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Security Analysts’ Summary Recommendations

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kendis
0 diapositives · 187 Views · Jul 05, 2014

Security Analysts’ Summary Recommendations. Rio Tinto (Ticker: Rio) Analyst: Garett Mahoney. Recommendation: “Sell” Target Price: $39 Today’s Price: $55.01. Rio Tinto (Ticker: Rio) Analyst: Garett Mahoney. Segments: Iron Ore Aluminium Copper Energy Diamonds & Minerals.

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Security Analysts’ Summary Recommendations
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  1. Security Analysts’ Summary Recommendations
  2. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney Recommendation: “Sell” Target Price: $39 Today’s Price: $55.01
  3. Rio Tinto (Ticker: Rio) Analyst: Garett Mahoney Segments: Iron Ore Aluminium Copper Energy Diamonds & Minerals
  4. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney
  5. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney Copper (₵/lb) OyuTolgoi Largest New Copper Mine Disputes with Mongolian Government Regarding Expansion Expansion Required in order to turn profit. Turquoise Resources estimates current operating output to decline. Northern Dynasty 19.1% stake gifted to Charities
  6. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney
  7. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney China’s Influence
  8. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney
  9. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney Source: Spring 2014 portfolio management class
  10. Recommendation SELL China’s economic and political changes will negatively impact multiple segment revenues. Significant impact on iron ore prices. Development of GHOST Cities cannot be sustained. China’s consumption will be cut. Aluminium demand and price increase will be overshadowed by Chinese policy changes. Copper price decrease. Poor HPR and Risk-Adjusted Returns shows investment would be more beneficial in Sector ETF. Target Price: $39 Today’s Closing Price: $55.01
  11. Recommendation for PPG Industries (Ticker: PPG) Analyst: Marin Decaudaveine Recommendation: SELL Target price (6/30/2015): $181 Closing Price (5/7/2014): $198.74
  12. PPG Segments Overview
  13. Why sell PPG? Very high return since its purchase: 210.32% since 4/8/2010 (S&P 500 return in the same time: 58.31%). Sell PPG to secure these gains. Morningstar
  14. Why sell PPG? (cont) Exposure to the risk of raw materials inflation. Titanium dioxide purchases are 70% to 80% of the cost of goods sold of the coatings business (93% of the total revenues of PPG in 2013). Only one large supplier, Henan Billions. Architectural coatings business (29% of revenues) weaker than other coatings businesses, despite the construction market recovery. Due to fewer competitive advantages, based on technological leadership and not on prices. Transitions optical business separation, which was very profitable, and had excellent margins (29.2% versus 15.5% for the whole company)
  15. However, PPG has some strengths Current PPG’s portfolio shift. Focus on coating activity (2004: 56%, 2014: 93%). Strong acquiring activity, and a lot of divestitures. Coatings manufacturing industry benefits from many positive points. Low capital intensive and consolidating industry. High growth potential. Results improved in the long run. 25% of the firm's sales are from emerging regions. It will drive growth, because the western regions expand at a slower rate. High return of cash to shareholders ($1.35 billion in 2013), through shares repurchases and dividends.
  16. Questions?
  17. Chevron Corporation (Ticker: CVX) Analyst: Edward Weagel
  18. Recommendation for Chevron (CVX) Recommendation: BUY Target Price (12/31/2015): $141 Closing Price (05/06/2014): $126.23 Reasoning Behind the Recommendation The company is investing heavily in new US and International projects. Barrels of Oil Equivalent per day (BOEPD) production is projected to increase into 2017. CVX outperformed the other supermajors in profit per barrel. The company reliably pays dividends. For the past decade, dividends have grown at 9.8% per annum. Cash is also used for stock buybacks. Industry Outlook Because of new technology, global liquid production is still growing despite several analysts claiming that it would peak in the 2000’s.
  19. Strengths Upstream Strengths Greater than 90% of earnings come from 27% of revenue Production per day is projected to increase to 3.1 million bpd of BOE. New Projects Angola LNG project started shipping its product. Australia – Wheatstone LNG project Delaware Basin Kurdistan Region – 80% stake in QaraDagh Block Marcellus Shale Downstream Strengths Demand is expected to rise for refined products in the next 15 years. US Gulf Coast Petrochemicals Project
  20. Weaknesses Risk-adjusted performance during the past 5 quarters The sector performed worse than the S&P. The company performed worse than the sector. Upstream Weaknesses Exploration expense is at a high for the past 5 years at $1.8 billion Capital and Exploratory expenditures are at a high for the past 5 years The increasing reliance on offshore drilling means more risks. Downstream Weaknesses Historically, the segment is vulnerable to low margins. This segment contributes less than 10% to earnings. For both US and International, sales decreased for refined products.
