Author: Sambit Mohanty

Interpump Group

Posted on by Sambit Mohanty

Key points from this report:

 

  • We have a Buy rating on Interpump Group. The stock has fallen 12.5% following its in-line Q3 FY21 earnings. It has found support at the 50-DMA, and any bounce from here would be a good time to add to positions. Its current multiples are on par with the industry.
  • The stock has seen some profit-taking and has found support at its 50-DMA (€60.19) after its Q3 results.
  • Strong fundamental profile: EPS Rank of 91, Composite Rating of 89, and SMR Rating of A. It reported sales and earnings CAGR of 8.8% and 15.9%, respectively, in the past five years and 0.6% and -0.7% in the past three years, respectively.
  • Technical profile is strong, with an A/D Rating of D+ and Up/Down Volume ratio of 0.9. RS line is trending upward with a strong RS Rating of 79.

U.S. Lithium Producers

Posted on by Sambit Mohanty

Key points from this report:

 

  • We recommend holding positions here in ALB and LTHM as they broke out ahead of Q3 results from their respective bases on strong volume and became extended following strong Q3 results last week and raised their FY21 guidance that was ahead of estimates. For ALB, look for alternate entry point at $244-256, the pivot range in the daily chart, with immediate support at its 21-DMA (-12%). LTHM has hit power from pivot after breaking out from a  nine-week consolidation base. Look for a secondary entry point on a low-volume pullback to its rising 21-DMA (-14%).
  • The growth story for both of these companies is driven by the rising share of energy storage in Li demand. This is attributable to strong EV demand amid the transition to clean energy. The share of energy storage for EV batteries in Li demand is expected to more than double to 83% in FY30 from 40% in FY20. These companies have outlined strong capacity expansion plans over the next five years to meet the increasing energy storage demand. They are in the process of renewing their multi-year fixed Li contracts for FY22 and expect 15-20% increase in contract prices.

Ingersoll Rand

Posted on by Sambit Mohanty

Key points from this report:

 

  • We are reiterating our buy call on Ingersoll Rand as the stock broke out of a stage-one cup-with-handle base on average volume and reached an all-time high after the company reported better-than-expected Q3 FY21 results. We recommend that investors add to positions as the stock broke out and hit a new 52-week high. We believe the company should continue to benefit from its strong leadership position in the global compressors market.
  • Strong fundamental ratings: EPS Rank of 88, Composite Rating of 92, and SMR Rating of A. Ratings are expected to be strong going forward as consensus estimates double-digit earnings growth over the next two years.
  • Improving technical ratings: A/D Rating of B+ has been improving over the past three weeks, with an Up/Down Volume ratio of 0.8. RS line is improving, with a strong RS Rating of 81.

ExlService Holdings

Posted on by Sambit Mohanty

ExlService Holdings offers operations management and analytics services across
industries. It has a high proportion of recurring revenue and may benefit from
growth in the analytics segment.

Cleveland-Cliffs

Posted on by Sambit Mohanty

Cleveland-Cliffs (CLF)
$12B market cap; $461M ADV
Clevland-Cliffs is the largest fully vertical integrated flat-rolled steel producer in North America, producing 17M tons of
steel annually. It is the largest steel supplier to U.S automotive companies, with ~33% market share, and supplies 2.5x
more steel than the next competitor.
Q3 FY21 revenue by end-market: distributors and convertors, 42%; infrastructure and manufacturing, 27%; automotive,
20%; steel manufacturers, 11%.

Q3 FY21 sales volume by product: hot rolled, 32%; coated, 31%; cold rolled, 18%; plate 6%; stainless/electrical, 4%; oth-
ers, 9%.

