Saturday, November 4, 2017

TLH Market Review + Earnings From Facebook, MasterCard, Cummins, Church & Dwight, ABInbev, HCP, & Cognizant 11/4/17

With 7 companies reporting earnings this week there is a lot to discuss with heavyweight names like Facebook(FB), MasterCard(MA), Cummin's(CMI), & Cognizant(CTSH).  We also had some record breaking on the jobs front. Yes hard to believe.

The recently released Non-Farm Payroll report showed the economy added 261,000 jobs last month.  The eye-popper was the unemployment rate hit a multi-decade low. Well technically. At no point since the 1970's has the unemployment rate been lower.  With the exception of the first month in the 70's(January 1970), and the last month of the 90's(December 1999), the unemployment rate is now lower than it was at any point during that time with a 4.1% handle.


Now I know people will say that's impossible because of X, Y, and Z with good reason. This rebound hasn't left many people feeling that great about their employment, or lack thereof.  But the numbers are the numbers.

So onto earnings

Last week I forgot to add my piece on AB InBev's(BUD) Q3. For the quarter the company had EPS of $1.31 on revenues of $14.7 billion, and Net Income of $2.1 billion.  The company also announced a dividend of 1.60 EUR for the quarter.  Volumes slipped 1.2% overall which was attributed mostly to a decline in Budweiser, and Bud Light sales in the US.  That's not surprising giving the competitive landscape of craft brews, and consumer tastes. It's worth keeping an eye on volumes as the next few quarters materialize. The company celebrated it's first full year as an entity with SAB Miller, and upped their cost saving synergies guidance from $2.8 billion to $3.2 billion over the same four year period(October 2020).

MasterCard(MA) reported Q3 earnings with EPS of $1.34 on revenues of $3.4 billion, and net income of $1.4 billion.  It was a record quarter for the company as revenues grew 18% which fell directly to record net income. The company saw a 10% increase in gross-dollar volume. We already knew after hearing from portfolio members Visa(V), and PayPal(PYPL) it would be a good quarter.  Not much else to say here other than the sector is on fire.  Shares drifted lower this week after hitting an all time high at exactly $152.

Cummins(CMI) reported Q3 earnings with EPS of $2.71 on revenues of $5.3 billion, and Net Income of $453 million.  The company saw large increases in sales as revenues climbed 26% from 2016, but remember that was a tough year for the company.  The company expects to finish the year strong and expects year end revenue growth to come in at 14-15% from 9-11%.  The shares took a bit of a hit on the news, but the stock has rallied over 18% since it's August lows so it looks like some profit taking was going around.

Church & Dwight(CHD) reported Q3 earnings with EPS of $0.52 on Revenues of $967 million, and Net Income of $133 million.  If you take a look at the balance sheet you'll see long term debt has increased by $1.4 billion over the last year.  That is from the $1 billion WaterPik purchase announced in July as the company issued a series of debt tranches due from 2019-2047 ranging 2.45% to 3.95% with $300 million due in 2019 attached to a floating LIBOR rate.  So where is the extra $400 million coming from? That money was borrowed to pay off other short term borrowings. The stock has been sliding the 2nd half of the year after getting off to a great start.  I think this is normal, and I expect the stock to eventually return to it's winning ways.

HCP(HCP) reported Q3 earnings with EPS of $-0.02,FFO of $0.33, Revenues of 454 million, and Net Loss of $7.7 million. The company is still struggling to really find it's footing as it realigns it's portfolio, as it makes strides in fits. SPP NOI growth was good at 2.5%, but the company did see occupancy declines in every category.  This has been a tough stock to own the last couple years as they worked through the QCP spinoff, and continue to shed Brookdale locations.  I'm not sure if I completely soured on this pick as I love the real estate health care sectors dependability.  But competition is fierce, and performance hasn't been nearly as great as I expected. Of course shares perked up on the news as they shot from $25 to $27. The stock has literally meandered for over 30 years in the 20's to low 30's.

