Tuesday, June 20, 2017

Gold Vs Silver

To many novice traders, and investors it's assumed Gold and Silver are basically mirror opposites of each other, they just have different values per ounce.  That's not true. Hence why we have the Gold/Silver ratio which is used by commodity traders and investors around the world. I decided to take a look at the recent, and longer term performance of the two metals. Let's take a look at the widely held Gold(GLD) and Silver(SLV) ETF's through a few charts. First is the YTD chart.  We see gold has a near 5% lead over it's counterpart. 

Saturday, June 17, 2017

TLH Market Review - 6/17/17

The big news this week other than Amazon(AMZN) snapping up Whole Foods(WFM) for $13.7 billion was the Federal Reserve sticking to it's guns to raise interest rates yet again.  The move by the Fed was widely expected.  In turn equity markets were relatively muted during the event, and even the bond market saw a modest reaction.  In fact yields on 1 Month Treasury Notes actually fell after the announcement.

Thursday, June 15, 2017

The Great Sector Rotation?

We've been hearing a lot about the sector rotation going on with stocks the last week. So I decided to take a look at what's been happening recently, and not as recently. Below are the Sector SPDR ETF's and their performance from the last 10, 40, 100, and 200 days in that respective order.

Saturday, June 10, 2017

TLH Market Review 6/10/17

This week was not dull by any means. Between the now seemingly endless charade of "He said, she said, they said, I don't know who said", on Capitol Hill, the Brits that can't catch a break, and the huge rotational move in equities we witnessed Friday.  Yep that's a lot to swallow in just a few days.  The markets don't even seem concerned about next weeks Fed meeting where it's all but certain we'll see another rate hike, yet the bond markets have seen yields trend lower at the long end recently.

Wednesday, June 7, 2017

Does International Real Estate Have More Room To Run?

I was browsing various asset class performance via ETF's that I follow.  I happened to be looking at the Vanguard REIT ETF(VNQ) which focuses on the USA, and it's international counterpart Vanguard Global ex-US REIT ETF(VNQI).

I noticed there was quite a large difference in performance YTD.  Now the performance in the chart below does not include dividends, which are generally quite large for REIT's. There is also a large difference in yield between the two on a TTM basis.

Friday, June 2, 2017

Stocks No One Talks About - Rockwell Collins

Every once in awhile I like to look at companies no one really talks about, but have performed really well. This is usually where you can find some solid winners perfect for your portfolio. 
 
Today is Rockwell Collins(COL). The company was spun off from Rockwell International on June 29, 2001.  In a nutshell the company basically makes aviation equipment, and parts. Well more specifically communication, and electronic equipment for the aviation industry.   Shareholders have been rewarded well by this company. Since the spin-off shares have gained a total of 465% versus a 98% gain for the S&P 500. If we include dividends for the S&P 500 the gain is 172%. Considering Rockwell Collins doesn't pay a dividend that's some huge out-performance.



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Saturday, May 27, 2017

TLH Market Review - 5/27/17

"The willingness of America's veterans to sacrifice for our country  has earned them our lasting gratitude." - Jeff Miller

Let's not forget the real reasons why Memorial Day marks the unofficial start of summer in the USA.  It takes a lot of courage, will, and fearlessness to fight for what you truly believe. That common belief runs through all of us. The belief that we are free individuals to pursue our dreams, and a life full of happiness. It doesn't matter what country you hail from.  Ultimately that's what we all want in life.  So as you sit back unwind on a long scenic road trip, and BBQ in the back yard with family and friends give a thought of gratitude to those whom gave the ultimate sacrifice so we could pursue our dreams.


This week was full of news.  We received the Fed Minutes which shined some light on the Fed's interest rate intentions, and balance sheet issues.

Friday, May 26, 2017

Is Sugar A Bad Investment? - Part Two

Earlier this week I pondered if Sugar Is A Bad Investment? I highlighted portfolio member Hershey's(HSY) along with fellow snack, and confectioners. It was noteworthy to see the overall out-performance of the group compared to the S&P 500 over 5 years.


Today we are going to take a quick look at what's most likely the sugar industries dreaded 800 pound gorilla. Beverage Manufacturers. They have been under increased public scrutiny due to  high sugar content drinks that offer no additional nutritional value.  There also seems to be a larger incorrect belief by the public that sugary drinks are more harmful than sugary snacks.

Thursday, May 25, 2017

Earnings - Universal Corp & Costco

On May 23rd after the close we received FY 2017 & Q4 results from Universal Corp(UVV).  The company reported Q4 EPS loss of $1.64 on revenues of $650 million. The loss was a result of a mandatory conversion of UVV's 6.75% convertible perpetual preferred shares into approximately 2.5 million common shares, which resulted in a one time cost at $74.4 million reducing EPS by $2.99(basic) & $2.90(diluted).  For the year the company reported EPS of $0.88 on revenues slightly down at $2.07 billion. If you add back the share conversion charge for the quarter UVV earned on a diluted basis $1.35, and for the year $3.88. Both numbers are down from $1.95 & $3.92 respectively in 2016. Shares took a 5 point hit on the news, and have been extremely choppy in 2017 after hitting a high of $83.35 in February. Here is part of managements statement:

Tuesday, May 23, 2017

Is Sugar A Bad Investment?

I've been thinking about the danger's of sugar a lot lately as I try cutting down my own consumption to shed a few extra pounds for summer. It's no secret that consuming sugary drinks, and especially sugar laden foods are bad for your overall health.

I decided to look at the performance of Tootsie Roll(TR), Mondelez(MDLZ), and portfolio member Hershey's(HSY) versus the S&P 500. 

