrective action to protect their profits. The maturity of the industry in general has also meant that growth avenues are difficult to find, and this has resulted in a bit of corporate engineering from several players. This includes pursuing merger and spinoff activity to boost slower organic growth trends. Below is a brief overview of some of the more interesting food stocks to watch in the coming year, and how they plan to boost shareholder returns for 2012 and beyond.
Posted: Dec 26, 2011 07:30 AM by Ryan C. Fuhrmann , CFA
Packaged food firm General Mills (NYSE:GIS) continued to see its near-term profits dented by higher food and raw material costs, but a major acquisition helped boost the reported top line significantly. Looking out over the long haul, the firm offers investors very respectable annual return potential and solid downside protection.
Shuffle Master (Nasdaq:SHFL) started off providing casino operators with card shuffling systems and related products, to help them operate games more efficiently. The company has evolved into selling gaming systems to the same customer base. The concept is performing well, but puts Shuffle Master more directly in competition with larger industry players. Given the higher valuation, prospective investors may want to watch the action from the sidelines.
Specialty retailer Bed Bath & Beyond (Nasdaq:BBBY) posted another impressive quarter of sales growth. Additionally, as has been its custom, it leveraged this into even higher profit growth. There are few signs that these trends won’t continue for the foreseeable future, and a pessimistic view from myopic-minded investors has pushed the valuation into more reasonable territory.
Posted: Dec 23, 2011 08:33 AM by Ryan C. Fuhrmann , CFA
http://www.scribd.com/doc/76327556/Fuhrmann-Capital-2012-Stock-Market-Outlook
Please also feel free to contact ryan@fuhrmanncapital.com for a copy!
The past year has been a mixed one for leading firms in the defense and aerospace industries. Defense firms have been subject to significant budget cutbacks in 2011 while aerospace has been caught with global growth headwinds. The coming year could see much less turbulence. Below is an overview of the valuations and business outlooks for the coming year on important firms to watch in the industry.
Companies that count on construction activity around the globe have had a rough few years, while those dependent on residential housing build-outs have experienced severe depressions in their businesses. At some point in the future, industry conditions will improve, with many hoping 2012 is the first year of a sustainable upturn. Below is an overview of the leading cement firms in the world, and an overview of likely business trends in the next year or so.
Creative software product provider Adobe Systems (Nasdaq:ADBE) closed the books on its fiscal year on Dec. 15, 2011, and returned to posting double-digit sales and profit growth. Its end markets have vast growth potential, and though competitive threats continue to loom from a number of archrivals, Adobe is proving that its customer base remains loyal to its products and services.
Earlier in December, casual dining operator Darden Restaurants (NYSE:DRI) pre-announced disappointing second-quarter results, as its largest restaurant concept is struggling to grow sales at existing locations. Higher food costs are also denting near-term profits, but Darden’s long-term growth trends remain on track and look quite impressive. Better yet, weak near-term share price performance means very little of this growth is built into the valuation.
In a recent investor presentation, for-profit educator Devry (NYSE:DV) detailed its belief that “quality leads to growth.” Namely, this includes high graduation and job placement rates after graduation. Growth trends in the near term have been uneven, but a low valuation leaves plenty of upside, should these trends return closer to historic levels.
So far in 2011, the financial group is by far the worst performing sector and has posted a negative return of more than 21%. And with financials making up 13.3% of the S&P 500, they have been a significant lag to overall index returns. Fears over sovereign debt levels and flagging growth in Europe have been a primary concern lately, but could spell an opportunity for brave investors willing to bet that the problems in Europe will be worked out over time.
Avon Products (NYSE:AVP) has a compelling business model that sells cosmetics, fragrances and related products directly to consumers around the world. Unfortunately, for a number of years now it has wasted its advantage of being able to avoid the fixed costs that come with operating retail stores, but the removal of its CEO offers a renewed opportunity to bring in a leader who can boost profits back to more respectable levels.
Due to overall stock market weakness, the share price of Stryker Corp. (NYSE:SYK) is quickly trending back toward its lows for the year. At the current valuation, the stock offers the potential for above-average shareholder returns with modest downside risk.
Posted: December 15, 2011 7:17AM by Ryan C. Fuhrmann , CFA
In his book “Ron’s Road To Wealth,” well-known investment manager Ron Muhlenkamp detailed that the average life expectancy for Americans was 63 years of age back when the Social Security Act was passed. The act set the retirement age at 65, which meant that, on average, individuals could expect to collect retirement benefits for a couple of years. He also pointed out that there were 40 workers for each retired individual back around when the act was passed.
