Berkeley Farms dairy products, a brand of Dean Foods, are displayed for sale at a San Francisco supermarket. Bloomberg News
Why such a tepid reaction from Dean Foods (DF) on the heels of better than expected financial results,upbeat guidance and news that the milk processor scooped up an iconic ice cream brand?
At a recent $18.16, the shares inched 0.2% lower in recent market action.
As Barrons noted in February, milk markets have been moving in Deans favor. Falling raw milk prices boost Deans bottom line by lowering input osts.
The Dallas-based company sells ice cream, cream and juices to grocery stores and big retailers. But Deans regular milk business is about 70% private label, the rest of it is branded, and like other milk sellers, it is grappling with falling consumption and increasing competition from almond milk and other milk substitutes.
Top 5 New Companies To Own In Right Now: Potash Corporation of Saskatchewan Inc.(POT)
Potash Corporation of Saskatchewan Inc. (PCS), incorporated on May 15, 2002, is a fertilizer producer producing various primary crop nutrients, such as potash, nitrogen and phosphate. The Company operates through three segments: potash, nitrogen and phosphate. The Company owns and operates approximately five potash operations in Saskatchewan and one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. The Company’s phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. The Company has approximately four phosphate feed plants i n the United States and produce phosphoric acid at its Geismar, Louisiana facility.
The Company’s potash operations include the mining and processing of potash, which is used as fertilizer. The potash ore is contained in a rock salt formation known as the Prairie Evaporite, which lies approximately 1,000 meters below the surface. The evaporite deposits, which are bounded by limestone formations, contain potash beds of 2.4 to 5.1 meters of thickness. The potash deposits that occur in the Province are the Esterhazy, Belle Plaine and Patience Lake Members. The Patience Lake Member is mined at the Lanigan, Allan, Patience Lake and Cory mines, and the Esterhazy Member is mined at the Rocanville mine. The Company produces potash using both conventional and solution mining methods. The Company’s conventional potash operations mine approximately 28.2 million tons of ore at an average mineral grade of over 23.7% potassium oxide (K2O). Its potash produ ction from its operations consists of over 9.1 million tons ! of potash (KCl or finished product) with an average grade of 61.0% K2O. In addition to potash production, its New Brunswick operations also produces over 0.9 million tons of sodium chloride (salt).
The Company’s nitrogen operations include the production of nitrogen fertilizers and nitrogen chemicals. Its products are used for agricultural, industrial and animal nutrition purposes. The Company has over four nitrogen production facilities, of which over three are located in the United States and one is located in Trinidad. The Company’s plant locations are Augusta, GA, which produces ammonia, urea, nitric acid, ammonium nitrate and nitrogen solutions; Geismar, LA, which produces ammonia, nitric acid and nitrogen solutions; Lima, OH, which produces ammonia, urea, nitric acid and nitrogen solutions, and Point Lisas, Trinidad, which produces Ammonia and urea. The ammonia is used to produce a line of upgraded nitrogen products, including urea, n itrogen solutions, ammonium nitrate and nitric acid. Ammonia, urea and nitrogen solutions are sold as fertilizers to agricultural customers and to industrial customers for various applications. Nitric acid and ammonium nitrate are sold to industrial customers for various applications. Urea is also sold for feed applications.
The Company mines phosphate ore and manufactures phosphoric acid, solid and liquid fertilizers, animal feed supplements, purified phosphoric acid, which is used in food products and industrial processes, hydrofluosilicic acid (HFSA) and silicon tetrafluoride (STF). The Company conducts its phosphate operations primarily at over two facilities, including a 75,212-acre facility near Aurora, North Carolina and a 99,588-acre facility near White Springs in northern Florida. The Aurora facility includes approximately six million ton per-year mining operation, over three sulfuric acid plants, approximately four phosphoric aci d plants, over four purified acid plants, a liquid fertilize! r plant, ! approximately four superphosphoric acid (SPA) plants, a deflourinated merchange grade acid plant (DFMGA), a low magnesium SPA plant (LOMAG), a defluorinated phosphate (DFP) or animal feed plant, approximately two granulation plants capable of producing diammonium phosphate (DAP) or monoammonium phosphate (MAP), and over four STF plants.
