MINI BUBBLES

Client Talking Points

MINI BUBBLES

There are plenty of mini-bubbles out there to take note of and recognize. Everything from shipbuilding to capital expenditures in industrials; all you have to do is look for the clues to help guide you. Mining spending is another one that’s about to pop. Companies like Caterpillar, etc. are realizing that #GrowthSlowing is very much a part of earnings season, like it or not. 

Asset Allocation

CASH 64% US EQUITIES 6%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 18% INTL CURRENCIES 12%

Top Long Ideas

Company Ticker Sector Duration
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.

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.

HCA

While political and reimbursement risk will remain near-term concerns, on the fundamental side we continue to expect accelerating outpatient growth alongside further strength in pricing as acuity improves thru 1Q13. Flu trends may provide an incremental benefit on the quarter and our expectation for a birth recovery should support patient surgery growth over the intermediate term. Supply costs should remain a source of topline & earnings upside going forward.

Three for the Road

TWEET OF THE DAY

“Norway Tells Largest Sovereign Wealth Fund to Buy on Dip bloom.bg/THCwJi” -@JohnLothian

QUOTE OF THE DAY

“The love of truth lies at the root of much humor.” -Robertson Davies

STAT OF THE DAY

US jobless claims come in at 369,000.