Cognizant Technology Solutions(CTSH) reported Q3 earnings with EPS of $0.84 on Revenues of $3.77 billion, and Net Income of $495 million. Revenues were up 9.1%, and the company is doing quite well. Cognizant if you recall was in the dog house when the reported some bad conduct back in 2016 and shares hit a low $40's for a brief time. Since the beginning of November 2016 shares have rallied 45%! This is why you don't sell good companies on knee jerk reactions. Here is what the company CEO had to say

"We are making consistent progress in executing the plan to accelerate our shift to digital services and solutions," said Francisco D'Souza, Chief Executive Officer. "We've systematically built the significant capabilities needed to help our clients transform their business, operating, and technology models ̶ a transformation we call digital at scale. We believe our long-term relationships with clients and deep understanding of their priorities puts us in a privileged position to help them adapt, compete, and grow."

And finally what everyone has been waiting for. 

Social Media Juggernaut Facebook(FB) reported Q3 earnings with EPS $1.59(up 77%) on Revenues of $10.3 billion(up 47%), and Net Income of $4.7 billion(up 79%).  The company continues to exhibit rock solid growth across the board. DAU's were up 16% to 1.37 billion! Plus the company has nearly $38 billion in cash on the balance sheet with total liabilities of only $7.7 billion.  Yeah it's crazy how successful the company is. The shares though didn't react much, and have been seeing progressively smaller swings on each earnings report. The shares are up 55% YTD for us which is huge for the portfolio.  I don't know if I expect that type of performance to continue though in the short term.  That's quite a powerful rally, and I think eventually profit taking will come along. There's not much more room for the company to grow into an already $500 billion + valuation.  





Sunday, October 29, 2017

TLH Market Review + Earnings from Visa, Altria, Wabtec, Praxair, Hersheys, & Boston Beer 10/29/17

There is seemingly no stopping this bull market from continuing to hit new highs. The S&P 500 is closing in on 2,600 & the Nasdaq is fast approaching 7k with a lot of help from big hitters in the tech field this week when Alphabet(GOOGL), Amazon(AMZN), & Microsoft(MSFT) reported earnings that helped boost confidence in the tech sector aiding a 2.20% move for the index Friday.  Over the last l2 months the Nasdaq is up a HEFTY 28%. That's huge performance, and definitely reflects the risk on mentality of this market.



The crazy thing is despite the Nasdaq hitting new highs regularly I wouldn't say the index is anywhere near overvalued like it was just before the dotcom crash.  Many of the companies that are still around, and were part of the index then, are now big profit producers.  Back then making money on the internet was actually really tough.  Sure growth was big(off a small base), and the potential was seemingly huge. Unfortunately too many people paid upfront for earnings that didn't materialize for years to come.

 Speaking of earnings we had a bunch of reports from The Long Haul Portfolio members this week.  They include Visa(V), Altria(MO), Hershey(HSY), Praxair(PX), Wabtec(WAB), and Boston Beer(SAM).

But before that I'll touch on GDP.  We found out that Q3 GDP came in up 3% from the prior quarter. Now this will be subject to plenty of revisions in the next couple months, but it's encouraging to see a headline number above 2%.  Steady and dependable growth has been tough to come by so this is a welcome sign.

Earnings definitely started off strong this week when we got good results from Wabtec, and great results from Visa. However the market treated the rest of our stocks with mixed results overall as the weak wore on.

Wabtec(WAB) reported Q3 earnings with EPS of $0.70 on revenues of $957 million, and net income of $68.5 million.  The company reported a record backlog of $4.5 billion along with a 12 month backlog of $2.24 billion, and has been showing some signs that operating results are stabilizing.The company expects full year revenue of $3.8 billion and expects EPS between $3.45-$3.50, which is down from $3.55-$3.70 as the company is expecting some charges.  Overall these are OK numbers, but not fantastic.  Shares initially popped close to $82, but have since drifted down to $76. I'd say the company is very fairly valued right now.  

Visa(V) reported Q4 and fiscal year 2017 results with EPS of $0.90 on revenues of $4.9 billion, and net income of $2.1 billion. Fiscal 2017 saw EPS of $2.80 on revenues of $18.4 billion, and net income of $6.7 billion. The purchase of Visa Europe continues to look extremely savvy as total revenue grew 22% for the year, and a 30% increase in payment volume(11% without). I was expecting a blow out(per twitter), and I think we got it.  Shares perked up to a new all time high just over $110 on the news.  The company provided the following guidance for 2018:

• Annual net revenue growth of high single digits on a nominal dollar basis, with approximately 0.5 to 1 ppt of positive foreign currency impact;
• Client incentives as a percentage of gross revenues: 21.5% to 22.5% range;
• Annual operating expense growth: Mid-single digits adjusted for special items in fiscal 2017 (see note below);
 • Annual operating margin: High 60s;
 • Effective tax rate: About 29%; and
• Annual diluted class A common stock earnings per share growth: Mid-40's on a GAAP nominal dollar basis and high end of mid-teens on an adjusted, non-GAAP nominal dollar basis (see note below), both including approximately 1 to 1.5 ppts of positive foreign currency impact.

