Tag: noah kiedrowski

Disney Continues Path via Future Growth Initiatives

Posted on by Noah Kiedrowski

Disney’s Growth and Future Initiatives

Disney delivered solid Q3 FY2018 quarterly results as the company continues to be focused on future initiatives such as acquiring Twenty-First Century Fox assets and a major push into streaming with a majority stake in Hulu (60% ownership), ESPN Plus launch earlier this year and direct to consumer Disney branded streaming service coming in 2019. Disney’s Q3 revenue and EPS grew by 7.3% and 18%, respectively year-over-year. Disney continues to deliver at the box office, and theme parks and its stock has finally broken out above the $110 level and appears to be consolidating above this level. Disney’s brands are ubiquitous and providing long-lasting, durable revenue streams that transcend theme parks, toys, merchandise, movie franchises, streaming initiatives, Fox properties and international reach. Disney is closing the gap in streaming as Hulu grows rapidly and in the backdrop, ESPN+ and direct to consumer Disney branded streaming service matures and comes to fruition. Disney currently trades at a P/E of 14.1 while the average stock in the S&P 500 trades at 24.9 representing a 40% discount to the average stock. Disney has been growing its dividend over the years and currently yields 1.5% to bolster Disney’s investment thesis further. Disney offers a compelling long-term investment opportunity considering the growth, Fox acquisition, pipeline, Media Networks remediation plan, diversity of its portfolio, tax reform, share repurchase program (on suspension) and dividend growth. Continue reading "Disney Continues Path via Future Growth Initiatives" →

Inexpensive Stocks: Pharmaceutical Supply Chain Cohort

Posted on by Noah Kiedrowski

The entire pharmaceutical supply chain cohort, specifically, McKesson (MCK), Cardinal Health (CAH), CVS Health (CVS) and Walgreens Boots Alliance (WBA) are all near multi-year lows despite still posting growth albeit slow with healthy balance sheets and growing dividends. This cohort has been faced with several headwinds that have negatively impacted the growth, and the changing marketplace conditions have plagued these stocks. The political backdrop has been a major headwind for the entire pharmaceutical supply chain including drug manufacturers, pharmaceutical wholesalers, and pharmacies/pharmacy benefit managers. Compounding the political climate, the drug pricing debate continues to rage on throughout political and social media circles weighing on the overarching sector. This backdrop erodes the pricing power of drugs that ultimately move from drug manufacturers to patients with insurers and other middlemen playing roles in the supply chain web.

In an effort to address these headwinds and restore growth, companies within this cohort have made bold moves such as CVS acquiring Aetna (AET) to form a colossus bumper-to-bumper healthcare company. Cardinal Health shelled out $6.1 billion to acquire Medtronic's Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency business. McKesson has made a string of acquisitions over the past two years deploying $1.2 billion for Biologics, $2.1 billion for Rexall and $525 million for Vantage Oncology in 2016. This was followed by a $1.1 billion acquisition of CoverMyMeds, undisclosed acquisition costs for RxCrossroads and Well.ca in 2017. Thus far in 2018, McKesson acquired Medical Specialty Distributors. Continue reading "Inexpensive Stocks: Pharmaceutical Supply Chain Cohort" →

Facebook - $119 Billion Disastrous Conference Call

Posted on by Noah Kiedrowski

Facebook’s (FB) fundamentals were shining bright and outweighed its data misuse scandal from months’ prior leading into its Q2 earnings. In the wake of mishandling user data, Facebook’s stock tumbled from $195 to $152 or 22%. Facebook was well off those data misuse induced sell-off lows and marched right through its previous 52-week high and broke out to $219 for a nice ~44% rebound. This scenario ended abruptly on the heels of its Q2 earnings which came in shy of analysts’ expectations on the revenue front. Facebook also issued a major guide down in growth for the next few quarters tampering growth expectations in the near term. Facebook is facing a challenging confluence of slowing revenue growth, margin compression and stagnant daily active users in the near to intermediate term. Facebook’s CFO stated that investors could expect "revenue growth rates to decline by high single-digit percentages from prior quarters." Despite these headwinds, Facebook is still posting accelerating revenue growth across all geographies, expanding market penetration with Instagram’s IGTV, Facebook’s Stories and monetization efforts in Messenger and WhatsApp. Factoring in this high single digit decrease in revenue, Facebook is still poised to grow at a double-digit clip with the most recent growth rate coming in at 42% in Q2. The long-term picture looks bright for Facebook, and the recent sell-off is a good opportunity to initiate a long position as the company contends with and addresses all the issues across its platforms. Facebook remains a premier large-cap growth stock and inexpensive relative to other large-cap growth stocks in its cohort.