Saturday, May 20, 2017

TLH Market Review - 5/20/17

Was that the correction we have all been waiting for?  Earlier this week the markets caught a lot of people off guard when all the major indexes dropped 1.50%, and the Russell took a whopping when at one point it was down around 2.50%.  The indexes rallied back to erase most of the losses for the week.  Time will tell if this turns out to be the start of a pullback, or just a blip on the radar screen.  I'd welcome a good 5-10% downdraft in equities.  It'd be healthy for the market to wipe out some weaker hands, and create a nice base for further gains.


YTD the majors are all still showing gains, led heavily by technology stocks, and some lagging by small caps.

S&P 500 - 6.38%
Dow Jones - 5.27%
Nasdaq - 13.01%
Russell 2000 - 0.75%


The drop was so surprising because the Volatility Index(VIX) was testing decade long lows below 10 when all of the sudden it surged 50%+.  That might sound like a huge number but the VIX ultimately only hit a high of 16.30, and it's not abnormal for the index to trade around that number historically. I don't like to think of the VIX as the best overall indicator for tops either. Personally I think it's a bit better at marking bottoms.



We received economic reports his week per usual, and the standout was Industrial Production which rose 1.0%. That's a good number since more manufacturing works its way throughout the economy very well.  Remember about 3 weeks ago I pointed out the decades long time decline in Industrial Capacity Utilization

The Atlanta Fed's GDP Now is predicting a 4.1% increase for Q2. But the New York Fed is only predicting a 2.3% increase for Q2. Why the difference? It comes down to the way each model is calculated.  Either way both reports have cited IP as a reason to boost forecasts this week. 

Portfolio

It was a quiet week on the news front.  No holdings had earnings this week as earnings season wraps up. The portfolio was however a bit choppy due to the overall market.

Global Payments(GPN), PayPal(PYPL), and Visa(V) all hit a 52-week high to start the week. Global Payments now trades with a $90 handle, and Paypal just edged above the psychologically important $50 level for the first time. Needless to say I'm expecting big things from this group. The portfolio isn't shy about focusing on certain sectors such as financial payments, and tobacco.  It means the portfolio can lag the market at times due to it's concentration, but when these sectors are out-performing like they should it translates to much better gains. 

Wednesday, May 17, 2017

Similar Strategies But Vastly Different Outcomes

One thing I like to do is compare the performance of certain groups of stocks, asset classes, or strategies.  Today I'm going to take a look at what appears to be a similar investing strategy, and how it can affect your results with just a few charts.

Many investors are fans of buying the best available stocks. For good reason as they usually carry the following traits:

Saturday, May 13, 2017

TLH Market Review - 5/13/17

Despite what seems to be a constant barrage of worries about European elections, Chinese capital flows, trade & tax reform going nowhere, and dysfunction in DC as normal the markets keep chugging along to new highs just about everyday.




Wednesday, May 10, 2017

Wabtec Increases Quarterly Dividend 20%

There's nothing like waking up on a Wednesday morning to find out you received a 20% pay raise for doing little more than holding some stock in a great company.  Today Wabtec(WAB) announced a 20% hike in their dividend to a quarterly rate of $0.12 from $0.10.  That comes out to a current dividend yield of around 0.58%. For their fiscal year Wabtec is projected to payout $0.46/share in dividends.   That's not a huge yield compared to some other holdings like Altria(MO) which sports a 3.6% yield.

Still WAB has raised it's dividend for 7 years in a row now, and sports a 10 year dividend growth rate of 36%.


Tuesday, May 9, 2017

Earnings - Vector Group, Cognizant Technology

Life got a bit in the way last week but here is a quick earnings recap for Vector Group(VGR), and Cognizant Technology Solutions(CTSH).

Vector Group(VGR) reported Q1 results with EPS of $-0.03 on revenues of $415 million. The loss is mainly due to extinguishing older 7.75% senior secured notes due 2021 with new notes of $850 million principal at 6.125% due 2025.  The company reported strong growth in their tobacco brands as consumers look for discounted options with a 6.2% YoY increase in retail shipments. The stock took a dive after earnings, but that's short term noise. The company is still well positioned within the real estate markets it transacts, and maybe it's looking like the other major tobacco companies have come close to their max price points in a lot of markets judging by the VGR's surge in discount brand sales. That's not exactly a great thought considering the portfolio is heavy in tobacco, but I think this is a short-term industry issue.

Thursday, May 4, 2017

Earnings - AB Inbev, Church & Dwight, Global Payments

We had a trifecta of earnings reports this AM. I say trifecta because all three stocks are up, and as I write this each one is up over 4%.

AB Inbev(BUD) reported Q1 results with EPS of $0.71 on revenues of 12.9 billion. Despite flat overall volumes and a small 3.7% revenue increase, revenue growth in their 3 big brands(Stella, Budweiser, & Corona) grew by 12.1% as consumers continue to stick with big brands they love. The stock is so far up 5.5%. Here is part of managements comments.

Earnings - Facebook

Just about every investor clamors to hear from Apple(AAPL), and Facebook(FB). Since only Facebook is in the portfolio I'll only be commenting on that one. Sorry!!

Facebook(FB) reported Q1 results with EPS of $1.04 on revenues of $8 billion(up 49%).  What is really good to see is

Tuesday, May 2, 2017

Earnings - Altria, Cummins, Emerson Electic, HCP, & MasterCard

An absolute flurry of  earnings reports this morning already as we received results from 5 companies in our portfolio including Altria(MO), Cummins(CMI), Emerson Electric(EMR), HCP(HCP), and MasterCard(MA).

Altria(MO) reported Q1 results with EPS of $0.72 on net revenues of $6 billion.  The company reported a 2.6% decline in smokeable products volume, and a 5% decline in smokeless products. The company re-iterated full year guidance for EPS growth of 7.5%-9.5%. The stock initially dipped this morning below $70, but has fought all the way back up to $71+. Here is what management had to say.

