Brookdale Senior Living: are its thematic tailwinds enough to earn a buy rating?

Brookdale Senior Living: are its thematic tailwinds enough to earn a buy rating?

The following article is an excerpt from Tematica Investing, our cornerstone research publication. Tematica Investing includes original investment ideas and strategies based upon our proprietary thematic investing framework developed by our Chief Investment Officer Chris Versace. Click here to read more about our Premium Tematica Research Membership offering.

One of the great things about thematic investing is there is no shortage of confirming data points to be had in and our daily lives. For example, with our Connected Society investing theme, we see more people getting more boxes delivered by United Parcel Service (UPS) from Amazon (AMZN) and a several trips to the mall, should you be so inclined, will reveal which retailers are struggling and which are thriving. If you do that you’re also likely to see more people eating at the mall than actually shopping; perhaps a good number of them are simply show rooming in advance of buying from Amazon or a branded apparel company like Nike (NKE) or another that is actively embracing the direct to consumer (D2C) business model.

While it may not be polite to say, the reality is if you look around you will also notice that the domestic population is greying. More specifically, we as a people are living longer lives, and when coupled with the Baby Boomers reaching retirement age, it has a number of implications and ramifications that are a part of our Aging of the Population investing theme.

There are certainly the obvious issues related to this demographic shift, such as whether or not folks have enough saved and invested well enough to support themselves through increasingly longer life spans. And then, of course, there is the need of having access to the right healthcare to deal with any and all issues that one might face. That is something that shouldn’t be taken for granted, given the national shortage of nurses and health care professionals we are currently experiencing, and the reason why one AMN Healthcare Services (AMN) has been on the Tematica Investing Select List in the past.

But our Aging of the Population theme doesn’t stop there. Again, much like looking around at what people are doing at the mall, all one has to do is sit back and assess the day-to-day life of a typical octogenarian and see that we are seeing:

  • A shift in demand for different types of housing as seniors give up on the homestead and move into easier to maintain condos and townhouses.
  • An even greater focus on online retailers that will deliver purchases directly to the home, rather than having to go out and carry purchases from the store to the car and then into the home. Also driving this shift will be younger children making purchases for their aging parents and having them shipped directly to their home.
  • Fountain of Youth goods and services will be in even higher demand as Baby Boomers will not let go of their youth easily.
  • And finally, technology and services that will help maintain independence— we’re talking about robots, digital assistants, monitoring equipment and even things such as the autonomous car.

According to data published by the OECD in 2013, the U.S. expectancy was 78.7 years old with women living longer than men (81 years vs. 76 years). Cross-checking that with data from the Census Bureau that says the number of Americans ages 65 and older is projected to more than double from 46 million today to 75.5 million by 2030, according to the U.S. Census Bureau. Other data reveals the number of older American afflicted with and the 65-and-older age group’s share of the total population will rise to nearly 25% from 15%. According to United States Census data, individuals age 75 and older is projected to be the fastest growing age cohort over the next twenty years.

As people age, especially past the age of 75, it becomes challenging for individuals to care for themselves, and this is something I am encountering with my dad who turns 86 on Friday. Now let’s consider that roughly 6 million Americans will have Alzheimer’s by 2020, up from 4.7 million in 2010, and heading to 8.4 million by 2030 according to the National Institute of Health. Not an easy subject, but as investors, we are to remain somewhat cold-blooded if we are going to sniff out opportunities.

What all of this means is we are likely to see a groundswell in demand over the coming years for assisted living facilities to house and care for the aging domestic population.

 

Is Brookdale Senior Living Positioned to Ride this Thematic Tailwind?

One company that is positioned to benefit from this tailwind is Brookdale Senior Living (BKD), which is one of the largest players in the “Independent Living, Assisted Living and Memory Care” market with over 1,000 communities in 46 states.

The company’s revenue stream is broken down into fives segments:

  • Retirement Centers (14% of 2017 revenue; 22% of 2017 operating profit) – are primarily designed for middle to upper-income seniors generally age 75 and older who desire an upscale residential environment providing the highest quality of service.
  • Assisted Living (47%; 60%) – offer housing and 24-hour assistance with activities of daily living to mid-acuity frail and elderly residents.
  • Continuing care retirement centers (10%; 8%) – are large communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health.
  • Brookdale Ancillary Services (9%; 4%) – provides home health, hospice and outpatient therapy services, as well as education and wellness programs
  • Management Services (20%; 6%) – various communities that are either owned by third parties.
  • In looking at the above breakdown, we see the core business to focus on is Assisted Living as it generated the bulk of the company’s operating profit stream. This, of course, cements the company’s position within the framework of Tematica’s Aging of the Population theme. However, as with all investment strategies, success with a thematic approach ultimately comes down to the underlying principle of investing: determining if a stock is mispriced or undervalued relative to the business opportunities ahead as a result of the sea change presenting itself through a theme.

And so with Brookdale, we must determine whether it is a Tematica Contender — a company that we need to wait for the risk to reward tradeoff to reach more appetizing levels -—  or is one for the Tematica Investing Select List to issue a Buy rating on now?

 

Changes afoot at Brookdale

During 2016 and 2017, both revenue and operating profit at Brookdale came under pressure given a variety of factors that included a more competitive industry landscape during which time Brookdale had an elevated number of new facility openings, which is expected to weigh on the company’s results throughout 2018. Also impacting profitability has been the growing number of state and local regulations for the assisted living sector as well as increasing employment costs.

With those stones on its back, throughout 2017, Brookdale surprised to the downside when reporting quarterly results, which led it to report an annual EPS loss of $3.41 per share for the year. As one might imagine this weighed heavily on the share price, which fell to a low near $6.85 in late February from a high near $19.50 roughly 23 months ago.

During this move lower in the share price, Brookdale the company was evaluating its strategic alternatives, which we all know means it was putting itself up on the block to be sold. On Feb. 22 of this year, the company rejected an all-cash $9 offer as the Board believed there was a greater value to be had for shareholders by running the company. Alongside that decision, there was a clearing of the management deck with the existing President & CEO as well as EVP and Chief Administrative Officer leaving, and CFO Cindy Baier being elevated to President and CEO from the CFO slot.

Usually, when we see a changing of the deck chairs like this, it likely means there will be more pain ahead before the underlying ship begins to change directions. To some extent, this is already reflected in 2018 expectations calling for falling revenue and continued bottomline losses.

