AeroVironment (AVAV): Reported better-than-expected Q1 FY25 results. Revenue (+24% y/y) beat estimates by 3% and adjusted EPS (-11% y/y)
beat estimates by 51%. The stock is testing support at its 50-DMA (-2%) and is forming the right-side of a stage-three cup-with-handle base, with the
pivot 15% away. Add positions on a high-volume retake of its short-term moving averages.
Symbol: ABM
O’Neil Capital Equipment Sector Weekly
VAT (VACN.CH): Reported FY23 results yesterday before market open. Revenue (-23% y/y), came largely in line with estimates, while EPS (-38% y/y) beat estimates by 5%. Q1 FY24 revenue guidance came in 15% below estimates. The stock
has pulled back 6% from its 52-week high. We recommend investors hold positions and look for support at its 21-DMA (-1%), followed by its 50-DMA (-4%).
O’Neil Capital Equipment Sector Weekly
TransDigm (TDG): Will report Q1 FY24 results Thursday before market open. Revenue is expected to grow 20% y/y and EPS to grow 40% y/y. The stock is extended after breaking out of a stage-two flat base and is trading close to its all-time highs. We recommend that investors hold positions into the print. It has support at its 21-DMA followed by its 50-DMA.
O’Neil Capital Equipment Sector Weekly
Saab (SAAB.SE) – $9B market cap; $20M ADV: We added Saab to our Developed Markets Focus List as the stock broke out of a stage-two 39-week consolidation base on above average volume into a new all-time high. Saab
manufactures equipment used in air defense, ground surveillance, and is a world leader in surface-based radar systems. The company is expected to benefit from the increase in defense expenditure across Europe, along with
Sweden’s possible accession to NATO. Saab has a strong order backlog of SEK 139B (+24% y/y), 3.3x its FY22 revenue, offering strong visibility. For FY23, management expects organic sales growth to be around 19–23% y/y and
operating income to outgrow organic sales. Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Saab (SAAB.SE): Reported better-than-expected Q1 FY23 results today before market open. Revenue (+25% y/y) beat estimates by 9%, while EPS (+105% y/y) beat estimates by 36%. We recommend that investors add to positions if the stock retakes its 50-DMA on above average volume, which is a secondary entry point. On the downside, it has support at SEK 564.20 (-5.5%).
Global Laggards
ighlighted Charts
U.S.: Wabco
oldings (
),
yatt
otels (
), Penske Automotive (
), Lithia Motors (
), Cypress Semiconductor (
), United Parcel Service (
)
Developed: Solvay SA (SOL.BE; SOLB BB), Sandvik (SAND.SE; SAND SS), Cyberagent (
BA.JP; 4751:JP), Greencore Group (GNC.GB; GNC LN), Finecobank Spa (FCBK.IT; FBK:IM), Canadian Tire (CTC/A.CA; CTC CN), Morrison(
)spmkts. (MRW.GB; MRW LN), Fujifilm
oldings (FP@N.JP; 4901 JP)
Emerging: Nan Ya Plastics (NYP.TW; 1303 TT), Cathay Financial
oldings (CFC.TW; 2882:TT)
Stocks worth focusing on in this week’s Global Laggards:
U.S.
yatt
otels (
) — Consumer Cyclical; $7.5B market cap — manages owned and franchised
yatt Branded properties across the world.
Revenues have been declining for the last three quarters and are expected to continue to do so in the upcoming quarter.
Institutional fund ownership has been steadily declining the past year.
The Company operates in the upscale segment. Amidst slowing occupancy growth, in line with our call in August, the Company is far more exposed to a downturn than its peers. Also, its business model is overly dependent on owned and leased properties, with more than 70% of revenues coming from the such properties, giving
yatt little flexibility.
The Company has one of the lowest adjusted EBITDA margins in the industry, which adds to its lack of resilience in a downturn.
The stock’s A/D and RS Ratings have been steadily declining and are currently at E and 38, respectively, indicating increased selling pressure.
Global Laggards
Highlighted Charts
U.S.: Lyondellbasell Ind A Nv ( LYB ), Barnes Group ( B ), Criteo SA ( CRTO ), Colgate Palmolive Co ( CL ), Plains GP Hldgs Cl A ( PAGP ), Corporate Office Pptys ( OFC ), Bio Rad Labs Inc. ( BIO ), Autonation ( AN ), Shutterstock Inc. ( SSTK ), Kulicke and Soffa Ind ( KLIC ), Manhattan Associates ( MANH ), Saia Inc ( SAIA ).
Developed: Rio Tinto ( RIO.GB; RIO LN ), Singapore Telecom ( TELC.SG; ST SP ), Nissin Foods Holdings ( NIFP.JP; 2897 JP ), Subsea 7 ( SUBC.NO; SUBC NO ), Partners Group Holdings ( PGHB.CH; PGHN SW ), Recordati Industria Chimica ( REC.IT; REC IM ), Izumi ( IZUM.JP; 8273 JP ), Hitachi Metals ( HM@N.JP; 5486 JP ), Fujitsu ( FT@N.JP; 6702 JP ).
