Kratisto Investing

Investopedia: Home Depot Continues To Rack Up Impressive Numbers

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:53:00 +0000

When a company finally gets its operational ducks in a row, the performance can be impressive. Couple that with a rising tide of improving underlying conditions, and the performance can be exceptional. That's the basic thesis on Home Depot (NYSE:HD) these days, as operational improvements started years ago are really bearing fruit and the company is starting to see the positive impact of improving housing markets.

Please click here for more:
http://www.investopedia.com/stock-analysis/052113/home-depot-continues-rack-impressive-numbers-hd-mas-swk-bby-usg.aspx

Investopedia: Roche, Reloaded

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:52:00 +0000

There's a saying that you'll hear used with perennially successful sports franchises – they don't rebuild, they reload. That could apply to Swiss drug giant Roche (OTC:RHHBY) as well, as the company appears to be well on its way with a second generation of top-end oncology drugs, supplemented with promising new drugs in CNS, metabolic disease, and other high-potential treatment areas. While Roche has questions to answer in its diagnostics and life science businesses, as well as its capital priorities, the business looks to be on solid footing for years to come.

Please click the link to read more:
http://www.investopedia.com/stock-analysis/052113/roche-reloaded-rhhby-bmy-gild-mrk-jnj.aspx

Investopedia: A Good Deal For Actavis, But Warner Chilcott Goes A Little Cheap

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:51:00 +0000

Confirming a pretty active recent rumor mill in the generic and specialty drug space, Actavis (NYSE:ACT) announced on Monday that it had reached an agreement to acquire Warner Chilcott (Nasdaq:WCRX) in an all-stock deal. This deal should bring real long-term value for Actavis, while giving the owners of long-struggling Warner Chilcott an honorable exit.

The Deal To Be
Assuming that the deal gets the request approvals and a rival suitor doesn't break things up, Actavis will acquire Warner Chilcott in an $8.5 billion all-stock deal that values Warner Chilcott at $20.08 a share – a roughly 5% premium to Friday's close, but closer to a 50% premium relative to where the shares were trading before spiking on M&A rumors.

Please read the full article here:
http://www.investopedia.com/stock-analysis/052113/good-deal-actavis-warner-chilcott-goes-little-cheap-act-wcrx-vrx-myl.aspx

Investopedia: Strategically-Challenged Websense Gets A Fair Deal

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:49:00 +0000

For a company that has been struggling with a multi-year identity crisis, Websense (Nasdaq:WBSN) got a pretty good deal Monday morning. While the company's bid from Vista Equity Partners won't be setting new records in the tech space for deal multiples, it's a good deal for a growth-challenged company with iffy margins and a very uncertain long-term strategic place.

Read more here:
http://www.investopedia.com/stock-analysis/052113/strategicallychallenged-websense-gets-fair-deal-wbsn-symc-intc-fire.aspx

Investopedia: Elan Continues To Make Baffling Strategic Decisions

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:48:00 +0000

When Elan (NYSE:ELN) announced back in February that it was selling its interests in Tysabri to Biogen Idec (Nasdaq:BIIB) my biggest concern was that Elan management would waste the proceeds. Elan management had made a series of questionable (if not bizarre) decisions prior to the Tysabri announcement, and I had minimal confidence that they would do the right thing – which, in my opinion, was simply to sell off the remaining assets and write a check to shareholders. Since then, the company's two major strategic decisions only reinforce my worries that Elan shareholders are not going to be well-served by management in the deployment of this cash.

Please read the full article here:
http://www.investopedia.com/stock-analysis/052113/elan-continues-make-baffling-strategic-decision-eln-thrx-gsk-prta-sny.aspx

Investopedia: Campbell Soup Shows That Shoppers Are More Price-Sensitive Than Investors

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:47:00 +0000

This has been a banner year for investors in consumer product companies, particularly staples like packaged foods and beverages. What makes that interesting is that the backdrop hasn't been quite that strong – organic revenue growth has been hard to come by and margin leverage is not exactly plentiful. And yet, despite worries about sustainable growth in the soups business and the weakness in the beverage business, Campbell Soup (NYSE:CPB) has seen its stock outperform the likes of Nestle (OTC:NSRGY), Kellogg (NYSE:K), General Mills (NYSE:GIS), and Coca-Cola (NYSE:KO).