Altria(MO) reported Q3 earnings of $.90 on revenues of $6.7 billion, and net income of  $1.8 billion. The company reported some extra tax benefits this quarter as a result from an IRS audit. But the downside is smokeable products volume were down 6.1%. I've stated this before that the tobacco industry is struggling to deal with accelerating volume declines. I don't expect the stock price to head higher, but the dividend should continue to be bumped. Just back in August the company approved an 8.2% increase to $2.64 annualized, which comes to a 4% yield at current prices.  The company still expects EPS growth of 7.5-9.5%, again nothing exciting, but still respectable.

Hershey's(HSY), America's favorite candy maker, reported Q3 earnings with EPS of $1.28 on revenues of $2 billion, and net income of $273 million. The company also announced a new $100 million stock buyback, but that's a small program considering the company has a market cap of $22 billion.  The company reported some small updates to it's outlook including net sales growth of 1.25% up from a negative .25% estimate, and adjusted gross margin will increase .25% from .50%. The company has a gross margin of approximately 46%. Halloween is just around the corner and store shelves have been stocked with company product for weeks now.  It's sure to be a favorite among consumers again this year.  I'll personally be looking to snag a few bags if I can find them on the discount shelf. Hey what can I say I like getting a bargain!

Praxair(PX) reported Q3 results with EPS of $1.45 on revenues of $2.9 billion, and net income of $419 million.  The company also reported a record FCF of $474 million while reducing debt by $202 million, and paying out $225 million in dividends. The company also reported a backlog increase, saw little impact from the hurricanes, and realized 15% sales growth in it's Asia business primarily due to increased electronic and metal manufacturing. Furthermore the merger with Linde AG was finalized during the quarter. The company also upped their adjusted EPS guidance and expect 2017 to finish $5.78-$5.83 up from $5.63-$5.75. Shares surged 3.5% to land just shy of $150 on the news. Overall it's a very good quarter in the air business.

Boston Beer Co(SAM) reported Q3 results with EPS of $2.78 on revenues of 247 million, and net income of $33.7 million.  The company saw shipment volumes decrease by 4% from the previous year as the company continues to deal with increased competition in the craft market.  Overall an OK quarter, but nothing exciting.  The market agreed as the stock which had a nice run to $180 took a 5% hit on the chin to $167 as investors sold on the news.  Here is what management had to say:

Jim Koch, Chairman and Founder of the Company, commented, "Total Company depletion trends showed continued improvement during the last quarter while still remaining slightly negative.  We remain challenged by the general softening of the craft beer and cider categories and a competitive retail environment with a lot of options for our drinkers. Our leadership team continues to make strides to address these challenges. During the quarter, we have had better focus and execution at retail around our fall seasonal program, which appear to have helped our Samuel Adams Octoberfest trends.  We are excited by the introduction in the coming weeks of new media campaigns for both our Samuel Adams and Angry Orchard brands and by the early reception to our key innovations that we are planning to launch nationally in the first quarter of 2018.  These innovations include Samuel Adams Sam '76, a uniquely flavorful and refreshing lager ale union. The Sam '76 launch will be supported by new media, launch events and other marketing programs to drive awareness of this revolutionary beer.  Other innovations that we are planning to launch nationally in the first quarter of 2018 include Samuel Adams New England IPA and Angry Orchard Rosé.

Sunday, October 22, 2017

TLH Market Review + Earnings From IBM, Phillip Morris, PayPal, & Procter & Gamble 10/22/17

It was just over a month ago the S&P 500 crossed the 2,500 mark for the first time.  Then this week the Dow Jones decided it would join the party too as it touched, then closed above the 23,000 mark for the first time ever too. It's only a matter of time before the Dow trades with a 25 handle at this point.  Yes it's an all in party and everyone is drinking the punch now.  Volatility has seen it's deathbed, literally, and the calls for a crash keep getting louder, but the market seems to just keep heading higher.

