Tag Archives: KORS

Fossil: Now Is The Time To Add

In 2017, Fossil (NASDAQ:FOSL) laid out an aggressive five-year strategic plan called “New World Fossil”, looking to transform the business to adjust to the changing dynamics of the traditional and connected watch business. The story was grim – Fossil was at risk of obsolescence, traditional watches sales fell off for many quarters, and the company’s ancillary products (leather and jewellery) suffered even more. The stock declined to $6 at one point.

A year later, Fossil has a new breath of life as smartwatches come to the fore, and showed that it is flexible and can transform into the new market! The stock is now $19.

This shows how emotional and short-term the market can be. The continuous slide of the share price spread the fear and affirmed investors that Fossil was deemed for failure. Chatter such as How many watches does a man need? Or Fossil is fossilising really showed how sceptical the market was with respect to the company. And madness is what it was with the share price. In the middle of this, we came out with a bold move at the beginning of the year and shared our opinion to buy in the stock. Now, at $19, we are adding more. The market likes stories, and the new story of Fossil is just starting to spread among investors.

The latest two earnings reports showed that the companys transformation plan – New World Fossil – is manifesting into tangible results. This quarters headline improvements were abundant and reflected in a huge change of sentiment in the market. So much so that even institutions are buying in.

And yes, we need to remind ourselves of the fact that as investors, we tend to seek affirmation from the market to confirm our findings. The share price reversion from $6 to now $19 tells investors that the New World Fossil strategic change is working thus far, but we are cognizant that it remains premature to judge precisely where this is going. However, Fossil is executing on the first leg of its turnaround.

Q1 Results

In the last conference call, the management laid out very conservative guidance, coupled with clear strategic goals. As a result, we factor in our reading that Fossil is attempting to underpromise and over-deliver. Regardless of how the company was before, we like this way forward.

Worthy mentions are:

Smartwatches shined again, posting growth of 97% yoy

We had the benefit of reading Fitbits (NYSE:FIT) earnings call a week before, and we would be lying if we didnt expect a good performance by smartwatches. Fitbits results and outlook on smartwatches were very assuring. Its smartwatches sales doubled on a sequential basis. Moreover, the company foresees an excellent product mix coming from its newly introduced smartwatches, and the health and wellness market is expanding rapidly.

Unsurprisingly to us, Fossils smartwatches performed well. The company delivered $80 million in sales for the quarter, 97% higher when compared to the first quarter of last year. The absolute sales percentage, 18% of total watches sales, is still small, but it was big enough to make yoy sales of watches to stabilise. Remember the double-digit declines just a few quarters before? 97% growth makes that seems so far back in the past!

Geographically, things are working better in Europe and Asia as opposed to the Americas.

(Source: Fossil’s 1Q18 8-K)

We are excited, and the analysts at the conference call were too. Nearly all questions were about the future of smartwatches.

Better yet, Fossil predicts the most dramatic improvement is going to be on fitness and health and wellness features that were already featured in a couple of SKUs last year in Q4. It is a step ahead of time. Additionally, it is always positive to learn that Google (GOOG, GOOGL) and Qualcomm (NASDAQ:QCOM) are significantly stepping up their investment in the category and the support of the ecosystem. Lastly, wearables last year was an $18 billion business, growing to $33 billion in three years. Fitbit is the number one in this category, but it is yet to produce positive FCF. Fossil has the scale and is still winning big contracts such as PUMA. Extrapolating the 5-6% of its traditional watch market share to smartwatches is an exciting prospect.

Marketing and sales channel wise, e-commerce outperformed wholesales

Ok, so it was impressive that Fossil achieved 5% improvement in SSS. However, it wasnt strictly “same stores sales”. This growth was mainly thanks to the companys inclusion of the direct e颅-commerce sales in its comp sales calculation – this channel alone increased almost 50% for the quarter. Nevertheless, it was very encouraging to read that direct sales channel (in-store) also performed well. In contrary, the wholesale segment in the US and Europe suffered due to the phasing out of the Adidas (OTCQX:ADDYY) and Burberry (OTCPK:BURBY) contract and the decline in sales in Skagen. The remaining brands: Michael Kors (NYSE:KORS), Emporio Armani, Armani Exchange, and Diesel were relatively flat. Thus, the decision to exit the wholesale business in the Europe leather segment was a welcoming move.

Digital marketing was the second strategic change that Fossil wanted to focus on, and we will be watching this closely. So far, it is executing exceptionally well.

Margins improved

Gross margin improved to 50.5%, highest in the past five quarters (4Q17: 48.66%, 3Q17: 46.45%, 2Q17: 50.49%, 1Q17: 49.76%). Q1 benefited from nearly $20 million of the New World Fossil cost tightening effort, which is projected to drive $200 million in gross margin and efficiency benefits through 2019.

The company had lower expenses in the first quarter resulting from corporate and regional infrastructure reductions, as well as lower store expenses, given 81 stores were closed since last year (the total now is 512 stores). Unfortunately, store closures will continue to hurt total direct channels sales; last quarter, this negatively impacted up to 300 basis points. All in all, we are encouraged, for as more unprofitable stores are closed, Fossil will become smaller but leaner.

Lastly, restructuring costs will continue to affect EPS. However, it will decrease as fewer stores are required to shut down.

Our reported loss of $0.99 per share included $0.35 of New World Fossil restructuring charges. Excluding these items, our adjusted EPS loss was $0.64. Last year, our first quarter EPS loss was $1 and included $0.35 impact from restructuring charges. EPS was relatively flat this year compared to last year despite the lower sales volume as we continue to deliver on our New World Fossil initiatives with improved gross margins and lower operating expenses.

– Source: Fossil 1Q18 Earnings Call

EBITDA and FCF

For 2018, Fossil expects adjusted EBITDA in the range of $175-225 million and will invest approximately $25 million in capital expenditures. Coupled with interest expense of $50 million, Fossils FCF will range from $100 million to $150 million. These are fantastic numbers for a company that was supposedly struggling just a few quarters earlier.