Here’s the thing – those expectations were last updated about a month ago, which means the new management team hasn’t offered its own updated outlook. If the changing of the deck history holds, it likely means offering a guidance reset that includes just about everything short of the kitchen sink.

On top of it all, Brookdale has roughly $1.1 billion in long-term debt, capital and leasing obligations coming due this year. At the end of 2017, the company had no borrowings outstanding on its $400 million credit facility and $514 million in cash on its balance sheet. It would be shocking for the company to address its debt and lease obligations by wiping out its cash, which probably means the company will have to either refinance its debt, raise equity to repay the debt or a combination of the two. This could prove to be one of those overhangs that keeps a company’s shares under pressure until addressed. I’d point out that usually, transaction terms in situations like this are less than friendly.

 

The Bottomline on Brookdale Senior Living (BKD)

While I like the drivers of the underlying business, my recommendation is we sit on the sidelines with Brookdale until it addresses this balance sheet concern and begins to emerge from its new facility opening drag and digestion. Odds are we’ll be able to pick the shares up at lower levels.

This has me putting BKD shares on the Tematica Investing Contender List and we’ll revisit them for subscribers in the coming months.

The preceding article is an excerpt from Tematica Investing, our cornerstone research publication. Tematica Investing includes original investment ideas and strategies based upon our proprietary thematic investing framework developed by our Chief Investment Officer Chris Versace. Click here to read more about our Premium Tematica Research Membership offering.

WEEKLY ISSUE: Several stocks capitalizing on strong thematic tailwinds

WEEKLY ISSUE: Several stocks capitalizing on strong thematic tailwinds

In this Week’s Issue:

  • Disney Delivers an EPS Beat, But Reaffirms 2017 is a “Transitional” Year
  • Amplify Snacks Serves Up a Healthy Quarter
  • USA Technologies: Riding the Cashless Consumption Wave
  • March JOLTS Report Confirms Our Stance on AMN Healthcare (AMN) Shares

 

As we noted in the Monday Morning Kickoff a few days ago, this week was going to be yet another barn burner in terms of activity, with yet another 1,000 companies reporting earnings. We’ve gotten some incremental economic data points, but the main ones for the week – the April reports for PPI, CPI and Retail Sales – all come later in the week.

As we sifted through hundreds of earnings reports over the last two days, we also saw further downward revisions by both the Atlanta Fed and the New York Fed for their respective 2Q 2017 GDP forecasts. Hardly surprising, given the readings from ISM and Markit Economics as well as the April data supplied by regional Fed banks, but once again here we are. What made headlines yesterday was the comments from Commerce Secretary Wilbur Ross that the US economy “won’t achieve the Trump administration’s 3 percent growth goal this year and not until all of its tax, regulatory, trade and energy policies are fully in place.”

Given Ross’s comments that the growth target “ultimately could be achieved in the year after all of President Donald Trump’s business-friendly policies are implemented” but that “delays were possible if the push for tax cuts was slowed down in Congress,” odds are there is some DC-style politicking going on. Even so, the reality is without a jolt to the system odds are the US economy will remain in low gear.

As we’ve shared previously, the economy is facing several headwinds associated with our Aging of the Population and Cash-strapped Consumer investing themes that are likely to keep it’s growth range bound. As such, we continue to see current GDP expectations as somewhat aggressive for the coming quarters, and the same holds true for S&P 500 earnings expectations. That said, we are not buyers of the stock market, but rather those companies that are well suited to capitalize on the tailwinds associated with our investing themes. You’ll see confirmation of that in our comments below on Disney (DIS), Amplify Snacks (BETR), USA Technologies (USAT) and AMN Healthcare (AMN), as well as Amazon (AMZN) and Alphabet (GOOGL) in the next paragraph.

As a quick reminder, later this week we’ll get the April Retail Sales Report, which could see favorable comparisons year over year given the late Easter holiday. As usual, we’ll be digging in below the headlines to get a better sense of consumer spending for not only what they are buying, but where. We once again suspect the report will confirm the accelerating shift toward digital commerce that is power our Amazon (AMZN) and Alphabet (GOOGL) shares. We continue to rate both Buy with $1,100 and $1,050 price targets, respectively.

Now let’s dig into the earnings reports for several positions on the Tematica Select List…

 

 

 

Disney delivers an EPS beat, but reaffirms 2017 is a “transitional” year.

Last night Disney (DIS) reported March 2017 results, which included better than expected EPS, revenue that came in a tad shy of expectations and sober forward guidance, which reminded investors that 2017 is a transitional year for the company as it targets better growth in 2018. EPS for the quarter came in at $1.50, $0.09 ahead of consensus expectations as revenue rose 2.8 percent compared to the year-ago quarter hitting $13.34 billion, shy of the $13.44 billion that was expected.

Heading into 2017, we noted the first half of the year would likely be a more subdued one and so far that is proving to be exactly the case. As we enter the company’s fiscal second half of 2017, Disney has a far stronger movie lineup, which should continue into 2018 and beyond. Higher costs at ESPN and investments in new park attractions, however, are likely to be gating factors over the next few quarters. We see Disney as investing today to leverage its vast array of characters and tentpole films that will drive incremental business at its parks, for its merchandise and other businesses in the coming quarters.

Our price target remains $125, but we’ll continue to revisit that target based on box office strength in the coming months. Odds are the quarter’s results will take some of the wind out of Disney’s sails, but with the company set to continue to leverage its Content is King strategies, we’re inclined to be patient.

Breaking down the company’s segment results from the March quarter we find:

  • Cable Networks revenues for the quarter increased 3 percent to $4.1 billion and operating income decreased 3 percent to $1.8 billion. The decrease in operating income was due to a decrease at ESPN due to higher programming costs because of the timing between College Football Playoff (CFP) bowl games and NBA programming, which was partially offset by increases at the Disney Channels and Freeform. Programming costs are expected to be 8 percent higher this year due in part to the new NBA contract.
  • On a positive note, Disney continues to make progress in transitioning ESPN by expanding its reach into streaming services like those from Sling TV, Sony’s (SNE) PlayStation Vue, YouTube TV (GOOGL), Hulu and DirecTV Now from AT&T (T). While Disney is seeing favorable momentum, it’s still not enough to totally offset the slide it is seeing in cable subscriptions. As we discussed recent, Disney is focusing on live mobile content, which should help drive incremental viewing compared to the 23 million unique users who collectively spent 5.2 billion minutes engaging with ESPN on its mobile platforms in the March quarter.
  • Parks and Resorts revenues for the quarter increased 9 percent to $4.3 billion and segment operating income increased 20 percent to $750 million. We’d note that segment benefited from price increases taken in prior months, but this was offset by the later than usual Easter holiday this year.
  • As expected construction is underway on Star Wars attractions at both Disney World and Disney Land, a great example of how the company’s film content will drive park attendance and merchandise sales. Management commented that in a few days the 10 millionth guest will pass through Shanghai Disney and the park is tracking to break even this year as Disney downshifts investing in the park compared to year-ago levels.
  • Studio Entertainment revenues for the quarter decreased 1 percent to $2.0 billion and segment operating income increased 21 percent to $656 million. Despite having two films that grossed more than $1 billion each during the quarter – Rouge One from the Star Wars franchise and remake of Beauty and the Beast – the quarter faced stiff year over year comparisons given the success of last year’s Star Wars: The Force Awakens and Zootopia and in essence making them a victim of their own success. On the earnings call, as expected management talked up Friday’s Guardians of the Galaxy 2 release, which took the top spot at the box office and raked in more than two times the first installment of the Guardians franchise. Disney reminded investors it has four Marvel films coming over the next 14 months, as well as the next installment of the Pirates of the Caribbean franchise and Cars 2 dropping in the next few months before The Last Jedi lands in December. Longer-term, there will be more Marvel, Pixar and Lucasfilm tentpole properties, but on the call Disney shared that Frozen 2 will be released in 2019.
  • Broadcasting revenues for the quarter increased 3 percent to $1.9 billion and operating income increased 14% to $344 million led by greater sales of Marvel TV programming content to Netflix (NFLX) and others.
  • Consumer Products & Interactive Media revenues for the quarter decreased 11% to $1.1 billion and segment operating income increased 3 percent to $367 million.

On the housekeeping front, during the March quarter, Disney repurchased about 18.6 million shares for about $2 billion. Over the last two quarters (better known as the company’s fiscal year-to-date), its repurchased 41.5 million shares for approximately $4.4 billion. Citing lower than expected capital spending needs and improved operating cash flow, Disney once again increased its share repurchase target by $2 billion to $9 billion to $10 billion for the year. As the company chews through this program, it should help improve year over year EPS comparisons, but we’ll still be monitoring both operating profit as well as net income growth when contemplating how to best value the shares.

The bottom line on DIS shares:

  • Given the appreciation in the shares price over the last five months, we would not add to positions in the Walt Disney Co (DIS) at current levels and thus are changing our rating to a Hold at this point in time.
  • Rather, we would look to commit fresh capital to DIS shares between $100-$105 if the shares pull back in the coming days, while over the longer term we still maintain a price target of $125 for the shares.

 

 

Amplify Snacks Serves Up a Healthy Quarter

After last night’s market close, Foods with Integrity theme company Amplify Snacks (BETR) reported 1Q 2017 results that included EPS of $0.06 vs. the expected $0.06 on revenue of $87.2 million vs. the consensus expectation of $87.6 million and up more than 60% compared to $54.3 million in the year-ago quarter. The one wrinkle in the quarter was the company’s gross margin line that contracted year over year, which we attribute to short-term initiatives to grow the company’s business further. For example, during the quarter the company launched its SkinnyPop Ready-to-Eat popcorn in the U.K., carried a full quarter of both the Oatmega and Tyreell acquisitions, and introduced new SkinnyPop product extensions (popcorn cakes, popcorn mini-cakes and microwave popcorn).

As these initiatives bear fruit over the coming months and longer term as Amplify brings Tyrrell chip products to the US in the back half of 2017 and 2018, the good news is the company continues to expand its distribution. Exiting the quarter, its ACV (a widely recognized distribution measure) hit 81 points up from 73 in the same period last year. The year over year improvement reflects new distribution across grocery, mass and convenience channels as those companies embrace our Foods with Integrity investing theme and expand their healthy snacking alternatives.

Given stronger prospects for the domestic business, Amplify amended its tax guidance which has led to a modestly higher tax rate than previously expected. This, in turn, has led the company to ever so so slightly trim its 2017 EPS outlook to $0.42-0.50 versus our prior expectation of $0.43-0.51., which in our view is a very minor change relative to the growth prospects to be had over the coming quarters.

  • Exiting the company’s quarterly earnings report, we continue to rate BETR shares a Buy with a $10.50 price target.

 

  

USA Technologies: Riding the Cashless Consumption Wave

Yesterday, USA Technologies (USAT) reported inline EPS expectations for the March quarter on better than expected revenue. USA Technologies 1Q 2017 revenue rose 30 percent year over year as the company continued to grow the number of connected to its ePort services, up 26 percent to 504,000 connections. As the adoption of mobile payments continues to spread, USA expanded its customer base by another 500 to reach 12,400 exiting the quarter, a 15 percent increase year over year. The company also issued a more upbeat outlook calling for 2017 revenue of $95-$100 million, a tad higher than the $95-$97 consensus expectation derived from the three Wall Street analysts following the shares.

On the earnings call, the company shared a number of confirming data points for investment thesis on USAT shares including:

  • USAT is working with Ingenico to provide customers with more hardware options and where Ingenico will be able to leverage USA’s quick connect service as well as ePort Connect platform for use with its NFC/contactless unattended payment solutions. As way of background, Ingenico was the first international multi-billion-dollar mainstream payments hardware company that have entered the unattended retail market.
  • During the quarter, USA also launched an alliance with vending company Gimme Vending as also announced a stand-alone loyalty program that integrates with Apple’s (AAPL) Apple Pay.
  • Digging into 1Q 2017 revenue, the company had 105 million total transactions representing 203 million in transaction volume increases of 28% and 34% respectively from last year.
  • License and transaction fees rose 19% year over year to $17.5 million compared to $14.7 million last year. We call this out because the segment includes recurring monthly service as well as transaction processing fees, which offer good visibility and predictability. As the percentage revenue derived from license and transaction continues to climb from 66% of total revenue in 1Q 2017, the company’s visibility should similarly improve.

With the continued migration toward a cashless society, we continue to rate USAT shares a Buy with a $6.00 price target.

 

 

March JOLTS Report Confirms Our Stance on AMN Healthcare (AMN) Shares

Yesterday we received the March Job Openings and Labor Turnover Survey and once again it showed not only a strong year over year increase in healthcare job openings, but also the number of open healthcare jobs significantly outweighs the number of positions filled. Granted the data lags by a month, but given the April jobs data, we rather doubt there has been any meaningful change in the metrics over the last month. We continue to see the far greater number of healthcare job openings compared to the available talent pool as driving demand for AMN Healthcare’s (AMN) healthcare workforce solutions.