What does that all mean for the rest of us?

Friday, October 20, 2017

The Long Haul Watchlist for 2018

Here is my current list of companies I'm keeping an eye on to add for 2018.  It's going to be real tough to narrow it down as the year comes to an end. A lot of solid well known names in the running. Take a look below and let me know what you think in the comments section!

Sunday, October 15, 2017

TLH Market Review 10/15/17

Well I'm sure the pundits will be out in full force this week calling for a crash as we commemorate the 30th anniversary of the greatest stock market crash in history. That day the Dow Jones fell an astounding 22.61%, which would be equivalent to 5,171 points today. Wait, you mean the biggest crash wasn't when stocks fell at the onset of the Great Depression in 1929? Nope. Although that day comes in at a distant 2nd with a 12.82% decline.  It was October 19, 1987 when markets fell a whopping 508 points, and I think it's likely to keep that record forever as modern day circuit breakers shut down the exchanges when large moves occur.

Thursday, September 28, 2017

McCormick Delivers Spicy Q3 2017 Earnings

First of all sorry for the light and sporadic posting lately.  Life has been very busy. But onto earnings from one of my favorite holdings McCormick & Company(MKC)

McCormick reported Q3'17 results with EPS of $0.85 on revenues of $1.18 billion.  It was overall a good quarter when you look at things outside of their RB Foods acquisition. The company is seeing strong growth in all markets, especially their main brands in the US.  The company's industrial EMEA operations saw strong growth on the industrial side as the Giotti acquisition helped contribute 25% to sales growth for the quarter.

The acquisition of Reckitt Benckisers Group Plc's(RB) added 4% to sales growth during the quarter. If you recall a lot of people were worried, myself included, that McCormick might be overpaying for RB's unit that contains French's Mustard, and Franks Red Hot Sauce. Turns out my worries about costs so far are true as the company noted increased expenses in their report.  That's trickling down to their EPS guidance which is basically flat for 2017 at $3.69-$3.73 compared to 2016's $3.69 as the company expects integration costs to shave $0.51 off EPS this year.  I think the company will beat those numbers, but really not by much. Maybe just a penny or two. There were additionally minimal changes to the company's cost saving projection at $105 million, which is in line with what it's projected each of the last few years.

Still the market took this report on an upbeat note and sent the shares soaring higher by 5% on the day as shares crossed the $100 mark for the first time since June



Here is what management had to say

Lawrence E. Kurzius, Chairman, President and CEO, stated, "Our strong third quarter financial results continue our growth momentum and reflect the effectiveness of our strategies and engagement of our employees around the world. We are driving both sales growth and significant productivity improvements resulting in adjusted operating margin expansion. Both our consumer and industrial segments contributed to our constant currency sales growth of 8%. Our consumer segment delivered base and new product sales growth from the year ago period, led by the Americas. Our industrial business delivered excellent sales growth across all regions driven by new products, expanded distribution, and customer intimacy. In addition to our strong base business and new product growth, the acquisitions of RB Foods and Giotti contributed to higher sales as valuable additions to our global portfolio of flavors. Through the third quarter, we have grown year to date sales 6% in constant currency.

Sunday, September 17, 2017

TLH Market Review 9/17/17

"You can have to much of a good thing" - Anonymous

I'm not quite sure a lot of people would agree with that quote above if they glanced at their investment accounts lately.  When the markets keep heading higher who really wants to complain?  Well I'm sure we could find a lot of people on Twitter. On Friday the S&P 500, Dow, and Nasdaq all hit new highs.  A trifecta!  Clearly most people aren't overly concerned about North Korea firing missiles just about every day.

The indexes have piled on

Thursday, September 14, 2017

The Battle of International & American Real Estate

An area not talked about enough is the big disparity in International Real Estate(VNQI), and American Real Estate(VNQ) performance. Below is a chart depicting the performance for the last year.  You can see International based land and bricks are doing better than their American brethren.

Why is that?