Company management expects to see better years ahead:

As we said in our last call, our longer颅-term view is that after top颅line contraction in 2018, our initiatives should begin to stabilize sales levels in 2019 with sales growth returning in 2020 and continuing to grow annually thereafter. And with our New World Fossil transformation initiatives, we are targeting a double-颅digit operating margin over the long term.

– Source: Fossil 1Q18 Earnings Call

Financial Health

Fossils debt is at $463 million, reduced from $616 million a year ago. Cash is at $230 million, compared to $320 million last year. However, interest payment is higher by $2 million yoy due to the recent refinancing.

Overall, with trailing 12颅-month adjusted EBITDA of $204 million. Fossils first-quarter leverage ratio was 2.3 times, well within its 4.5 times bank leverage ratio covenant limits. The company is in no hurry to pay off its debts, but given the $230 million pile of cash and conservatively $100 million FCF, all debts could be paid off within two years.

Takeaway

Fossil’s 1Q18 results were very progressive in the essential areas, though dampened with a few misses in the wholesales channel, the American market and further restructuring costs expected. However, it was enough to change the sentiment of the market from the demise of traditional watches to the growth of wearables! The current product mix of 18% is expected to rise to 25%, 30% and then 35%.

With forward EBITDA of $175-225 million and FCF in the $100-150 million range, managements convincing story is well-supported! The strategic transformation to shift the company from owning 5-6% of the world’s traditional watches to owning the same percentage in the hybrid and smartwatches segments is well underway.

Fossil is a still buy from here.

__

If Fossil is not for you, we cover value stocks, so maybe try a diversified rail stock (L.B. Foster (NASDAQ:FSTR)), a beaten-down health retailer (GNC Holdings (NYSE:GNC)), or a pure online car parts play (U.S. Auto Parts Network (NASDAQ:PRTS)).

Author’s note: Thank you for reading the article. If you have enjoyed our article, please click “Follow” to receive our stock picks as soon as they are published. Lastly, please do further due diligence to reach your own conclusions.

Disclosure: I am/we are long FOSL, GNC, PRTS, FSTR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Fossil: Now Is The Time To Add

In 2017, Fossil (NASDAQ:FOSL) laid out an aggressive five-year strategic plan called “New World Fossil”, looking to transform the business to adjust to the changing dynamics of the traditional and connected watch business. The story was grim – Fossil was at risk of obsolescence, traditional watches sales fell off for many quarters, and the company’s ancillary products (leather and jewellery) suffered even more. The stock declined to $6 at one point.

A year later, Fossil has a new breath of life as smartwatches come to the fore, and showed that it is flexible and can transform into the new market! The stock is now $19.

This shows how emotional and short-term the market can be. The continuous slide of the share price spread the fear and affirmed investors that Fossil was deemed for failure. Chatter such as How many watches does a man need? Or Fossil is fossilising really showed how sceptical the market was with respect to the company. And madness is what it was with the share price. In the middle of this, we came out with a bold move at the beginning of the year and shared our opinion to buy in the stock. Now, at $19, we are adding more. The market likes stories, and the new story of Fossil is just starting to spread among investors.

The latest two earnings reports showed that the companys transformation plan – New World Fossil – is manifesting into tangible results. This quarters headline improvements were abundant and reflected in a huge change of sentiment in the market. So much so that even institutions are buying in.

And yes, we need to remind ourselves of the fact that as investors, we tend to seek affirmation from the market to confirm our findings. The share price reversion from $6 to now $19 tells investors that the New World Fossil strategic change is working thus far, but we are cognizant that it remains premature to judge precisely where this is going. However, Fossil is executing on the first leg of its turnaround.

Q1 Results

In the last conference call, the management laid out very conservative guidance, coupled with clear strategic goals. As a result, we factor in our reading that Fossil is attempting to underpromise and over-deliver. Regardless of how the company was before, we like this way forward.

Worthy mentions are:

Smartwatches shined again, posting growth of 97% yoy

We had the benefit of reading Fitbits (NYSE:FIT) earnings call a week before, and we would be lying if we didnt expect a good performance by smartwatches. Fitbits results and outlook on smartwatches were very assuring. Its smartwatches sales doubled on a sequential basis. Moreover, the company foresees an excellent product mix coming from its newly introduced smartwatches, and the health and wellness market is expanding rapidly.

Unsurprisingly to us, Fossils smartwatches performed well. The company delivered $80 million in sales for the quarter, 97% higher when compared to the first quarter of last year. The absolute sales percentage, 18% of total watches sales, is still small, but it was big enough to make yoy sales of watches to stabilise. Remember the double-digit declines just a few quarters before? 97% growth makes that seems so far back in the past!

Geographically, things are working better in Europe and Asia as opposed to the Americas.

(Source: Fossil’s 1Q18 8-K)

We are excited, and the analysts at the conference call were too. Nearly all questions were about the future of smartwatches.

Better yet, Fossil predicts the most dramatic improvement is going to be on fitness and health and wellness features that were already featured in a couple of SKUs last year in Q4. It is a step ahead of time. Additionally, it is always positive to learn that Google (GOOG, GOOGL) and Qualcomm (NASDAQ:QCOM) are significantly stepping up their investment in the category and the support of the ecosystem. Lastly, wearables last year was an $18 billion business, growing to $33 billion in three years. Fitbit is the number one in this category, but it is yet to produce positive FCF. Fossil has the scale and is still winning big contracts such as PUMA. Extrapolating the 5-6% of its traditional watch market share to smartwatches is an exciting prospect.

Marketing and sales channel wise, e-commerce outperformed wholesales

Ok, so it was impressive that Fossil achieved 5% improvement in SSS. However, it wasnt strictly “same stores sales”. This growth was mainly thanks to the companys inclusion of the direct e颅-commerce sales in its comp sales calculation – this channel alone increased almost 50% for the quarter. Nevertheless, it was very encouraging to read that direct sales channel (in-store) also performed well. In contrary, the wholesale segment in the US and Europe suffered due to the phasing out of the Adidas (OTCQX:ADDYY) and Burberry (OTCPK:BURBY) contract and the decline in sales in Skagen. The remaining brands: Michael Kors (NYSE:KORS), Emporio Armani, Armani Exchange, and Diesel were relatively flat. Thus, the decision to exit the wholesale business in the Europe leather segment was a welcoming move.

