Rheinmetall (RHMX.DE; RHM GR) – $64B market cap; $744M ADV: We booked a 121% gain and removed Rheinmetall from the Developed Markets Focus
List as the stock has formed a climax top on the daily chart with five criteria. It has pulled back 10% from its all-time high and is testing support at its 10-DMA
(-2%). We have booked profits in strength here and continue to believe that Rheinmetall, being Germany’s largest defense contractor, is one of the biggest
beneficiaries of a multi-year defense cycle in Europe. Next support is at its 21-DMA (-8%). Fundamental & Technical note
Symbol: LMT
Industrials Conference: Annotated Charts For Select Ideas
Key points from this report:
- The following select ideas are showing near-term relative strength while displaying good O’Neil Fundamental ratings and rankings: EA3.BR, MMM, and AER.
- The following select ideas are showing near-term technical weakness with poor O’Neil Ratings and Rankings: HON, HRI, VRT, TT, PNR, HUBB, CTOS, KMT, R, AL, ROK, DOV, ATS.CA, AVY, RS, ATI, AGCO, GTES, LMT, and REZI.
O’Neil Capital Equipment Sector Weekly
Taylor Morrison Home (TMHC; TMHC US) – $7B market cap; $50M ADV: We removed Taylor Morrison Home from our U.S. Focus List as the
stock breached its 100-DMA on below average volume. Investors have been concerned about the company’s weaker-than-expected gross margin
outlook, due to continued pricing pressure as mortgage rates remain elevated. XHB, the homebuilders index, has also breached its 100-DMA,
indicating broader negative sentiment for the group. Next support for TMHC is at 200-DMA (-1%). Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Prysmian (PRY.IT; PRY IM) – $21B market cap; $47M ADV: We added Prysmian to the Developed Markets Focus List as the stock is actionable after breaking out of a stage-one consolidation base. Prysmian is the world’s largest cable manufacturer. Increased exposure to the high-growth North American market after Encore acquisition, strong demand for highvoltage cables on the back of energy transition capex, and expected recovery in volumes in the telecom end market are the key growth drivers. Consensus expects sales and EPS CAGR of 10% and 34%, respectively, in FY23–26. Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
The Times reported that the U.K. government is working on a new policy to support first-time home buyers. The news resulted in sharp moves in U.K.-based homebuilders (PSN.GB, VTY.GB, BWY.GB, RDW.GB,
BDEV.GB and TW.GB were up 1–5%), as the policy may help boost demand.
O’Neil Capital Equipment Sector Weekly
U.S. housing starts slipped 0.8% m/m in March, with a 5.9% m/m drop in multi-family starts, partially offset by a 2.7% m/m rise in single-family homebuilding. This increase in single-family starts may be attributed to
builders aiming to boost demand through discounts following a spike in borrowing costs, and higher mortgage rates compared to FY21. This week, the 30-year mortgage rate declined to 6.27% (-1bps w/w), recording a
decline for the fifth consecutive week. The homebuilders have a Group Rank of 5.
O’Neil Capital Equipment Sector Weekly
Wolters Kluwer (WSG.NL): Issued a trading update for the nine-month period ending September 2022. It recorded revenue growth of 15% y/y and an adjusted operating margin improvement of 50bps y/y. The stock is consolidating in a stage-one flat base. We recommend investors add to positions on a break above the pivot of €111.4 (+9%). Look for support along its 50-DMA (-1%) followed by the 200-DMA (-5%).
O’Neil Capital Equipment Sector Weekly
Lockheed Martin (LMT) reported mixed Q3 FY22 results. Revenue increased to $16.6B (+3.5% y/y) but missed estimates by 0.5%. Revenue growth in its aeronautics and space segment was offset by the decline in the rotary and
mission systems segment. The company saw operating profit margin contracting in most operating segments due to supply chain issues. Adjusted EPS was $6.87 (+4.1% y/y), beating estimates by 2.2%. Management maintained its
FY22 guidance and increased its share buyback program to $14B. For FY23, it has guided for flattish revenue growth with a 20–30bps y/y decline in operating margin. The stock gapped up 8% post-print and reclaimed its 200-DMA. It
has a good RS Rating of 91 and an A/D Rating of B+.
O’Neil Capital Equipment Sector Weekly
YouGov (YOU.GB), a U.K.-based international research and data analytics group, announced mixed FY22 results for the year ended July 31. Revenue grew to £221.1B (+31% y/y), beating estimates by 3%, driven by double-digit growth across its data products, data services, and custom research segments. Adjusted operating profit improved 42% y/y, due to business efficiencies and operational leverage benefits, with an adjusted operating profit margin of 16.4% (+130bps y/y). It reported an adjusted EPS of 23.7p (+9% y/y), missing estimates by 12%, impacted by adverse foreign exchange movements. The stock continues to trade below its key moving averages and has fallen 50% off its 52-week high. It has an RS Rating of 18 and an A/D Rating of D-.
O’Neil Capital Equipment Sector Weekly
The National Association of Home Builders/Wells Fargo Housing Market Index dropped 3 points to 46 in September, compared with estimates of 47. This was the ninth consecutive month of decline in homebuilder confidence as a
result of higher mortgage rates and high material prices. Current sales conditions deteriorated 3 points to 54, while sales expectations for the next six months and buyer traffic declined 1 point each to 46 and 31, respectively.
