Author: Cornelio Ash

Cornelio Ash is a senior equity analyst and member of the U.S. Focus List and the Global Focus List Committees, which approves all equity recommendations for developed, emerging, and frontier markets. He is also a lead for the Technology sector and specializes in the Americas region. Cornelio joined the firm in 2005 and received his B.A. in Finance from California State University, Northridge. He holds a Series 65 securities license.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

U.S.: Mosaic Company ( MOS ), Aramark ( ARMK ), Sabre Corporation ( SABR ), Murphy Oil Corporation ( MUR ), Brighthouse Financial ( BHF ), Patterson Companies ( PDCO ), Walgreens Boots Alliance ( WBA ), Cracker Barrel ( CBRL ), Dolby Laboratories ( DLB ), Yelp ( YELP ), Hub Group Incorporation ( HUBG )

Developed: Svenska Cellulosa Aktiebolaget Sca ( SW@G.SE; SCAB SS ), Taisei ( TC@N.JP; 1801 JP ), Nikon ( OU@N.JP; 7731 JP ), Suncor Energy ( SU.CA; SU CN ), Caixabank ( CABK.ES; CABK SM ), Sumitomo Dainippon Pharma ( DPPH.JP;4506:JP ), Seven and I ( SEVI.JP; 3382 JP ), Aeon ( JT@N.JP; 8267 JP ), Marubeni ( MRBU.JP; 8002 JP ), Spark New Zealand ( SPKZ.NZ; SPK NZ ), Dena ( DENA.JP; 2432 JP ), Yamato Holdings Corporation ( OJ@N.JP; 9064 JP )

Emerging: Koza Altin Isletmeleri ( KAI.TR; KOZAL TI ), Tenaga Nasional ( TENN.MY; TNB MK ), Discovery ( DSYJ.ZA; DSY SJ ), Lojas Americanas Pn ( LM4.BR; LAME4 BZ )

Stocks worth focusing on in this week’s Global Laggards:

Yelp ( YELP ) – Technology; $2.9B market cap – provides an online platform that allows users to find and review local businesses via Yelp.com and the Yelp mobile app.

O’Neil Methodology

  • We see resistance at the 10- and 40-WMA and immediate support near November 2018 lows of ~$29, which provides downside of about 22%.
  • Poor O’Neil Ratings and Rankings: Composite Rating of 43, SMR Rating of D, RS Rating 22, and A/D Rating C+.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

U.S.: Bunge ( BG ), Harsco ( HSC ), News ( NWSA ), Helen of Troy ( HELE ), Phillips 66 ( PSX ), Bankunited ( BKU ), Amerisourcebergen ( ABC ), Walgreens Boots Alliance ( WBA ), Sprouts Farmers Market ( SFM ), Interdigital ( IDCC ), Amdocs ( DOX ), Atlas Air Worldwide ( AAWW )

Developed: Israel Chemicals ( ICL.IL; ICL IT ), China Railway ( CHRL.HK; 390 HK ), Nichirei ( RZ@N.JP; 2871 JP ), Sumitomo Mitsui Trust ( SMTH.JP; 8309 JP ), Sumitomo Dainippon Phamra ( DPPH.JP; 4506 JP ), Lawson ( LAWS.JP; 2651 JP ), Marubeni ( MRBU.JP; 8002 JP ), Dena ( DENA.JP; 2432 JP )

Emerging: Naver ( NHN.KR; 03542 KS ), Tenaga Nasional ( TENN.MY; TNB MK ), Central Pattana ( CPN.TH; CPN TB ), Lojas Americanas Pn ( LM4.BR; LAME4 BZ )

Global Technology Sector – Software

Posted on by Cornelio Ash

Highlights from this report are below. You can listen to this report’s accompanying webinar any time after Thursday, April 4, 2019, at 11am ET, on the PANARAY Knowledge Center.

Although the Software ETF ( IGV ) has rallied 22% year-to-date, we believe the rally is not yet over and more gains are on the table.