Emerging: Klabin Units ( KLU.BR; KLBN11 BZ ), Mondi ( MNDJ.ZA; MND SJ ), Minor International ( RGRT.TH; MINT TB ), Pegatron ( PEG.TW; 4938 TT ).
Stocks worth focusing on in this week’s Global Laggards:
U.S.
Shutterstock ( SSTK ) – Retail Internet, $1.36B Market Cap – operates an online marketplace for licensed commercial digital imagery for sale to media and marketing agencies. The company serves more than 1.8 million active paying users in 150 countries.
The company’s Enterprise business (40% of revenues) faces an increasingly competitive environment, with y/y sales growth for this segment decelerating from 35% in Q2 to 14% in Q3. This trend is particularly concerning as Enterprise has been the key growth driver for SSTK, while the company’s e-commerce business has only been growing in the single digits.
The stock breached its 200-DMA, previous a level of support, in mid-October before gapping down substantially on October 30 after reporting below-consensus Q3 results and reducing the high end of its guidance range for FY 2018 sales and EPS.
SSTK has missed consensus EBITDA estimates in 7 of the past 8 quarters.
The stock’s RS rating has dropped from 88 to 21 over the past month, while its weak A/D Rating (D+) indicates ongoing distribution.
SSTK trades at 25x next year’s earnings, while estimated 2019 EPS only represents 5% y/y growth.
Global Laggards
This report has been curated by our sector analysts to find stocks showing technical weakness. We believe these stocks are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance.
Stocks worth focusing on in this week’s Global Laggards:
U.S.
Jack in the Box ( JACK ) – Retail ( $2.7B market cap ) – Operates and franchises Jack in the Box quick service restaurants in the United States.
* Shares are finding resistance at the 21-EMA and are currently testing support along ~$91. We believe the stock will eventually break support and follow the RS line lower toward the low $80s.
* The stock’s RS line is near multi-year lows. It has a weak RS Rating of 13 and A/D Rating of D+.
* Fund sponsorship has been steadily declining since peaking in the September 2016 quarter.
* The Company recently gave FY 2018 guidance that fell short of street expectations. The Company expects EBITDA of $260M-270M (versus street of $288M). Part of the reason for the weak EBITDA was contractual obligations to support services for Qdoba as part of the spinoff sale to Apollo Global Management.
* The Company missed consensus EPS expectations in three of the past four quarters.
Developed
Hoya ( HQ@N.JP; 7741:JP) – Health Care ($19.4B market cap) – Hoya is a global supplier of eyeglasses, medical endoscopes, intraocular lenses, optical lenses, and key components for semiconductor devices, LCD panels, and HDDs.
* The stock is breaking back below its 50- and 200-DMA on heavy volume.
* The stock’s RS line is hitting YTD lows with an RS Rating of 11 and an A/D Rating of D.
* The Company released Q3 FY 2018 results, below expectations due to lower-than-expected profit from the Company’s life care segment. Operating profit of ¥33.2B fell short of the ¥34.2B consensus estimate. Sales of eyeglass lenses in Europe and Japan were weak and sales of endoscopes in Europe were weaker than expected. Hoya announced new full-year pretax profit guidance of ¥128B, below consensus of ¥130.2B.
Global Laggards
In 1963, we began profiling the characteristics of top-performing stocks prior to their outstanding runs in market cycles dating back to the 1880s. Through our decades of research, we have produced powerful proprietary Ratings and Rankings that help identify leading and lagging stocks. These metrics form the foundation of our O’Neil Methodology (OM) and our evaluation services.
Our Global Laggards list comprises stocks that have poor O’Neil Ratings and Rankings. This list has been curated by our sector analysts to find stocks showing technical weakness. We believe these stocks are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance. Criteria used to build the list include:
Our proprietary Relative Strength Rating gauges the market’s top performers by looking at a stock’s price change relative to all stocks within a country. The rating is calculated over 12 months, with higher weighting for more recent months. Stocks are ranked in order of greatest percentage price change and assigned a rank from 99 (best) to 1 (worst). Stocks on this list will usually show a low or declining RS Rating.
Our proprietary Accumulation/Distribution Rating shows where money is flowing by tracking the relative degree of institutional buying and selling over the prior 13 weeks. It is a technical rating based on price and volume statistics, where A = best and E = worst. Stocks on this list will usually have a low or falling Accumulation/Distribution Rating, indicating institutional selling.
Our unique Negative Alerts Score uses 11 monitoring characteristics to detect a stock’s decline, allowing you to act early on weakening holdings. Stocks on this list will usually have multiple alerts, indicating a possible breakdown.
Global Laggards
In 1963, we began profiling the characteristics of top-performing stocks prior to their outstanding runs in market cycles dating back to the 1880s. Through our decades of research, we have produced powerful proprietary Ratings and Rankings that help identify leading and lagging stocks. These metrics form the foundation of our O’Neil Methodology (OM) and our evaluation services.
Our Global Laggards list comprises stocks that have poor O’Neil Ratings and Rankings. This list has been curated by our sector analysts to find stocks showing technical weakness. We believe these stocks are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance.
