Generac (GNRC) – $9B market cap; $160M ADV: We added Generac to the U.S. Focus List as the stock broke out of a stage-one 18-week cup base on above average volume. Generac
manufactures power generators and solar equipment. Per media reports, a power grid operator in Texas recently asked its customers to preserve electricity to prevent blackouts. This could
drive the demand for Generac’s home standby (HSB) generators
Author: gundaboina saikiran
Tube Investments of India Ltd (TF.IN)
Key points:
- We reiterate our buy recommendation on Tube Investments as it breaks out of a stage-two, 25-week consolidation base.
- The company targets moving away from the cyclical business and achieving stable revenue growth of 17% in the long term. It expects a pre-tax margin of 12–15% in the next three to four years and 25% in the next 10 years.
- To achieve stable revenue growth, it targets improving its existing business, transforming to an asset-light business model, and acquiring mismanaged companies in secular industries.
- Good fundamental ratings: Excellent EPS Rank 95 and SMR Rating of B. ROIC has increased to 54.5% in FY23 from 46.8% in FY22.
- Good technical ratings: RS line is at a 52-week high, with an RS Rating of 77 and an A/D Rating of A-.
O’Neil Capital Equipment Sector Weekly
ABB (ABBN.CH; ABBN SW) – $73B market cap; $119M ADV: We added ABB to our Developed Markets Focus List as it broke out of a stage-one seven-week flat base with sharp improvement in the technical profile
seen in recent weeks. Management has doubled its revenue growth target for FY23 after reporting a strong Q1 FY23 print, where it beat EPS estimates by 22%. ABB is a major beneficiary of industry automation,
transition to electric vehicles, and renewable energy growth. It has seen strong margin expansion over FY22 and Q1 FY23 driven by better pricing and volume growth
Britannia (BRI.IN)
We recommend adding positions to Britannia as it makes new all-time highs after breaking out of a stage-one, 13-week cup base on massive volume. It has solid O’Neil Ratings. Other key points include:
- Revival in volume growth.
- Expansion of direct coverage.
O’Neil Consumer/Retail Weekly
Consumer Staples (XLP): The index has broken below all the key support levels including its 200-DMA. It consolidated
and formed a downside reversal on high volume after finding resistance at its 200-DMA. RS line is trending
downward with the worst possible A/D Rating.
Trim JYP Entertainment
Key Points:
- We recommend investors trim positions and take some profits in Focus List idea JYP Entertainment (ARA.KR; 035900 KS) as it is extended from a historical perspective. The stock gapped up 20% following strong Q1 FY23 print. It is trading 37% above its 50-DMA and 70% above its 200-DMA. We expect the stock to consolidate or form a base here as the moving averages catch up.
- The stock is up 78% since we added it to the Emerging Markets Focus List in December 2022.
- We continue to be positive on the fundamental story. JYP’s global expansion plan through localization and resumption of offline concerts post lockdowns are expected to drive growth. Q1 revenue and EPS beat estimates by 21% and 104%, respectively.
- Good fundamental profile: EPS Rank 91 and SMR Rating of B.
- RS line is trending upward and is at a 52-week high. It has a strong RS Rating of 97 and an A/D Rating of A+. The stock has been under accumulation over the past nine weeks. Good Up/Down Volume ratio of 1.9.
O’Neil Capital Equipment Sector Weekly
U.S. homebuilder sentiment unexpectedly rose to its highest level in 10 months, reaching 50 in May on the National Association of Home Builders/Wells Fargo gauge. Limited supply continued to push buyers toward new
construction. The measures of current sales, sales expectations, and prospective buyer traffic also increased. The share of builders reducing home prices declined, indicating recovering demand. Homebuilders have
benefited from the limited supply of existing homes. New construction is expected to play a significant role in the upcoming quarters.
O’Neil Capital Equipment Sector Weekly
Per the Wall Street Journal, Carrier (CARR) is exploring plans to sell or spin off its Fire & Security Business. The business accounts for 17% of total revenue. The stock bounced off its 200-DMA and is testing
resistance along its 50-DMA. It has an RS Rating of 80 and an A/D Rating of D-.
Market View
The U.S. market is in a Confirmed Uptrend. The Nasdaq staged a Day 13 follow-though Wednesday, jumping 1.8% in higher day over day volume before continuing to progress higher to close the week. The next level of resistance is February highs at 12,269, while support is now the rising 10- and 21-DMA (11,740). The S&P 500 cleared above its 50-DMA, downtrend channel line within the base, and prior March high (4,078) with the next level of resistance also at its February high of 4,195. Near-term support remains the 50-DMA (4,021)
Reiterate buy call on ANG.CN
Key points:
- Anhui Gujing Distillery (ANG.CN) is breaking out of a stage-two, double-bottom base with much higher volume. It is only 4% off the historical high on January 16, 2023.
- We expect that the consumption of baijiu will recover as China has opened up and the production resumed.
- The company will continue to benefit from the upgrade trend of baijiu in Anhui Province and the expansion to other regions.
- The company set the target that revenue reaches RMB 20B in 2023. The management team will have higher stronger motivations as remuneration was linked to the company earnings.