  • With more than 20% upside to our $47 price target, we continue to rate AMN shares a Buy.

 

 

 

 

 

 

 

 

 

AMN shares Trumped — Washington activity puts shares of AMN Healthcare under pressure

AMN shares Trumped — Washington activity puts shares of AMN Healthcare under pressure

After Thursday’s market close, healthcare workforce solutions company AMN Healthcare (AMN) reported better than expected March quarter results and guided 2Q 2017 a tad shy of existing expectations. EPS came in at $0.63, $0.03 per share better than consensus expectations and compares to the $0.60 earned the year-ago quarter. Revenue rose to $495.1 million for the reported quarter, edging out expectations of $493 million, and was up roughly 6 percent year over year. Despite those results and the continued pain point that is fueling its business, better known as our Aging of the Population investing theme, AMN shares have come under pressure in the last 24 hours.

We attribute this to the TrumpCare passing the House and heading to the Senate for a vote. We’ll be digging into this to determine what if any potential negatives are for AMN’s business over the coming days. We’ll also examine the March JOLTs report that is released next week, as we repeatedly double check our underlying thesis on the shares.

  • For now, our price target on AMN shares remains $47, which offers sufficient upside to keep our Buy rating in play.

 

Getting back to the company’s 1Q 2017 results, from a mix perspective AMN’s Nurse and Allied Solutions business (63% of revenue) rose 5 percent year over year due primarily to a near 7% increase in the average number of healthcare professionals on assignment compared to the year-ago quarter. That performance was bittersweet given its the company’s largest business, and even though gross margins rose to just under 28 percent vs. just under 27 percent in the year go quarter, those margins remained the lowest of among its three businesses.

The Locum Tenens solutions business (21% of revenue) delivered flat revenue as the revenue per day filled (up 5.4%) was offset by a lower number of days filled (down 5% year over year). Both the increase in revenue per day as well as lower number of days fill speak to the widening disconnect we keep seeing in the monthly JOLTS report when it comes to healthcare workers. Lastly, the Other Workforce Solutions business (16% of revenue) delivered a 22% increase in revenue, with a large part of that reflected last June’s acquisition of Peak Health Solutions as well as growth in the VMS and interim leadership businesses.

To sum it up, the quarter was another solid one for AMN and given the demographics, we continue to see the company benefiting from both the aging of the population that will spur demand for healthcare workers as well as be benefitting from the continued nursing shortage.

 

 

WEEKLY ISSUE: While earnings so far have been mixed bag, it’s been mostly good news for the Tematica Select List

WEEKLY ISSUE: While earnings so far have been mixed bag, it’s been mostly good news for the Tematica Select List

In this Week’s Issue:

  • Boosting Amazon and Alphabet Price Targets on Blockbuster Earnings
  • Intel’s Capital Spending Bodes Well For Applied Materials
  • Facebook Earnings Due After Today’s Market Close
  • Universal Display and AMN Healthcare Earnings On Tap for Thursday

 

As we noted in our Monday Morning Kickoff out just a few days ago, this week is by far one of the busiest with more than 1,000 companies reporting, a slew of economic data and the Fed’s latest FOMC meeting. The Fed meeting culminates today at 2 PM ET, and soon thereafter we’ll learn if the Fed has once again boosted interest rates. As we have been pointing out here at Tematica in an almost broken drum-like fashion, the domestic economy cooled rather dramatically during 1Q 2017, with GDP clocking in around 0.7 percent vs. 2.1 percent in 4Q 2016.

While that is in the rear view mirror, the initial data for 2Q 2017 found in the April data from ISM Manufacturing, Markit Economics and several regional Fed indices all point to a continuation of that slow speed. That compares to the current consensus expectation that has GDP clocking in at 2.8 percent according to The Wall Street Journal’s Economic Forecasting Survey. At least, for now, that view looks rather aggressive and with inflation data rolling over as year over year comparisons ease, it looks to us like the Fed is likely to stand pat on interest rates later today. Of course, there will be the usual slicing and dicing of the Fed policy statement to get a better sense if the Fed will look to boost rates at its next meeting in June or in the back half of this year. As a reminder, coming into 2017 the Fed shared that it was looking to boost rates three times. Following one hike already earlier this year, the growing question could very well be will they get around to all three?

Turning to the Tematica Select List, we’ve seen a number of strong moves over the last week as we’ve journeyed through 1Q 2017 earnings season. Examples include our Amazon (AMZN), Alphabet (GOOGL) and PowerShares Exchange-Traded Fund Trust (PNQI) shares, but we’ve still yet to hear from a number of Select List companies. Luckily (yes that was sarcasm), we’ve got several reporting later this week, including Facebook (FB) after today’s close, followed by Universal Display (OLED) and AMN Healthcare (AMN) tomorrow night. In the coming paragraphs, we’ve set the table for what is expected from these companies and we also share our price target updates for Amazon and Alphabet, which even after their respective moves over the last week still keeps the shares in the Buy zone.

In case you were afraid the earnings fun would be over soon, that’s certainly not the case as we have several others Select List companies, including The Walt Disney Co. (DIS) and International Flavors & Fragrances (IFF) reporting next week. Don’t worry, we’ll be here to guide you through it, using our thematic lens to lead the way.

 

Boosting Amazon and Alphabet Price Targets on Blockbuster Earnings

Last week, Amazon reported blowout earnings of $1.48 per share for the first quarter, well ahead of the $1.10 consensus expectation for the quarter. Revenue for the quarter rose 23 percent, year over year, to $35.71 billion, ahead of the $35.31 billion consensus number with double-digit improvement across all three businesses — North America, 23.5%; International, 15.6%; and Amazon Web Services (AWS), 42.7%. The revenue beat, alongside better-than-expected operating income of $1 billion vs. the $900 million consensus and Amazon’s own guidance for the quarter of $250 million-$900 million, led to the positive earnings surprise.

Sifting through the segment results, AWS continues to be the key profit generator for the company as it delivered the vast majority of the company’s overall operating profit, with operating losses at International offsetting profits in North America. As impressive as that was, we’d note that despite the segment’s revenue growth, its operating margin only improved to 24.3 percent in 1Q 2017 vs. 23.5 percent in the year-ago quarter. Once again Amazon offered forward guidance that one could drive a truck through, but even though it was not specifically shared, we find there is a growing comfort following the quarter that Amazon can deliver profits even as it continues to expand its footprint.