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Sunday, September 10, 2017

TLH Market Review - 9/10/17

Well it doesn't seem a couple of hurricanes, missiles, and a Federal Reserve Board missing more than half it's members can slow down the markets.  Well maybe just a little bit.  For our Labor Day shortened week the S&P 500 fell a whopping 8.92 points. That's hardly a heartbeat at this level. Of course that's not to say everything is going great.

  

Thursday, August 31, 2017

United Technology Looks To Buy Rockwell Collins

It wasn't that long ago I pointed out Rockwell Collins(COL) as an interesting company with a stellar performance record. I love doing columns like that, and frankly I need to do more of them.  The company was on my watch list to possibly add in 2018.  That hasn't changed until this supposed deal with United Technology(UTX) is consummated.

Of course seasoned investors know a deal can fall thru for any variety of reasons.  But for now it seems United Technology is considering making an offer around $140/share.  That would value the company at approximately $21 billion. That's a decent premium from where the stock was trading at the beginning of August when it started it's current breakout. If you were lucky enough to buy on August 1st you are potentially sitting on a 29% gain in just one month. That's pretty solid by just about any standard.

Here is a chart depicting the performance of both companies since January 2002.  Rockwell Collins is smashing the already stellar returns of United Technology with a 727% gain during that time compared to United Technology's equally earth shattering gain of 401%.  No wonder why shares of UTX are up on the move. Investors already see how great of an addition this could be for the company.



Tuesday, August 29, 2017

Hain Celestial Earnings

Hain Celestial(HAIN) announced Q4 and fiscal year 2017 earnings today.  The company reported Q4 EPS of exactly $0.00 on revenues of $725 million.  For 2017 the company reported EPS of $0.65 on revenues of $2.85 billion which were down from $2.88 billion in 2016. I'm sure you can see a few problems with these numbers. While the EPS figures don't show it the company did post a modest profit of $313k for Q4 which was largely impacted by it's Tilda plant fire recovery, and ongoing accounting review costs.

But we see even bigger problems and that was revenue has actually gone down, albeit some of it due to currency fluctuations. Looking at the company financials we see they actually have a USA problem. Sales declined -3.5% for the year, which is strikingly odd considering most other companies have been showing better growth at home, than abroad.  With the US portion of Hain's business by far it's largest, it more than offset 13.8% growth in Europe, and 7% growth in Canada.

I think this is more to do with Hain competing on a much larger scale as the natural products category has really exploded the last two years.  The accounting scandal didn't offer any help as it kept management distracted.  I think the company is going to work on righting that ship much faster. They've already announced plans the last year to focus more on the brands it has, and develop better marketing.  Still investors will get impatient if things don't turn around after 12-18 months.

The company provided the following guidance for 2018.

  • Total net sales of $2.967 billion to $3.036 billion, an increase of approximately 4% to 6% as compared to fiscal year 2017.
  • Adjusted EBITDA of $350 million to $375 million, an increase of approximately 27% to 36% as compared to fiscal year 2017.
  • Adjusted earnings per diluted share of $1.63 to $1.80, an increase of approximately 34% to 48% as compared to fiscal year 2017.
I think the sales figures are a bit low.  Not that I think the company is low-balling us, it's just that the company used to grow sales at a 10%+ clip regularly.  I'd really like to see something around 7-8%, but maybe those days are gone for the company.  As for the adjusted numbers I don't pay much attention to that.  I like to follow GAAP which doesn't lend management as much room for playing around.  

Here is what CEO Irwin Simon had to say:

"We are pleased to have achieved sales growth in all of our business segments on a constant currency basis in the fourth quarter, despite an ever changing operating environment for food manufacturers and retailers," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. "Building upon our core platforms and cost savings initiatives, our global team has made significant progress during the year executing on our strategic plan. The business momentum and operational improvements we experienced in the fourth quarter of fiscal 2017 reinforces our confidence in the tremendous opportunities ahead to generate the growth we know we are capable of achieving over the next several years."

Wednesday, August 23, 2017

Saturday, August 19, 2017

TLH Weekly Review 8/19/17

Is it possible the market has awakened from it's seemingly eternal slumber?  That's what just about everyone thinks, and they are already calling for a huge market crash.

I can't say I completely agree the market will crash, but I have been saying and thinking for awhile that the market could really use a pullback. That should help set the market up for it's next uptrend. Small caps had already been struggling more than their larger peers.  That's usually a sign things aren't looking up short term. But like any indicator it's not 100% fool proof.

