Monday, February 8, 2016

Earnings & Adds - Super Bowl Edition

I thought that was a decent overall game yesterday. I know a lot of people love shootouts, but that to me isn't football. There was a lot of excitement on defense, offense, and special teams to make it a noteworthy game. I would have liked if the players refrained from the early celebration. That to me shows a lack of respect to the other team. On a side note Lady Gaga nailed the National Anthem.

Here are a couple updates from names that reported earnings in the portfolio and some adds made today.

Cummins Inc (CMI) reported results that beat views. The company guided 2016 for Revenue to decline 5-9%, so we can expect 17.3-18.1 billion for 2016. EBIT margins are expected to stay around 11.6-12.2% of sales which is very respectable and I think reflects the companies aggressive cost cutting measures. So we can expect around 2-2.1 billion in earnings before interest and taxes. The shares rallied all the way up to $100 and I think that reflects how oversold the stock was. I thought real hard about adding at $80, but I think the industry is not out of the woods yet. After I thought about it I think a few companies will delay upgrading older equipment as low energy prices give them some breathing room as they face their own headwinds.  Long term you still can't beat this company.  If the shares get to $75-80 I'm going to add.

Cognizant Technology Solutions(CTSH) reported earnings today and the shares are getting hit. The company guided 2016 non-GAAP EPS at 3.32-3.44.  I think that's low.  I want to add more shares, but I'm going to wait to see if I can get them at $50. My buy in the upper 60's is looking like a big mistake, but the company had reported what I thought was a solid quarter and continues to do so. I still expect big things from them in 2016, but it might not get reflected in the share price immediately. No worries though as this is a solid company.

I added to the PayPal position today. After the company reported earnings the stock blew up to $38. I was patient enough to wait for a pullback. I might not catch the low again here, but I think I've given myself some breathing room under $35. PayPal is growing very strongly and generating a lot of free cash.  I still would not be surprised if someone picked up this company. I could see a buyout firm taking them over first, but there are plenty of other players looking to consolidate a market share position in this field.

Visa was also added to the portfolio. I'll admit this was more of a fluke. I had set an old limit order set under $68 thinking it would get there on a flash crash or other panic. Especially since the company was just trading at $80 in December. Either way the last earnings report showed the underlying fundamentals are still intact. I'm going to look to add to MA also, but I'll wait until its under $80.  That's another one I should have been more patient on originally. More amazing is that after their earnings pop I didn't think the shares would come back down to this level. But given the way the market is acting I'm not sure why I'm surprised by anything right now.

On another note I've been working on the portfolio tracking spreadsheet.  I updated the portfolio to separate it by years. I think this approach will be best. I'm also working on getting the earnings tab completely up to date. I am going to use EPS figures from NASDAQ instead of Yahoo Finance as I originally planned. I'm still working on getting EPS for the ADR's of the foreign companies.

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