  21. Questions?
  22. Recommendation for Honeywell International (Ticker: HON) Analyst: Benjamin Yang Recommendation: BUY Target price (12/2015): $103 Closing Price (5/7/2014): $92.92 2013 Sales: $39.1 B (+4%) 2013 Net Income: $3.96 B (+12%)
  23. Strengths Aerospace Global Economy ACS Construction PMT Green Technology Transportation Ties to macroeconomic trends with positive outlook High expected earnings growth through M&A
  24. Weaknesses and Risks Defense and Space (Aero) faces headwinds (Target: bottom out in 2014) Net income margin improvement capacity uncertain beyond 2015 (Target: continued improvement in 2014) Risk: M&A could be poorly managed. Target: monitor to ensure organic growth for PMT and ACS in the 1%-4% range or better in 2014-2018.
  25. Recommendation for Kinder Morgan Energy Partners LP (Ticker: KMP) Analyst: Robert Nagaki Recommendation: BUY Target price (12/2015): $90 Closing Price (5/07/2014): $75.09 Industry Overview -Energy Transportation and Storage Business Segments - Natural Gas Pipelines - CO2 Pipelines - Product Pipelines - Terminals - Kinder Morgan Canada *Source of basic data company 10-k
  26. Positives Tennessee Gas Pipeline El Paso Natural Gas Jones Act Tankers $16.2 billion in future growth projects
  27. Negatives Interest Rates Alternative forms of Energy Transportation Terrorist Attacks
  28. Questions?
  29. Recommendation for PepsiCo (PEP) Analyst: Chase Eggleston Recommendation: BUY Target price (12/2015): $94 Closing Price (05/07/2014): $86.80 Segments PepsiCo Americas Foods Frito-Lay North America (FLNA) Quaker Food North America (QFNA) Latin American food businesses (LAF) PepsiCo Americas Beverage (PAB) Europe Asia, Middle East and Africa (AMEA)
  30. Reasons for Recommendation Positives: Return to Shareholders Share Repurchases Dividends $2.27 per share to $2.62 per share Size Cash Flows Revenue Volatility Low Risk Growth Potential Emerging Markets Shanghai’s DisneyLand At Home Beverage Production
  31. Reasons for Recommendation Things to be aware of: Consumer Trends Commodity Prices Currency Exchange Competitors
  32. Sources IBIS World Mergent PepsiCo 2013 10-k PepsiCo2012 10-k http://seekingalpha.com/article/2059583-pepsi-tingyi-take-aim-at-coke-with-disney-win http://www.fool.com/investing/general/2014/03/17/pepsico-enters-at-home-carbonation-market-before-c.aspx http://seekingalpha.com/article/2018301-pepsico-ceo-discusses-q4-2013-results-earnings-call-transcript?part=single http://advisor.marketscope.com/SP/msa/reports.pdf?reportURL=/indsurv/fnb/fnb.pdf
  33. Recommendation for Schlumberger Ltd (Ticker: SLB) Analyst: Jordan Fuentes Recommendation: HOLD Target price (12/2015): $114.00 Closing price (5/07/2014): $101.88 Regions: Segments:
  34. Recommendation for Schlumberger Ltd (Ticker: SLB) Analyst: Jordan Fuentes Recommendation: HOLD Target price (12/2015): $114.00 Closing price (5/07/2014): $101.88 Positives: Technological innovation and efficiency Financial performance against competition Industry outlook bullish Negatives: Highly dependent on expenditures from oil and gas industry related to the exploration and production (E&P) of hydro-carbons. Subject to risk related to foreign exchange and geo-political events Alternative energy production Competitors: Halliburton Company (HAL) Baker Hughes Incorporated (BHI) Weatherford International (WFT)
  35. Technological Innovation: SLB 1.2 billion invested into R&E in 2013 (2.46% of revenues) Over 125 R&E facilities worldwide Involved in optimization of hydro-carbon rigs. Improved efficiency for customers Shale, fracking, and deep-water E&P PowerDrive Vortex drill bit can penetrate 92% further than traditional drills bits. OneSubsea Joint Venture: world record for shortest time between exploration and production: 14 Months Wearable Intelligence: Google Glass
