GOLDEN APPLE
CLIENT TALKING POINTS
GOLDEN APPLE
For a long time, people thought you could just buy Apple (AAPL) and ride the train higher with little pullback in the stock. Things changed when people realized that the market is not Apple and Apple is not the market. The stock can drag the Nasdaq and tech down somewhat but it’s not the ultimate name in beta. Other factors drive market moves, like the US dollar. And if you remember our mantra, you know that if you get the US dollar right, you tend to get a lot of other things right.
THE TURNING POINT
If you think stocks are A-OK, yesterday’s sell off may have had you thinking twice. And there are plenty of other things to think about. Bernanke and Geithner still have their jobs, the US dollar continues to be devalued, equity volumes are lower than ever, global indices around the globe are down significantly from their 2012 highs, and regulation is being crammed down the industry’s throat. Positive catalysts are few and far between these days it seems and we’re reaching a turning point that will culminate in November’s election. After that, who knows what we’re in store for?
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ASSET ALLOCATION
Cash: DOWN
U.S. Equities: UP
Int'l Equities: UP
Commodities: Flat
Fixed Income: DOWN
Int'l Currencies: Flat
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TOP LONG IDEAS
BRINKER INTL (EAT)
Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
PACCAR (PCAR)
Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
UNDER ARMOUR (UA)
This company’s on track to post $3Bn in revenues by ’14 – impressive given a $1.5Bn print in 2011. Perhaps more impressive is the breadth of growth drivers that will get it there – women’s, accessories, new underwear platform etc. in addition to footwear. UA is gaining share in both apparel and footwear quarter-to-date. While some may be concerned over the loss of UA’s SVP/Sourcing we’re 8% ahead of the Street in the upcoming quarter and buyers on weakness.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
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THREE FOR THE ROAD
TWEET OF THE DAY
“Many of the 80 or so [Chinese] companies that produce wind turbines will probably have to close."bit.ly/Tf55O0” -@WindSector
QUOTE OF THE DAY
“Honesty pays, but it doesn't seem to pay enough to suit some people.” -Kin Hubbard
STAT OF THE DAY
20% of Corporate America cooks their books according to a new study from finance professors at Duke and Emory University.
