IRM – Page 3 – WILLIAM O'NEIL+CO

Market View

Posted on April 1, 2022April 1, 2022 by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. Indices pulled back over the last few sessions after accelerating higher earlier in the week. The S&P 500 is testing its 10-DMA (4,519) followed by the next level of support at its 200-DMA (4,485). The Nasdaq is also slightly above 10-DMA (14,137) support but remains below 200-DMA resistance despite the advance over the last few weeks. The distribution day count stands at one on the S&P 500 and none on the Nasdaq.

Defensive sectors – Utility, Consumer Staples and Health Care – along with Consumer Cyclical, led by Autos Manufacturers, outperformed this week after rising 1-3% respectively. Conversely, three sectors declined more than 1% led lower by Transportation (-4%), and Energy (-2%). Multiple sectors continue to trade below 200-DMA resistance including Financial, Technology, Retail , Consumer Cyclical and Health Care. The best performing industry groups over the past week include Consumer Electronics, Autos, Airlines, Travel Booking, Utilities, Outpatient Care, Medical Products, Medical Software, Desktop Software, Pollution Control, and REITs. The worst performing groups include Wholesale Autos, Drug Stores, Trucks, Mobile Homes, Home Builders, Building Products, Household Appliances, Toys, Commercial Loans, and Banks. 62% of S&P 500 stocks are trading above their 50-DMA and 51% are trading above their 200-DMA, compared with 60% and 51%, respectively, a week ago. 55% of Nasdaq 100 stocks are trading above their respective 50- DMA, compared with 59% one week ago.

US Focus

Posted on April 1, 2022April 1, 2022 by Ari Ramar

March 31, 2022 – Weekly Best Ideas (EXPE, PWR, IRM)

Posted on March 30, 2022March 31, 2022 by Marcelo Alvarez

Join our analysts for our Weekly Best Ideas webinar, where they discuss the current outlook for global markets from an O’Neil perspective and delve into the best actionable stock ideas of the week.

O’Neil Capital Equipment Sector Weekly

Posted on March 30, 2022 by Sambit Mohanty

Iron Mountain (IRM) – $16B market cap; $125M ADV: We added Iron Mountain to our U.S. Focus List as the stock broke out of a stage-one cup-with-handle base, and is trading at a new all-time high. IRM is the market leader in information storage and retrieval. It is expected to benefit from the increasing adoption of digital information access, demand for data centers, and the expansion into the asset lifecycle management market. Consensus estimates revenue and normalized FFO/share to have a CAGR of 10% each in the next two years.

Won Global View

Posted on March 30, 2022 by admin

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq cleared above February highs yesterday, continuing to press higher with no distribution. The S&P 500 is now just 4% off all-time high resistance (4,818), while the Nasdaq is now 10% off highs and just below resistance at its 200-DMA (14,727).

O’Neil Capital Equipment Sector Weekly

Posted on December 22, 2021December 23, 2021 by admin

Vulcan Materials Co (VMC; $26B market cap; $152M ADV) is the largest manufacturer and supplier of construction aggregates in the U.S. The aggregates segment, which produces and sells crushed stone, sand, and
gravel, generates three-fourths of the company’s revenue. The company also produces aggregates-based construction materials, including asphalt and ready-mixed concrete (one-fourth of revenue). Its materials are used to
build and maintain infrastructure such as highways, railroads, bridges, airport runways, and other large projects, with ~43% of its shipments used in publicly funded civil construction projects. Private-sector residential and
non-residential construction accounted for the rest of its aggregates shipments. VMC should benefit from the increased investment in improving public infrastructure and increasing demand for single-family housing in the
U.S. The stock is forming the right side of a stage-one six-week flat base and testing support near its 50-DMA. It should turn actionable if it bounces off its 50-DMA and breaks out of pivot at $210.16 (+5%).

Global Laggards

Posted on November 9, 2018February 1, 2019 by Heetae Kim

Highlighted Charts

U.S.: Lyondellbasell Ind ( LYB ), Berry Global Group ( BERY ), Aptiv Plc ( APTV ), Edgewell Personal Care ( EPC ), Enbridge Energy Partners ( EEP ), Bank of Nova Scotia ( BNS ), United Therapeutics ( UTHR ), AutoNation ( AN ), Penske Automotive Group ( PAG ), PTC ( PTC ), Allegiant Travel Company ( ALGT )