Disastrous Conference Call

Well, that was a disaster of a conference call. Facebook posted the largest one-day loss in market value by any company in stock market history. Facebook shed $119 billion worth of market capitalization after dropping ~20%. No other company has ever lost greater than $100 billion in market value in a single day (Figure 1). To add insult to injury, this was also Facebook’s worst day ever on the stock market. This sell-off came on the heels of a minor Q2 advertising revenue miss of $13.04 billion versus expectations of $13.16 billion and lower than expected daily active users in Europe. Key metrics suffered from data misuse and fake news issues within its platform. Continue reading "Facebook - $119 Billion Disastrous Conference Call" →

Hasbro Spikes 13% Following Positive Q2 Earnings

Posted on by Noah Kiedrowski

Hasbro's stock skyrocketed 13% after reporting better than expected Q2 earnings. Hasbro Inc. (NASDAQ:HAS) is setting the post-Toys "R" Us bankruptcy narrative and laying out a business roadmap for long-term profitable growth across its brands. The headwinds attributable to the bankruptcy of Toy "R" Us appear to be subsiding. Hasbro reported year-over-year overall revenue decline of 7%, however, beat on EPS and revenue by posting $0.48 (bearing by $0.18) and $904.5 million (beating by $66.4 million), respectively. Despite the negative revenue numbers, Hasbro's stock bounced to the upside especially after the earnings call commentary painted a positive long-term narrative while weathering the Toy "R" Us liquidation domestically and abroad. As Hasbro realigns and effectively manages the Toy R Us liquidation, this challenging backdrop is beginning to resolve itself to Hasbro's benefit. There's many current and future growth catalysts for Hasbro in movie franchises such as Marvel, Star Wars and other Disney properties since Hasbro is the exclusive toy maker, potential e-sports with Dungeons and Dragons and Magic: The Gathering, newly acquired Power Rangers franchise which will emulate Hasbro's My Little Pony and Transformers' Bumblebee within Hasbro Studios and its legacy games such as Monopoly and Nerf. Hasbro has great Q3/Q4 2018 catalysts, a strong and growing dividend yield, clear skies post Toy "R" Us liquidation and putting forth initiatives within Hasbro Studios to further propel growth thus presenting a compelling long-term buy.

Jim Cramer’s Mad Money Follow-Up Interview - “The Worst Is Over”

Previously, Jim Cramer interviewed Hasbro's CEO Brian Goldner on Mad Money, and he was confident that "the worst is over" for Hasbro as the Toys "R" Us liquidation unfolds. Goldner went on to say "I am certain that, a year from now, we will not be talking about Toys "R" Us in this negative light," Goldner added.

Now as a follow-on from that interview, conducted on July 23rd, Jim Cramer caught up Goldner to assess the progress Hasbro was making towards circumventing the Toys "R" Us liquidation and its other growth initiatives within the company. Continue reading "Hasbro Spikes 13% Following Positive Q2 Earnings" →

Visa: The Valuation Conundrum In A Frothy Market

Posted on by Noah Kiedrowski

Visa Inc. (NYSE:V) continues to deliver phenomenal shareholder returns year after year, and thus far 2018 is no exception. Over the past year, Visa has appreciated 45% and currently sits at a 52-week high. Visa has become a top-performing perineal large-cap growth stock that continues to deliver despite emerging threats in the digital payments space, blockchain technology and maturing markets in the traditional payments space leading to slower growth prospects. I’ve been reluctant to get behind the stock of Visa considering its valuation, slowing growth and trends away from the traditional credit card space among the younger demographics that embrace PayPal (PYPL) and PayPal’s Venmo for payment options and exchanging payments between multiple parties.

Furthermore, Amazon (AMZN) may be disrupting the credit card transaction space with its potential launch of Amazon financial services and Amazon Pay. Despite Visa’s massive move over the past year, growth has become worrisome and touched down to single digits before bouncing back to double digits over the last two quarters. I feel that shareholders have become overly enthusiastic about Visa’s growth prospects. The stock has appreciated over 45% during the past year, boasts a P/E of over 35 and a PEG of over 2.0 in the midst of a frothy market. This scenario doesn’t provide a great benefit-reward profile at these levels in my opinion. Continue reading "Visa: The Valuation Conundrum In A Frothy Market" →