Market 2017-10-25 (NKE, CMG, AMD, T, and more)

What a bloody morning with bullish afternoon. The market shakes off loose hands and holds the ground. I expect such volatility will continue as more ERs roll out.

Winners

Visa (V +1%), very solid ER. I prefer V over Mastercard (MA). Currently I hold AXP (lower P/E and higher dividend).

In the healthcare sector: Anthem (ANTM, +5.4%) ER beats and raises its full-year EPS forecast to $11.90-$12.00 from ~$11.70. Escript (ESRX +3.9%) Q3 EPS of $1.90 beats by $0.03. Revenue of $24.5B (-3.6% Y/Y) misses by $1.14B. They lift 2017 guidance. I am still concerned about the impact of political clouds on ACA reform.

Nike (NKE +2.8%) spikes in afternoon trading as the company lays outs long-term guidance and strategy at its investor day event, which I mentioned in my weekend post (https://tinyurl.com/yazpw2uq). Nike's future goal is revenue growth at a high single digit rate over the next 5 years and EPS growth in the mid-teens. Nike expects that 75% of sales will come from outside the U.S. in the future. I guess they are betting heavily in China. This also lifts Foot Locker (FL +0.5%) and the Finish Line (FINL +0.4%).

Losers (so many today)

CMG (-14.6%) falls to its lowest level since early in 2013. Credit Suisse analyst Jason West sums up the mood from Wall Street on the restaurant stock: "Despite some sales lift from queso and pricing, we view this result and outlook as disappointing, particularly for those looking for a more meaningful recovery following multiple food safety events." Lots of price target cuts are either published or on the way. About one month ago I have warned on CMG in my post about Bill Ackman (https://tinyurl.com/ybowaf7c). He just lost another $140M on CMG today.

AMD (-13.5%), delivers good ER. However, they expects Q4 revenue to fall between 12% and 18% sequentially. Today it stands above $12 support. If it breaks down in the next few days, I wish to buy @ $10 as entry point.

Trivago (TRVG -22.5%) has a disappointing Q3. In the crowded travel site stocks, clearly the winners are PCLN, EXPE and CTRP (in China). Smaller companies are struggling to compete with PCLN & EXPE. However, smaller players, such as TRVG/TRIP/TZOO, could be aquisition targets.

Netgear's (NTGR -5%) as Amazon announces its security camera ($120) , which includes 1080p Full HD resolution video, night vision, a wide viewing angle, two-way audio, and the ability to replay the previous 24 hours in the app, not to mention integration with Amazon Key which allows secure in-home deliveries.

The 10-year Treasury yield is up another three basis points to 2.45% - this from roughly 2.00% 7 weeks ago. Fixed income picks, including mREIT, REIT, utilities and telecommunications, all suffer.

AH Earnings

AMGN beats, Q3 EPS of $3.27 beats by $0.16. Revenue of $5.77B (-0.7% Y/Y) beats by $10M.
TSCO beats, Q3 EPS of $0.72 beats by $0.04. Revenue of $1.72B (+11.7% Y/Y) beats by $40M. +5.3% AH.
LVS beats, Q3 EPS of $0.77 beats by $0.09. Revenue of $3.2B (+7.7% Y/Y) beats by $50M. +1.5% AH.

My Trades Today 

I spent quite some cash this morning.

 GE keeps bleeding. I expect the dividend cut fear will eventually priced-in and fade. The stock price recovers gradually. If they dividend cut is milder than expected in Nov, it will bounce back a little. I also believe the new CEO is doing the right things to turn the ship around. I add more today and It is now 4% in my portfolio with average price $21.8.

Add 50% more O as long-term investment, which has 4.6% dividend ($0.21/month = $2.54/year). Average price $55.

Initiate T @ $33.6 for long-term investment. I will enjoy the 5.8% dividend ($2/yr).

Double down FIT to average cost to $6. Target price is $7.

Comments

  1. UnknownOctober 26, 2017 at 3:07 PM

    It's funny that AMD hits right @ $12.00 today

    ReplyDelete
    Replies
    1. UnknownOctober 30, 2017 at 9:43 AM

      AMD gap down to $10.77 today due to MS downgrade --- its price level in late May. It reached $10 in early May and $9.7 in Jan.

      Delete

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