  36. Financial Advantage Expanding margins Double digit EPS growth Shareholder approved buyback program: 2.6 of 10 billion spent Improved 2013: asset utilization, inventory management
  37. Recommendation Stryker Corporation (Ticker: SYK) Analyst: Bryan Deshayes Recommendation: BUY Target price (12/2015): 93 Closing Price (5/07/2014): 79.42 Company Overview 2013 Revenue : $9.02 Billion 4.2% Increase from 2012 Segments Reconstructive (4.8% increase) MedSurg (2.9% increase) Neurotechnology and Spine (5.6% increase)
  38. Stryker Corporation Future Industry Outlook Change in government regulation Reduced Cost Trend for Healthcare Providers Emerging Markets – Growing middle class Strengths Recent Acquisitions : MAKO, Trauson, Patient Safety Technologies Research and Development Fast Long-Term Growing Dividend
  39. Stryker Corporation Opportunities International Expansion : Emerging Markets Aging Population (Over 65 to double by 2030) Increased Obesity Threats - New Entrants in the Market/Competition Regulation Litigation/Lawsuits
  40. Stryker Corporation Questions?
  41. Recommendation for Union Pacific Corporation (Ticker: UNP) Analyst: Kathy Hollingsworth Recommendation: BUY Target price (12/2015): $216 Closing Price (5/7/2014): $188.35 Diversified Commodity mix Current leader in the industry Strong Brand Recognition
  42. Commodity Market Share Agriculture 30.6% Automotive 37.5% Chemicals 35.1% Coal/Energy 23% Industrial Products 14.3% Intermodal 44.9% *Commodity Total Revenues from the Association of American Railroads 2012 Market Share
  43. Positives Operations are tied to the economy Only railroad to have all six ports to Mexico -More manufacturing moving to Mexico (especially auto industry) $60 million buybacks until 2017 Investing in technology for locomotives to improve fuel efficiency Best transportation industry to turn to when fuel prices spike Investing capital into networks and infrastructure to grow
  44. Negatives Legacy contracts Railroad Unions Volatile fuel costs; Enforcement of fuel surcharges Pending law suits regarding price fixing Coal Industry/Natural Gas Competition
  45. Conclusion Union Pacific Corporation Leading the Rail Industry Maintaining strong financials Railroads are the best choice among industry competitors as fuel costs rise Preparing itself to grow with the forecasted economic rise Taking care of their investors It’s a buy.
  46. Walgreens Company (WAG)
  47. Walgreens Company (WAG) Analyst: Thai Yaparwong Recommendation: BUY Target price (12/2015): $76.00 Closing Price (5/07/2014): $69.87 Company Overview Over 8,600 Locations - 408 Healthcare Clinics Revenue: $72.2 B (+0.8%) Net Income: $2.3 B (+10.6%) Prescription Drugs Front End Products
  48. Walgreens Company (WAG) Analyst: Thai Yaparwong Recommendation: BUY Target price (12/2015): $76.00 Closing Price (5/07/2014): $69.87 Reasons for Recommendation Strategic Partnerships Alliance Boots Europe, Asia & Africa New Products 2016 Revenue Forecast: $130B AmerisourceBergen 10yr. Distribution Agreement Global Platform Synergies 2014 Projected: $425M 2016 Goal: $1B
  49. Walgreens Company (WAG)Analyst: Thai Yaparwong Recommendation: BUY Target price (12/2015): $76.00 Closing Price (5/07/2014): $69.87 Market Presence & Reputation Iconic Brand Loyalty Rewards Program Dividend 38 Consecutive Years Key Drivers Creating a Well Experience Advancing Community Pharmacy Establishing an Efficient Global Platform
  50. Walgreens Company (WAG)Analyst: Thai Yaparwong Recommendation: BUY Target price (12/2015): $76.00 Closing Price (5/07/2014): $69.87 Risks Uncertainty of International Economies Uncertainty of Government Regulation Buy Stable, Sustainable Growth Long Term Gains Increasing Dividends