Thursday, April 27, 2017

Earnings - Praxair(PX)

Praxair(PX) reported Q1 results with EPS of $1.35 on revenues of $2.7 billion. The company reported a huge 28% increase in operating cash flow to $710 million. For Q2 the company expects EPS of $1.38-1.43 and for 2017  $5.53-$5.78(GAAP). Shares are flat for the day. Here is what management had to say.

TLH Market Review - 4/29/17

Since I did not do a review last week I'm going to combine some of last weeks data and more recently released reports. This week we had a lot of activity with earnings reports.  I'll get to the economic data first.

Last week we saw Industrial Production and Capacity Utilization.

Wednesday, April 26, 2017

Earnings - HSY, PG, PYPL, SAM

Today we received a slew of earnings reports. This morning we received reports from Hershey's(HSY), Procter & Gamble(PG), and this afternoon will be Paypal(PYPL), and Boston Beer(SAM).

Hershey's(HSY) reported Q1 earnings with EPS of $0.58 on revenues of $1.87 billion. Overall sales increased 2.8% which is in-line with expectations and the industry overall. Nothing to exciting in this quarter so it's business as usual. The stock however has traded negative all day, and dipped below $107 for a bit. Here is what the CEO had to say.

Tuesday, April 25, 2017

Costco Announces $7 Per Share Special Dividend

Today Costco(COST) announced a special dividend of $7.00 per share.  That's in addition to a $0.05 increase in the regular quarterly dividend of $0.45/share to $0.50/share.  To receive an 11.1% raise plus a special dividend which comes out to a 4% payment based on today's close of $172.68.  You can read the company press release here.  The stock is up 3% in after hours trading.

The company stated the special dividend will amount to a $3.1 billion dollar payment to shareholders. That's quite a bit of money. For fiscal 2016 the company paid paid out $746 million to shareholders via dividends. According to the Costco's 2017 Q2 balance sheet they had $4.7 billion in cash on hand. But the company stated they were funding this dividend with additional borrowings. Once again according to Costco's recent balance sheet the company has approximately $5 billion worth of debt. Of that $2.2 billion is current.  The company most recently paid a special dividend of $5 in 2015.

Earnings - Wabtec(WAB)

We received earnings today from favorite 128 year railroad equipment provider Wabtec(WAB). The company reported EPS of $0.77 on revenues of $916 million. The company also completed it's large acquisition of Faiveley Transport. Then proceeded to buy Aero Transport a maker of hatch covers and outlet gates. Then at the end of the quarter they acquired Thermal Transfer a maker of heat exchanger's.  The latter two acquisitions will represent an increase of $65 million to annual sales initially. Sales in the Transit group grew to $568 million and represented 62% of sales on the back of the Faiveley acquisition. Freight sales lagged due to lower freight car and locomotive deliveries, plus  less spending on control related equipment and services.  It will be important to see that type of activity pick back up in the next couple quarters since those are big purchases by railroads, and are a direct indicator of economic health.

The stock has lagged for us lately, but so far is up close to 1% on the day. The company re-affirmed guidance for EPS of $3.95-$4.15. Here is what the CEO had to say

“Our first quarter adjusted earnings were in line with expectations, and we expect improvement during the year. As we work to integrate Faiveley and our other recent acquisitions, we are managing our costs aggressively based on market conditions. We continue to invest in our balanced growth strategies and expect to benefit from our diversified business model and rigorous application of the Wabtec Excellence Program.”

Friday, April 21, 2017

Visa Earnings

Visa(V) reported fiscal year 2017 Q2 results later yesterday. EPS came in at $0.18 on revenues of $4.5 billion. The company reported GAAP net income of $430 million, but adjusted net income of $2.1 billion due to special items related to Visa Europe reorganization costs. The company also announced a new $5.0 billion share repurchase program. The stock almost hit $94/share today but has since backed down to $91-$92 as of writing. I will note that is a new all time high. Here is what the CEO had to say.

“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc. "Robust growth in payments volume, cross-border volume and processed transactions drove better than expected results. Looking ahead, we are continuing our efforts across the globe to electronify commerce and digitize economies to the benefit of consumers and societies alike.”

I recently highlighted Visa's and other payment processors performance the other day The stock is now up over 17% for the year, and has returned over 500% not including dividends since it's IPO in 2008. 

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Thursday, April 20, 2017

Earnings - IBM, PM

As most of you know by now IBM(IBM) reported Q1 earnings that showed the company struggling with lower revenues for 20 quarters in a row.  That sent shares reeling back to $160 on heavy volume.  This has been tough stock for many investors. Especially those that bought back in 2012-2013 when shares were trading at highs. I was fortunate enough to add some to my personal portfolio, which was accounted for under the old tracking method, back in November 2015 when shares were trading near lows.  At that time I bought at $133.93/share.  Still it's hard to own a stock that sees falling revenues year after year.

The bright side is the company has been increasing it's dividend and reducing it's share count.Since Q1 2012 the dividend is up over 86%. Back then the quarterly payout was $0.75 and now stands at $1.40, but I think we can expect a bump for Q2.  Here is the total shares outstanding since 2012.

Share count(in millions)
2012 - 1,155
2013 - 1,103
2014 - 1,010
2015 - 983
2016 - 959

As you can see the share count has been reduced by 17%. That helps keep EPS propped up in the face of falling revenues.  Still it's not how you want to see your company survive. With the most recent quarter coming in with EPS of $1.85 on revenues of $18.1 billion it's not exactly looking to be another bumper year with full year EPS forecast at $11.95. I still believe in their Watson program, and I'm impressed with how well they ramped up strategic imperatives which now represent 42% of company sales. Most other companies would have failed by now.  I'll be patient for the remainder of the year, but patience runs thin eventually. 