Please read more here:
http://www.investopedia.com/stock-analysis/052113/campbell-soup-shows-shoppers-more-pricesensitive-investors-cpb-gis-flo-g-mdlz.aspx

Investopedia: After A Big Rally, Pfizer Might Need Some Rest

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:45:00 +0000

Big Pharma has enjoyed an exceptional stretch of performance lately, reversing what had been a relatively rare period of underperformance brought on by overdone fears over this sector's ability to continue to grow. While the recovery in Pfizer's (NYSE:PFE) valuation was valid, the question now is whether the shares have significant room left to move. Given a relatively weak growth profile, investors shouldn't expect these strong returns to continue on all that much longer.

Please continue here:
http://www.investopedia.com/stock-analysis/052113/after-big-rally-pfizer-might-need-some-rest-pfe-bmy-mrk-rhhby.aspx

Investopedia: Yahoo! Adds Tumblr, But Is This Another Underpants Gnome Deal?

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 19:44:00 +0000

Whether it's because of my Wall Street background or it's just legitimately funny on its own, the Underpants Gnome episode of South Park is one of my all-time favorites. I particularly love the explanation of the business plan – Step One: Collect Underpants, Step Two: ?, Step Three: Profit – as it so well captured the silliness of tech bubbles and pilloried the ridiculousness of the CEOs and corporate boards of the era.

I'm not sure Yahoo! (Nasdaq:YHOO) shareholders see quite the same humor in it, though, as the company's past acquisitions of GeoCities, HotJobs, AltaVista fit that model pretty well. Now we have Yahoo! spending over $1 billion of shareholders' money on Tumblr. Management promises that this time will be different, and how this deal goes over the next couple of years will say a lot about whether new management will produce different results for this long-struggling internet company.

Please click the link to continue:
http://www.investopedia.com/stock-analysis/052113/yahoo-adds-tumblr-another-underpants-gnome-deal-yhoo-goog-fb-msft-iaci.aspx

Investopedia: Kohl's Could Work For A Trade, But It's In A Brutal Business

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:59:00 +0000

Retailers have to try to pick winners, and whenever a company builds its model upon picking winners it's just a matter of “when” (not “if”) the company stumbles. Kohl's (NYSE:KSS) did a lot of things right in building up its 1,150-store chain of value-oriented specialty department stores, but execution has been more problematic recently. Conventional valuation metrics suggest Kohl's could have further to run if/when the reported numbers improve, but investors thinking long term should be wary of the cash flow model and the ability of any company to establish long-term competitive edges in retailing.

Please click below for more:
http://www.investopedia.com/stock-analysis/051613/kohls-could-work-trade-its-brutal-business-kss-jcp-gman-m-sks.aspx

Investopedia: Brocade's Uncertain New Direction

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:58:00 +0000

As Brocade (Nasdaq:BRCD) struggles to go anywhere, new management realizes that the company can't simply operate as it always has. But a new direction isn't particularly helpful if it is the wrong one, and I have real doubts about the company doubling-down and looking to compete with Cisco (Nasdaq:CSCO) in markets like data centers. While expectations for Brocade are shockingly low, it's hard to see this stock going anywhere without a real improvement in sales growth.

Please follow the link to continue reading:
http://www.investopedia.com/stock-analysis/051713/brocades-uncertain-new-direction-brcd-csco-jnpr-vmw.aspx

Investopedia: How Much Further Can Value Carry Autodesk?

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:56:00 +0000

I've been a little surprised by Autodesk's (Nasdaq:ADSK) performance over the past nine months or so. While I've long liked this company and thought it was significantly undervalued on a cash flow basis, I've been surprised that worries about macroeconomic conditions, the switch to a cloud/subscription model, and generally unimpressive top-line growth didn't overshadow that underlying value. With another disappointing quarter in hand and estimates heading lower, though, it may be a little harder for the value trade to support these shares in the short term.