Digital marketing was the second strategic change that Fossil wanted to focus on, and we will be watching this closely. So far, it is executing exceptionally well.

Margins improved

Gross margin improved to 50.5%, highest in the past five quarters (4Q17: 48.66%, 3Q17: 46.45%, 2Q17: 50.49%, 1Q17: 49.76%). Q1 benefited from nearly $20 million of the New World Fossil cost tightening effort, which is projected to drive $200 million in gross margin and efficiency benefits through 2019.

The company had lower expenses in the first quarter resulting from corporate and regional infrastructure reductions, as well as lower store expenses, given 81 stores were closed since last year (the total now is 512 stores). Unfortunately, store closures will continue to hurt total direct channels sales; last quarter, this negatively impacted up to 300 basis points. All in all, we are encouraged, for as more unprofitable stores are closed, Fossil will become smaller but leaner.

Lastly, restructuring costs will continue to affect EPS. However, it will decrease as fewer stores are required to shut down.

Our reported loss of $0.99 per share included $0.35 of New World Fossil restructuring charges. Excluding these items, our adjusted EPS loss was $0.64. Last year, our first quarter EPS loss was $1 and included $0.35 impact from restructuring charges. EPS was relatively flat this year compared to last year despite the lower sales volume as we continue to deliver on our New World Fossil initiatives with improved gross margins and lower operating expenses.

– Source: Fossil 1Q18 Earnings Call

EBITDA and FCF

For 2018, Fossil expects adjusted EBITDA in the range of $175-225 million and will invest approximately $25 million in capital expenditures. Coupled with interest expense of $50 million, Fossils FCF will range from $100 million to $150 million. These are fantastic numbers for a company that was supposedly struggling just a few quarters earlier.

Company management expects to see better years ahead:

As we said in our last call, our longer颅-term view is that after top颅line contraction in 2018, our initiatives should begin to stabilize sales levels in 2019 with sales growth returning in 2020 and continuing to grow annually thereafter. And with our New World Fossil transformation initiatives, we are targeting a double-颅digit operating margin over the long term.

– Source: Fossil 1Q18 Earnings Call

Financial Health

Fossils debt is at $463 million, reduced from $616 million a year ago. Cash is at $230 million, compared to $320 million last year. However, interest payment is higher by $2 million yoy due to the recent refinancing.

Overall, with trailing 12颅-month adjusted EBITDA of $204 million. Fossils first-quarter leverage ratio was 2.3 times, well within its 4.5 times bank leverage ratio covenant limits. The company is in no hurry to pay off its debts, but given the $230 million pile of cash and conservatively $100 million FCF, all debts could be paid off within two years.

Takeaway

Fossil’s 1Q18 results were very progressive in the essential areas, though dampened with a few misses in the wholesales channel, the American market and further restructuring costs expected. However, it was enough to change the sentiment of the market from the demise of traditional watches to the growth of wearables! The current product mix of 18% is expected to rise to 25%, 30% and then 35%.

With forward EBITDA of $175-225 million and FCF in the $100-150 million range, managements convincing story is well-supported! The strategic transformation to shift the company from owning 5-6% of the world’s traditional watches to owning the same percentage in the hybrid and smartwatches segments is well underway.

Fossil is a still buy from here.

__

If Fossil is not for you, we cover value stocks, so maybe try a diversified rail stock (L.B. Foster (NASDAQ:FSTR)), a beaten-down health retailer (GNC Holdings (NYSE:GNC)), or a pure online car parts play (U.S. Auto Parts Network (NASDAQ:PRTS)).

Author’s note: Thank you for reading the article. If you have enjoyed our article, please click “Follow” to receive our stock picks as soon as they are published. Lastly, please do further due diligence to reach your own conclusions.

Disclosure: I am/we are long FOSL, GNC, PRTS, FSTR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Michael Kors Holdings (KORS) Holdings Increased by Mckinley Capital Management LLC Delaware

Mckinley Capital Management LLC Delaware boosted its position in Michael Kors Holdings (NYSE:KORS) by 289.4% in the 1st quarter, according to its most recent filing with the SEC. The firm owned 4,396 shares of the lifestyle brand’s stock after acquiring an additional 3,267 shares during the period. Mckinley Capital Management LLC Delaware’s holdings in Michael Kors were worth $273,000 at the end of the most recent reporting period.

Other hedge funds have also recently added to or reduced their stakes in the company. American Century Companies Inc. grew its stake in shares of Michael Kors by 2,006.2% during the 4th quarter. American Century Companies Inc. now owns 1,342,506 shares of the lifestyle brand’s stock valued at $84,511,000 after buying an additional 1,278,764 shares during the period. Bank of Montreal Can grew its stake in shares of Michael Kors by 568.5% during the 4th quarter. Bank of Montreal Can now owns 1,115,901 shares of the lifestyle brand’s stock valued at $70,246,000 after buying an additional 948,966 shares during the period. Acadian Asset Management LLC grew its stake in shares of Michael Kors by 493.5% during the 4th quarter. Acadian Asset Management LLC now owns 939,826 shares of the lifestyle brand’s stock valued at $59,163,000 after buying an additional 781,460 shares during the period. Arrowstreet Capital Limited Partnership boosted its position in Michael Kors by 205.5% during the 4th quarter. Arrowstreet Capital Limited Partnership now owns 1,017,371 shares of the lifestyle brand’s stock worth $64,044,000 after purchasing an additional 684,310 shares during the period. Finally, Two Sigma Advisers LP boosted its position in Michael Kors by 40.3% during the 4th quarter. Two Sigma Advisers LP now owns 1,224,876 shares of the lifestyle brand’s stock worth $77,106,000 after purchasing an additional 352,016 shares during the period. 85.16% of the stock is owned by hedge funds and other institutional investors.

