Brunswick Corporation

Key points from this report:

 

  • We reiterate our Buy call on Brunswick (BC) after the stock broke out of a stage two six-week cup base and is reaching new highs, driven by stellar Q1 earnings.
  • Brunswick’s excellent fundamental profile and top-notch technical profile reflect the company’s improving growth profile.
  • Expectations call for high-single-digit revenue growth in the next two years and high-double-digit EPS growth through margin expansion, led by its diversification toward the high-margin Propulsion and Parts & Accessories segments.

European Weekly Summary

  • Of the 17 indices that we cover, 16 are in a Confirmed Uptrend and one in an Uptrend Under Pressure (Portugal). The average distribution day count in the region is at 3.63 compared with 3.94 last week. We remain constructive on the markets as long as it trades above its key moving averages. However, should the clustering of distribution persist, we would turn more cautious as it may be the first signal of a pullback. Till then, we are open to adding strong names coming out of proper bases on good volume.
  • About 55% of the companies among the Stoxx 600 have reported so far. Although Q1 2021 is on the pace to be one of the best earnings seasons for European equities, the market reaction has been quite muted due to market anticipation and questions arising around the outlook.
  • Over the past five days, we added one stock – Vitrolife ( VITR.SE ). Other Actionable names in the Focus List include Dassault Systemes ( DSY.FR ), Ambu B ( AMB.DK ), Carl Zeiss Meditec ( AFXX.DE ), Interpump Group ( IP.IT ), Schneider Electric ( QT@F.FR ), Eurofins Scientific ( EUF.FR ), Nibe Industrier ( NIBE.SE ), and Hermès ( RMS.FR ).

Brunswick

What’s happened? Brunswick reported strong Q1 FY21 numbers that beat
estimates on all metrics. Revenue grew 48% to $1,433M, beating estimates by
18%, driven by the strong retail demand for recreational marine products. We
recommend that investors add to positions as the stock is breaking out from a
stage-two cup-with-handle base.

Polaris

What’s happened? PII reported strong Q1 FY21 numbers, beating estimates on
all metrics. Revenue beat estimates by 5%, growing 39% to $1,951M, driven by
strong retail demand (North America retail sales increased 70% y/y). The stock
was down 1.15% despite strong numbers and raise in guidance. Hold support at
its 50-DMA of about $134.

Turning Point Brands

What’s happened? US Focus List constituent TPB reported strong Q1 results.
Revenue grew 18.7% y/y, beating estimates by 6.4%, while adjusted diluted EPS
grew 65% y/y to $0.7, beating estimates by 11%.We recommend that investors
hold on to the stock and add to the positions if it breaks above $61 on strong
volume.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • Last week, European equities had their first weekly decline in eight weeks. Despite the weakness and the addition of one distribution day, the Stoxx 600 has been able to stay above its key short-term 10-DMA. It remains in a Confirmed Uptrend with four distribution days. Of the 17 indices that we cover, 15 are in a Confirmed Uptrend and two in an Uptrend Under Pressure. The average distribution day count is at 3.94 compared with 3.44 last week. We remain constructive on the markets and are open to adding names coming out of proper bases on good volume.
  • Our rotation chart shows accelerating short-term (over four weeks) momentum among growth sectors. Conversely, value sectors have lost momentum. The move is not so surprising; as mentioned three weeks ago in our weekly report, the three-month and 12-month oscillation chart of MSCI Value versus growth suggested that the trade toward value that started last year was somewhat exhausted. This move translated into a great performance of the O’Neil Focus List, which has regained 600bps since April 1.

LG household & healthcare

What’s happened? Emerging Focus List constituent LG Household &HealthCare
(LHH.KR) reported mixed Q1 results. Revenue grew 7.4% y/y, missing estimates
by 1.7%, while EPS grew 24% y/y, beating estimates by 12%. We recommend
that investors hold onto the stock and add to positions if it breaks above KRW
1.70M price level.

Moncler Spa

What’s happened? European Focus List constituent MONC.IT posted slightly
above expectations Q1 revenue numbers on Thursday after market close.
However revenue growth was weak compared to its peers as Hermes beat
expectations by 16% and Kering beat expectations by 6%.