Stuart Hinshelwood is U.S. Equities Specialist at BMO Nesbitt Burns.
- 12.0x forward earnings
- vols are tracking well QTD
- crude on rail is a mutli-year stock
- U.S. recovery beneficiary
- 2.5-per-cent yield
- $28 TP range.
- valuation good for strong growth profile (sales CAGR 16 per cent - 5Y)
- strong balance sheet
- focused R&D mgmt team
- 2.3-per-cent yield
- smartphone/ tablet market will continue to grow
- $77 PT range.
- lagged peers (PEP-N) in 2013
- fair valuation
- opps on the cost side, growth in EM markets, 8-per-cent EPS growth over 5 years, lower debt levels
- opps in bottling, 2.8-per-cent yield,
- brand loyalty (Coke, Powerade, Dasani, Sprite, Minute Maid, Diet Coke).
Past Picks: April 19, 2013
Total return: +13.74 per cent
Total return: +3.48 per cent
Total return: +9.67 per cent
Total return average: +8.96 per cent
As we enter second-quarter 2013 earnings season, the combination of :
- (1) U.S. sequester drag in1H 2013,
- (2) China continuing to disappoint ; and
- (3) the rise in interest rates (plus volatility)
pose risks to a U.S. recovery and the global economic recovery (from essentially a credit tightening) which may obscure visibility and confidence on a second-half 2013 GDP acceleration . With 80 per cent of pre-announcements in 2Q negative, its easy to see why consensus is cautious about earnings over the next few weeks (and should be) and this is against a backdrop that is being fueled by the U.S. Federal Reserve versus purely fundamental factors for U.S. sectors and stocks, so risks are this point are to the downside versus upside, if growth doesn't materialize or interest-rates stall the housing/auto/U.S. recovery.