Get Michael Kors alerts:

A number of analysts recently weighed in on KORS shares. Jefferies Group reaffirmed a “buy” rating and set a $90.00 price target on shares of Michael Kors in a research report on Wednesday, February 7th. Nomura upped their price target on shares of Michael Kors from $69.00 to $80.00 and gave the stock a “buy” rating in a research report on Thursday, February 8th. Needham & Company LLC upped their price target on shares of Michael Kors from $69.00 to $75.00 and gave the stock a “buy” rating in a research report on Thursday, February 8th. ValuEngine cut shares of Michael Kors from a “strong-buy” rating to a “buy” rating in a research report on Friday, March 2nd. Finally, Deutsche Bank raised shares of Michael Kors from a “hold” rating to a “buy” rating and upped their price target for the stock from $66.20 to $86.00 in a research report on Monday, April 23rd. One analyst has rated the stock with a sell rating, fifteen have issued a hold rating and fifteen have given a buy rating to the stock. Michael Kors presently has an average rating of “Hold” and a consensus price target of $67.07.

In related news, CEO John D. Idol sold 150,000 shares of the stock in a transaction dated Wednesday, February 14th. The shares were sold at an average price of $62.26, for a total transaction of $9,339,000.00. The transaction was disclosed in a document filed with the SEC, which is available at the SEC website. Also, Director Stephen F. Reitman sold 6,500 shares of the stock in a transaction dated Tuesday, February 13th. The stock was sold at an average price of $62.47, for a total transaction of $406,055.00. The disclosure for this sale can be found here. In the last 90 days, insiders sold 707,090 shares of company stock worth $44,481,782. Company insiders own 6.00% of the company’s stock.

Shares of Michael Kors stock opened at $62.38 on Thursday. The stock has a market cap of $9.34 billion, a PE ratio of 14.71, a PEG ratio of 1.84 and a beta of 0.15. The company has a debt-to-equity ratio of 0.48, a current ratio of 2.00 and a quick ratio of 1.06.

Michael Kors (NYSE:KORS) last issued its earnings results on Wednesday, February 7th. The lifestyle brand reported $1.77 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $1.29 by $0.48. The business had revenue of $1.44 billion for the quarter, compared to analyst estimates of $1.38 billion. Michael Kors had a net margin of 11.32% and a return on equity of 40.86%. The company’s revenue for the quarter was up 6.4% on a year-over-year basis. During the same quarter in the prior year, the business posted $1.64 EPS. sell-side analysts forecast that Michael Kors Holdings will post 4.49 earnings per share for the current year.

Michael Kors Company Profile

Michael Kors Holdings Limited design, markets, distributes, and retails branded women's apparel and accessories, and men's apparel. The company operates in three segments: Retail, Wholesale, and Licensing. The Retail segment is involved in the sale of women's apparel; men's apparel; accessories, which include handbags and small leather goods, such as wallets; footwear; and licensed products comprising watches, jewelry, fragrances, beauty products, and eyewear.

Want to see what other hedge funds are holding KORS? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Michael Kors Holdings (NYSE:KORS).

Institutional Ownership by Quarter for Michael Kors (NYSE:KORS)

Top 5 Low Price Companies To Invest In 2016

Related IR Nomura On Industrials: Upgrades Ingersoll-Rand To Buy Benzinga's Top Upgrades Related KORS Benzinga's Top Initiations Best Stock Ideas Of February Valuation Dashboard: Consumer Discretionary – Update (Seeking Alpha) Featured stories in this weekend’s Barron’s offer a look at the prospects for a climate control giant, a London-based apparel company, a pending motor oil spinoff and a healthcare spinoff. Barron’s has 16 ways to play the rebound in value stocks. Other featured stories include a special report on strategic beta ETFs.

Top 5 Low Price Companies To Invest In 2016: Old National Bancorp Capital Trust I(ONB)

Old National Bancorp operates as a holding company for Old National Bank, which provides financial services to individuals and commercial customers primarily in Indiana, eastern and southeastern Illinois, and central and western Kentucky. The company?s Community Banking segment originates loans, such as home equity lines of credit, residential real estate loans, consumer loans, commercial loans, commercial real estate loans, letters of credit, and lease financing; and generates deposit products comprising noninterest-bearing demand, negotiable order of withdrawal, savings and money market, and time deposits. It also offers debit and ATM cards, telephone access, online banking, and other electronic banking services. In addition, this segment provides investment services and various brokerage products, including investment options and investment advice. Further, it offers merchant cash management and other services relating to the general banking business; reinsures credit l ife insurance; and provides property and casualty insurance. The company?s Treasury segment manages investments, wholesale funding, interest rate risk, liquidity, and leverage for the bank; and provides capital markets products, including interest rate derivatives, foreign exchange, and industrial revenue bond financing for its commercial clients. Old National Bancorp also offers fiduciary and trust services; and insurance brokerage services, such as commercial property and casualty, surety, loss control services, employee benefits consulting and administration, and personal insurance. As of December 31, 2010, it operated 161 banking financial centers, as well as loan production or other financial services offices. The company was founded in 1834 and is headquartered in Evansville, Indiana.

Advisors’ Opinion:

  • [By Ben Levisohn]

    The twenty stocks in Worth’s basket are: Ameriprise Financial (AMP) Bank of America, Banner (BANR), Citigroup, Citizens Financial Group (CFG), East West Bancorp (EWBC), First NBC Bank Holding (FNBC), HFF (HF), KeyCorp(KEY), Legacy Texas Financial Group (LTXB), Lincoln National (LNC), Morgan Stanley, Old National Bancorp (ONB), PacWest Bancorp (PACW), PNC Financial Services Group (PNC), Principal Financial Group (PFG), Stifel Financial (SF), SVB Financial Group (SIVB), TCF Financial (TCB), and Wells Fargo.

