The attached deck highlights European industrials with strong balance sheets, good O’Neil fundamental ratings, and above-average relative strength. We view these as high quality companies that are at low risk of facing serious near/medium-term liquidity issues in a challenging economic environment. We believe these stocks offer less downside risk than than peers in the case of continued weakness and volatility across equity markets, while also being well positioned to perform well on a market reboun
Author: Andrew Kessner
Andrew Kessner is an equity research analyst covering the Cannabis and Capital Equipment sectors. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Andrew joined the firm in June 2018. He has a B.A. in Economics from Bates College and an MBA from Columbia University.
High Quality Industrials
Key Selection Criteria
• Strong balance sheet provides for low risk of near-term liquidity issues in a bear case scenario (major interruptions to supply chain and operations, steep fall-off in demand, inability to easily access credit markets or government assistance)
• Strong O’Neil fundamental ratings, with moderate to strong relative strength
• Generated strong free cash flow in 2019
Best Industrial Stocks from the U.S and Europe
As equity markets reach fresh highs, many of the Industrials stocks on our Focus List are breaking out from their current bases. Attached is an update on U.S. and European Industrial stocks from Equity Research Analyst Andrew Kessner and
Feb 13, 2020 – Industrials Stocks with Andrew Kessner
As equity markets push toward fresh highs, many of the Industrials stocks on our Focus List are setting up to break out from their current bases. In this week’s webinar, available in the Research Library on PANARAY® and our website, Equity Analyst Andrew Kessner will uncover the best ideas from our U.S. and European Focus Lists.
Boeing
Event Summary
This morning, Boeing announced that CEO Dennis Muilenburg will be stepping down from his positions as CEO and Board
Director effective immediately. The company named current Chairman of the Board David Calhoun as the new CEO and
President, effective January 13, 2020. CFO Greg Smith will serve as interim CEO in the meantime.
Actionable Focus List Stocks in U.S. and European Industrials
Nov 21, 2019 – High Conviction Industrial Stocks
As value continues to outperform growth, we believe that many of the industrial stocks on our Focus List are well positioned given their GARP characteristics and attractive technical profiles. In this week’s webinar, Equity Analyst Andrew Kessner will highlight high conviction U.S. and European Focus List constituents as well as other stocks of interest.
Cannabis
Canadian Cannabis Q3 Earnings Highlights
Please refer to the attached PDF for the full report.
The key concerns raised in our Q3 preview note were largely reflected in last week’s results from Canadian Licensed Producers (LPs) CGC, ACB, TLRY, CRON, FIRE.CA, and OGI (preliminary). We saw:
- Q3 sales/EBITDA misses from all LPs and sequential sales declines from many
- Major reductions to 2020 consensus estimates
- Tepid international growth
- Substantial production/sales imbalances and declining sales prices
- High SG&A expenses.
Canadian Cannabis
Canadian Cannabis Q3 Preview: Oversupply Concerns in Focus
- Canadian Licensed Producers (LPs) enter Q3 earnings with share prices that are down 60-80% from YTD highs, as lower-than-expected recreational sales, financing issues, and a host of other concerns weigh on sentiment.
- We remain concerned about the prospect of significantly lower wholesale prices, with production capacity now far exceeding demand and inventories continuing to build across retailers, distributors, and LPs.
- While sell-side estimates continue to come down significantly, we believe 2020 estimates remain too optimistic.
- We also see the insignificant international cannabis sales by LPs as a key issue, as we believe the degradation of the global growth story for LPs could drive a substantial re-rating for the group.
Sep 26, 2019 – Reading the Defense Industry Landscape
Although gridlock in Washington continues to delay the passage of a defense spending bill, the Defense Department has made clear its plans to emphasize higher-tech, modern military systems and equipment. In light of heightening tensions with China and other adversaries as well as recent attacks on Saudi oil assets, defense stocks have moved back into focus for many investors. In this webinar, Equity Analyst Andrew Kessner examines the current industry landscape and highlights stocks that are attractive through the O’Neil lens, as well as those that should be avoided.