From our perspective, Amazon is riding the pole position of not only our Connected Society investing theme, but increasingly our Content is King, Cashless Consumption, and Asset-Lite Business Model as well. Talk about the power of four thematic tailwinds… as we have said before, Amazon is a stock to own and we see no signs of that changing anytime soon.

Also last week, Asset-Lite Business Model company  Alphabet (GOOGL) delivered knockout earnings and revenue despite concerns for advertising weakness at YouTube. For the March quarter, Alphabet delivered an impressive EPS of $7.73, $0.35 ahead of consensus expectations as revenue for the quarter rose more than 22 percent year over year to 424.75 billion. Without question Alphabet’s business – Search, Advertising and YouTube — are all benefitting by the shift to mobile from the desktop; launches thus far of the company’s TV streaming service, YouTube TV have been favorable and demand for its cloud business, much like that at Amazon, remains strong.

As we have shared for some time, we see no abatement in the tailwinds that are driving the two business, which includes the migration to online shopping, cloud adoption, streaming content and migration of advertising dollars to digital platforms. If anything, we continue to see prospects for those winds to blow even harder as the two companies continue to position themselves better than well for our increasingly connected society.

Those winds, along with solid execution and a focus on profits at both companies, are behind our revised price targets for both companies:

  • Our new price target on Amazon (AMZN) shares is $1,100, up from the prior $975, which offers just over 17 percent upside and keeps our Buy rating intact.
  • Our new price target for Alphabet (GOOGL) shares is $1,050, up from $975, and that equates to roughly 12 percent upside, which also keeps our Buy rating intact.

 

Intel’s Capital Spending Bodes Well For Applied Materials

Also last week, Intel (INTC) reported its quarterly earnings and reiterated its outlook for capital spending of $12 billion this year, which would be up from $9.6 billion in 2016. While not new information, the confirmation serves as a reminder of the tailwind driving the business at Applied Materials (AMAT). We expect similar data points as earnings season progresses in light of demands not only for memory and other chips but also organic light-emitting diode capacity. with regard to the latter, we’ll look for similar comments on OLED industry display capacity constraints and expansion when Universal Display (OLED) reports earnings after tomorrow’s market close (more on that below).

  • Our price target on AMAT shares remains $47.

 

Facebook Earnings Due After Today’s Market Close

On the heels of Alphabet’s stronger- than-expected quarterly results, expectations are running for Facebook (FB), a Connected Society company that like Alphabet is benefitting from the accelerating shift to digital advertising across its various properties. Even though Facebook has a track record of beating Wall Street expectations when it reports its quarterly results, from time to time whisper expectations that are above published forecasts can get the better of a company. Given the strong quarterly results coming out of Alphabet, odds are Wall Street is expecting Facebook to deliver at least several pennies better than the consensus forecast for 1Q 2017 that calls for EPS of $1.12 on revenue of $7.83 billion. We acknowledge the strong price move year to date as well as Alphabet’s quarterly results likely mean anything other than a blowout earnings report is likely to result in the shares pulling back.

  • In our view, any post-earnings pullback is a likely opportunity for those who have missed out previously.
  • We’ve been reviewing our $150 price target, which is modestly below the $161 consensus target on the shares, and expect to update it following Facebook’s earnings report out after today’s market close. 

 

Universal Display and AMN Healthcare Earnings On Tap for Thursday

The earnings fun continues tomorrow when we have both Universal Display (OLED) and AMN Healthcare (AMN) reporting results after the market close. First, with AMN, expectations are far the healthcare workforce solutions company to deliver EPS of $0.60 on revenue of $493 million. Recent JOLTs reports have confirmed the discrepancy between healthcare workers job openings and the viable candidate pool, which bode rather well for AMN’s workforce placement business. Longer-term, the Aging of the Population and capacity constrained nursing schools are a powerful combination that provides a longer-term tailwind for AMN’s business.

  • Our price target on AMN heading into the earnings report remains $47.

Turning to Universal Display, this Disruptive Technology investment theme company is expected to deliver EPS between -$0.05 per share and $0.02 on revenue between $31.8-$36 million, vs. $29.7 million achieved in the year-ago quarter. We’d remind subscribers the key to the Universal Display’s investment narrative is the expanding number of applications for organic light emitting diode displays, including prospects for Apple’s (AAP) next iteration of the iPhone.

On last night’s earnings call for Apple, the company’s iPhone volumes missed expectations and even CEO Tim Cook called out the culprit — “rumors around future products” — that is likely pushing out the current upgrade cycle. In our view, what’s bad for Apple today is very good news for Universal Display.

On the Universal Display earnings call, we expect to get an update on industry capacity expansion plans that bode well for our Applied Materials shares, as well as one for recent expansions being switched on. Without question, there will be much chatter over new applications, the next iPhone, and rising manufacturing levels, all of which points to rising demand for Universal’s chemicals and IP licensing business.

  • We continue to rate OLED shares a Buy and heading into the earnings call our price target remains $100.

 

Market finally catches up to reality — something we’ve warned about since the Trump Trade took off

Market finally catches up to reality — something we’ve warned about since the Trump Trade took off

Monday was the start of spring, which usually brings in some milder weather and a breath of fresh air. The latter was certainly what the stock market received yesterday when it had its worst day in a number of weeks.

For us here at Tematica, we’ve been talking about the growing disconnect between the stock market, the real speed of the economy and the growing likelihood that President Trump’s stimulative policies will arrive far later than the mainstream expected. The fact that there are several other snafus helping to deter progress is Washington — like the FBI investigation into potential links with Russia, judicial pushback on the second attempted travel ban and an attempt to repeal the Affordable Care Act that doesn’t have full support of Republicans in the House and Senate — are pushing out the focus on infrastructure spending and tax reform.

The good news is that once again the herd is catching up to what we’ve been saying. The not so good news is it means we’re likely to see the stock market give back some of its 2017 gains as these GDP expectations and subsequent earnings expectations get reset. If we look at several companies that reported earnings this week, including Rise & Fall of the Middle-Class contender Nike (NKE), and Economic Acceleration/Deceleration players FedEx (FDX) and Actuant (ATU) each of them have given their own warning signs:

  • Nike’s future orders fell 1 percent;
  • FedEx missed quarterly expectations and cut its 2017 global GDP forecast to 1.6 percent from the prior 2.6 percent;
  • Actuant guided its current quarter earnings and revenue below consensus and reduced the top end of its 2017 EPS guidance.

