Gordon Reid is president and CEO of Goodreid Investment Counsel. His focus is U.S. equities.
Latest Purchase May, 2014 at $211. Revenues and earnings are growing very rapidly as the world moves to electronic processing in place of cash to settle transactions. Debit transactions now account for almost 60% of Visa’s transactions. International expansion is driving growth and as a major sponsor of the upcoming FIFA World Cup and the 2016 Olympic Games in Brazil, watch for Visa to capture market share to propel growth.
Latest Purchase May, 2014 at $13. Wabash manufactures trailers for commercial trucking. With the average age of trailer fleets now almost nine years, the replacement cycle is taking hold. Price increases are sticking, margins are expanding and volumes are kicking in.
Latest purchase May, 2014 at $70. Walgreen, the largest drugstore chain in the U.S., has a number of positive catalysts propelling growth. Customers continue to migrate back after the resolution with Pharmacy Benefit Manager, Express Scripts and their generic drug sales are getting a boost from a distribution agreement with Amerisource Bergen. Earnings are also benefitting from synergies achieved from the Alliance Boots acquisition.
Past picks: May 8, 2013
Community Health Systems
Then: $46.10; Now: $41.77 -9.39%; Total return: -9.39%
Then: $75.05; Now: $108.36 +44.38%; Total return: +47.02%
Deere & Co.
Then: $92.35; Now: $91.17 -1.23%; Total return: +1.09%
Total return average: +12.91%
The U.S. equity market continues to experience rolling corrections targeting perceived over-valued areas such as social media and biotech stocks. As a group, stocks are fairly valued, suggesting that broad indexes can work higher in 2014 but at a rate that correlates more closely to earnings growth than we witnessed in 2013. Additional opportunity lies in highlighting undervalued specific situations.
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