The S&P 500 had two out of three largest down days so far all year in August.  Is it now beware the Ides of August?  There is a solar eclipse coming on Monday. Eery coincidence.


Still I don't think this bull market is done like everyone else is claiming it should be. Stocks aren't cheap on a historical basis with the S&P 500 trading at a 12 month forward P/E of 17.4 which is above the historical average of 14.0.  That's not a huge premium screaming bubble territory.  Does it mean there's no good values on traditional metrics? For sure. 

All eyes will be on the Fed next week at Jackson Hole. The market has been going all over the place on when the Fed will raise rates next week with most betting 2018 is when we see the next one.  That's possible, but I still don't doubt the Fed will want to stray to far from it's original path. We could see one in December, but I think that would mean we might not see one at all in 2018, or at least til the tail end. 

The portfolio did not have much news. Earnings season is behind us and for the most part it was pretty good. The portfolio has been reeling from it's heavy reliance on tobacco stocks, and the now clear indication the FDA is looking to put the hurt on the industry further.  I think it's a little overblown, but when the government is after stocks in your portfolio you must keep a keen eye on the situation. Altria(MO) has taken it on the chin the most as it's business is entirely focus on the USA.  Even British American Tobacco(BTI) that recently gobbled up former portfolio member Reynolds American has struggled recently as a result.  I'll be looking very closely at the portfolios tobacco allocation for 2018.

Fora moment it looked like our Ishares Nasdaq Biotechnology ETF(IBB) was going to really start breaking out. It hit a high of $329.90 a few weeks ago, but has since floated back down. Don't you just love how the market picks those numbers? It was so close to $330 even. Still the ETF has been a 14% winner this year.  I think the next few years will do quite well. 


That's all for now.  Enjoy a nice weekend and get outdoors!

Friday, August 18, 2017

Amazon Is REALLY Crushing The Competition

Since Amazon(AMZN) went public back on May 15, 1997 it's been one of the most talked about companies nearly everywhere. It's also been surprisingly one of the most successful despite just recently posting quarterly profits.  It's one of those rare instances when traditional valuation metrics cause many investors to miss out on big gains.Even the Oracle of Omaha, Warren Buffet, has mentioned how he missed out big time with Amazon for Berkshire Hathaway(BRK.A) investors.



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Even more mind-boggling is how strong the company's stock performance has been. Since it's IPO the stock is up over 48,851%, and that's with a $100 point drop in the stock the last few weeks. In other words $10k invested at it's IPO price would have turned into $4,885,100.  That'd be enough to throw you right into the top 5% pretty much for life.  



Amazons performance even makes Wal-Marts(WMT) respectable 603% gain during that time period look dismal, and it barely shows up as a blip on the chart.  Meanwhile Macy's(M), and JC Penney(JCP) shareholders which have been struggling mightily to compete the last few years have seen barely any, or in the case of JCP shareholders a complete destruction of their capital.



You never know when disruption is right around the corner.

Sunday, August 6, 2017

TLH Market Review - 8/5/2017

This week was extremely busy with earnings, and the usual economic reports. Because of that I'll only be recapping earnings I haven't address yet from Church & Dwight(CHD), Global Payments(GPN), Cognizant Technology(CTSH), and Universal Corp(UVV).

If you were on Twitter this week(surely following me) you most likely heard that Donald Trump is responsible for all the job growth, and equity market highs.  Ummm no.  Truth is, as many long time readers of this blog know, is that job growth, the economy, and markets have been going up for some time now. Sure equity markets jumped post-election in anticipation of better times ahead.

Wednesday, August 2, 2017

Earnings - Cummins, Emerson Electric, HCP

We received earnings from 3 companies on Tuesday - Cummins(CMI), Emerson Electric(EMR), & HCP(HCP)

Cummins(CMI) reported Q2 EPS of $2.53 per share on revenues up 12% from a year ago to $5.1 billion. The company credited the quarter to stronger demand for trucks and construction equipment in North America and China, and stronger sales to mining, and oil & gas customers.  The company also announced during the quarter the Eaton Cummins Automated Transmission Technologies joint venture. Cummin's and Eaton each own 50 percent of the global joint venture which will design, manufacture, sell and support all future medium-duty and heavy-duty automated transmissions for the commercial vehicle market.