Overnight we’re also reading that Payless (PSS) may file for bankruptcy next week and Sears (SHLD) mentioned in its latest 10-K filing just a day or two ago that, “substantial doubt exists related to the company’s ability to continue as a going concern.” Candidly given the rise of Connected Society company Amazon (AMZN) in apparel, as well as its Zappos business, we’re a little surprised that Payless has hung on as long as it has.

 

 

The point is we’re starting to see 2017 expectations get adjusted, and the new question we need to focus on is the degree of those negative revisions. With hindsight being 20/20, last year we saw a steady move lower in earnings expectations for the S&P 500 and we wound up seeing 2016 earnings growth come in at a whopping 0.5 percent for those 500 companies.

As we entered 2017, the expectation was those 500 companies would grow their collective earnings more than 12 percent compared to 2016. Even before we get March quarter results, the view on 2017 earnings growth for the S&P 500 has fallen to just over 10 percent. With several highly anticipated policies getting pushed out, odds are companies will have to reset EPS expectations for 2Q 2017 and most likely 3Q 2017 as well, which means we are likely to see full year 2017 expectations come down further.

As this happens, the market will likely continue to wake up to current valuation levels, especially since if the price of the S&P 500 remains steady and earnings get cut, the market valuation will climb. Odds of that happening are rather low given the market’s stretched valuation and it would mean paying more for even slower earnings growth. What this means is we’re likely to see the market move lower over the coming weeks as all of these expectations get rejiggered lower.

 

We’ve been patient as well as selective, and we’ll continue to do so.

The most recent addition to the Tematica Select List, the Connected Society “missing link” that is United Parcel Service (UPS), was one month ago. While we use the expected retrenchment in the market to identify new players for the Tematica Select List, we’ll continue to look for confirming data points for the existing positions. A great example was the piece we published earlier this week on Applied Materials (AMAT) and Universal Display (OLED) as well as Disney (DIS) that saw Barron’s backing our thematic rationale for having these three companies on the Select List.

With 8 trading days left in the quarter, a number of companies will soon be entering their “quiet periods” and that means we’re going to have our “scope up” as it were for potential earnings pre-announcements. If we get more negative warnings than usual, or from some larger blue chip companies, we could see the market get a little bouncy. In times like that, we’ll look to scale into positions where it makes thematic sense, especially if we can reduce the cost basis on the Tematica Select List. It’s a strategy that’s paid off for Dycom (DY), AMN Healthcare (AMN), International Flavors & Fragrances (IFF) and several others positions.

Be sure to check the website for more comments and insights, and be sure to listen to our Cocktail Investing Podcast — it’s all the insight with some good humor and more than few laughs as well.

Hope and enthusiasm can only carry the market so high for so long

Hope and enthusiasm can only carry the market so high for so long

Waiting for the Fed’s Economic Forecast Update

What a week it’s been! We’ve received a solid February jobs report, endured a March snow storm and late last night even saw another round of would-be news on President Trump’s 2005 tax return. Those two later stories were far less newsworthy than was widely anticipated as Trump paid a 25 percent tax rate and winter storm Stella’s impact wasn’t as extreme as expected, although it did leave trading volumes rather light yesterday. They would have been so regardless, as the market is still in wait-and-see mode as it eyes today’s afternoon announcement from the Federal Reserve on interest rates.

What was once thought of as a long shot, has reversed course and picked up steam with the market now widely anticipating the Fed to modestly boost interest rates. The rate increase is expected even though, as we pointed out in this week’s Monday Morning Kickoff, the Atlanta Fed has done nothing but trim its GDP expectations for 1Q 2017 over the last few weeks. Odds are, today’s latest iteration of that GDPNow report will see a boost up from the dismal 1.2 percent reading owing to the February Employment Report, but it will be hard pressed to break past the 1.9 percent GDP print for 4Q 2016.

Keeping in mind the Fed has a knack for boosting interest rates at the wrong time, and it looks increasingly like Trump’s fiscal policies will take longer than many have expected to take hold and boost the economy, we here at Tematica will continue to tread prudently and cautiously in the near-term.

 

Hope and enthusiasm can only carry the market so high for so long.

Yes, each week we continue to see confirming data points for our 17 investment themes, which you can see in our Friday missive that is Thematic Signals, but we remain concerned over the market’s stretched valuation and the simple fact that expectations have to catch up with the current economic reality.

Now when many hear talk like that, the first reaction is to get nervous. It’s understandable, but we’re not suggesting a market correction is coming. Even though there are signs the economy has slowed, it is still growing as evidenced by the recent reports from Markit Economics and ISM. Our thinking is that a market pullback — something we define to be in the 3-6 percent range — may not be popular to all the recently returned investors, but it would take, to quote former Fed Chief Alan Greenspan, some of the “irrational exuberance” out of the market. Not a bad thing as it would allow us to revisit some thematic contenders that have moved higher and faster than they probably should over the last four and a half months.

Like Warren Buffett is often quoted saying, “Price is what you pay, value is what you get.”

We couldn’t agree more.

Aside from the now largely expected interest rate increase itself, let’s remember the Fed tends to be very vague in its language and the market has a habit of not really listening to what the Fed is trying to communicate. As the Fed boosts interest rates, we’re likely to get an update on its economic and inflation forecasts in its policy statements and its that language that will either soothe the market or give it some indigestion.

 

You’ve probably come to the conclusion that it’s best to stand pat for now, and we certainly agree. 

We’ve got a number of positions on the Tematica Select List that are benefitting from pronounced multi-year tailwinds, like Connected Society company Dycom Industries (DY) and the 5G deployment; Disruptive Technology plays Universal Display (OLED) and Applied Materials (AMAT)Aging of the Population and AMN Healthcare (AMN) and the PureFunds ISE Cyber Security ETF (HACK) that is part of our Safety & Security investing theme to name just a few.

Two stocks we will be watching closely are Food with Integrity United Natural Foods (UNFI), which reported good quarterly earnings last week and recently stopped out Costco Wholesale (COST) shares. Both stocks drifted lower last week, with UNFI a tad below the average cost basis of $42.95 on the Tematica Select List and Costco shares breaking through their 50-day moving average at $167.34. When we’ve seen such moves in COST shares previously, it tends to take more than a few weeks for the shares to settle out. Given our Cash-strapped Consumer investing theme and the Costco’s continued expansion, as well as announced membership price hike, that should drive membership-related profits higher.