Developed: Nine Dragons Paper ( NDRA.HK; 2689 HK ), Cyberagent ( CYBA.JP; 4751 JP ), Just Eat ( JE.GB; JE/LN ), Ezaki Glico ( BQ@N.JP; 2206 JP ), Subsea 7 ( SUBC.NO; SUBC NO ), RSA Insurance Group,( RSA.GB; RSA LN ), William Demant Holding ( WDH.DK; WDH DC ), K’s Holdings ( GIKS.JP; 8282:JP ), SAP ( SAPX.DE; SAP GR ), Deutsche Post ( DPWX.DE; DPW GR )

Emerging: Mondi ( MNDJ.ZA; MND SJ ), Godrej Consumer Products ( GCD.IN; GCPL IN ), Zhen Ding Technology ( ZHE.TW; 4958 TT )

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

Penske Automotive Group ( PAG ) – Retail ( $4B market cap ) – operates automotive and commercial truck dealerships principally in the U.S., Canada, and Western Europe.

Shares of PAG are 20% off 52-week highs and facing resistance at their downward sloping 10- and 40-WMA. The stock has poor RS and A/D Ratings of 35 and D, respectively. We see support for the stock at ~$42, followed by ~$38.

For Q3 2018, total revenue was $5.7B, increasing 2.4% y/y and missing consensus of 5.5% y/y. The miss was due to lower-than-expected sales growth of 1.2% in its Retail Automotive segment.

Same-store sales of new cars declined 4.2% y/y compared with consensus of 6% y/y growth, as revenue from new car sales in the U.K. decreased 10.5% y/y in Q3 and 20.5% y/y in September. The implementation of the new U.K. emission standard “Worldwide Harmonised Light Vehicle Testing Procedure” delayed the delivery of new cars to dealerships.

PAG expects the availability of new cars from OEM to normalize by the end of Q1 2019.

In 2019, revenue and EPS growth are expected to decelerate to 2%, as the Company is expected to be impacted by FX headwinds because of Brexit. The U.K. market accounted for 36% of the Company’s revenue in 9M 2018.

Further, commercial truck sales growth in the U.S. is expected to slow in 2019. In its trucks segment, which contributed to 5.9% of sales in 9M 2018, the Company expects volume growth to moderate from 28% in 2018 to 1.6-4.8% in 2019.

Global Laggards

Posted on October 18, 2018February 1, 2019 by Heetae Kim

Highlighted Charts

U.S.: Arcelor Mittal Cl ( MT ), News Corporation ( NWS ), Hyatt Hotels ( H ), Schlumberger Ltd ( SLB ), Packwest Bancorp ( PACW ), Varian Medical Systems ( VAR ), Cheesecake Factory ( CAKE ), HD Supply Holdings ( HDS ), Finisar Corporation ( FNSR ), Pegasystems ( PEGA )

Developed: Orica Limited ( ORI.AU; ORI AU ), Nidec ( NDEN.JP; 6594 JP ), Telefonica ( TEF.ES; TEF SM ), Salvatore Ferragamo ( SFER.IT; SFER IM ), Kose ( OSEC.JP; 4922 JP ), Inter Pipeline Fund ( IPL.CA; IPL CN ), ASX ( ASX.AU; ASX AU ), Sonova ( SOON.CH; SOON SW ), Compass Group ( CPG.GB; CPG LN ), Rocket Internet ( RKETX.DE; RKET GR ), Brother Industries ( BI@N.JP; 6448 JP ), Square Enix Holdings ( ENIX.JP; 9684 JP ), Ana Holdings ( ANAW.JP; 9202 JP )

Emerging: Larsen & Toubro ( LST.IN; LT IN ), Sun TV Network ( NSV.IN; SUNTV IN ), Lg Electronics ( JHD.KR; 066570 KS ), Shin Kong Financiual Holding ( SHK.TW; 2888 TT ), Quanta Computer ( QUM.TW; 2382 TT ), SK Holdings ( C&C.KR; 034730 KS )

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

U.S.

HD Supply Holdings ( HDS ) – Retail ( $7B market cap ) – Industrial distributor in North America

HDS shares have come under pressure since the Company reported Q2 FY 2019 results on September 5 and are now 16% off highs. The next level of support is at ~$35 (-10%).

For the quarter, HDS delivered revenue and adjusted EPS growth of 18% and 90%, y/y, respectively, to $1.6B and $0.74. For the full year, it raised its guidance and now expects sales to reach $5.95B-6.00B, compared with $5.12B in FY 2018.

Despite the beat-and-raise quarter, we believe the market is concerned about margin compression, which is expected to continue in the near term.