Phillip Morris International(PM) reported Q1 2017 results this AM. Q1 EPS came in at $1.02 on revenues of $16.6 billion which is down 1.4%.  The shares have been rocked so far today, and at one point were down more than 4%. The reason is the large decline in their traditional cigarette business which saw volumes shrink by 11.5%. That's an acceleration from recent quarters, and the growth in their Reduced Risk Products including HEETS and Heatsticks has not been enough to offset the fall.  The company guided full year results at $4.84-$4.99. I'll admit I'm slightly worried about that falloff. Fellow portfolio member Altria(MO) has also taken a hit today.  Here is what the CEO had to say.

“Our results were in line with our previously communicated expectation of a relatively weak first quarter, due to lower cigarette volume -- primarily related to low-price brands in specific markets where the impact on our profitability was limited -- and certain timing factors," said AndrĂ© Calantzopoulos, Chief Executive Officer.

"We are fully on track to deliver our full-year EPS guidance, driven by robust pricing and accelerating IQOS volume growth. We anticipate a combined cigarette and heated tobacco unit volume decline of 3% to 4% for the full year.

Payment Space Performance - V, MA, PYPL

One surefire fundamental bet the next decade will be electronic payments.  With a few countries in Europe and South America moving towards cashless systems, and recent moves in India to curb the use of cash for transactions it only makes sense for this sector to have a tailwind behind it.  Below is the performance of portfolio holdings Visa(V), MasterCard(MA), and PayPal(PYPL) alongside the S&P 500's Total Return Index(SPXTR) which includes dividends.  Note Visa and MasterCard pay dividends but that's not reflected in the chart. Either way all 3 picks have been outperforming the market YTD. Let's hope it continues.

YTD Performance
Visa - 15.25%
PayPal - 9.70%
MasterCard - 9.20%
SPXTR - 5.07%
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Tuesday, April 18, 2017

Investors Stampede Into 10 Year Bonds

If there is any takeaway from this chart it's that people are definitely rushing to get in line to lend their money to the US Government for 10 years, and stampeding out of the line to lend their money for the next 1 year.  Below is the chart showing the relative performance of the US Governments 1 year and 10 year debt obligations.  The 1 Year US Treasury yield has been on an absolute tear since March. 



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Saturday, April 15, 2017

TLH Market Review 4/15/17

I'll be keeping this one short and sweet as I celebrate Easter Weekend.  Today is normally the final day to file your 2016 taxes, unless of course you file for an extension.  However procrastinators fear not as you have until Tuesday April 18th this year to square up with Uncle Sam.

There was a slew of lower tier economic reports this week. One that I've been watching more closely is Consumer Confidence provided by the Conference Board, and Consumer Sentiment which is calculated by the University of Michigan.  It's oft understated how much of our economy is based upon expectations and

Tuesday, April 11, 2017

TLH Portfolio Performance Q1 2017

I've made some changes to the way I account for portfolio performance for 2017.  Originally I was tracking the portfolio since inception(October 2015).  This created a couple problems. For one it was tedious to track everything, and it wasn't exactly quite clear how well the portfolio was doing on a yearly basis against our benchmark SPDR S&P 500 Index ETF(SPY).  So I started calculating since inception and the yearly number. That's confusing then for me to explain the performance of each one.

Saturday, April 8, 2017

TLH Market Review - 4/8/17

Well the big news this week was President Donald Trump firing off Tomahawk missiles, 59 to be exact, into Syria. I won't comment on the political ramifications of the whole ordeal, but it makes you think of all the innocent lives lost in wars over the centuries.  Sad.

Other than that we had the FOMC minutes released from the meeting where interest rates were raised.  What was interesting for most people was the Fed actually discussed it's balance, and taking steps to reduce it's size this year.  Any contraction in the Fed's balance sheet would actually be a deflationary/"contractionary" for the economy.  The reason being is this action would actually take money out of the economy. Here is part of the Fed's comment  

"...most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the Committee’s reinvestment policy would likely be appropriate later this year.”


What did get overshadowed this week was the ISM Services Index that came in at 55.2 under expectations for a 57.0 reading. While not a huge deal since anything over 50 shows expansion. Services still account for the lions share of our economy.  If we start seeing readings closer to 51-52 then we can start getting concerned. The ISM Index was a bit stronger at 57.2 vs expectations of 57.0.

The big report this week was the bad jobs number we received. NFP showed a total gain of 89k jobs. That's way below expectations for 175k, and paltry compared to the prior reading of 221k.  Not exactly a great number especially when our Chief keeps talking about bringing the jobs back. For now we can chalk it up as a one off.

So how did the markets react to all this?  Actually quite well.  The S&P had some down time this week, but only ended up -0.3% lower despite all this big news. Not exactly what many people would expect. If this were 4-5 years ago I think we would have seen some big 1-3% moves for the week.

Earnings seasons starts in earnest next week. We received a some news reports from a few portfolio holdings.

McCormick(MKC) which got pummeled after its earnings report, had better reception after it's
investor's day. The stock hasn't recovered all it's losses since earnings last week. With projected EPS growth of 9-11% there is still a lot to get excited about for this blue chip.






Costco(COST) reported same store sales growth that really blew away expectations.  Total company sales for March were up 6%, and when excluding gasoline and foreign exchange fluctuations sales were up 5%.  Those are some solid numbers from consumers that have continued to be fickle, and at odds with other retailers still struggling with the "Amazon" effect.  That's why Costco is in the portfolio.  Sure they'll lose some sales, but it occupies a nice niche that's not easily replicated online. I'm expecting good things from this company the next few years.

