Schneider Electric (QT@F.FR; SU FP) – $146B market cap; $180M ADV: We added Schneider Electric to the Developed Markets Focus List as the stock bounced off its 10-WMA support on above average volume. Schneider Electric is a global market leader in energy management and industrial automation solutions. Rising capex in electrification, expected gradual improvement in the discrete automation market, and transition of its software business from a license-based to a subscription-based model are the key growth drivers. Consensus expects revenue CAGR of 6% and adjusted EPS CAGR of 14% during FY23–25. Fundamental & Technical note
Symbol: KFY
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U.S.: Axon Enterprise ( AAXN ), Korn Ferry ( KFY ), Dorman Products ( DORM ), Ambev ( ABEV ), Loews ( L ), Livanova ( LIVN ), Childrens Place ( PLCE ), Ciena ( CIEN ).
Developed: Amcor ( AMC.AU; 1723503D AU ), Persol ( TMHD.JP; 2181 JP ), Pirelli ( PIRL.IT; PIRC IM ), Anheuser-busch ( ABI.BE; ABI BB ), China Pacific Insurance ( CHPX.HK; 2601 HK ), Ambu ( AMB.DK; AMBUB DC ), Seiko Epson ( SEEP.JP; 6724 JP ).
Emerging: Thai Oil ( THOI.TH; TOP TB ), KB Financial Group ( KHB.KR; 105560 KS ), Phison Elctronics ( PHE.TW; 8299 TT ).
Global Laggards
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U.S.: Korn Ferry ( KFY ), Graham Holdings ( GHC ), ROKU ( ROKU ), JM Smucker ( SJM ), Canadian Solar ( CSIQ ), Interactive Brokers ( IBKR ), Caredx ( CDNA ), Wayfair ( W ), Ciena ( CIEN ).
Developed: Mineral Resources ( MIN.AU; MIN AU ), Spirax-Sarco Engineering ( SPX.GB; SPX LN ), Informa ( INF.GB; INF LN ), Reckitt Benckiser ( RB.GB; RB LN ), Hiscox ( HSX.GB; HSX LN ), GN Store Nord ( GSN.DK; GN DC ), DENA ( DENA.JP; 2432 JP ).
Emerging: Uni-President ( PRE.TW; 1216 TT ), Central Pattana ( CPN.TH; CPN TB ), Phison Electronics ( PHE.TW; 8299 TT ).
Global Laggards
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U.S.: Grace WR ( GRA ), CNH Industrial ( CNHI ), Robert Half ( RHI ), Korn Ferry ( KFY ), Vonage Holdings ( VG ), Sabre Corporation ( SABR ), Comerica ( CMA ), LHC Group ( LHCG ), Groupon ( GRPN ), Texas Roadhouse ( TXRH ), Viasat ( VSAT ), Ciena Corporation ( CIEN ), Corning ( GLW ).
Developed: Johnson Matthey ( JMAT.GB; JMAT LN ), Sumitomo Heavy Industries ( OZ@N.JP; 6302 JP ), Kubota ( KU@N.JP; 6326 JP ), Continental AG ( CONX.DE; CON GR ), A2 Milk Company ( A2M.AU;A2M ASE ), Subsea 7 ( SUBC.NO; SUBC NO ), Royal Bank of Scotland ( RBS.GB; RBS LN ), Evotec ( EVTX.DE; EVT GR ), Kingfisher ( KGF.GB; KGF LN ), Infineon ( IFXX.DE; IFX GR ), Nippon Express ( NX@N.JP; 9062 JP ).
Emerging: Lg Chemical Ltd ( LCM.KR; 051910 KS ), Uni-President Ents. ( PRE.TW; 1216 TT ), Bank Rakyat Indonesia ( BRI.ID; BBRI IJ ), Hon Hai ( HON.TW; 2317 TT ).
Global Laggards
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U.S.: Packaging Corporation of America (
), Korn Ferry (
), World Wrestling Entertainment (
), Madison Square Garden (
), Cabot Oil and Gas Corporation (
), Bank of New York Mellon (
), Eli Lilly & Company (
), Kroger (
), Sprouts Farmers Market (
), Qorvo (
), Yelp (
), American Airlines Group (
).
Developed: Brenntag (BNRX.DE; BAS GR), Toshiba (TS@N.JP; 6502 JP), Dai Nippon Printing (DP@N.JP; 7912 JP), Hengan International (HENG.HK; 1044 HK), Suncor Energy (SU.CA; SU CN), Tokyo Tatemono (JQ@N.JP; 8804 JP), Morphosys (MORX.DE; MOR GR), Kononklijke Ahold (AD.NL; AD NA), Tokyo Electron (RG@N.JP; 8035 JP), Japan Airlines (JAPL.JP; 9201 JP).