The White Springs facility includes a mine and the Swift Creek chemical complex. The remaining Swift Creek chemical complex consists of over two sulfuric acid plants, one phosphoric acid plant, and one SPA plant. At its Geismar, Louisiana facility, the Company manufactures phosphoric acid. The Geismar facility has a phosphoric acid plant and a liquid fertilizer plant. The Company extracts phosphate ore using surface mining techniques. Its other phosphate properties include animal feed plants in Marseilles, Illinois; Joplin, Missouri; Weeping Water, Nebraska; a technical and food grade phosphate plant in Cincinnati, Ohio, and a te rminal facility at Morehead City, North Carolina. It produces MGA at Aurora, White Springs and Geismar facilities.
The Company competes with The Mosaic Company, Agrium Inc., Intrepid Potash Inc., ICL, SQM, Belaruskali, Uralkali, K+S Group, Agrium Inc., CF Industries Holdings, Inc., Koch Industries, Inc., J.R. Simplot Company, OCP S.A. and Innophos Holdings, Inc.
- [By Daniela Pylypczak]
Morgan Stanley announced on Monday that it has resumed coverage on Potash Corp (POT).
Morgan Stanley analyst Vincent Andrews stated that the company has assigned the fertilizer stock an “Equal Weight” rating, warning “We remain cautious on the overall potash market, though more because of loose supply/demand fundamentals than because of dynamics in Russia/Belorussia. Potash prices have been moving lower for 8 quarters in a row now (7 of which BPC was fully functioning) and prices were continuing to drift lower in the weeks preceding the BPC break-up (recall Mosaic’s disclosure about lower prices in the Brazilian market on its July 16th earnings call.”
Potash shares popped 1.55% during Monday’s session. Year-to-date, the stock has fallen 21.35%.
Top 5 New Companies To Own In Right Now: Aaron's, Inc.(AAN)
Aarons, Inc. operates as a specialty retailer of furniture, consumer electronics, computers, appliances, and household accessories in the United States and Canada. It operates through six segments: Sales and Lease Ownership, Progressive, HomeSmart, DAMI, Franchise, and Manufacturing. The company engages in the lease ownership and retail sale of various products, such as televisions, computers, tablets, mobile phones, living room, dining room and bedroom furniture, mattresses, washers, dryers, and refrigerators. It offers products of various brands, such as Samsung, Frigidaire, Hewlett-Packard, LG, Whirlpool, Simmons, Philips, JVC, Sharp, and Magnavox. As of February 29, 2016, the company operated approximately 2,100 company-operated and franchised stores in 47 states and Canada; and provided lease-purchase solutions through approximately 16,000 retail locations in 46 states, as well as various second-look financing programs through approximately 1,400 locations. Aarons, Inc. was founded in 1955 and is headquartered in Atlanta, Georgia.
- [By Lisa Levin]
On Friday, non-cyclical consumer goods & services shares climbed by 1.03 percent. Top gainers in the sector included B&G Foods, Inc. (NYSE: BGS) and Aaron's, Inc. (NYSE: AAN).