I'm still working on updating the portfolio results for Q1.  I'm updating a lot including another performance tracking mechanism to the portfolio. You'll see what I mean when I get the results out in a couple days. 

Friday, March 31, 2017

TLH Market Review -3/31/17

There was some big stock news this week. For one Apple(AAPL) hit a market cap value of $750 billion.  Then portfolio member Facebook(FB) announced it's next full out assault on Snap Inc(SNAP) with the addition of its stories feature within it's Newsfeed on Mobile and Desktop. That's on top of it being accessed via it's Messenger & Instagram apps, and it was recently added to WhatsApp.

In other portfolio news we received word that Danone and WhiteWave have gotten some approvals from the DOJ this week.  The stock quickly shot up close to the buyout price of $56.25/share. It was interesting to see shares trade around $54.50 just last week.  Originally the company said the merger would be done by this month. I still think there's another 3-6 weeks until investors see shares being replaced with cash in their broker accounts.

Also we received earnings from McCormick(MKC).  The company posted another steady quarter as it does in my opinion a great job managing currency fluctuations, and costs. For Q1'17 EPS came in at $0.74 on revenues of $1.043 billion.  A bright spot was operating earnings were up 3.8% to $134 million despite weaker EPS and top-line growth.  Yet that hasn't stopped the shares from reeling this week. 



In economic news  we received the third estimate for Q4 GDP. The market gave a collective yawn at this one per usual.  It's frankly old news.  At this point in time investors are gearing up for Q1 earnings so GDP isn't forefront unless it's Q1 2017 GDP. There was some talk that the job market is getting soft with Initial Claims coming in at 258k.  That's some short term thinking right there. The number has been lower for a record amount of time.  Yes the job market is not robust like it was in previous recoveries, but it doesn't seem to be anything to fret about yet. Once it starts climbing fast then we can pay attention. 

I'll be getting Q1 results for the portfolio going this weekend as I'll need to be the S&P's 5%+ return. I'm going to be working on some calculation changes going forward as I refine my reporting.  Stay tuned. I never updated the portfolio page with 2016 results and I apologize, although you can check out the portfolio results in the google sheet. 

Tuesday, March 28, 2017

Can Anyone Compete With Facebook?

The big news today is Facebook(FB) has released a "stories" feature similar to "camera company" Snap Inc(SNAP).  Facebook has stated the move has come from user requests. Sure I don't doubt that, but we aren't fools either.  The news has initially sent Snap shares reeling.  But this begs a bigger question.

Can Anyone Compete With Facebook?

Earnings - McCormick(MKC)

This AM we received earnings from McCormick(MKC) a global leader in flavor. For Q1'17 EPS came in at $0.74 on revenues of $1.043 billion.  A bright spot was operating earnings were up 3.8% to $134 million despite weaker EPS and top-line growth.  The company continues to do a great job maintaining costs and currency headwinds. The stock has seemed to meander around the last few months.  That's fine as it was a nice winner for us in 2016. I expect the stock to get back on track come summer.  Here is what management had to say:

Sunday, March 26, 2017

TLH Market Review - 3/25/2017

This week was definitely one that investors have not become accustomed too in 2017. Despite it being the 4th weekly decline in a row this week was reminiscent of 2008 to some.  I wouldn't necessarily agree with that. We just ended one of the longest streaks in history for the S&P 500 going without a 1% drop. The last time the S&P 500 declined by 1% was October 11, 2016.  What's also interesting is we saw the yield on 10 Year US Treasuries decline a few basis points to 2.41% on the week so investors weren't running for the perceived safety of government debt.


Thursday, March 23, 2017

Domino's Pizza Coming In HOT!

No that's not a mistake. Domino's Pizza Group(DPZ) has absolutely crushed it since March 2008 with a 1,487% gain.  Remember them? They are the company that satisfied all your dorm room cravings for hot pizzaand cheese sticks.  Well your finance professor should have mentioned you should buy shares. Ah woulda, shoulda, coulda.

The stocks performance has literally smoked Altria's(MO) 438% gain,  fabled Google's(GOOGL) 255% gain, and left the S&P 500 in it's flour dust.  Who knew making pizza was so profitable. The company started paying a dividend in 2012.  




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Tuesday, March 21, 2017

The Apple Mega Cap King

That's one mighty fine chart.  Apple(AAPL) is closing in on being worth $750 billion dollars today.  That's a lot of coin.  By my calculations shares need to hit around $190 to be worth $1 trillion with a float of 5.24 billion shares. If you aren't away the I-Phone make is the largest company by market cap in the world.


Investors holding on since January of 2000 have seen a 4,185% gain in value. In other words $1,000 is now worth $41,850. That's serious long haul investing gains.



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Saturday, March 18, 2017

TLH Market Review - 3/18/17

I don't know if it's St. Patricks Day giving us some that good old fashioned Luck of The Irish, or just flat out good times to make money that heaved indexes up this week. Either way it was another up week for all the indexes. Although large caps didn't quite participate to the extent small caps did.  

Janet Yellen and her Federal Reserve took another step towards taking rates off historic lows. Don't get me wrong here by any means. Rates are still at rock bottom from a historical perspective. Even if rates follow the Fed's projected path to hit 3.0% by 2019 that's still a far cry from the 10%+ this country saw in the 80's. And let me tell you those hair styles were rocking!!!

Thursday, March 16, 2017

Bond Performance Blazing Hot!

No that's not the blazing hot performance of GoPro(GPRO) or Snap Inc(SNAP) below.  It's the "performance" of US Treasury 1 year(UST1Y), 2 year(UST2Y), and 5 year(UST5Y) yields.