Top 5 Low Price Companies To Invest In 2016: Nuveen Municipal Value Fund Inc.(NUV)

Nuveen Municipal Value Fund, Inc. is a closed-ended fixed income mutual fund launched by Nuveen Investments, Inc. The fund is managed by Nuveen Asset Management. It invests in the fixed income markets of the United States. The fund also invests some portion of its portfolio in derivative instruments. It invests in undervalued municipal securities and other related investments the income, exempt from regular federal income taxes that are rated Baa or BBB or better. It employs fundamental analysis with bottom-up stock picking approach to create its portfolio. The fund benchmarks the performance of its portfolio against the Standard & Poor?s (S&P) National Municipal Bond Index. Nuveen Municipal Value Fund, Inc. was formed on April 8, 1987 and is domiciled in the United States.

Advisors’ Opinion:

  • [By Donald van Deventer]

    The latest implied forward rate forecast from Kamakura Corporation shows projected 10-year U.S. Treasury yields differing -0.07% to 0.03% from last week while fixed rate mortgage yields varied by -0.01% to 0.08%. Mortgage yields, determined by the Monday through Wednesday weekly survey of the Federal Home Loan Mortgage Corporation, lag Treasury movements simply because of the 3-day yield calculation used in the Primary Mortgage Market Survey. The 10-year U.S. Treasury yield is projected to rise from 2.92% at Thursday’s close (down 0.06% from last week) to 3.374% (down 0.06% from last week) in one year. The 10-year U.S. Treasury yield in ten years is forecast to reach 4.639%, 1 basis point lower than last week. The 15-year fixed rate mortgage rate is forecast to rise from the effective yield of 3.69% on Thursday (down 0.001% from last week) to 4.222% (down 0.006% from last week) in one year and 6.29% in 10 years, up 0.038% from last week. We explain the background for these calculations in the rest of this note, along with some mortgage servicing rights metrics. The forecast allows investors in exchange traded U.S. Treasury funds (TLT) (TBT), total return bond funds (BOND), municipal bonds (NUV) and exchange traded mortgage funds (REM) to assess likely total returns over the next 120 months. Treasury-related exchange traded funds affected by the forward rates include:

Top New Stocks To Own For 2016: Clarke(t)

T.Clarke plc, a building services contractor, provides electrical and mechanical installation services and supplies associated equipment. The company offers information communications technology (ICT) services in the areas of structured cabling and connectivity, network infrastructure and security, networked energy management, data centre infrastructure, and managed and support services; facilities management services, such as preventative, reactive, and planned maintenance solutions; and green technologies services, which comprise photovoltaics, rainwater harvesting, biomass boilers, ground source heating, air source heating, wind turbines, lighting, and carbon reduction audit services. It also provides massive reading station redevelopment, cross rail, border rail link, and underground power upgrade services for the rail sector; lifecycle building services combining mechanical and electrical works with ICT for utilities and technologies sectors; lifecycle services for ho tel and residential sectors, which include electrical, ICT, and mechanical systems design, installation, commissioning, and maintenance; and mechanical and electrical contracting services for education, healthcare, government/local authority, retail and leisure, stadiums, transport, towers, media, and residential sectors. In addition, the company manufactures and prefabricates elements of an installation, as well as engineering components. T.Clarke plc was founded in 1889 and is headquartered in London, the United Kingdom.

Advisors’ Opinion:

  • [By Shauna O’Brien]

    Credit Suisse reported on Wednesday that it has begun coverage on wireless provider AT&T Inc. (T).

    The firm has initiated coverage on AT&T with an “Outperform” rating and a $38 price target. This price target suggests a 9% upside from the stock’s current price of $34.75. Analysts believe that the stock is attractively valued.

    AT&T shares were mostly flat during Wednesday morning trading. The stock has been mostly flat YTD.

  • [By Diane Alter]

    The last time a Dow shake-up caused such a stir was in April 2004, when AT&T (NYSE: T), Eastman Kodak (currently in bankruptcy proceedings), and International Paper Co. (NYSE: IP) were removed and replaced with American International Group Inc. (NYSE: AIG), Pfizer Inc. (NYSE: PFE), and Verizon Communications Inc. (NYSE: VZ).

Top 5 Low Price Companies To Invest In 2016: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors’ Opinion:

  • [By Ben Levisohn]

    Should oil prices recover, we believe that deepwater drilling activity growth should lag growth in US shale activity, as project economics is generally better in US shales, and E&Ps involved in US shales are generally quicker to react. Deepwater activity is largely comprises a handful of companies (Petrobras (PBR), Statoil (STO), Total (TOT), Shell (RDS.A), BP (BP), ONGC, ExxonMobil (XOM) and Chevron (CVX)) and it is unlikely that these companies can meaningfully increase their rig demand in a short period of time to absorb the current oversupply. Thus, should oil prices rise in 2018, rig demand may increase, but likely not enough to tighten the market, given that supply equaling 43% of current working rig count is stacked and new supply equaling 25% of working rig count is under-construction and should be entering the market in the coming years. As a result, while we expect some improvement in rig utilization owing to rig retirements, it will unlikely be strong enough to meaningfully improve rates in 2018 above spot levels. Any demand increase in the interim could slow rig retirements materially, and be self-defeating. We thus are Sell rated on Transocean, Atwood and Noble.

Top 5 Low Price Companies To Invest In 2016: Sotheby's(BID)

 

Sothebys operates as an auctioneer of authenticated fine art, decorative art, jewelry, wine, and collectibles in the United States, the United Kingdom, China, France, Switzerland, and internationally. The company operates through two segments, Agency and Finance. The Agency segment accepts property on consignment; and matches buyers and sellers of authenticated fine art, decorative art, jewelry, wine, and collectibles through the auction or private sale process. It is also involved in the sale of artworks; and operation of an auction house for investment-quality automobiles. The Finance segment offers art-related financing services to various collectors and art dealers. This segment provides secured loans, including advances secured by consigned property to borrowers who are contractually committed to sell the property in the near term; and general purpose term loans secured by property not presently intended for sale. The c ompany is also involve d in the retail wine operations; licensing Sothebys International Realty and related trademarks; and licensing its Sothebys brand name for use in connection with the art auction business in Australia, and art education n services in the United States and the United Kingdom. Sothebys was founded in 1744 and is headquartered in New York, New York.

