Earnings winners, a Stock to Buy on Weakness and the first Trillion Dollar Company — Weekly Top Picks
A positive week…
Stock Market around the world ended on the positive note last week.
On weekly basis, the S&P500 and NASDAQ Index provided showed positive gains, while the DJIA Index remained roughly flat. Because of Weak US Jobs Data and Trade war concerns, yields on 7-Year US Treasury notes led a fall across maturities.
Investors must still remain cautious on an escalating trade tensions between US & China. In retaliation, China proposed $60 Billion worth of Tariffs on US Goods.
We selected 5 stocks that stand out this week starting with Alimentation Couche-Tard…
[nextpage title=”Top Pick #1 : A great set of numbers for Q4 FY2018″]
Alimentation Couche-Tard (B)
Last month, Alimentation Couche-Tard provided a great set of numbers for the Q4 FY2018.
Company provided the Revenue of $13.6 Billion (Growth of +41.5%). Company’s total merchandise and service revenues were of $3.2B (+25% yoy), Same-store merchandise revenues increased by 1.8% in the US, 4.3% in Europe, and by 3.6% in Canada.
Stock almost touched the $63.50 price in few days after the earnings announcement. Its lost some of its gain and the stock is not seems to be settled at $60.0 price. The experts are bullish on the stock.
Paul Gardner likes it as a defensive play…
Really great numbers last quarter. Convenience stores are projected to grow 4-5% this year. Good acquirers. Merging with Holiday brand. Margins starting to creep up. Not cheap, but you can run with it for a long time because it’s defensive, and Amazon can’t sell you a chocolate bar with your gas. Yield is 0.7%. (Analysts’ price target is $74.69.)
Bryden Teich sees further synergies going forward…
Trading at 12 times next year earnings and the US investments are yielding benefits. He sees further synergies going forward. They will need to find ways to add loyalty plans and continue to grow revenues. The CircleK name is a good way to do it. Over 65% of their revenues are coming from the US now. Yield 0.7%. (Analysts’ price target is $74.69)
[nextpage title=”Top Pick #2 : Still trading at a discount”]
Baytex Energy Corp
Baytex Energy Corp provided its Q2 earnings on 31 July 2018. Company had revenue of C$347.61 Million (+25.2% yoy) and had the Earnings Per Share of -C$0.25.
It missed its EPS number by C$0.14. Because of which stock immediately dropped 4.3% announcement. By the end of the week, the stock jumped back to its Pre-earnings levels.
One of the possible reason could be the market participants trying to capture the arbitrage opportunity coming from proposed merger between Baytex and Raging River. This could be an opportunity for investors.
Merger is not popular with Raging River shareholders. However, Baytex shareholders are saying it is a wonderful deal. Have added a free cash flow machine in their Viking asset. This name has been beaten down by Raging River shareholders. The deal gets voted on mid August. At $70 oil he has a $7.00 target and at $80 oil he has a $10.00 target. That is 60% to 130% upside. (Analysts’ price target is $6.00)
[nextpage title=”Top Pick #3: A stock to buy on weakness”]
Netflix Stock has corrected by almost 20% from it’s all time high. Company added less number of the new subscribers. Stock price almost fell 15% after the earnings announcement.
One of the possible reasons could be short term speculators who purchased the stock for quick gains exiting the position.
Netflix stock price has more than doubled this year.
Experts are confident that newer subscriptions growth will be back soon and current numbers were result of Football World Cup.
Richard Croft things it will pick up in the next quarters…
More volatile stock. Premiums are three times what you would get from an Apple (AAPL-Q) option. They missed because of the World Cup. He wouldn’t be surprised if they pick up in the next quarters.
There recent earnings indicated their growth in subscribers is slowing. This is an example where the stock is priced for perfection – any slip up and the stock can plunge. Management has done an outstanding job to date. They are now spending on content and this impresses him how they remain profitable.
[nextpage title=”Top Pick #4 : The first trillion dollar company”]
One good news for the Apple shareholders is that it retained its price and overall sentiment/views are still positive from current life time high price levels. Apple’s stock run has been incredible and stock experts like Richard Croft think it can still go higher.
First company to reach the trillion-dollar market cap. He really likes this company. They are kicking on all cylinders. A cash hoard that is staggering.
Read : 5 Expert Opinions on a Trillion Dollar Company
[nextpage title=”Top Pick #5: They just won a $100 million contract”]
Covalon Technologies make medical devices and are doing well. Peter Hodson thinks they have good potential for growth.
This company makes wound dressings for medical devices and just won a $100 million contract overseas. Earnings growth is going to massively accelerate with the new contract. He wants to see them get another contract and they have good potential for growth in Europe. Yield 0%.