SNE – WILLIAM O'NEIL+CO

Global Laggards

Posted on March 28, 2019March 28, 2019 by Cornelio Ash

Highlighted Charts

U.S.: The Chemours Company ( CC ), Aecom Technology ( ACM ), Valmont Industries ( VMI ), Aptiv ( APTV ), Molson Coors Brewing ( TAP ), Halliburton Company ( HAL ), Capital One Financial ( COF ), Henry Schein ( HSIC ), Beacon Roofing Supply ( BECN ), Qurate Retail ( QRTEA ), TE Connectivity ( TEL ), Amdocs Limited ( DOX )

Developed: Upm Kymmene Corporation ( UPM.FI; UPM FH ), Ngk Insulators ( KI@N.JP; 5333 JP ), Mazda Motor ( KO@N.JP; 7261 JP ), Orkla ( ORK.NO; ORK NO ), Equinor ( EQNR.NO; EQNR NO ), RSA Insurance Group ( RSA.GB; RSA LN ), Cochlear ( COH.AU; COH AU ), Seven & I ( SEVI.JP; 3382 JP ), Lawson ( LAWS.JP; 2651 JP ), Infineon Technologies ( IFXX.DE; IFX GR ), Toppan Printing ( PT@N.JP; 7911 JP), Deutsche Lufthansa (LHAX.DE; LHA GR)

Emerging: Hyundai Heavy Industries (HUE.KR; 00950 KS ), Fubon Financial Holdings ( FUB.TW; 2881 TT ), Bim Birlesik Magazalar ( BMI.TR; BIMAS TI )

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

Developed

Cochlear ( COH.AU; COH:AU ) – Health Care; $7.1B market cap – global leader in implantable cochlear hearing devices with ~60% market share.

O’Neil Methodology

The stock gapped down below its 50- and 200-DMA on February 19 following poor H1 FY19 results. We believe the stock can now be shorted following a low volume rally into the 50-DMA.
Technical ratings: RS line at a new low, RS Rating of 48, A/D Rating of D-.

WON Global View

Posted on March 22, 2019 by Anuj Kumar Chouhan

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq each jumped more than 1% after consolidating earlier this week. The distribution count stands at four days on each index after one day expired on the S&P 500 at yesterday’s close. The next level of resistance is ~2,864 on the S&P 500 and ~7,873 on the Nasdaq.

Global Laggards

Posted on March 21, 2019March 27, 2019 by Cornelio Ash

Highlighted Charts

U.S.: Sociedad Quimica Y Minra ( SQM ), Huntington Ingalls Inds ( HII ), Sony Corp American Shrs ( SNE ), Scotts Miracle (

), Halliburton Company ( HAL ), Washington Federal ( WAFD ), Amerisourcebergen Corp ( ABC ), Cracker Barrl Old Cnt St ( CBRL ), Qurate Retail Inc ( QRTEA ), Dave & Buster’s Entmnt ( PLAY ),Juniper Networks ( JNPR ), Vonage Holdings ( VG ), Werner Enterprises Inc ( WERN ).

Developed: Israel Chemicals limited ( ICL.IL; ICL IT ), Kddi Corporation ( DDIC.JP; 9433 JP ), Salmar ( SALM.NO; SALM:NO ), Equinor ( EQNR.NO; EQNR NO ), Daito Trust Construction ( DITC.JP; 1878 JP ), Mitsubishi Tanabe Pharma ( EF@N.JP; 4508 JP ),Lawson ( LAWS.JP; 2651 JP ), Nintendo ( NNDO.JP ; 7974 JP ),Deutsche Lufthansa ( LHAX.DE; LHA GR )

Emerging: Sk Telecom ( SKT.KR; 017670 KS ), Remgro ( REMJ.ZA; REM SJ )

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

U.S.

Cracker Barrel Old Country Store ( CBRL ) – Retail ( $4B market cap ) – operates 659 rustic country-stores, each of which comprise a full-service restaurant, offering homestyle food and a gift shop.

O’Neil Methodology

The stock is down 17% from its 52-week high and is trading weakly below key moving averages. We see the next support level for the stock at ~$142, which is ~7% below the last closing price of $153.43.
It has a strong EPS Rank of 71, but is expected to decline going forward, as FY 2019 EPS growth is expected at 4%, which would make it the second consecutive year of low single-digit EPS growth. Further, it has a weak Composite Rating of 57.
Its RS line has been trending down, and its RS Rating currently stands at 29, and its A/D Rating is weak at D-.