To read more, please click below:
http://www.investopedia.com/stock-analysis/051713/how-much-further-can-value-carry-autodesk-adsk-anss-pmtc-adbe.aspx

Investopedia: Should Investors Hang Around For More From Applied Materials

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:55:00 +0000

From the fall of 2012 until very recently, my bullish call on Applied Materials (Nasdaq:AMAT) finally started to pay. Shares rose nearly 50% in six months as investors finally started to believe that NAND capex spending was going to improve and that the flat panel business had likely bottomed, not to mention some confidence that the company would see better results with different leadership. Although these shares are not overpriced on a free cash flow basis, investors who want to stay exposed to semiconductor equipment may want to think about switching over to the stocks of companies with better individual growth stories.

Please follow this link for more:
http://www.investopedia.com/stock-analysis/051713/should-investors-hang-around-more-applied-materials-amat-klac-asml-utek.aspx

Investopedia: Frear Of Cisco Leads The Market To Abandon Aruba Networks

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:53:00 +0000

It was only nine days ago that investors were left speculating as to whether Aruba's (Nasdaq:ARUN) weak fiscal third quarter meant that the WLAN market was slowing or that rival Cisco (Nasdaq:CSCO) was gaining share. With Cisco's earnings in hand and Aruba management's own post-earnings comments, it's clear that Cisco now looms large as a major disruptive force.

A more aggressive (and successful) Cisco is a multi-faceted threat to Aruba, and investors aren't hanging around to see how this plays out – sending the shares down more than one-quarter Friday morning. Although I continue to believe that there's long-term value in Aruba Networks shares, investors approaching this stock today have to treat it like nitroglycerine – be gentle and have a backup plan if and when things go badly wrong.

Please read more here:
http://www.investopedia.com/stock-analysis/051713/fear-cisco-leads-market-abandon-aruba-networks-arun-csco-hpq-msi.aspx

Investopedia: Wal-Mart Uses Rigorous Cost Control To Offset Weaker Sales

noreply@blogger.com (Stephen Simpson, CFA) — Tue, 21 May 2013 00:52:00 +0000

It's no secret that a meaningful percentage of the country's retail business goes on under the roof of Wal-Mart's (NYSE:WMT) stores. To that end, when consumers are feeling pressure (particularly those on the less affluent side of the ledger) it shows up in Wal-Mart's numbers. This gigantic retailer didn't have a bad fiscal first quarter, and it sounds like the fiscal year ahead should get better, but once again Wal-Mart is having to turn to operating synergies to wring out some growth. This stock's status as a proxy for the U.S. retailing sector makes talk of value somewhat moot, but these shares don't look notably cheap on a long-term basis.

Continue reading here:
http://www.investopedia.com/stock-analysis/051713/walmart-uses-rigorous-cost-control-offset-weaker-sales-wmt-tgt-kss-jcp.aspx

Investopedia: Cisco Comes Through, But Times Are Still Tough

noreply@blogger.com (Stephen Simpson, CFA) — Fri, 17 May 2013 01:46:00 +0000

With so many negative earnings reports for the first quarter, expectations for Cisco's (Nasdaq:CSCO) quarter were pretty modest. As a good company should, Cisco came through with a solid quarter and signs of share gain in multiple markets. That said, while I do believe Cisco is still undervalued, investors might want to exercise some caution before piling back into tech stocks.

Please continue reading here:
http://www.investopedia.com/stock-analysis/051613/cisco-comes-through-times-are-still-tough-csco-jnpr-arun-ntap.aspx

Investopedia: Kohl's Could Work For A Trade, But It's In A Brutal Business

noreply@blogger.com (Stephen Simpson, CFA) — Fri, 17 May 2013 01:45:00 +0000

Retailers have to try to pick winners, and whenever a company builds its model upon picking winners it's just a matter of “when” (not “if”) the company stumbles. Kohl's (NYSE:KSS) did a lot of things right in building up its 1,150-store chain of value-oriented specialty department stores, but execution has been more problematic recently. Conventional valuation metrics suggest Kohl's could have further to run if/when the reported numbers improve, but investors thinking long term should be wary of the cash flow model and the ability of any company to establish long-term competitive edges in retailing.

