Rick Shea submits:
Food manufacturers continue to post solid earnings growth driven by lower commodity costs. However, for increased profitability to be sustainable, companies need to drive sales growth and increase their long term dollar share in their respective food categories. Having a number one or two share is the best way to drive long term profitability in the food sector.
With that, we have identified our top 5 companies within the supermarket industry that have gained market share over the last two years through sales growth or new acquisitions. We prefer that share gains come through organic growth, but strategic acquisitions can also be very helpful in driving above-average earnings.
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Chuck Carnevale submits:
Historical Perspective
Headquartered in Richfield, Minnesota, Best Buy (BBY) is the world’s largest consumer electronics retailer. With over 4000 locations throughout the world, revenues are expected to approximate or even exceed $50 billion dollars annually when they next report. In fiscal 2009 their segment mix was 78% domestic and 22% international.
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Ockham Research submits:
The grocery store business has been fiercely competitive in the last few years with consumers eating out less during the recession. Today, Safeway (SWY) announced that it would likely miss current fiscal 2010 earnings estimates mainly because of lowering prices to better compete against industry rivals. This more conservative guidance for Safeway was not at all unexpected though as the stock has regained much of the losses in afternoon trading, but we believe there is a much more attractive stock than Safeway even in an industry where margins are squeezed and competition from warehouse retailers threatens.
Supervalu (SVU) is one of the largest national grocery store chains and operates under various brand names including Albertsons, Shaw’s and Save-A-Lots. SVU stock has greatly underperformed the market over the last year thanks to industry competition and food price deflation, and the comparably high debt load has caused Supervalu to lag many of its closest competitors. However, we think there are reasons to believe that better times are indeed ahead. For example, in January SVU reported fiscal third quarter earnings results
that showed EPS of $.46 easily topped estimates of $.40 despite underachieving sales. The company was able to maintain profit margins of 22.3%, which is of extreme importance with food price lower than they were a year ago. One of the ways that they are achieving those margins is through better inventory management and reducing the number of items in stores to reduce costs. Strict inventory management is essential to grocers and should show up in the bottom line results.
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ChinaBio Today submits:
Generex Biotechnology (NSDQ: GNBT) announced it has been granted a China patent for its Ii-Key peptide vaccine technology, a vaccine currently in US clinical trials to prevent a recurrence of breast cancer. Generex said the patent covers both its platform technologies and Ii-Key-containing drug development compounds. The patent was granted to Antigen Express, the Generex subsidiary that is developing the vaccine.
According to Generex, it is “actively seeking” either joint venture or licensing partnerships for the vaccine, and it has already begun discussions with several large pharmas.
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Trefis submits:
Qualcomm (NASDAQ:QCOM) makes money primarily by selling CDMA chipsets to mobile phone manufacturers such as Apple (NASDAQ:AAPL), Nokia (NYSE:NOK), Samsung and Motorola (NYSE:MOT), and by charging a royalty to mobile manufacturers on every phone sold.
We estimate the Qualcomm’s cash balance constitutes around 27% of the $42 Trefis price estimate for Qualcomm’s stock. In comparison, the company’s chipset business constitutes 43% of our estimate while its mobile phone royalty business is about 29% of the Trefis price estimate.
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Paul Price submits:
Wal-Mart [NYSE:WMT - $53.40] is the world’s largest retailer with almost $406 billion in FY 2010 sales (FY ended Jan. 31, 2010). Despite the poor economic conditions, WMT posted all-time record sales and earnings last year.
Here are the excellent long-term per share numbers for WMT as reported by Value Line:
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Prieur du Plessis submits:
The gold price is not only making headway in US dollar terms, but also in most major (and minor) currencies as illustrated by the table and graph below. Bullion veterans will recognize this phenomenon as a manifestation of solid investment demand (and a vote of no confidence in fiat paper per se).
The picture and the numbers tell the full story.
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Saj Karsan submits:
In general, makers of capital equipment see highly cyclical demand from their customers, as the will/ability of companies to finance expensive purchases during recessions disappears. Further, adding to the already-pressured earnings situation for companies that manufacture heavy-duty capital goods, is the fact that a large component of their costs are fixed, at least in the short-term. But often, this combination of negative factors in the short-term can result in a beaten down stock price, where upside potential is strong and downside risk is low in the long-term.
As an example, consider Gencor (GENC), a manufacturer of heavy-duty equipment for the highway construction industry. As one might expect, Gencor’s revenue has taken a hit, and the fixed-cost nature of its business has resulted in several consecutive quarterly losses. But while the company has lost under $3 million in the last five quarters combined, it holds cash of $65 million against no debt, and it trades for just $68 million.
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Tom Armistead submits:
Back in January last year I did a compare and contrast on diskmakers Western Digital (WDC) and Seagate Technology (STX). At the time, I saw value, but found that WDC exhibited superior management and financial strength. Subsequent performance and price appreciation have confirmed the value, but with WDC trading under 40 with a TTM P/E of 9.7, the question comes up: why so cheap?
Margins – The disk-making industry can be characterized as cyclical and commodity-like, so that typically the stocks will trade at low P/Es during high points of the cycle. Working with 5 year average EPS, and projecting through the end of WDC’s 2010 fiscal year on 6/30, I get 3.80 X 15.9 average P/E on that metric = 60 as a midpoint target price. A similar exercise based on P/S yields a target of 36. When these valuation methods give such widely divergent results, the issue is margins. The market is interpreting WDC’s margins as unsustainable.
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Sol Palha submits:
See it big, and keep it simple.
Wilferd A. Peterson
From high to low, silver has dropped over 24%. From high to low, gold has so far shed only roughly 12%. Silver also did not take out its 2008 highs when gold went on to put in a series of new all time highs. This is another massive intra market negative divergence signal and yet another reason to suggest that gold could correct/consolidate for several months. On a positive note, gold has held up remarkably well in the face of a very strong rally from the dollar. If it continues to hold up like this, then when the dollar rally finally fizzles out, one can expect gold to literally explode upwards.
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Dobromir Stoyanov submits:
After my post when to break your rules, some readers asked me whether it is reasonable to enter into a dividend investment which has not raised dividends for more than 10 years in row.
The truth is that dividend investing should require intense scrutinizing of companies in order to find the best stocks for ones portfolio. Otherwise, investors could end up getting whipsawed in and out of stocks, which would increase trading costs and would make them less likely to reach their goals. The reason behind requiring at least a decade of consistent dividend growth is to weed out all companies which are inconsistent in their dividend policies. Few companies which raise distributions for less than a decade end up on the dividend achievers list. In fact of the total universe of 10,000 US publicly traded stocks, less than 300 are included in the achievers list.
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Stockerblog submits:
The ‘PIIGS‘ are the European countries that are suffering due to current economic woes. The countries are Portugal, Italy, Ireland, Greece, and Spain, and the crisis that is looming is heavy. Recently, there has been much talk about Greece being bailed out by stronger EU countries, but even that is uncertain. And even if Greece is bailed out, will there be enough funds or even enough interest in bailing out Spain or Italy, with a much greater amount of sovereign debt outstanding?
But if the bailouts come through, the economies will come through, and the stocks in those countries should do well. So if you are a real contrarian, here are some stocks worth taking a look at.
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Investing, Long Term Investment, stock market | admin March 3, 2010 | 
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