  • We’ll continue to keep our eyes on COST for an opportunity to jump back in.

 

Ways to Get Prepared for Future Moves

Be sure to listen to the latest edition of Cocktail Investing, in which Tematica Chief Macro Strategist Lenore Hawkins and I talk with Steve Fredette of Toast, a restaurant technology company at the intersection of the Connected Societyand Asset-lite investment themes. We’ll have another episode out tomorrow that will wrap up all the key market and economic data with a special guest Jack Mohr, who up until recently worked with Jim Cramer — yes that Jim Cramer — managing his Action Alerts Portfolio.

Also be sure to come back to Tematica Investing during the week to see our latest thoughts and comments on the economy, the market and stocks, both in and out of the Tematica Select List.

Revisiting Position Ratings as the Stock Market Grinds Higher

Revisiting Position Ratings as the Stock Market Grinds Higher

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Since our last issue, the stock market continued to move higher on the news that President Trump will soon be sharing his tax overhaul plan and Fed Chairwoman’s Yellen’s congressional testimony yesterday. We review Yellen’s comments below in greater detail, but the point is the Fed, in aggregate, sees enough oomph in the economy to keep its stated goal of up to three rate increase this year in the mix. Candidly, we didn’t expect Yellen to deviate from the script given the next Fed meeting is still several weeks away, and far more data will be had ahead of it.

With the market climbing, we had a number of strong performers on the Tematica Select List, including recently added Disruptive Technology company Nuance Communications (NUAN) and  Safety & Security play PureFunds ISE Cyber Security ETF (HACK). Both of those remain Buys at current levels. Several other positions are closing in fast on their respective price targets. Last week we trimmed back the position in Costco Wholesale (COST) and reduced it to a Hold from Buy. We’d note that’s a true Hold, not to be interpreted in the herd mindset as a loose Sell recommendation. We continue to see Costco benefitting from our Cash-strapped Consumer theme and its plan to open additional warehouse clubs, which boosts higher margin membership fee income.

Similarly, this morning we are reducing our ratings on both Universal Display (OLED) and PowerShares NASDAQ Internet Portfolio ETF (PNQI) from Buy to Hold. Both have enviable runs, the former as more talk of Apple’s next iPhone iteration heats up and the potential of OLED screen and the latter given the moves we’ve enjoyed in our Facebook (FB) and Alphabet (GOOGL) shares. As we adjust these ratings, we’re also going to layer in stop losses as well:

  • We will set the OLED stop loss at $60, which ensures a gain of at least 13 percent.
  • And set a stop loss at $88 for PNQI shares, which ensures a 5 percent gain.

Positions that we’ll be watching closely as they move closer to our price targets include AMN Healthcare (AMN), Facebook FB), Alphabet (GOOGL) and Disney (DIS) shares.

 


What’s all the Yellin’ About Yellen?

As we mentioned above, yesterday Fed Chairwoman Janet Yellen began her two day session in front of Congress for her semiannual testimony on monetary policy. Last night Tematica Chief Investment Officer, Chris Versace, joined CGTN’s Global Business to discuss the testimony, which was very much a non-surprise given the Fed Chair is not likely to tip the Fed’s policy hand in between meetings, particularly when we have ample economic data ahead and we’ve yet to get the particulars on several Trump policies. In her prepared speech to the Senate Banking Committee yesterday, Yellen said the central bank can continue to raise interest rates slowly although it would be “unwise” to wait too long. Pretty much more of the same if you ask us.

Over the last few months, the pace of manufacturing activity has picked up as evidenced by the monthly ISM manufacturing data and manufacturing PMI metrics from Markit Economics. And while it has us thinking another hike is in the cards, we agree with Yellen that with little meat on the Trump policy bone as yet, the Fed might hold out until more specifics are shared before boosting rates. This also means much more economic data to factor into their economic group-think. Odds are this means a rate hike is more likely at the May FOMC meeting than at the March one.

Today Yellen takes the stage in front of the House Financial Services Committee, and while it’s a bit mean to say we do tend to get a hearty chuckle out of watching some of those folks ask questions they don’t really understand. That good fun aside, we don’t expect Yellen to deviate from the Fed script anytime soon.


Updates, Updates, Updates

Over the last few days, there were several noteworthy items for a few of our Tematica Select List holdings. The following is a roundup of those developments.

The Walt Disney Co. (DIS)    Content is King

Disney raised admission prices for U.S. theme parks, by as much as $5 for certain one-day tickets at the Magic Kingdom theme park in Orlando and Disneyland. The cost of a regular ticket at the Magic Kingdom, effective yesterday, is now $115, while the same at Disneyland is now $110. The $124 peak price at Magic Kingdom, which includes many summer days and holidays, is unchanged.

As a consumer, we may cringe at the Disney’s ticket prices, but there is no denying its parks remain a key attraction, and new exhibits/rides, such as Frozen and eventually Star Wars, will only serve to keep people coming. From an investor perspective, price increases like these tend to drive margin expansion and profits, and that’s something we certainly like.

  • Our price target on Disney remains $125, and we continue to rate DIS shares a Buy. 

 

AT&T (T)  Connected Society

AT&T competitor Verizon (VZ) announced it was returning to unlimited data plans, in part to combat Sprint (S) and T-Mobile USA (TMUS). Typically, there tends to be a herd mentality when such programs are introduced, which means we’ll be watching to see if AT&T joins the fray — and if so, how the company tiers its product offering.

Also with AT&T, when asked about the pending merger with Time Warner (TWX), CEO Randall Stephenson said, “We still think we’ll be closed by the end of the year.” That matches recent comments from Time Warner, and likely means AT&T shares will be somewhat rangebound until the proposed merger clears its review by the Department of Justice. Time Warner shareholders will meet today to decide on the company’s proposed $86B merger with AT&T — a “yes” vote is expected.

  • We continue to rate T shares a Hold, with a $45 price target. All things being equal, we’d look to revisit our rating on the shares below $40.
Amazon (AMZN)    Connected Society

As it relates to our position in Amazon, over the weekend there was news that FedEx (FDX) has launched FedEx Fulfillment, a logistic network for small and medium businesses. Given the accelerating shift to digital commerce (one of our key investment pillars for AMZN shares), it comes as little surprise that FedEx would seek to replicate Amazon’s Fulfilled By Amazon (FBA) business. For FBA transactions, Amazon receives a portion of each sale, but could, at the same time, be competing with the vendor.