Emerging: Formosa Chemicals and Fibre Corporation (FOR.TW; 1326 TT), Lg Uplus (BRI.IN; BRIT IN), Sk Innovation (
Highlighted Charts U.S: Bunge ( BG ), Embraer ( ERJ ), Proto Labs ( PRLB ), Gentex ( GNTX ), Archer Daniels Midland ( ADM ), Delek US ( DK ), T Rowe Price ( TROW ), Gilead Sciences ( GILD ), Caleres ( CAL ), Evolent Health ( EVH ), Hawaiian Holdings ( HA ) Developed: Sumitomo Chemical ( SC@N.JP; 4005 JP ), Siemens ( SIEX.DE; SIE GR ), Honda Motor ( HO@N.JP; 7267 JP ), Nichirei Corporations ( RZ@N.JP; 2871 JP ), Subsea 7 ( SUBC.NO; SUBC NO ), Sumitomo Mitsui Financial ( SMFI.JP; 8316 JP ), Santen Pharma ( XY@N.JP; 4536 JP ), Isetan Mitsukoshi ( ZW@N.JP; 3099 JP ), Hitachi Metals ( HM@N.JP; 5486 JP ), Nomura Research ( NMRS.JP; 4307 JP ) Emerging: Vale ( VA3.BR; VALE3 BZ ), Fubon Financial ( FUB.TW; 2881 TT ) Stocks worth focusing on in this week’s Global Laggards: Proto Labs ( PRLB ) – Capital Equipment; $2.8B market cap – develops and manufactures custom prototypes and short-run production parts through advanced 3D printing, computer numerical control ( CNC ) machining, sheet metal fabrication, and injection molding processes. 80% of revenues are derived from the U.S., while the remainder primarily come from Europe. PRLB gapped down substantially on February 7 after reporting disappointing Q418 results and issuing below-consensus Q119 guidance. The stock is now sitting below its trailing twelve-month low of $101, while it’s A/D Rating has declined to D-. Sales of $113M were near the low end of management’s previous guidance of $112M–117M, while EPS of $0.74 was below guidance of $0.77–0.83. More importantly, the company provided guidance for Q119 that was far below consensus expectations and raised concerns about the growth trajectory of a company that has long been expected to post mid-teens sales and EPS growth from 2019–2020. Revenue guidance of $113M–119M was below consensus of $120M, and the midpoint of this range represents 7.5% y/y growth. EPS guidance of $0.65–0.73 was below consensus of $0.80, and the midpoint of this range represents a 2% y/y decline. Management noted that the company’s recently acquired sheet metal business had underperformed expectations and was the primary driver of the weak quarter. Highlighted Charts U.S.: AAR ( AIR ), Unifirst ( UNF ), Boston Beer Company ( SAM ), T Rowe Price ( TROW ), Henry Schein ( HSIC ), Party City Holdco ( PRTY ), Carmax ( KMX ), Juniper Networks ( JNPR ), Autohome ( ATHM ), Hawaiian Holdings ( HA ). Developed: Henkel AG ( HEN3X.DE; HEN3 GR ), Suez ( SEV.FR; SEV FP ), Nissan Motor ( NR@N.JP; 7201 JP ), Beiersdorf ( BEIX.DE; BEI GR ), Nintendo ( NNDO.JP; 7974 JP ), Park24 ( PARR.JP; 4666 JP ), Morphosys ( MORX.DE ), Isetan Mitsukoshi Holdings ( ZW@N.JP; 3099 JP ). Emerging: Petronas Chemicals (PCHE.MY; PCHEM MK ), Bajaj Auto ( BHG.IN; BJAUT IN ), Tenaga Nasional ( TENN.MY; TNB MK ), L&T Finance ( LFH.IN; LTFH IN ). Stocks worth focusing on in this week’s Global Laggards: U.S. Autohome ( ATHM ) — Technology;($8B market cap)— is the leading platform in China providing automobile listing information to consumers. In 2017, 101 automakers used the company’s platform for advertising and 27,167 dealers used the platform’s lead generation service. The website’s user forum had more than 58.6M registered users, the number of average daily unique visitors to the website from mobile was 13.7M, and the number of mobile app daily unique users was 8.8M. The company also provides loans, leasing, insurance, and used car transactions through its website. Highlighted Charts U.S.: Barrick Gold ( GOLD ), Leidos ( LDOS ), Delek U.S. Holdings ( DK ), Western Union ( WU ), Livanova ( LIVN ), Autonation ( AN ), Caleres ( CAL ), Williams Sonoma ( WSM ), HP ( HPQ ), GCI Liberty ( GLIBA ), Hawaiian Holdings ( HA ). Developed: Henkel ( HEN3X.DE; HEN3 GR ), Daikin Industries ( DA@N.JP; 6367 JP ), Reckitt Benckiser ( RB.GB; RB LN ), Omv ( OMV.AT; OMV AV ), Ms&Ad Insurance ( MSAD.JP; 8725 JP ), Astellas Pharma ( YP@N.JP;4503 JP ), Daiichi Sankyo ( D@SA.JP; 4568 JP ), Isetan Mitsukoshi Holdings ( ZW@N.JP; 3099 