Big-box electronic retailer Best Buy (NYSE:BBY) failed to ease investor concerns about its competitive position when it reported third quarter results on Dec. 13, 2011. An onslaught from online rivals and other big-box peers is continuing, but the fact that most investors have left the stock for dead suggests the potential for future upside.
The Pantry (Nasdaq:PTRY) bills itself as a leading convenience store operator in the Southeastern part of the United States. Sales trends have been solid in recent years and the valuation is at rock-bottom levels, but the company is struggling to boost profits consistently and is heavily indebted.
In the face of an anemic overall stock market so far this year, rural convenience store operator Casey’s General Stores (Nasdaq:CASY) has returned about 20% for its shareholders. Its operating trends are also holding up well, as it indicated recently by releasing fiscal second quarter results. The earnings multiple isn’t overly appealing, but the firm has an impressive growth track record and a competitive advantage compared to its rivals.
Posted: December 12, 2011 1:57PM by Ryan C. Fuhrmann , CFA
Back in 2005, shortly after Wynn Resorts (Nasdaq:WYNN) opened its first resort in Las Vegas, the aptly-named Wynn Las Vegas, in a filing it made with the Securities and Exchange Commission (SEC), the company reported that the average daily win rate at its table games was $7,117 per table. The slot machine win rate was $273 per machine per day. These win rates are indicative of the daily rakes at other casinos and means that each gaming device inside a casino is effectively its own money-making franchise.
Membership warehouse giant Costco (Nasdaq:COST) kicked off the first quarter of its fiscal year with healthy sales growth. Profit growth was muted due to higher costs of buying merchandise for sale to loyal members at its giant big-box stores. A consumer focus on penny pinching is likely to limit the sales downside at the underlying store base, but a rather lofty valuation on the stock suggests investors may not have the same protection.
So far in 2011, industrial, residential and commercial solutions provider Ingersoll-Rand (NYSE:IR) is among the worst performers of its industrial-based peer group. Despite the near-term weakness, the firm has done an incredible job of managing its business, since the credit crisis peaked several years ago. A major acquisition at the height of the debacle could have easily done it in, and while the outlook for its operations continues to be tepid, a reasonable valuation leaves room for some level of stock upside over the next few years.
So far this year, mid-market department store retailer Macy’s (NYSE:M) has reported stellar stock performance, compared to its peers and the market in general. A focus on the basics, including a localized merchandise strategy and store remodeling programs, are key reasons for its revival among customers and investors alike.
Pandora (NYSE:P) lets users stream music from anywhere they can secure an internet connection, be it a home computer or smartphone on the go. To date, it has successfully captured two thirds of the streaming market and is currently growing revenues at an impressive clip. However, with an enterprise value at roughly 10 times sales and any steady profit generation uncertain, well into the future, the only winners so far look to be early investors who received proceeds from the public offering, back in June.
Discount consumer goods retailer Dollar General (NYSE:DG) has posted solid and steady operating growth in recent quarters. Its third quarter was no exception and hasn’t gone unnoticed by investors. Because of the strong share price rally, there is little investment appeal for prospective shareholders, though a down economy could keep operating growth strong.
Tiffany & Co. (NYSE:TIF) reported third quarter results late last week that were downright impressive. The stock fell as the market was apparently looking for stronger trends, and may be worrying about Tiffany’s growth prospects over the longer haul. Given the firm’s track record and lofty valuation, investors have an argument for being a bit skeptical.
T-shirt and related activewear and underwear manufacturer Gildan Activewear (NYSE:GIL) surprised investors with a weak outlook when it reported full year results on Dec. 1, 2011. The stock dropped precipitously as a result as the market digests the volatility its underlying operations are experiencing. Based on management’s track record, the current woes could prove temporary.
Posted: December 1, 2011 1:40PM by Ryan C. Fuhrmann , CFA
The origins of the cliché that “everyone loves a villain” are not entirely clear, but it is clear that Hollywood loves portraying Wall Street’s internal betrayal as well as the duping of Main Street on the big screen. The latest vintage of films are dedicated to recounting the financial debacle that occurred between 2007 and 2009, but tales of greed, excess and betrayal have been common themes over the years. Below are four films that are especially entertaining in lending insight into Wall Street’s more extreme side.
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