Top 5 Defense Stocks To Buy For 2017: Bruker Corporation(BRKR)
Bruker Corporation designs, manufactures, services, and sells proprietary life science and materials research systems worldwide. The company?s Scientific Instruments segment offers advanced instrumentation and automated solutions based on magnetic resonance, mass spectrometry, gas chromatography, X-ray, spark-optical emission spectroscopy, atomic force microscopy, stylus and optical metrology, and infrared and Raman molecular spectroscopy technologies. This segment serves pharmaceutical, biotechnology, and molecular diagnostic companies; academic institutions, medical schools, and other non-profit organizations; clinical microbiology laboratories; government departments and agencies; nanotechnology, semiconductor, chemical, cement, metals, and petroleum companies; and food, beverage, and agricultural analysis companies and laboratories. Its Energy & Supercon Technologies segment provides superconducting materials, including metallic low temperature superconductors for use in magnetic resonance imaging, nuclear magnetic resonance, fusion energy research, and other applications; and ceramic high temperature superconductors primarily for fusion energy research applications, as well as non-superconducting Cuponal materials and wires based on co-extruded copper and aluminum, and non-superconducting high technology tools. Its customers include companies in the medical industry; private and public research and development laboratories in the fields of fundamental and applied sciences, and energy research; academic institutions; and government agencies. This segment is also involved in the development of superconductors and superconducting-enabled devices for applications in power and energy, as well as industrial processing industries. The company markets its products through direct sales force; and distributors, independent sales representatives, and other representatives. Bruker Corporation was founded in 1991 and is headquartered in Billerica, M assachusetts.
- [By Javier Hasse]
Yet another stock experiencing a correction after the bell was Bruker Corporation (NASDAQ: BRKR), which lost 2.75 percent in after-hours, after having gained 4.5 percent during the day.
Top 5 New Companies To Own In Right Now: Xylem Inc.(XYL)
Xylem Inc. engages in the design, manufacture, and application of engineered technologies for the water and wastewater applications. It operates through two segments, Water Infrastructure and Applied Water. The Water Infrastructure segment offers various products, including water and wastewater pumps, treatment and testing equipment, and controls and systems, as well as filtration, disinfection, and biological treatment equipment under the Flygt, WEDECO, Godwin, WTW, Sanitaire, YSI, and Leopold names for the transportation, treatment, and testing of water and wastewater for public utilities and industrial applications. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, Flojet, and Flowtronex names for residential and commercial building services, industrial water, and ir rigation applications. The company markets and sells its products through a network of direct sales force, resellers, distributors, and value-added solution providers in the United States, Europe, the Asia Pacific, and internationally. Xylem Inc. is headquartered in Rye Brook, New York.
- [By Ben Levisohn]
Technology and Industrials are our favorite ways to buy cyclical MO. Specifically, we see the Technology Select Sector SPDR ETF (XLK) as an attractive pre-breakout idea and a likely candidate to lead the S&Ps secular advance over the coming years. Buy ideas at the stock level include: Accenture (ACN), Broadcom (AVGO), Microsoft , Texas Instruments (TXN),Visa (V),Yahoo! (YHOO). We also recommend buying the Industrial Select Sector SPDR ETF (XLI) which is reversing its year-long downtrend and in position for new highs over the coming months, in our view. Buy ideas at the stock level include: Honeywell International, Ingersoll-Rand (IR), Illinois Tool Works (ITW), 3M, Southwest Airlines (LUV), Xylem (XYL). Underlined stocks are fundamentally-rated Outperform at Oppenheimer.
- [By Ben Levisohn]
Flexing the barbell strategy to balance Safe Havens with more cyclical exposures. In our view, industrials investors should be positioning their portfolio with a barbell strategy, with half of the exposure in Safe Havens like General Electric, Xylem (XYL), Danaher, Honeywell International, Roper Technologies (ROP), and AMETEK (AME), and the other half selectively in the cyclical names that are better positioned today, such as Pentair, HD Supply Holdings (HDS),Actuant (ATU), Atkore International Group (ATKR), Ingersoll-Rand, and Eaton (ETN). We still believe risk-reward is mostly balanced and that the macro will remain choppy into 2017, supporting a positioning in the defensive names. But if investor sentiment improves on not-worse news and earnings results, the more cyclical names could fare better.