Basically yields have gone up from their historic lows(less than 1%) to all now sporting yields above 1%.  So people who have been short near term duration treasuries have actually done quite well since the election. Remember with bonds if you buy them and interest rates head up you technically incur a loss on your holdings value, but the interest payment stays the same.  

Here is the percentage increase in yield for each Treasury type

1 Year: 61.90%
2 Year: 62.20%
5 Year: 56.59%



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Here is the performance YTD

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Tuesday, March 14, 2017

Intel Buys Mobileye As Self-Driving Vehicles Start To Accelerate

Besides the upcoming Federal Reserve rate hike everyone expects this week the big news has been Intel's(INTC) proposed $15 billion buyout of Mobileye(MBLY).  It looks like this past year big company's are starting to take note of the self driving space more as even Uber purchased self-driving truck startup Otto for $680 million.  Intel's offer for $63.54/share is a huge 34% premium to the closing price of $47.27.


Saturday, March 11, 2017

TLH Market Review - 3/11/117


It feels just like yesterday, actually it was February 28th, that it appeared metals were regaining some of that lost luster. Alas the market gods took note of my article and decided enough was enough. Over the last 2 weeks Gold and Silver have shed 4% & 7% respectively.  Not exactly a run for the exit beating, but noteworthy enough. I think this is more of harbinger of profit taking right now than anything else.  Still with the dollar not giving up any of it's gains, it's only a matter of time before currency headwinds kick back in.  Which brings us to our next topic. The rate hike. 

Friday, March 10, 2017

Crude Inventory At Record Highs

If you recall I wrote how the USA is a major producer of oil.  It turns out we are producing so much we are actually at record high storage levels as a result. Here is the US Ending Stock of Crude Oil from the EIA.  It's a weekly number that shows how many barrels of oil are currently in inventory for the USA.  You can see that the number has been spiking to new highs quite quickly since 2015 which coincides with the drop in crude prices. Currently there are 1.2 billion barrels of oil in inventory.





Meanwhile Crude Oil prices are down $54 to $48

Thursday, March 9, 2017

Index Performance As Bull Market Turns 8 Years Old

This week(March 6 to be exact) the bull market in equities turned 8 years old.  That's significant since it's getting towards the long end of bull runs.  Whats interesting is how much divergence there actually has been in the major indices since that fateful turn.  Now this doesn't include dividends so actual returns are higher.


Still it's noteworthy to see the Nasdaq has absolutely crushed all other indexes. Also small caps really got a nice boost the last few months and that's evident in the chart as it really pulled away from the S&P 500.


Nasdaq: 349.18%

Russell 2000: 290.91%

S&P 500: 246.20%

Dow Jones: 216.26%



Visit StockCharts.com to see more great charts.

Tuesday, March 7, 2017

Short Term Bond Yields Press Higher

It wasn't all that long ago short term bond yields were yielding paltry returns for investors.  That's changed course lately.  The US 1 Year Treasury Bill has been flirting with a 1% yield the last couple days.  I think it might be able to break past that barrier this week. The 1 year has not traded above 1% since 2008!







Meanwhile German 1 Year Treasury Bunds have seen the exact opposite. Especially lately. They look to be on a crash course collision with a negative -1% yield. They hit as high as -0.959%.

Friday, March 3, 2017

Is Biotech Taking It's Medicine?

Despite the heavy political whipping this industry has taken the last few months biotech stocks have quietly been moving up along with the market.  For the first time since September 23, 2016 the IShares Nasdaq Biotechnology Fund(IBB) is trading over $300. I think if the fund can close above the high set in September 2016 we might have a chance it can go on a run that made it an investor favorite for years. The next resistance area looks to be in the $340 range.



Visit StockCharts.com to see more great charts.

Thursday, March 2, 2017

Earnings - VGR, COST

Vector Group(VGR) reported Q4 and FY 2016 results after the close on Wednesday.  For Q4 the company reported EPS of $0.04 on revenues of $412.8 million. FY 2016 results came in with EPS of $0.55 on revenues of $1.69 billion, and net income of $233 million.The company saw a -5.2% decline in cigarrette sales volume in Q4 and -2.6% for 2016.  That's part of the reason why I think the stock is down over 4% this morning. Real estate results saw better revenue growth, but that didn't translate into a lot more profits.

Tuesday, February 28, 2017

Metal Performance Finally Regains Luster

Metals are maybe something I don't talk about enough. here is the performance of Copper, Gold, Silver, & Platinum. It's noteworthy that despite Gold's huge rally lately it's only up around 3% over the last year.  Meanwhile Silver has staged an impressive 25% rally.  Copper was really in the dog house until the US Elections. After that it was off to the races as the metal literally soared straight up. Meanwhile the S&P 500 Total Return Index has rewarded investors with a 24.29% gain. Let's look at some charts.

Sunday, February 26, 2017

TLH Market Review - 2/26/17

Very embarrassing but this article was never published a few weeks ago.  Either way I wrote it so I might as well put it out there. My apologies to all readers for the oversight.  

We just have to decide if we are willing to put our money where our faith is - The Long Haul Investor

It was close for a bit there at one point during the week when it seemed the market was going to log it's first down week in over a month.  Nevertheless the S&P 500 managed to eke out another 0.7% gain for the week.  Add in the fact that we haven't seen the S&P 500 close down by 1% in over 90 days(10/11/16 to be exact), plus over 10 days of new highs in the Dow, and it seems this bull market will never end!!!

Of course we know better here at The Long Haul.  Eventually we'll see this market trend sideways or down for a bit. When is any one's best guess.  I'd prefer sooner than later so I can buy more awesome companies at better than today's price.

Wednesday, February 22, 2017

Earnings - WAB & SAM

We have earnings from two of our holdings that haven't had the best stretch for us.  Wabtech(WAB) and Boston Beer Company(SAM) are our two most recent earnings reports. Wabtech reported their quarter yesterday while Boston Beer reports after the close today.