Commentary

Cracker Barrel reported Q2 FY 2019 results on February 26. Revenue of $811.7M ( +3.0% y/y ) beat estimates of $810M, while EPS of $2.52 (-7.7% y/y) also beat estimates of $2.51. Comparable store restaurant sales growth of 3.8% beat expectations of 1.3% on the back of strong off-premise sales growth in November.
Even as the comparable store restaurant sales growth was strong, it did not translate into improved margins. Store-level operating margin shrank 40bps y/y to 13.9% on account of higher labor and other operating costs. At the Company level, operating margin was 9.5%, down 20bps y/y.
For the full year, management has guided for comparable store restaurant sales to grow 1–2%, implying a deceleration in H2 from the H1 average comparable store restaurant sales growth of 2.6%. With persisting labor inflation, operating margin is guided at 9.0–9.3%, compared with 9.7% for FY 2018.

WON Global View

Posted on February 21, 2019 by Veera Manju

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq traded relatively flat yesterday, consolidating gains over the last
several sessions. Distribution remains at two days on the S&P 500 and one on the Nasdaq. Nine of 11 sectors remain above their
respective 200-DMA, though we are noticing early signs of rotation into Basic Material, Energy, and select Transports as Technology
digests gains.

Global Laggards

Posted on February 14, 2019March 27, 2019 by Heetae Kim

Highlighted Charts

U.S.: Bunge ( BG ), Dish Network ( DISH ), Hsbro ( HAS ), Delek US Holdings Inc ( DK ), Markel ( MKL ), Healthcare Svcs ( HCSG ), Central Garden Pet ( CENTA ), Penske Automotive Group ( PAG ), Netgear ( NTGR ), Amdocs ( DOX ).

Developed: Henkel ( HEN3X.DE; HEN3 GR ), Mitsubishi Chemical ( MCHC.JP; 4188 JP ), NGK Insulators ( KI@N.JP; 5333 JP ), Calbee ( CALB.JP; 2229 JP ), Subsea 7 ( SUBC.NO; SUBC NO ), Hargreaves Lansdown ( HL.GB; HL/LN ), Daiichi Sankyo ( D@SA.JP; 4568 JP ), Ain Holdings ( DCL.JP; 9627:JP ), Isetan Mitsukoshi Holdings ( ZW@N.JP; 3099:JP ), Hitachi Metals (HM@N.JP; 5486 JP), Nomura Research (NMRS.JP; 4307 JP), Nippon Yusen KK (NY@N.JP; 9101 JP).

Emerging: Sociedad Quimica y Minera De Chile ( SQB.CL; SQM/B CI ), Maruti Suzuki India ( MUD.IN; MSIL IN ).

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

U.S.

Markel Corp ( MKL ) – Insurance-Property/Casualty/Title; $14B market cap – is a financial holding company offering insurance products primarily focused on specialty insurance.

O’Neil Methodology

The stock is facing strong resistance along its declining 50-DMA.
Poor fundamental ratings: EPS Rank of 26, Composite Rating of 20, SMR Rating of D.
Technical ratings: RS Rating of 27 (near all-time low), A/D Rating of D-.
Pretax margin and ROE have deteriorated over the last four years, and currently stand at 0% and -1%, respectively.
The Insurance-Property/Casualty/Title industry group has sharply declined in rank over the last few weeks. The group is now ranked 97, down from 26 eight weeks ago.

Worsening Combined Ratio During the Last Two Years

The combined ratio of the Company has significantly deteriorated over the last few years. In 2018, it managed to improve, but it remains higher than the industry median of 92%.

Global Laggards

Posted on February 7, 2019March 27, 2019 by Heetae Kim

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.

Global Technology/Cyclical Sector–Internet and Media

Posted on October 17, 2018February 1, 2019 by Derek Higa

Some highlights from the report:

Consumer demand for online food delivery is growing. The Gross Merchandise Value (GMV) for online food delivery is expected to reach $147B, an 11% 2018–2022 CAGR.

There are two types of delivery models: aggregators and new delivery, both of which are expected to grow through 2022. Recently, aggregators have begun offering delivery services to complement their marketplace but at a higher cost to revenue.

As of June 2018, China contributes the most GMV for online food delivery globally, followed by the U.S., India, the U.K., and Germany.

China’s online food delivery market is almost twice the size of the U.S. market. Meituan holds the largest share.

The U.S. core addressable food delivery market is expected to reach +$200B by 2020, or 40% of total restaurant sales. Pizza delivery accounts for the majority of the TAM and nearly 50% are from phone orders, leaving plenty of room for online food delivery penetration.

In the U.S., Grubhub ( GRUB ), on our Focus List, is the leader with a market share of 34% in food delivery services as of July 2018.

Other publicly traded food delivery companies include Just Eat ( JE.GB ), Delivery Hero ( DHERX.DE ), Takeaway.com ( TKWY.NL ), and Meituan ( MEDI.HK ).

Lastly, given the current weak market conditions going into earnings season, we have provided annotated Datagraphs for several other U.S. ideas in the report, including support and resistance levels to keep in mind.