Many of 2019’s best-performing software stocks ( NOW, CYBR ) just emerged from first-stage bases but are exhibiting healthy signs of consolidation ( HUBS, OKTA ), with the possibility of secondary entry points developing in the coming days and weeks.

Six of 10 software groups are ranked in the top 20 within our 197 Industry Groups, led by Enterprise ( TEAM, PCTY ), Security ( CYBR, RPD ), and Database ( AYX, MDB ). Enterprise and Security are by far the best-performing groups thus far, both up 31% year-to-date.

Mega caps, including the IGV’s largest constituents—CRM, MSFT, ADBE, and ORCL—have increased by a median of 17% year-to-date, significantly underperforming the median performance of medium caps (26%) and small caps (20%).

IGV constituents reported median revenue and EPS growth of 19% and 26%, respectively, better than expected. More importantly, sales growth (19%) was the strongest in three years.

Standout industries include: cybersecurity ( CYBR, ZS ), human capital management ( PAYC, PCTY ), and customer relationship management platforms ( HUBS, ZEN ).

Global Sector Commentary

Posted on by Cornelio Ash

Key points:

The Vanguard Total World Stock ETF is on pace for a seventh consecutive week of gains. Developed and emerging market indices are broadly back in uptrends, and the breadth of growth stock leadership has improved significantly. However, there are still major hurdles to overcome in terms of the technical health of the global index. Looking back to the long correction from mid-2015 to mid-2016 could give some clues as to how the challenges could play out. As we can see from the comparison, only the first step of rallying off lows has been completed.

Downside

2015–2016

  • 22% drop from May 2015 highs to ultimate lows in February 2016. It took nine months to establish the lows.
  • 16% below 40-WMA at worst, three weeks before ultimate lows.

2018–2019

  • 22% drop from January 2018 highs to lows in December 2019. It took 11 months to establish the lows.
  • 15% below 40-WMA at worst, the week of December lows.

Upside

2015–2016

  • 10-/40-WMA began trending higher together for the first time in June 2016, 13 months after highs and four months after lows.
  • After a break above the 40-WMA, three major areas of resistance before eventual new highs.
  • New highs established 12 months after lows and 21 months after prior highs.

2018–2019

  • 10-WMA now trending higher; 40-WMA still trending lower 12 months after highs.
  • First resistance at 40-WMA approaching. Above that, major overhead supply for another 5–6%.
  • Still just two months from lows and 13 months from highs.

Looking at the number of weekly breakouts across the world is also useful to compare the time periods. Breakouts are only counted when a stock emerges from a properly built, consolidative period (ie: flat base, cup consolidation, etc).

2015–2016

  • Trough number of breakouts was below 120 in August 2015 and again in January 2016.
  • First big spike the week of was March 4, 2016, four weeks after lows. More consistently above average breakouts in May/June/July.

2018–2019

  • Trough number of breakouts was 121 in December 2018.
  • First big spike the week of February 1, 2019, six weeks after lows. Still needs several more above average weeks to become a trend.

Best in Breed in AI and Cybersecurity with Cornelio Ash — February 7, 2019

Posted on by Cornelio Ash

After pulling back 20% in late 2018, the North American Software Index and its constituents are under heavy accumulation and poised to move even higher. Underlying secular drivers such as AI, machine learning, and enterprise cloud adoption remain intact as the software benchmark index trades at a median 5.5x EV/S (FY 2020) and 23x EV/EBITDA (FY 2020). In this webinar, join William O’Neil + Co. Senior Equity Analyst Cornelio Ash to uncover the best of breed in AI and cybersecurity.

Global Technology Sector— Software

Posted on by Cornelio Ash

Some highlights from this report:

Software is setting up to move higher. Since the October 2018 sell-off, the North America Software Index ( IGV ) has consolidated and is poised to move higher as valuations have improved.

Analytics and cyber security spending are driving AI growth, with the analytics addressable market poised to increase by a five-year CAGR of 18% (see chart below).

Spending on cyber security software is expected to increase 9% in 2019 to $124B (see chart below).

Multiple factors drive cyber security spending, including the secular shift to the cloud, accelerating growth of unstructured data/IoT, and increasing regulation ( GDPR ).