For Q2, gross margin was down 100bps y/y to 38.9%, out of which 40bps was attributed to the product mix following the acquisition of A.H. Harris by the Company’s Construction and Industrial business ( 49% of Q2 FY 2019 revenue ). In the Facilities Maintenance segment ( 51% of Q2 FY 2019 revenue ), gross margin declined 50bps from a high base due to higher growth of lower-margin HVAC sales and installation and the property improvement business.

HDS is expected to meet its target of revenue growth of more than 300bps above that of the market. For FY 2019, the Company sees its end markets growing ~3%, a key assumption of which is mid-single digit growth in the residential construction market. In our view, residential construction market growth will slow going forward on account of the rising interest rates in the U.S., which will impact the Company’s prospects.

If the Trump administration’s proposed tariff hike to 25% on $200B of Chinese imports goes into effect, it will put further pressure on the Company’s gross margin.

Developed

Kose ( OSEC.JP; 4922:JP; $9.3B market cap ) – Personal care company whose products include cosmetics, skin care, and hair care

Expected Slowdown in Earnings Growth — Japanese Tourism Badly Affected

Kose relies on its international presence for its sales. As of Q1 FY 2019, about 26% of revenues were international. Including sales made to consumers touring in Japan, international customers represented 35% of total sales.

Per data from Japan’s National Tourism Organization, the number of visitors to Japan fell 5.3% y/y in September, the slowest growth since January 2013. Tourists from China fell 3.8%, while visitors from South Korea plunged 14%. The primary reasons for the decline include natural disasters such as earth quakes and typhoons.

This impacted Japanese companies that have revenue exposure to market inbound sales ( foreign visitors to Japan ). With about 10% of Q1 FY 2019 revenues from sales to foreign tourists in Japan, the Company’s Q2 revenues will be affected.

Media reports quoted a customs official announcing that Chinese visitors returning from foreign trips should declare goods if they surpass the tax-exempt amounts for travelers. This is expected to negatively impact the Company’s top-line, as it derives about 76.7% of its revenues from the cosmetics segment (high prestige), which has the highest margins. The increased scrutiny will deter tourists from purchasing high-end cosmetics, which will also impact margins.

Decaying Technical Factors

With Japanese tourism badly affected, the Company’s EPS growth has been revised down to 18% and 8%, y/y, respectively, for FY 2019 and FY 2020.

A/D Rating has declined to E due to above average selling for the past three weeks.

Sharp deterioration in RS Rating to 39 currently ( versus 75 on August 24 ), reflecting the poor stock performance compared with the markets.

Global Laggards

Posted on May 24, 2018February 1, 2019 by Heetae Kim

U.S.

Arch Coal (

)—Energy ($1.6B market cap) – Coal producer with operations in West Virginia, Virginia, Kentucky, and Wyoming generates two-thirds of revenues from the U.S. and one-third from overseas, mostly in Europe/Asia.

After emerging from bankruptcy in Q3 2016 with a big reduction in debt and operations that were once again profitable, the Company reported five quarters of solid growth.
From Q4 2016 to Q4 2017, it averaged 16% sales growth and 40% EPS growth. It also beat consensus EPS estimates by double digits in four of the five quarters.
Q1 2018 EPS missed the consensus by 33% as sales declined 4% and missed the consensus by high-single digits. It was hit with a trifecta of lower volumes, lower realized prices, and higher cash costs in the quarter.
The Company also lowered full-year 2018 guidance for coking and thermal coal volumes and raised cash cost guidance by high-single digits.
Consensus now expects sales and EPS to decline an average of 4% and 13%, respectively, for the next eight quarters. Full-year 2018 consensus EPS estimates have come down 25% since the Q1 miss.
Despite pledges by the Trump administration to keep the coal industry alive, competition from natural gas in the U.S. and the combination of natural gas and other renewables in overseas markets will likely continue to erode industry revenues.
U.S. natural gas production is at an all-time high and supply is expected to continue growing along with domestic demand for the next two decades.
Coal production increased in 2017 for first time in three years, but remains 35% below a 2008 peak. However, demand did not increase and is expected to fall by single digits annually going forward. Supply is expected to fall this year but flatline thereafter, which could put more pressure on prices.
Shares fell 15% on volume that was 700% above average after the Q1 earnings miss, breaking through the 200-DMA. Volume to the upside has since been weak, and shares are hitting resistance at the 21-DMA. This is a new short opportunity.
Despite the cheap valuation (7x trailing Q4 EPS), declining earnings for the next few years could create a value trap.

Global Laggards

Posted on February 1, 2018February 1, 2019 by Heetae Kim

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.