Advisors’ Opinion:

  • [By Marshall Hargrave]

    Now Loeb's looking to put that capital to work in other markets, with the art market being a perfect candidate. Loeb and his Third Point hedge fund have started their latest activist campaign with leading auction house Sotheby's (NYSE: BID). Loeb joins fellow activist investor Marcato Capital in the stock.

Top 10 European Companies To Buy Right Now

Stocks will open lower this morning as oil continued to fall, and shares ofExxonMobil (XOM) andBP (BP) head lower following earnings reports.

sanjeev gupta/European Pressphoto Agency

S&P 500 futures have dropped 0.8%, while Dow Jones Industrial Average futures have fallen 0.8%. Nasdaq Composite futures have declined 0.8%. Oil has dropped 4% to $30.37 a barre.

Mattel (MAT) has climbed 7% to $28.62 after the toy company reported its first quarterly revenue gain in more than two years.

Dow Chemical (DOW) has gained 2.8% to $43.79 after the chemical company beat earnings and revenue forecasts.

Michael Kors (KORS) has soared 19% to $48.20 after the beaten down purveyor of purses and other accessories reported earnings that beat the Street consensus.

ExxonMobil (XOM) has fallen 1.9% to $74.81 even though the oil giant beat earnings forecasts, as BP’s (BP) reported a monster loss that has put a damper on the entire industry. BP has tumbled 8.3% top $29.07.

Top 10 European Companies To Buy Right Now: Jabil Circuit Inc.(JBL)

Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions worldwide. The company offers electronics and mechanical design, production, product management, and after-market services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, solar, storage, and telecommunications industries. Its services comprise integrated design and engineering; component selection, sourcing, and procurement; automated assembly; design and implementation of product testing; parallel global production; enclosure services; and systems assembly, direct-order fulfillment, and configure-to-order services. The company also provides set-top boxes, mobility products, and display products, as well as peripheral products, such as printers and point of sale terminals; and aftermarket services consisting of warranty and repair services. Jabil Circuit, Inc. was founded in 196 6 and is headquartered in St. Petersburg, Florida.

Advisors’ Opinion:

  • [By Amber Hestla, Michael J. Carr]

    Another Apple supplier to consider is Jabil Circuit (NYSE: JBL), a company that offers a number of manufacturing services to customers in the technology sector.

Top 10 European Companies To Buy Right Now: Packaging Corporation of America(PKG)

Packaging Corporation of America produces and sells containerboard and corrugated products in the United States. Its corrugated packaging products, include conventional shipping containers used to protect and transport manufactured goods; and multi-color boxes and displays with strong that help to merchandise the packaged product in retail locations. The company also offers meat boxes and wax-coated boxes for the agricultural industry. Packaging Corporation sells its products through direct sales and marketing organization. The company was founded in 1867 and is headquartered in Lake Forest, Illinois.

Advisors’ Opinion:

  • [By Paul Ausick]

    Stocks on the move: Boise Inc. (NYSE: BZ) is up 26% at $12.55 following the companys acquisition by Packaging Corporation of America Inc. (NYSE: PKG) for $12.55 a share ($1.28 billion). Omeros Corp. (NASDAQ: OMER) is up 68.2% at $8.56 following an analyst upgrade. Northern Dynasty Minerals Ltd. (NYSEArca: NAK) is down 33.3% at $1.48 following an announcement from Anglo American plc that it was withdrawing from a massive copper mining project in Alaska.

  • [By David Sterman]

    That was precisely the rationale behind Packaging Corp. of America's (NYSE: PKG) just-announced $2 billion (in cash and assumed debt) acquisition of rival Boise (NYSE: BZ). The deal will create a $6 billion (in sales) behemoth in the cardboard box industry.

Top 5 Medical Stocks To Invest In Right Now: Novo Nordisk A/S(NVO)

 

Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Biopharmaceuticals. The Diabetes Care segment covers insulins, GLP-1 analog, obesity, and oral antidiabetic drugs, as well as other protein related products comprising glucagon, protein related delivery systems, and needles. The Biopharmaceuticals segment offers products in the areas of haemophilia care, growth hormone therapy, and hormone replacement therapy. The company markets and distributes its products through its subsidiaries, distributors, and independent agents. Novo Nordisk A/S has a collaboration agreement with the Langer Laboratory for the development of next-generation drug delivery devices; and collaboration and licensing agreement with Ablynx nv to discover and develop novel multi-specific Nanobody drug candidates. The compa ny was founded in 1925 and is headquartered in Bagsvaerd, Denmark.

Advisors’ Opinion:

  • [By Charles Carlson, CEO and Portfolio Manager, Horizon Investment Services]

    For investors looking for growth but also income, I especially like three health-care related stocksFresenius Medical (FMS), Novo Nordisk (NVO), and Smith & Nephew (SNN).

Top 10 European Companies To Buy Right Now: Emerson Electric Company(EMR)

Emerson Electric Co. operates as a diversified manufacturing and technology company. The company engages in appliance solutions, climate technologies, industrial automation, motor technology, network power, process management, professional tools, and storage solutions businesses. Its appliance solutions business provides appliance controls, appliance motors, heating products, and white-rodgers; climate technology business provides heating, ventilation, air conditioning, and refrigeration (HVACR) solutions for residential, industrial, and commercial applications; and industrial automation business offers bearings and power transmission products, electrical power generation products, electric motors, variable speed drives and servos, electrical products, material joining solutions, fluid automation products, and wind turbine systems. The company?s motor technology business provides appliance motors, HVACR motors, DC motors, fractional horsepower motors, integral horsepower a nd larger motors, and drives; network power business provides power, precision cooling, connectivity, and embedded solutions; and process management business provides various wireless related products from self-organizing field networks to wireless asset and people tracking. Its professional tools business offers pipe working and threading equipment, pressing technology, utility locating and visual diagnostics systems, drain maintenance tools, power tools, air tools, general purpose hand tools, wet/dry vacs, job site storage equipment, truck tool boxes and equipment, and van storage equipment; and storage solutions business provides shelving and storage products for residential, commercial, and foodservice needs, as well as offers specialized carts, mobile computer workstations, and cabinet fixtures. The company was founded in 1890 and is headquartered in St. Louis, Missouri.