Saturday, February 18, 2017

TLH Market Review - 2/18/17

This week's highlight was from Janet Yellen's semiannual testimony in front of Congress. When asked why the Fed didn't update their growth projections at the December meeting like other organizations did. Yellen said the Fed decided to refrain from updating it's economic forecasts until they had greater clarity on on any fiscal stimulus measures that are going to be taken.  In other words now that it appears fiscal stimulus is on the way it seems the Fed maybe raising rates more than the markets expect them too.

Thursday, February 16, 2017

Belated Valentine For Twitter

Let's say 3 years ago you had the choice of buying for a Valentines Day gift either Twitter(TWTR), or portfolio member Facebook(FB) stock.  If you were lucky you bought Facebook stock as you likely posted your date night on the social sharing site with for all your friends to see and comment on.  Clearly the performance of the two stocks agrees.

Earnings - HCP, WWAV

My apologies for not getting HCP's latest report out as personal matters took front and center the last few days.  So here it is.

On Monday February 13th HCP Inc (HCP) reported Q4 and FYE'16 results. Q4 results came in with EPS of $0.12, FFO of $0.35, and revenues of $539.9 million. FYE'16 results came in with EPS of $1.34, FFO $2.39, and revenues of $2.12 billion. During the year the company completed it's previously announced spinoff of QCP. For the whole year the company entered into agreements to sell 64 communities to Brookdale Senior Living, and an additional $723 million in acquisitions along with $770 million in dispositions. The company also repaid $1.7 billion worth of debt in Q4. The company also gave guidance for 2017 that is inline with prior guidance released on 11/1/16.

  • EPS: $1.32-$1.38
  • FFO: $1.88-$1.94
  • SPP Cash NOI: 2.5%-3/5% 
WhiteWave(WWAV) reported Q4 and FYE'16 results after the close today.  Q4 EPS came in at $0.34 on revenues of $1.05 billion. FYE'16 results came in with EPS of $1.18 on revenues of $4.2 billion.  The company continues to struggle with with its fresh food segment.  Overall these are ok results. i think if the company didn't have the merger pending we would have seen the stock drop on this news.  The company still expects to see it's merger with Danone to be completed this year.  I'll have to figure out another company to replace this pick with.  

Sunday, February 12, 2017

TLH Market Review

This week we saw every major index hit a new high.  The Nasdaq led the way with a 1.2% gain for the week while continuing to lead in the new year as it's already tacked on 6.5% in 6 weeks!!!

Visit StockCharts.com to see more great charts.
The week was light in economic reports so we are going to focus strictly on the earnings front with our picks.  We had a slew of reports out this week from Church & Dwight(CHD), Emerson Electric(EMR), Universal Corp(UVV), Cognizant Technology Solutions(CTSH), Reynolds American(RAI), and Cummins Inc(CMI).

Thursday, February 9, 2017

Earnings - Cummins(CMI)

Our global leader in power and engine manufacturing, Cummins(CMI), reported their Q4 and FYE'16 results this morning.  The company had Q4 EPS of $2.25(up 11.3%) on revenues of $4.5 billion(down 6%). The company had FYE'16 EPS of $8.23(up from $7.84) on revenues of $17.5 billion(down from $19.1 billion). I must say considering the challenging environment and sagging sales the company still managed to post net income that was barely unchanged from 2015 at $1.394 billion. Shares are so far up around 4% today. The company gave guidance for 2017:

Tuesday, February 7, 2017

Earnings - CHD, EMR, UVV, CTSH

Today we are receiving earnings from Church & Dwight(CHD), Emerson Electric(EMR), and later Universal Corp(UVV), and the 8th is Cognizant Technology Solutions(CTSH)

Church & Dwight(CHD) reported Q4 and FYE'16 results. Q4 EPS came in at $0.42 on revenues of $896 million.  FYE'16 results came in with EPS of $1.75 on revenus of $3.49 billion.  For the year the company increased operating cash by 8.1%, which got reflected in the 7% dividend increase to $0.19 share. Make no mistake about it they are a dividend machine as this marks the 21st consecutive year of dividend increases & 116 years of dividend payments. The company plans to continue targeting a 40% payout ratio. Shares are so far up over 2.5%

Monday, February 6, 2017

TLH Market Review - 2/4/16

First of all sorry this did not get published over the weekend. The auto-scheduler wasn't set and I overlooked it.


It was a busy week with news from the Fed, economic reports, and plenty of earnings so I won't be wasting anyone's time here today. So like a grizzly on a salmon let's get on it.

The Federal Reserve released their FOMC rate decision which you can read here. At first look it seems the Fed is pretty bullish on the economy relative to their tepid wait & see outlook for most of 2016.  The market I think actually agrees.  The economy is still growing. The clip and pace of growth isn't meteoric by any measure.  Yet it's still growth. Participants think the Fed will raise rates next at the June meeting with 60%+ odds still.  I'd say that's about right.  If not then I could easily see a September hike as the next likely target.

Thursday, February 2, 2017

Earnings - MO, FB, PM, V

We received a slew of earnings reports since yesterday from many of our biggest companies, and I'll update this post to highlight Visa after they report tonight.

Altria(MO) reported Q4 and FYE'16 results yesterday morning. Q4 EPS came in at $0.68 on revenues of $5.45 billion.  For 2016 EPS came in at $3.03 on revenues of $22.8 billion.  The company recently completed an acquisition of Sherman Group Holdings, which markets ultra premium cigarettes and cigars.  The company gave 2017 EPS guidance that ranges between $3.26-$3.32. The stock initially started the day down a bit, but moved up the rest of the day to finish up 20 cents higher than the day before. #winning. Here are the CEO's remarks:

Saturday, January 28, 2017

TLH Market Review - 1/28/2016

This week certainly is rounding out a great start to the year, and continuing what's been an impressive rally since the election. The big news was the Dow hit 20,000 for the first time ever. That's great and it's hard to believe that less than 8 years ago the index was under 6,500.  That's a return of 207% for investors that bought during those seemingly difficult times. 