Saturday, July 29, 2017

TLH Market Review & Earnings From Facebook, Altria, Procter & Gamble, MasterCard, Boston Beer, & Praxair

This post will second as my weekly TLH Market Review, and earnings recap for a busy week in our portfolio.

The Federal Reserve had a two day meeting that went pretty much as expected. Interest rates were kept in the 100-125 bps range while the Fed kept it's options open for another rate hike this year.  The market didn't completely buy it. After the meeting participants decided the next meeting with the highest probability of a rate hike switched from December 2017 to March 2018 with 47.5% odds.  That doesn't mean the market is oblivious to it happening this year. Participants are saying there is still a 46.8% chance of a hike before 2017 is in the books.

Thursday, July 27, 2017

Earnings - Wabtec, Hershey's, Paypal, Diageo, AB Inbev

The portfolio has seen a lot of companies report earnings the last few days, and I've been short on time in getting my summary out.  In total 11 of our picks will report this week.

I'll have an update tomorrow with earnings from Facebook, Procter & Gamble, MasterCard, Altria, Praxair, & Boston Beer.

I'll start with the biggest miss first.

Saturday, July 22, 2017

TLH Market Review 7/22/17

"Profits always take care of themselves but losses never do." Jesse L. Livermore

Equity markets have continued to post new highs this year. The S&P 500 has posted 3 weeks in a row of gains.  Meanwhile the Nasdaq had registered 10 days in a row of gains, with a slew of new all time highs this week. The Nasdaq continues to pace this years rally as it's up 18.7% YTD. Over the last year the Nasdaq has put in a 25.25% gain. Impressive! In fact every index is showing solid gains over the last year. That makes it easy to do well in a bull market like this. 

Friday, July 21, 2017

McCormick Buys Reckitt Benckiser Food Unit For $4.2 Billion

There was big news earlier this week when portfolio member McCormick(MKC) purchased the food division from Reckitt Benckiser, a British conglomerate. That means some very well known brands including French's mustard, and Franks Red Hot Sauce will now fall under the company umbrella.  The purchase price was not small at $4.2 billion when you factor in McCormicks total market cap is just shy of $11 billion.

Thursday, July 20, 2017

Earnings - IBM, Phillip Morris, & Visa

Here is my earnings recap for IBM(IBM), Phillip Morris(PM), and Visa(V)

IBM reported 2017 Q2 EPS of $2.48 on revenues of $19.3 billion.  Revenues continue to decline overall at Big Blue, but the company is still seeing growth in it's strategic imperatives, although that growth rate is really coming down. The company is expecting GAAP EPS for 2017 to come in at $11.95. I also don't like how the company has been benefiting from a tax benefit recently.  That would have knocked $0.18/share off EPS this quarter.  I'm also starting to become uncomfortable with the company's rising debt levels considering revenues are still falling. We aren't near danger levels, but with total debt clocking in around $45 billion it's quite a large amount overall. Shares have not fared the best since earnings as they trade lower from $153 to around $147 today

Saturday, July 15, 2017

TLH Market Review - 7/15/17

It's the summer doldrums in equity markets as volumes thin out while traders at big institutions take summer vacations.  That's normal every year across the globe.  Yet it hasn't stopped the indexes from continuing to new highs. This week we saw the Dow Jones, and S&P 500 hit new record highs, up 9.5% & 9.9% respectively. Meanwhile the Nasdaq trades just 9 points off it's record high. What's more impressive is the Nasdaq has been lapping the other indexes in terms of performance this year as it trades 17.3% in the plus column.

Thursday, July 13, 2017

Facebook At New Highs

Well Facebook(FB) has hit an all new time high today as it rallies with the market.  It's now just $27 billion shy of being worth $500 billion, or a a roughly 5% move.  I'll take a wild guess here and say the stock eclipses that mark this year.  It might not be next week, but there's still a lot of time left in 2017. 



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Thursday, July 6, 2017

It Only Takes A Snap Of The Finger To Lose Money

It's been a just a little over 4 months since Snap Inc(SNAP) went public with much hoopla. On their first trading day shares opened at $24, and the next day hit a high of $29.44 which valued the company right around $30 billion.  Well things can change pretty quickly.


Shares are trading right around lows at $17.28 which represents a loss of 41.3% from the high. 