The differentiator, in our view, is Amazon’s Prime service, which offers “free” two-day delivery for the shopper, and a growing list of items/services. Given the overall shift to digital commerce, odds are this rising tide will lift several boats, but to us, the real question is how vendors will offset shipping costs paid by shoppers. If they stick it to shoppers, this effort by FedEx could be more sizzle than steak.

 

AMN Healthcare (AMN)    Aging of the Population

The December JOLTS report showed yet another month-over-month increase in health-care and social assistance jobs, which led to a 12 percent increase in December 2016 compared to December 2015. Meanwhile, hiring levels in December remained relatively unchanged, up only 2.1 percent year over year.

In our view, this confirms the difficulty in finding quality staff, which bodes well for AMN’s business. Longer term, by 2020, the U.S. is expected to need 1.6 million more direct-care workers than in 2010, which equates to a 48 percent increase for nursing, home-health and personal-care aides over the decade, due primarily to the aging of 78 million baby boomers.

Our intent remains to nibble on AMN shares closer to $35 to build out the position at better prices. AMN will report its quarterly earnings tomorrow (Feb. 16) and consensus expectations call for EPS of $0.54 and revenue of $476.4 million.

  • We have a $47 price target on AMN and at current levels, that leaves 21 percent upside; as such we will look to revisit the rating and the price target after the company’s earnings announcement.

 

Dycom Industries (DY)  Connected Society

Our shares of this Connected Society infrastructure play rose more than 2 percent since last week following the news that CenturyLink’s (CTL) 2017 capital spending will be $2.6 billion vs. $3.0 billion in 2016. While overall spending is ticking down, on its earnings call CenturyLink management shared that its “broadband investments for 2017 are expected to actually be a little higher than 2016 levels.” Combined with 2017 capital spending plans for AT&T, Verizon, and Comcast, it looks like total capital spending on broadband and wireless will be up modestly year over year with a greater portion of spending on network capacity and new technologies (5G, Gigabit fiber).

We continue to see Dycom as a prime beneficiary of that wireless and wireline capital spending. We are going to sit tight and be patient with the position given our view that, worst case, it’s only a matter of time for next-generation network technologies to be deployed.

  • We rate Dycom shares a Buy with a $115 price target.

 

International Flavors & Fragrances (IFF) Rise & Fall of the Middle Class

After today’s market close, IFF will report its December quarter earnings. Consensus expectations have the company delivering EPS of $1.16 on revenue of $752.3 million. As we’ve shared previously, flavor and fragrance competitor results set a sound footing for IFF’s quarterly earnings that will be reported this week (Feb. 15).

We remind subscribers that given IFF’s international exposure, currency is likely to weigh on its December-quarter results as well as its near-term outlook. But, as we have said before, we see that largely reflected in the share price over the last few months.

  • We continue to see ample upside to our $145 price target over the coming quarters fueled by rising disposable income, particularly in the emerging markets, but also from the shift in consumer preferences to natural/organic flavors.

 

Nuance Communications (NUAN)  Disruptive Technology

Following solid December-quarter earnings last week, shares of this voice technology company rose more than 6 percent over the last several days, bringing our return in the shares to roughly 9 percent. In our view, the performance in the most recent quarter shows that despite all the headway we are hearing about Amazon’s (AMZN) Alexa voice digital assistant and similar offerings from Alphabet (GOOGL), there is ample opportunity in this expanding voice technology market for Nuance and its offerings to the health-care, mobile/auto, enterprise and imaging markets.

During the conference call Nuance shared that while there has been growing interest in voice interface technology in the last few years, the arrival of Amazon and Alphabet products has accelerated the pace of investment across several Nuance customer verticals. These opportunities along with Nuance’s expanding solution set, which includes artificial intelligence and analytics, bodes well for the company’s competitive position in the coming quarters.

Longer term, Tractica forecasts total voice digital assistant revenue will grow from $1.6 billion in 2015 to $15.8 billion in 2021. That is also likely to put Nuance on the M&A contender list for those larger entities that need to expand their voice technology capabilities.

  • Our price target on the shares remains $21 and our rating a Buy. All things being equal, the line at which we will revisit that rating is around $19

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As the market scales new heights, we review our current holdings

As the market scales new heights, we review our current holdings

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Over the last few days, we’ve been attending the Inside ETF conference in warm and sunny Hollywood, FL. While we were focused on the latest developments in the ETF space, we’ve kept one eye on the markets and the renewed climb in the stock market, with the DOW tipping over the 20,000 mark for the first time in history just this morning.

With yesterday’s close both the tech-heavy Nasdaq composite index and the S&P 500 powered to new all-time highs amid news that President Trump is already getting down to business, the domestic manufacturing economy perked up further in January and the continued mixed bag of December quarter earnings.

As we shared in this week’s Monday Morning Kickoff, this is the first full week of the year that teems with both data and earnings, with the latter escalating as the week goes on and on into next week. Toward the end of the week, we get the first print on 4Q 2016 GDP and we close it out with the start of Chinese New Year. As that holiday begins, we’ll be looking for confirming points for our Affordable Luxury, as well as Rise & Fall of the Middle-Class themes.

This week we have four positions on the Tematica Select List reporting – Cash-strapped Consumer company McCormick & Co. (MKC), Connected Society player AT&T (T), Guilty Pleasure company Starbucks (SBUX) and Alphabet (GOOGL), which resides in our Asset-lite Business Model investing theme. This morning McCormick reported is 4Q 2016 results, and despite the impact of currency, which was expected given the company’s geographic mix, we found the results rather favorable and the same can be said for the outlook over the next year – more on that below.

After today’s market close, AT&T will share its full results for the December quarter. Last week the company pre-announced several metrics for its December quarter, but yesterday Verizon’s (VZ) results fell short of Wall Street expectations. As part of our monthly position review below, we’ve laid out some of those metrics as well as shared reporting dates for those companies that have made their reporting dates known. That’s right, today is the last Wednesday in January and it’s time to take stock (pun intended) of the positions on the Tematica Select List.

This week’s issue is jammed packed, with updates on the 15 of the holdings in the Tematica Select List along with our current ratings and guidance on each position. Given the length, we recommend you download the full issue by either clicking on the download button below or simply clicking here.

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The full content of Tematica Investing is above; however downloading the full issue provides detailed performance tables and charts. Click here to download.