JP ), Toyota Tsusho ( TYTS.JP; 8015 JP ), Finning ( FTT.CA; FTT CN ). Emerging: Nissan Motor ( NR@N.JP; 7201 JP ), TVS Motor ( TVS.IN; TVSL IN ), Cathay Financial Holdings ( CFC.TW; 2882 TT ). Stocks worth focusing on in this week’s Global Laggards: U.S. Western Union ( WU ) – Financial ($8B market cap) is a global leader in cross-border, cross-currency money movement. The Company provides money transfer and payment service through its 550K agent locations in 200 countries. Highlighted Charts U.S.: Servicemaster ( SERV ), Liberty Media ( LSXMA ), Booking ( BKNG ), Marathon Oil ( MRO ), CyrusOne ( CONE ), Trustmark ( TRMK ), Realogy ( RLGY ), Insulet ( PODD ), Autonation ( AN ), Jabil ( JBL ), Unifirst ( UNF ), Saia Inc ( SAIA ) Developed: Akzo Nobel ( AKZA.NL; AKZA NA ), Nippon Telegraph and Telephone ( NTT.JP; 9432:JP ), Aeroports de Paris FA ( ADP.FR; ADP FP ), Lundin Petroleum ( LUPE.SE; LUPE SS ), Merlin Properties ( MRLN.ES; MRLM SM ), Diasorin ( DIA.IT; DIA IM ), Domino’s Pizza ( DMP.AU; DMP:AU ), Fujifilm Holdings ( FP@N.JP; 4901 JP ), Amadeus ( AMS.ES; AMS SM ) Emerging: Berli Jucker ( BJCT.TH; BJC TB ), Shinhan Financial ( SHB.KR; 055550 KS ) Stocks worth focusing on in this week’s Global Laggards: U.S. Realogy ( RLGY ) – Financial; $2B market cap— is the largest owner and operator of residential real estate brokerages in the U.S. The company franchises its brands to residential and commercial real estate brokerages in the U.S. and internationally, with more than 16,000 affiliated offices (~5% company owned) across 116 countries and territories. Two key fundamental drivers underpin our negative view on the name: The stock continues to be in a long downtrend, having closed above its 50-DMA only a handful of times over the past eight months. Technical/quantitative ratings are poor, with an RS Rating of 17, an A/D Rating of D, and a Composite Rating of 20. While the stock trades at only 10x 2019 EPS, we believe the its profitability will continue to deteriorate due to secular headwinds. Highlighted Charts U.S.: Univar Incorporation ( UNVR ), Berry Global Group ( BERY ), Nordson ( NDSN ), Toyota Motor Corp ADR ( TM ), Travelport Worldwide Ltd ( TVPT ), Western Gas Partners Lp ( WES ), Regions Financial Corp ( RF ), Chemical Financial Corp ( CHFC ), Alkermes ( ALKS ), The Gap ( GPS ), Sothebys ( BID ), Waters Corporation ( WAT ), Mindbody ( MB ) Developed: Symrise ( SY1X.DE; SY1 GR ), Nomura Research Institute ( NMRS.JP; 4307 JP ), China Unicom ( UNIC.HK; 762 HK ), Kirin Holdings ( KB@N.JP; 2503 JP ), Dcc ( DCC.GB; DCC LN ), Phoenix Group Holdings ( PHNX.GB; PHNX LN ), Novo Nordisk ‘B’ ( NON.DK; NOVOB DC ), Rocket Internet ( RKETX.DE; RKET GR ), Rakuten ( RAKT.JP, 4755 JP ), NextDC ( NXT.AU; NXT AU ), Rentokil ( RTO.GB; RTO LN ), MTR Corporation ( MTRC.HK; 66 HK ) Emerging: Hero Motocorp ( HER.IN; HMCL IN ), Nedbank Group ( NEDJ.ZA; NED SJ ), Quanta Computer ( QUM.TW; 2382 TT ) Stocks worth focusing on in this week’s Global Laggards: U.S. Hilton Worldwide ( HLT ) – Leisure Lodging ( $23B market cap ) – Hospitality company operating more than 5,300 properties (~879,000 rooms) through 14 brands across 106 countries. Its brands include Hilton Hotels & Resorts, Waldorf Astoria, Embassy Suites, and Hampton. The U.S. Leisure-Lodging ( G7011 ) group continues to underperform the general market, reflected by its poor RS Rating and IG Rank of 182 out of 197 groups (1 being the best). Our bearish call in July was based on concerns about supply surpassing demand growth in the near term, currency volatility, increasing alternative accommodations, rising interest rates, and stretched valuations. HLT reported Q3 results this week and revenues grew a modest 7.7%. RevPAR grew 2.0%, lagging the 2.5-3.0% expectation. The occupancy rate in the U.S. was 79.1%, down 0.5% y/y. System-wide occupancy was down 0.1% y/y, which reinforces our belief that demand has topped. HLT remains under distribution: RS line at multi-year lows, RS Rating of 21, and A/D Rating of E. Next level of support is ~$61.Global Laggards
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