Please continue here:
http://www.investopedia.com/stock-analysis/051613/kohls-could-work-trade-its-brutal-business-kss-jcp-gman-m-sks.aspx

Investopedia: If You Don't Mind Volatility, Deere Could Still Do Alright

noreply@blogger.com (Stephen Simpson, CFA) — Thu, 16 May 2013 00:35:00 +0000

Deere (NYSE:DE) is a curious stock. It seems all too common for investors to bid these shares up into earnings (up about 12% this time), only to be disappointed when management's guidance sounds more conservative than they wanted. And yet, more often than not, the company does fine (or better) the next time around. While this pattern can be frustrating for investors who get stomach aches over the week to week moves in their portfolio, it's an opportunity for investors to make entries (or exits) at better prices.

Please follow this link:
http://www.investopedia.com/stock-analysis/051513/if-you-dont-mind-volatility-deere-could-still-do-alright-de-cat-agco-cnh.aspx

Investopedia: Investors Already Thinking Recovery For Cummins

noreply@blogger.com (Stephen Simpson, CFA) — Thu, 16 May 2013 00:34:00 +0000

Seeing as it is no simple task to find a company with the right mix of good management, competitive products, and attractive long-term markets, I understand why investors are slow to give up on companies that feature these attributes. All the same, it looks like the Street has already looked past this lull in Cummins' (NYSE:CMI) business. Not only is the stock up about 15% over the past year and within 10% of its all-time high, but today's valuation already presumes a pretty solid future outlook with respect to growth.

Read more about Cummins here:
http://www.investopedia.com/stock-analysis/051513/investors-already-thinking-recovery-cummins-cmi-cat-nav-volvy-etn.aspx

Investopedia: Agilent Isn't Making It Easy On Investors

noreply@blogger.com (Stephen Simpson, CFA) — Thu, 16 May 2013 00:33:00 +0000

It's getting harder for me not to view Agilent (NYSE:A) as something like the store-brand version of Danaher (NYSE:DHR). It's cheaper and pretty close to the real thing, but it's just not quite the same and sometimes those differences leave you walking away unsatisified. To be sure, I think Agilent could do a lot to close this gap, but I'm not sure they will. Consequently, while Agilent is a little bit undervalued, it's harder for me to be as enthusiastic about buying shares today – particularly when Danaher seems undervalued to a similar degree.

To continue, please follow this link:
http://www.investopedia.com/stock-analysis/051513/agilent-isnt-making-it-easy-investors-dhr-ter-nati-wat.aspx

Investopedia: BP Looks Cheap, But A Lot Of Improvements Have To Come Through

noreply@blogger.com (Stephen Simpson, CFA) — Thu, 16 May 2013 00:31:00 +0000

The energy sector has been in a rut for a while now. Despite some decent one-off performances, energy screens as one of the worst performers over the year-to-date, one-year, three-year, and five-year periods. With that sort of performance, it's not altogether surprising that many of the majors (Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), et al) look a little undervalued. BP (NYSE:BP) actually jumps out as one of the potentially cheapest names to consider, but there's still quite a bit of work that management has to do to get this one performing again.

Please read more here:
http://www.investopedia.com/stock-analysis/051513/bp-looks-cheap-lot-improvements-have-come-through-bp-xom-cvx.aspx

Investopedia: Waiting For Housing To Recover, Valspar's Recovery Already Arrived

noreply@blogger.com (Stephen Simpson, CFA) — Thu, 16 May 2013 00:30:00 +0000

Data on the residential housing market has been getting better. Prices and sales activity have both improved, and data from the major big-box home improvement stores Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) suggests that homeowners and contractors are back at work fixing up properties.

