Client Talking Points
Golden Days Are Over
As employment and housing continue to stabilize, our growth thesis remains in tact. Consumption and growth are good for stocks, bad for bonds and gold. Although we're seeing gold flashing an immediate-term TRADE oversold signal at $1641/oz, it's still in bearish formation. Some people will never give up their long gold trade but eventually, they'll have to if we stay on the current path.
Our Best Ideas
After offering up our best ideas earlier this week, we'd like to reiterate two longs and two shorts that our sector heads are really passionate about. From Gaming, Leisure and Lodging Sector Head Todd Jordan comes LONG IGT. Jordan sees room for growth and a 3-5 year bull market for slot makers on the horizon. Retail Sector Head Brian McGough is LONG JCP as he thinks near-term sentiment is too bearish at current prices among other reasons.
On the short side, Consumer Staples Sector Head Rob Campagnino is SHORT KMB. Rob's talked about KMB before and commodity prices could become an issue in the pulp and oil areas. Restaurants Sector Head Howard Penney is SHORT BKW and has been making noise on the name with good reason: the company was never 'fixed' when it went private and the outlook for the co. isn't good.
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Top Long Ideas
We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.
With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.
HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act
Three for the Road
TWEET OF THE DAY
"you know the stock market is on fire when I have to use the pan tool to move my charts down..." -@allstarcharts
QUOTE OF THE DAY
"About the most originality that any writer can hope to achieve honestly is to steal with good judgment." -Josh Billings
STAT OF THE DAY
Retail sales rose a seasonally adjusted 0.1% last month, or by 0.2% excluding the auto sector.