Advisors’ Opinion:

  • [By Rising Dividend Investing]

    Pent Up Demand Pushing Cyclical Stocks

    We are coming out of a lengthy period of decreased spending in the wake of 2008-09, which has built pent up demand for automobiles, housing and capital expenditures. The average age of vehicles on the road has reached a record high of 11.4 years. Demand for new houses fell off dramatically since the Great Recession. The average U.S. home was built in 1974 and continues to age.
    As people have chosen to fix rather than replace their vehicles and homes, we’ve seen the replacement-type industries do very well. Auto Retail’s second quarter sales and earnings per share were up 14.7% and 18.6%, respectively. Home improvement retail grew sales nearly 10% with earnings up 20% from second quarter 2012.
    Adding to the pent up demand for housing is the number of young people living with their parents rather than buying or renting on their own. According to real-estate marketplace Trulia, the number of “missing hou seholds” (Americans who would currently be owning or renting a home if pre-recession economic trends had continued) was up to 2.4 million in March. More than half of these missing households are 18 to 34-year-olds.
    This pent up demand extends beyond just the immediate products being bought by consumers. Businesses have held off replacing durable goods since the recession. All of this excess demand will have to be released at some point. Eventually, these homes and vehicles will exceed their useful life and need to be replaced. To meet the need for the excess demand, companies will not be able to hold off re-investing in new plant equipment.
    We’ve seen the beginning of this demand in 2013 and believe there is more to come. The market is buying into this as well, as more growth and manufacturing oriented sectors – such as Consumer Discretionary and Industrials – have performed well over the near-term.
    Share prices for stocks in the Indu strial sectors are mo

Top 10 European Companies To Buy Right Now: AAON Inc.(AAON)

AAON, Inc., together with its subsidiaries, engages in the manufacture and sale of air conditioning and heating equipment primarily in the United States and Canada. The company offers rooftop units, chillers, air-handling units, make-up air units, heat recovery units, condensing units, commercial self contained units, and coils. It serves the commercial and industrial new construction and replacement markets. AAON, Inc. sells its products through manufacturers representatives and internal sales force. The company was founded in 1987 and is based in Tulsa, Oklahoma.

Advisors’ Opinion:

  • [By Jonas Elmerraji]

    We’re seeing the exact same setup in shares of small-cap HVAC firm Aaon (AAON). The biggest difference is that in AAON’s case, the ascending triangle pattern is coming in at the top of this stock’s recent price action, not at the bottom. That makes this a more textbook trade for September.

    Another important difference is the fact that AAON hasn’t triggered yet. Shares have been coiling below $26 resistance since the middle of the summer; a breakout above that $26 level is the indicator that it’s time to buy. Whenever you’re looking at any technical price pattern, it’s critical to think in terms of buyers and sellers. Triangles and other price pattern names are a good quick way to explain what’s going on in this stock, but they’re not the reason it’s tradable. Instead, it all comes down to supply and demand for shares.

    That resistance line at $26 is a price where there’s an excess of supply of shares; in other words, it’s a place where sellers have been more eager to take recent gains and sell their shares than buyers have been to buy. That’s what makes the move above it so significant — a breakout indicates that buyers are finally strong enough to absorb all of the excess supply above that price level.

    Wait for that to happen before you put your money on this trade.

Top 10 European Companies To Buy Right Now: American International Group Inc.(AIG)

American International Group, Inc. is an international insurance organization. The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also involves in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company, through Chartis Inc., provides various property and casualty insurance products under commercial and consumer categories worldwide. These products include surplus lines, executive liability/directors? and officers? liability, employment practices, excess casualty, and travel/assistance lines. American International Group, through SunAmerica Financial Group, offers a suite of life insurance and retirement products and services, including term life, universal life, accident and health, fixed and variable deferred annuities, fixed payout annuities, mutual funds, and financial planning products and services to individuals and grou ps in the United States. The company, through International Lease Finance Corporation, operates as an aircraft lessor that acquires commercial jet aircraft from various manufacturers and other parties, and leases those aircraft to airlines worldwide. It also sells aircraft from its fleet to other leasing companies, financial services companies, and airlines, as well as provides management services to third-party owners of aircraft portfolios. American International Group, through United Guaranty Corporation, issues residential mortgage guaranty insurance that covers mortgage lenders from the first loss for credit defaults on high loan-to-value conventional first-lien mortgages for the purchase or refinance of one- to four-family residences in the U.S. and internationally. The company was founded in 1967 and is based in New York, New York.

Advisors’ Opinion:

  • [By David Sterman]

    My favorite insurers: AIG (NYSE: AIG) (which I discussed a few months ago), Protective Life (NYSE: PL) and Reinsurance Group of America (NYSE: RGA).

  • [By Diane Alter]

    The last time a Dow shake-up caused such a stir was in April 2004, when AT&T (NYSE: T), Eastman Kodak (currently in bankruptcy proceedings), and International Paper Co. (NYSE: IP) were removed and replaced with American International Group Inc. (NYSE: AIG), Pfizer Inc. (NYSE: PFE), and Verizon Communications Inc. (NYSE: VZ).

Top 10 European Companies To Buy Right Now: Starbucks Corporation(SBUX)

Starbucks Corporation purchases and roasts whole bean coffees. It operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. The company offers approximately 30 blends and single-origin premium arabica coffees. It also provides handcrafted beverages, such as fresh-brewed coffee, hot and iced espresso beverages, coffee and non-coffee blended beverages, Vivanno smoothies, and Tazo teas; and merchandise products, including home espresso machines, coffee brewers and grinders, coffee mugs and accessories, packaged goods, music, books, and gift items. In addition, it offers fresh food items, which comprise baked pastries, sandwiches, salads, oatmeal, yogurt parfaits, and fruit cups. Further, it also provides VIA ready brew coffee, bottled frappuccino beverages, discoveries chilled cup coffee, doubleshot espresso drinks, iced coffee, whole bean coffee, and ice creams. The company?s brand portfolio includes Tazo tea, Ethos water, Seatt le?s Best Coffee, and Torrefazione Italia Coffee. Starbucks Corporation sells its products in approximately 50 countries worldwide. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington.