Advanced 4th quarter GDP estimates also came in this week showing growth of 1.9%.  That's not an entirely exciting number, but it continues to be par for the course in what's now one of the weakest recoveries in American history.  I understand a lot of people like Barack Obama, and yes as noted above the Dow has been up 207%, but under his watch this recovery will go down as one of the worst American's have endured. No wonder why so many people are frustrated and fed up right now.  It's nothing political. Just plain old economic facts. 

Just take a look at the percentage change in GDP since 1947. Notice the percentage increase is in a long term downtrend. 

Friday, January 27, 2017

Is Tobacco On Fire?

With the recently revised merger between British American Tobacco(BTI) & Reynolds America(RAI) I thought it'd be a good idea to review the performance of our other
tobacco holdings.  Some of which have been on fire the last couple months.


Here is a chart depicting the performance of Altria(MO), Phillip Morris(PM), Vector Group(VGR), and Universal Corp(UVV)


Visit StockCharts.com to see more great charts.

All show strong performances, but what's noteworthy is the huge run we've seen in one of our lesser known holdings Universal Corp(UVV) with a 34% gain since December 2016. A lot of this run up is due to the increased expectations for the vaping sector. Universal is a supplier of liquid nicotine and other components for vaping liquids. The company is more of a pure play on this trend than the major tobacco companies which will have to compete amongst themselves. Also UVV has already positioned itself as a major supplier for the big tobacco companies.

Here is the performance for all tobacco holdings since December 2016

 UVV - 37.39%
 RAI - 12.15%
 MO - 11.83%
VGR - 7.48%
PM - 10.41%
BTI - 13.51%

Thursday, January 26, 2017

Earnings - PX, PYPL, DEO

Today we received earnings from 3 picks. Praxair(PX), PayPal(PYPL), & Diageo Plc(DEO).

Praxair(PX) reported Q4 and 2016 FYE results with quarterly EPS of $1.41 on sales of $2.6 billion.  FYE results saw sales of $10.5 billion and EPS of $5.21. The company had record free cash flow of $1.3 billion of which 65% of that was returned to shareholders through dividends. The company guided 2017 EPS at $5.45-$5.80. At the mid-point of that range it looks like EPS will increase 8% for 2017. Shares traded flat for the day. Here is managements remarks:

Friday, January 20, 2017

IBM & PG Earnings

International Business Machines released Q4'16 results with EPS of $4.73 on revenues of $21.8 billion.  Strategic Imperatives now represent 41% of sales at $32.6 billion for the year, and were up 13%. The company earned $12.39 for the year on revenues of $79.9 billion. The company gave 2017 EPS guidance for GAAP EPS of $11.95 & Non-GAAP $13.80. The shares are trading up around 1% today to $168

For perspective sake I'd like to take a look at IBM's historical revenue, EPS, and dividend figures for since 2011. Despite revenues falling off nearly $26 billion in the last five years, the company has managed to keep raising it's dividend payout, and keeping its EPS is only down 13% since it's 2012 high.


            EPS   Revenue(bil) Dividend
2011- $13.06   $106.90         $3.00
2012- $14.37   $102.80         $3.40
2013- $14.94   $98.30           $3.80
2014- $11.90   $92.70           $4.40
2015- $13.42   $81.70           $5.20
2016- $12.39   $79.90           $5.60

Procter & Gamble(PG) reported Q2'17 results with EPS of $2.88 on revenues of $16.9 billion. The stock is trading up 2.7% to $89/share.  You can read the press release here.http://www.pginvestor.com/file/Index?KeyFile=37611831

Sorry for the brevity today.


Wednesday, January 18, 2017

British American Tobacco Ups Reynolds Bid

Most everyone is aware by now but just in case you had no idea British American Tobacco(BTI) upped it's bid for Reynolds American(RAI) by $2 billion to $86 billion total consideration. Based on the terms of the deal each share of Reynolds is worth $59.64.  The deal still retains it's cash/stock split with shareholders receiving $29.44 in cash, and 0.5260 ordinary shares of BTI. That's adjusted from the original terms of the deal at $24.13 and 0.5502 announced in October 2015.

The deal is being funded with cash on hand and a variety of debt instruments. The company expects the transaction to close in Q3 2017, but I think that might be a bit soon. Here is an excerpt from the Press Release.

“Through this transaction, we form an industry leader that will focus on innovation and brand building,” said Susan M. Cameron, executive chairman of Reynolds American’s board of directors. “This combination will create a truly global tobacco company with multiple iconic tobacco brands, and a world-class pipeline of next generation vapor and tobacco-heating products.” 



Friday, January 13, 2017

Low Volatility VS High Beta

A favorite of mine is comparing two ETF's - SPHB & SPLV. They are the S&P High Beta, and S&P Low Volatility ETF's that track stocks with characteristics explicitly as the names state.

Sunday, January 8, 2017

2016 Portfolio Performance

Well the first full calendar year has passed for The Long Haul Portfolio.  It seems just like yesterday that I started this endeavor back in October 2015. It's been fun tracking and writing about my picks.  2016 was for sure a year to remember.  We transitioned from one of the most volatile starts ever, to one of the calmest summers ever, to one of the sharpest post election rallies ever. You definitely needed nerves of steel to ride this year out.

Of course our style of investing is meant to be very long term so all these bumps in the road are just minor blips on our screen.