Shares of Caterpillar (CAT) are soaring today after the equipment manufacturer reported earnings that, at first glance, didn’t seem to inspire investor confidence. National Bank Financial’sMaxim Sytchev offers his take:
Daniel Acker/Bloomberg News
CAT-US just finished its conference call (please see our first take on Q2/16 results Here). In general we would qualify the tone as realistic vis–vis the macro environment with some slight positive incremental data points for the dealers on inquiries for rebuild activity (on the mining side). On the oil side, CAT has not seen any improvements yet from the sales perspective despite the commodity recovering from the bottom. When looking at global aggregated CAPEX spending, consensus is still pointing to y/y declines in 2016E and 2017E. We want to be sensitive to timing of CAPEX thawing as consensus numbers have a tendency to remain very sticky and not responsive to turning points. When we overlay gold / copper / iron ore index on CAPEX numbers going all the way back to 2000, there is a very strong correlation. The million dollar question is when the producers will start to feel more comfortable with loosening the spending purse strings
Top US Stocks To Own Right Now: Costco Wholesale Corporation(COST)
Costco Wholesale Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The company’s product categories include candy, snack foods, tobacco, alcoholic and non-alcoholic beverages, and cleaning and institutional supplies; appliances, electronics, health and beauty aids, hardware, office supplies, garden and patio, sporting goods, toys, seasonal items, and automotive supplies; dry and institutionally packaged foods; apparel, domestics, jewelry, house wares, media, home furnishings, cameras, and small appliances; meat, bakery, deli, and produce; and gas stations, pharmacy, food court, optical, one-hour photo, hearing aid, and travel. It also provides business and gold star (individual) membership services. As of April 26, 2011, the company operated 581 warehouses, including 425 in the United States and Puerto Rico, 80 in Canada, 22 in the Uni ted Kingdom, 7 in Korea, 6 in Taiwan, 8 in Japan, 1 in Australia, and 32 in Mexico. It also has Costco Online, an electronic commerce Web site, at costco.com in the United States and at costco.ca in Canada. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.
- [By Monica Gerson]
Analysts are expecting Costco Wholesale Corporation (NASDAQ: COST) to have earned $1.22 per share on revenue of $27.09 billion in the latest quarter. Costco shares gained 0.27 percent to $142.95 in after-hours trading.
- [By Spencer White]
American Express Company (NYSE: AXP) held its annual Investor’s Day event Thursday, hoping to reassure investors spooked by the company’s loss of the Costco Wholesale Corporation (NASDAQ: COST) co-brand account, and its announcement of $1 billion in cost reductions last month. The credit card market has squeezed AmEx, as its higher swipe fees face intense competitive pressure.
- [By Motif Investing]
But in the past two-and-a-half years, the stock has fallen by nearly half, due mostly to two main reasons: First, rising competition from the likes of Sprouts Farmers Market Inc (NASDAQ: SFM) and The Fresh Market Inc (NASDAQ: TFM), as well as traditional grocers like The Kroger Co (NYSE: KR) and mass merchants like Costco Wholesale Corporation (NASDAQ: COST), both of which have built out organic lines. Then there’s Amazon.com, Inc. (NASDAQ: AMZN), which is pouring resources into its AmazonFresh delivery service.
Top US Stocks To Own Right Now: DRDGOLD Limited(DRD)
DRDGOLD Limited, incorporated on February 16, 2015, is a surface gold tailings retreatment company. The Company operates in the central Witwatersrand (Wits) basin in Gauteng province and recovers gold from tailings. Ergo Mining Proprietary Limited (Ergo) is the Company’s operating entity. Ergo is a surface retreatment operator. Ergo’s assets cover an area approximately 62 kilometers from east to west and around 25 kilometers from north to south. The Company operates approximately two metallurgical plants, two milling and pump stations, a network of pipelines and the Brakpan tailings facility (BTF).
The Ergo plant has a total retreatment capacity of 1.8 Million tons per month. The Company’s product is dore bars. Ergo is owned by Ergo Mining Operations Proprietary Limited (EMO). The Company extracts gold through a combination of flotation, milling, carbon-in-pulp (CIP) and carbon- in-leach (CIL) processes. As of 30 June, 2015, the Company produced approximately 150,145 ounces of gold. The slime is dislodged and mixed with water and the resulting slurry is pumped to a metallurgical treatment plant for processing. The Crown and City Deep milling and pump stations partly process approximately 600 thousand tons per month. The Knights satellite plant processes approximately 200,000 to 300,000 thousand tons per month from various sites.
- [By Lisa Levin]
In trading on Wednesday, basic materials shares fell by 1.27 percent. Meanwhile, top losers in the sector included McEwen Mining Inc (NYSE: MUX), down 12 percent, and DRDGOLD Ltd. (ADR) (NYSE: DRD), down 7 percent.