Advisors’ Opinion:

  • [By Victor Mora]

    Starbucks provides in-demand coffee and tea products and services to consumers around the world. The company is reportedly ready to expand to Colombia, where it sources most of its beans. The stock has been flying higher in recent years and is now trading at all-time high prices. Over the past four quarters, earnings and revenues have been rising, which have led to upbeat investors in the company. Relative to its peers and sector, Starbucks has been a year-to-date performance leader. Look for Starbucks to continue to OUTPERFORM.

  • [By Jared Cummans]

    The ultra-popular coffee chain Starbucks (SBUX) has announced a new Group President for Global Business Services.

    The hire comes from within, as CFO Troy Alstead has been given the new title, while still maintaining his CFO position. Alstead has been a member of the Starbucks team since 1992; a time when the company was private and had just 100 stores. Over his two decade tenure he held a number of financial and managerial positions and was also an original member of the Starbucks International team.

    Alstead will look to continue to contribute to the firm’s strong success, as its stock currently sits just below its all-time high. Though the company suffered a slight drawback in early 2012, it has gotten back on track and pushed to new levels.

    Starbucks shares were up 80 cents, or 1.05%, upon Tuesday’s close. The stock is up over 40% this year alone.

  • [By David Sterman]

    Consumers will migrate to other machines that work with the growing proliferation of K-cup options, all of which are cheaper than Green Mountain's offerings. The effort to design an "enhanced brewing process" also seems curious. Few consumers seem to feel that current K-cup offerings are disappointing. It's akin to Starbucks (Nasdaq: SBUX) saying, "Our coffee used to be good, but we're making it better." That's not what a Starbucks customer is looking to hear.

Top 10 European Companies To Buy Right Now: CBOE Holdings Inc.(CBOE)

CBOE Holdings, Inc., through its subsidiaries, operates markets for the execution of transactions in exchange-traded options. The company offers marketplaces for trading of options on individual equities, various market indexes, exchange-traded notes, and exchange-traded funds, as well as futures contracts and cash equities. It has strategic relationships with Standard & Poor’s Corporation; Dow Jones & Co.; NASDAQ; and Frank Russell Co. The company was founded in 1973 and is based in Chicago, Illinois.

Advisors’ Opinion:

  • [By CNNMoney Staff]

    Stocks continued to rally despite the fact that options trading was temporarily halted Monday afternoon at exchanges run by CBOE Holdings (CBOE), Nasdaq OMX (NDAQ), BATS Global Markets and Miami International Holdings due to issues at the Options Price Reporting Authority (OPRA), which provides trading data and price quotes.

Top 10 European Companies To Buy Right Now: Halliburton Company(HAL)

Halliburton Company provides various products and services to the energy industry for the exploration, development, and production of oil and natural gas worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation. The Completion and Production segment offers production enhancement services, completion tools and services, cementing services, and Boots & Coots. Its production enhancement services include stimulation and sand control services; completion tools and services comprise subsurface safety valves and flow control equipment, surface safety systems, packers and specialty completion equipment, intelligent completion systems, expandable liner hanger systems, sand control systems, well servicing tools, and reservoir performance services; cementing services consist of bonding the well and well casing, while isolating fluid zones and maximizing wellbore stability, and casing equipment; and Boots & Coots include well intervention services , pressure control, equipment rental tools and services, and pipeline and process services. The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation, and wellbore placement solutions that enable customers to model, measure, and optimize their well construction activities. Its services comprise fluid services, drilling services, drill bits, wireline and perforating services, testing and subsea services, software and asset solutions, and integrated project management and consulting services. The company serves independent, integrated, and national oil companies. Halliburton Company was founded in 1919 and is headquartered in Houston, Texas.

Advisors’ Opinion:

  • [By Tony Daltorio]

    The biggest oilfield service companies should get a big lift from the boom, Moors said. That includes Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), Weatherford International Ltd. (NYSE: WFT), and Baker Hughes Inc. (NYSE: BHI).

Top 10 European Companies To Buy Right Now: Clean Energy Fuels Corp.(CLNE)

Clean Energy Fuels Corp., together with its subsidiaries, provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The company designs, builds, operates, and maintains fueling stations, as well as supplies compressed natural gas (CNG) and liquefied natural gas (LNG) fuel for medium and heavy-duty vehicles. Its CNG is used in automobiles, light to medium-duty vehicles, refuse trucks, and transit buses as an alternative to gasoline and diesel. The company also sells non-lubricated natural gas compressors and related equipment used in CNG and LNG stations; and produces renewable natural gas, which is used as vehicle fuel or sold for power generation. In addition, it offers vehicle finance services for the purchase of natural gas vehicles, as well as for the conversion of gasoline or diesel powered vehicles to operate on natural gas. Further, the company provides natural gas conversions, alternative fuel systems, application engineering, service and warranty support, and research and development services for natural gas vehicles. As of December 31, 2011, it served approximately 530 fleet customers with approximately 25,000 natural gas vehicles; and owned, operated, or supplied 273 natural gas fueling stations in 23 states within the United States, and British Columbia and Ontario within Canada, as well as in Peru. Clean Energy Fuels Corp. was incorporated in 2001 and is headquartered in Seal Beach, California.

Advisors’ Opinion:

  • [By Michael Vodicka]

    Clean Energy Fuels Corp. (CLNE) designs, builds and operates natural gas filling stations in the United States. The company supplies compressed natural gas (CNG) and liquefied natural gas (LNG), serving a fleet of 650 customers, more than 32,000 natural-gas vehicles while owning or supplying more than 350 filling stations in 32 states.