While the aforementioned data has been incremental, many housing-related stocks have already posted strong runs. One of them, paint and coatings manufacturer Valspar (NYSE:VAL) is already up 75% over the last two years and about 46% over the past year. While declining TiO2 prices and improving demand should both help results, as will a growing presence in emerging markets, the stock seems to already be testing the high end of its typical valuation range.

Please continue here:
http://www.investopedia.com/stock-analysis/051513/waiting-housing-recover-valspars-recovery-already-arrived-val-shw-ppg-akzoy-dd-low.aspx

Seeking Alpha: LipoScience Gives Its Shareholders Chest Pains

noreply@blogger.com (Stephen Simpson, CFA) — Wed, 15 May 2013 01:55:00 +0000

There's a good reason that I always include the warning that small-cap med-techs carry above average risks, and LipoScience (LPDX) dutifully provided an example last week. Due in part to system placement delays and delays in ramping up new sales reps, this emerging diagnostics company missed expectations for the first quarter and lowered guidance for the rest of the year.

Retribution was swift and severe - the shares tanked 25% in a single day. Now the question for investors is whether there is still an opportunity here and where it's worth the risks to buy shares in the hopes of realizing that opportunity.

Read the full article here:
LipoScience Gives Its Shareholders Chest Pains

Investopedia: Chipotle Executing Well, But Valuation Leaves No Margin Of Error

noreply@blogger.com (Stephen Simpson, CFA) — Wed, 15 May 2013 01:46:00 +0000

Investors can be slow to abandon their favorite growth stocks, particularly when management has shown itself able to execute at a high level. Couple that with a very strong sector and you have a good recipe for Chipotle Mexican Grill (NYSE:CMG) to perform. While the shares are still down almost 10% from their year-ago level, they are up almost 60% from a late October bottom and investors seem to be willing once again to just look past challenging same-store traffic trends.

Please continue here:
http://www.investopedia.com/stock-analysis/051413/chipotle-executing-well-valuation-leaves-no-margin-error-cmg-mcd-yum-pnra.aspx

Investopedia: Danaher Proves Even The Nimble Can Stumble

noreply@blogger.com (Stephen Simpson, CFA) — Wed, 15 May 2013 01:45:00 +0000

I don't want to sound like too much of a fan-boy when it comes to Danaher (NYSE:DHR) (many, if not most, sell-side analysts seem love it more than I do), but I do think it's fair to say that when even Danaher is struggling to put up a good quarter, you know the industrial sector is in a tough spot. With growth decelerating across the board, even Danaher's much-vaunted margin improvement has come up a little short. Even so, this is still a bull market and the shares are just shy of a 52-week high.

Read more here:
http://www.investopedia.com/stock-analysis/051413/danaher-proves-even-nimble-can-stumble-dhr-emr-bio.aspx

Investopedia: Roper A LIttle Short On Growth, But A Proven Builder Of Value

noreply@blogger.com (Stephen Simpson, CFA) — Wed, 15 May 2013 01:43:00 +0000

As much as investors and analysts talk about growth, you'd think that would be the be-all end-all of stock selection. The data tells a different story, though, particularly in the industrial sector. When it comes to industrials, at least the diversified conglomerates, it would seem that margin leverage, improving ROICs, and active capital deployment are what really drive shares over the long term. To that end, Roper (NYSE:ROP) still looks like an interesting stock to watch.

Another Unimpressive Growth Story

The theme for the first quarter of 2013 has been disappointing and dreary industrial earnings reports, and Roper certainly fits that theme. While reported revenue rose 4%, organic revenue was down 3% on an identical decline in volume. That puts Roper behind other conglomerates like ABB (NYSE:ABB) and Danaher (NYSE:DHR), ahead of GE (NYSE:GE) and Illinois Tool Works (NYSE:ITW), and in basically the same boat as companies like Dover (NYSE:DOV) and Honeywell (NYSE:HON).
Please follow the link to continue:
http://www.investopedia.com/stock-analysis/051413/roper-little-short-growth-proven-builder-value-rop-dhr-ge-itw-hon.aspx