Today, Cole Kachur and Stockchase Insights commented about whether ZWK-T, PLC-T, CTAS-Q, ENB-T, CJT-T, PYPL-Q, QCOM-Q, BNS-T, IAG-T, ATD-T, ZWU-T, XSP-T, HPR-T, LVS-N, EIF-T, ZFM-T, GWO-T, HMAX-T, IWM-N, AMZN-Q, AMD-Q are stocks to buy or sell.
CTAS operates as a corporate uniform service provider, and is now trading at 35x times' Forward P/E. In the last five years, sales grew around 6% on average. The balance sheet is strong, with net debt of $2.5B. Net debt/EBITDA is currently at 1.1x. Based on consensus estimates, sales are expected to grow by 6%-8% on average over the next few years. The company has been consistently raising dividends and repurchasing shares over the last few years, which we like. Overall, a solid company with the recurring business model and shareholder-friendly policies, however, trading at 35x Forward P/E while growth is only around 7% does not seem to us as a screaming buy, but we would be comfortable averaging into the position over time, being more aggressive if valuation dips.
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We continue to like PLC for its growth potential and it could accelerate its growth via more acquisitions. Analysts expect marginal sales and earnings growth for this year, but higher growth in future years. Its valuation has come down to reasonable levels, at a 15.9X forward earnings multiple. It generates positive free cash flows, issues a yield, and has recently been repurchasing shares. Its balance sheet has been growing over the years, its valuation is the cheapest it has been in over a decade, and we feel that these low price levels will not last forever. We continue to like the name at these prices.
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With the US banking sector 'settling' down, ZWK does look a bit better. It is up 8.6% in the past month as the crisis subsides. We still have recession and rate risks, but with no new bank failures in a while and confidence returning, we would be more comfortable with ZWK today.
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Investing Trends: The future of retail.
If retail wants to compete with the online landscape they need to do one of three things from our perspective:
Online wins on cost & convenience, so customers need an experience of some kind. Give people a reason to go to the store, to interact with others who have similar interests, share ideas and educate your customers or just plainly make a destination that is fun to be in and interact with. Apple get this and I think Indigo is starting to catch on as well.
Much ink has been spilled over the death of retail and a lot of stats show this to be coming true. The reality is that retail will always have a place in society, it will probably just need to look a lot different than it does today. The companies that can execute on this early or companies that can help make the physical shopping experience more personal and tailored whether it is through digital aids or not, will have a certain type of first mover advantage and will be the ones to watch.
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Current share price is a good place to buy.
Very well run company with excellent capital allocation skills.
No price target - but $80 range would be safe.
Strong business for the long term investor.
Provides international exposure through asset base.