Top 10 Trucking Stocks To Buy Right Now: Wells Fargo & Company(WFC)
Wells Fargo & Company, through its subsidiaries, provides retail, commercial, and corporate banking services primarily in the United States. The company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. The Community Banking segment offers deposits, including checking, market rate, and individual retirement accounts; savings and time deposits; and debit cards. Its loan products comprise lines of credit, auto floor plans, equity lines and loans, equipment and transportation loans, education loans, residential mortgage loans, health savings accounts, and credit cards. This segment also provides equipment leases, real estate financing, small business administration financing, venture capital financing, cash management, payroll services, retirement plans, loans secured by autos, and merchant payment processing services; purchases sales finance contracts from retail merchants; and a family of funds, and investment managemen t services. The Wholesale Banking segment offers commercial and corporate banking products and services, including commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection services, foreign exchange services, treasury and investment management, institutional fixed-income sales, commodity and equity risk management, insurance, corporate trust fiduciary and agency services, and investment banking services. This segment also provides banking products for commercial real estate market, and real estate and mortgage brokerage services. The Wealth, Brokerage, and Retirement segment offers financial advisory, brokerage, and institutional retirement and trust services. As of December 31, 2010, the company served its customers through approximately 9,000 banking stores in 39 States and the District of Columbia. Wells Fargo & Company was founded in 1929 and is headquartered in San Franc i sco, California.
- [By Ben Levisohn]
KBW’sFrederick Cannon andAllyson Boyd consider whether mega banks like Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM) and Morgan Stanley (MS) should be broken up:
- [By Reuters]
Justin Sullivan/Getty Images RICHMOND, Calif. — Richmond, Calif.’s leaders approved Wednesday morning a plan for the city to become the first in the nation to acquire mortgages with negative equity in a bid to keep local residents in their homes. The power of ’eminent domain’ allows governments to seize private property for a public purpose. Critics say the plan threatens the market for private-label mortgage-backed securities. Richmond’s city council voted 4 to 3 for Mayor Gayle McLaughlin’s proposal for city staff to work more closely with Mortgage Resolution Partners to put the plan crafted by the investor group for the city to work. Richmond can now invoke eminent domain if trusts for more than 620 delinquent and performing “underwater” mortgages reject offers made by the city to buy the loans at deep discount pegged to their properties’ current appraised prices to refinance them and reduce their principal. A mortgage is under water when its unpaid balance is greater than its property’s market value. Mortgage Resolution Partners has failed to get similar plans approved by local governments elsewhere — most recently in North Las Vegas, Nev., and earlier this year in San Bernardino County in Southern California — as the mortgage industry and local real estate businesses rallied against them. But in Richmond, Mortgage Resolution Partners found an ally in a Wall Street-bashing Green Party mayor of one of the San Francisco region’s poorest cities who sees working with the investor group to acquire mortgages as a public purpose if it makes the loans more affordable, averts foreclosures and alleviates blight. Richmond’s residents have been “badly harmed by this housing crisis,” McLaughlin said, defending the plan and partnership with Mortgage Resolution Partners during an often contentious city council meeting that began Tuesday evening and ended early Wednesday morning. “Too many have already lost their homes.” City council members opposed to the pl
- [By Ben Levisohn]
We at Smead Capital are doubling down on the idea that the interest rates, which determine the discount rate for long-duration assets, are going to rise. What could possibly satisfy you if that happens? First, we think it takes much better economic growth and higher loan demand to get there. We like banks and insurance companies which reside in the 100 cheapest stocks and will be positively affected by an increase in the velocity of money and the spread between short-term and long-term interest rates. We believe JP Morgan (JPM), Wells Fargo (WFC), Bank of America (BAC), American Express (AXP) and Aflac (AFL) stand to benefit from this era and fall in the cheapest quintile.
Top US Stocks To Own Right Now: Nucor Corporation(NUE)
Nucor Corporation, together with its subsidiaries, engages in the manufacture and sale of steel and steel products in North America and internationally. It operates through three segments: Steel Mills, Steel Products, and Raw Materials. The Steel Mills segment produces hot and cold-rolled sheet steel; plate steel; structural steel comprising wide-flange beams, beam blanks, and sheet piling; and bar steel, such as blooms, billets, concrete reinforcing bar, merchant bar, and special bar quality products. The Steel Products segment offers steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, metal building systems, light gauge steel framing, steel grating and expanded metal, and wire and wire mesh products. The Raw Materials segment produces direct reduced iron (DRI); brokers ferrous and nonferrous metals, pig iron, hot briquetted iron, and DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap metal products. The company?s operations also include various international trading companies that buy and sell steel and steel products. It sells its hot-rolled steel and cold-rolled steel to steel service centers, fabricators, and manufacturers; steel joists and joist girders, and steel deck to general contractors and fabricators; and cold finished steel and steel fasteners to distributors and manufacturers. The company?s products are used by contractors in constructing highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings. Nucor Corporation was founded in 1940 and is based in Charlotte, North Carolina.
- [By Wayne Duggan]
JPMorgan names United States Steel Corporation (NYSE: X), AK Steel Holding Corporation (NYSE: AKS), Steel Dynamics, Inc. (NASDAQ: STLD) and Nucor Corporation (NYSE: NUE) as its top steel stock picks.
- [By Ben Levisohn]
Given revised commodity deck forecasts (particularly for Steel and Gold) and improved Balance Sheet health (Steels, Precious and Industrials Metals) we are upgrading our ratings on several stocks in our coverage. We generally favor companies that have already initiated specific self-help, have low-cost assets and are less exposed to China supply and demand dynamics. In Steels, we have increased our rating from Hold to Buy on Nucor (NUE) and from Sell to Hold on US Steel. We have also upgraded Kinross Gold (KGC) to a Hold on valuation…On higher-than-peer valuations, we reiterate Sell-rated Coeur Mining (CDE), Franco-Nevada (FNV), Goldcorp (GG), Teck Resources (TCK) and highly leveraged AK Steel given preference to issue further equity if possible.