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Tuesday, July 4, 2017

Portfolio Performance - First 6 Months

Well it took me a little longer to get this out than anticipated, but I found some time early this morning and later this afternoon to get this out just in time for the fireworks this evening.

The portfolio has beaten our SPY benchmark with a total return of 12.37% for the first 6 months of 2017.  The SPY has returned investors 9.23%, which is still a respectable gain.

I'm very proud to be leading our benchmark by 3.15%. I'm hoping that gain will continue. Proceeds from WhiteWave were consolidated into additional shares of each holding based on the April 12 closing price.  Since the buyout price was $56.25/share we received 10,117.12. Each holding was given additional shares worth $361.32(10,117.12/28).

Our two biggest gainers are in the payment space with PayPal(PYPL), and Global Payments(GPN) clocking in 38%, and near 34% gain. Our two biggest losers have been Boston Beer(SAM), and IBM with loses of 17%, and 1% respectively.



Equal Weight Performance With $10k Starting Balance

SharesShares After
WWAV Sale.
4/12/17 Closing
Price
12/31/2016BeginningPrice TodayEnding%GainDividendsTotal Return
BTI177.51182.8456.34$10,000.00$68.03$12,438.7924.39%$262.2027.01%
BUD94.8498.12105.44$10,000.00$110.42$10,834.228.34%$169.8510.04%
CHD226.30233.5244.19$10,000.00$52.02$12,147.6621.48%$87.3722.35%
CMI73.1775.63136.67$10,000.00$163.36$12,354.6323.55%$152.5225.07%
COST62.4664.58160.11$10,000.00$158.82$10,256.652.57%$512.467.69%
CTSH178.48184.6456.03$10,000.00$66.70$12,315.1823.15%$27.7023.43%
DEO96.2199.31103.94$10,000.00$119.14$11,832.3318.32%$113.7219.46%
EMR179.37185.5655.75$10,000.00$60.25$11,179.8111.80%$175.1713.55%
FB86.9289.51115.05$10,000.00$148.43$13,285.5832.86%$0.0032.86%
GPN144.07148.7369.41$10,000.00$90.05$13,393.4133.93%$3.3733.97%
HAIN256.21266.0939.03$10,000.00$38.34$10,201.812.02%$0.002.02%
HCP336.47346.3529.72$10,000.00$32.55$11,273.6512.74%$252.6415.26%
HSY96.68100.00103.43$10,000.00$106.64$10,663.696.64%$121.557.85%
IBB37.6838.93265.38$10,000.00$310.95$12,106.3921.06%$18.1521.25%
IBM60.2462.36165.99$10,000.00$155.58$9,702.25-2.98%$177.88-1.20%
MA97.05100.29103.04$10,000.00$120.78$12,113.1621.13%$43.4121.57%
MKC107.15110.7793.33$10,000.00$97.30$10,777.507.78%$102.428.80%
MO147.89152.8967.62$10,000.00$74.53$11,395.0713.95%$183.4815.79%
PG118.93122.9484.08$10,000.00$87.74$10,786.347.86%$164.399.51%
PM109.30112.4891.49$10,000.00$116.90$13,148.5831.49%$230.6533.79%
PX85.3388.39117.19$10,000.00$134.18$11,859.8518.60%$136.8919.97%
PYPL253.36261.8639.47$10,000.00$52.87$13,844.5738.45%$0.0038.45%
RAI178.44184.0756.04$10,000.00$64.80$11,927.8719.28%$184.8821.13%
SAM58.8861.47169.85$10,000.00$134.05$8,239.46-17.61%$0.00-17.61%
UVV158.18163.2463.22$10,000.00$64.30$10,496.224.96%$173.576.70%
V128.17132.2578.02$10,000.00$93.35$12,345.2323.45%$42.9723.88%
VGR439.75457.2222.74$10,000.00$21.17$9,679.29-3.21%$358.790.38%
WAB120.45124.9983.02$10,000.00$92.51$11,562.6515.63%$27.0415.90%
WWAV179.8610,117.1255.60$10,000.00$0.00$0.00






$290,000.00
$322,161.8411.09%$3,723.0612.37%

Benchmark Comparison







SPY44.74
223.53$10,000.00241.8$10,817.348.17%105.679.23%