Top 5 New Companies To Own In Right Now: Terex Corporation(TEX)
Terex Corporation operates as a lifting and material handling solutions company. Its Aerial Work Platforms segment designs, manufactures, services, and markets aerial work platform equipment, telehandlers, and light towers, as well as related components and replacement parts under Terex and Genie names. The companys Construction segment offers compact construction equipment, including loader backhoes, mini and midi excavators, wheeled excavators, site dumpers, compaction rollers, skid steer loaders, and wheel loaders; and specialty equipment, such as material handlers, concrete mixer trucks, and concrete pavers. Its Cranes segment designs, manufactures, services, refurbishes, and markets mobile telescopic, tower, lattice boom crawler, lattice boom truck, utility equipment, and truck-mounted cranes, as well as related components and replacement parts under Terex name. The companys Material Handling & Port Solutions segment offers industrial cranes, such as universal cranes, process cranes, rope and chain hoists, electric motors, light crane systems, and crane components; and port and rail equipment, including mobile harbor cranes, straddle and sprinter carriers, gantry cranes, reach stackers, empty and full container handlers, general cargo lift trucks, automated stacking cranes, automated guided vehicles, terminal automation software, and related components and replacement parts. Its Materials Processing segment provides materials processing equipment, such as crushers, washing systems, screens, apron feeders, chippers, and related components and replacement parts under the Terex and Powerscreen brands. The company also provides financing solutions to assist customers in the rental, leasing, and acquisition of its products. It serves the construction, infrastructure, quarrying, mining, manufacturing, transportation, energy, and utility industries worldwide. Terex Corporation was founded in 19 25 and is based in Westport, Connecticut.
- [By Ben Levisohn]
Third and a trigger for the change: China becomes an active bidder in the space. Chinas Zoomlion bid for Terex (TEX) ($3.3B) along with Haier/General Electric (GE) ($5.4B) and several ChemChina proposed deals in industrials changes the upside/downside skew, particularly on lower quality/more challenged names. The Terex bid does not appear to be one-off. Chinese outbound M&A announcements rose to record highs in 15; to $112B (up 57% from 2014) in total acquisitions. Industrials formed a large and rising portion, at ~12B completed. Thats roughly equal to the 3 prior years industrials deals combined, and is the highest on record. Energy and materials accounted for ~15% of 15 spend vs. ~83% in 2011. Even lower quality or more currently challenged machinery franchises have distribution which could be highly attractive to new entrants…
- [By Ben Levisohn]
Yesterday, Terex (TEX) announced that it would sell its ports business to Konecranes for $1.3 billion. Today, Baird’s Mircea Dobre and Joseph Grabowski upgraded Terex to Outperform from Neutral, arguing that the sale makes a takeover by China’s Zoomlion that much easier. They explain:
Balint Porneczi/Bloomberg News
The sale of MHPS to Konecranes is a positive catalyst on multiple fronts: shareholders got an attractive multiple for what historically has been a challenged business with further upside possible given 25% equity ownership in Konecranes, execution risk is diminished as new CEO can focus on operational improvement without the effort required to integrate the Terex and Konecranes businesses, and finally, the MHPS sale makes it easier for Zoomlion to acquire remaining Terex.
While our upgrade is not reliant on Zoomlion acquiring Terex, the MHPS transaction could make a firm Zoomlion offer more likely.
At the margin, a Zoomlion deal appears easier to get done: 1) the remaining businesses fit better with Zoomlions existing product portfolio of construction equipment, cranes, and various commercial and municipal equipment, 2) given the attractive terms of the MHPS sale, the funding hurdle required to acquire Terex is lowered, 3) many of the CFIUS issues center around national security concerns regarding the nations ports, no longer a concern given MHPS sale.
Dobre and Grabowski also raised their price target on Terex to $30, up from $24. With Terex off 0.1% at $24.88 today, that leaves 21% upside in the stock to Baird’s target.
In February, I wrote about Chinese demand for U.S. companies, including Terex.
- [By Ben Levisohn]
RBC’sSeth Weber and team offer their thoughts on Zoomlion’s revised bid for Terex (TEX):
After the close today, Terex announced that it is moving forward in its negotiations with Zoomlion Heavy Industry Science and Technology Co. following receipt of a non-binding proposal from the Chinese company to acquire all outstanding shares for $31/share in cash.