Tata Power

Posted on by Sambit Mohanty

Key points from this report:

 

  • We suggest that investors trim positions and take some profits as the stock starts to consolidate after climactic action this week.
  • Excellent technical ratings: High RS Rating of 91 and RS line is at 52-week highs. A/D Rating a perfect at A+ and solid money flows for the past two months.
  • Decent fundamental ratings: EPS Rank of 48 and SMR Rating of C indicate weaker performance in the last three years. They are set to improve sharply following FY22 results.
  • Shares of Tata Power have risen 55% in the last four weeks, driven by a new large-scale solar engineering, procurement, and construction (EPC) contract, policy change at its Mundra (coal-based) power plant, and a buzz surrounding its potential renewable energy IPO. General markets have also been strong (+6%) through this period.
  • The stock has advanced more than 60% since its addition to our Focus List and more than 300% in the past 52 weeks, versus the Sensex’s 50% rise. For investors looking for an opportunity to buy shares, we suggest waiting for shorter-term (21-/50-DMA) moving averages to catch up and for the recent extreme daily price moves to ease.

BYD Company Limited

Posted on by Sambit Mohanty

Key points from this report:

 

  • Add to positions as BYD breaks out of a stage-four double bottom base. The company is the leading EV manufacturer in China. We expect the company’s new Blade Battery to be a significant competitive advantage. The IPO of its subsidiary BYD Semiconductor is the near-term catalyst for the stock.
  • The company is a market leader in China’s hybrid vehicle market with more than 40% share. Based on year-to-date sales, the company had 16% market share in China’s plug-in electric vehicle market, only behind SGMW (17%) and ahead of Tesla (10%). The company’s recent outperformance in the EV market is majorly driven by its flagship model BYD Han.
  • Its unique blade battery design helps achieve a long range at a lower cost. Its battery design enables the car to achieve 50% more range while occupying the same space.
  • Between 2017 and 2020, the company had revenue and EPS CAGR of 13.8% and 1.4%, respectively. Consensus expects EPS growth of 47% and 28% in FY21 and FY22, respectively.
  • Good technical ratings: RS Rating of 87 and A/D Rating of B. RS line is at 52-week highs.
  • Institutional sponsorship stood at 917 funds (+2% q/q; +76% y/y) in June.

O’Neil Capital Equipment Sector Weekly

Posted on by Sambit Mohanty

James Halstead (JHD.GB), a manufacturer and distributor of flooring products, announced preliminary results for the year ended June
2021. Revenue grew to £266.4M (+11.6% y/y) and profit before tax grew to £51.3M (+16.9%). The company faces supply chain issues
due to increased costs of its key raw material, PVC; however, improved sales product mix offset this. Management expects the raw
material issues to decline in the upcoming quarters. The stock is facing resistance along its 50-DMA. It has a low RS Rating of 48 and
an A/D Rating of D

Balkrishna Industries

Posted on by Sambit Mohanty

Key points from this report:

 

  • Buy Balkrishna Industries as the stock breaks out of a stage-three cup base on 3x average volume. The company is gaining share in key export markets with its low-priced offering. At the same time, it has the best margin in the industry, helped by backward integration. Exports have been robust, driven by strong demand across multiple industries and geographies.
  • Strong demand from agriculture and mining is driving volume growth for the company.
  • It has further room for price increases. Its products are priced 20% lower than those of its peers. The company expects to reduce the gap to 12-15% in the next few years

O’Neil Capital Equipment Sector Weekly

Posted on by Sambit Mohanty

Rentokil Initial (RTO.GB; RTO LN) – $15B market cap; $19M ADV: We added Rentokil Initial to our Developed Markets Focus List as the stock broke out of a
stage-one 40-week consolidation base on average volume. The company is the world’s largest commercial pest control services provider and is a top three player in
most of its global markets. The company is likely to benefit from the rising usage of pest control services and the demand for remote pest monitoring solutions.
Rentokil aims to expand its hygiene services business beyond the washroom services to other environments, which should drive growth in the segment. Consensus
estimates revenue CAGR of 6% and earnings CAGR of 36% over the next two years