- Crude oil futures rallied 3.6% to 49.21 a barrel, gaining for the fourth day in a row
- Dollar retreats from historic high
Nike: solid fiscal 2015 third quarter result
- Double digit revenue grow
- Excluding currency fluctuation 12% growth in rev
- Including dollar appreciate 7% growth
Kraft and Heinz merge to form the world’s largest food and beverage company
- Merger valued around 48 million
- Post-merger revenue around 38 million
Facebook plans to add reservation booking, online order tracking and custom videos on messenger
Stock Pitch: Coco- cola (KO)
- World’s largest manufacturer, distributor and marketer of non- alcoholic beverage
- Produce both carbonated and non- carbonated beverage
- Has 8.4% global market share.
- Its competitor Pepsi Co holds the NO. 6- 3.6%
- Pepsi defend structure as a beverage and snack foods business—- coke is digging deeper into beverages
- Consistent issuance of dividend
- Dependency on emerging markets, which have become more volatile in recent times
- 2015 will be transitional years—- rewards 2016-2017 onward.
- And since the start of 2007, Coco- cola has outperformed both Pepsi and the S&P 200 on a total return basis, shares of coco-cola are up 113%, while Pepsi is up 94%
- Net operating revenue 45998
- Stable cash flows- stocks extremely low price volatility
- Carbonated soft drink volumes declined by 3.2%
- Expenses decreased slightly year to year, except AD—3,499-3,266
- EPS grew 5% in both the quarter and the full year
- The revenue has grown from around 8 million
- ROA 7.46; ROE 22.26; Revenue 46.00 B; Net Income 7.10 B; Gross Profit 28.11 B
In the News
- New product- Fairlife milk
- Product of smaller cans, less calorie, sugar 7.5 oz, 90 cal
- Cloud technology
- 30 billion in developing markets around the world over the next five years
- Management expects 2015 to be a “transition year”
- 16% stake in Keurig Green Mountain
Risk and competitor
- Health and wellness concerns
- Raw materials-corn syrup, aluminum, plastic, oranges, water
- Needs to balance risk of new innovation with low growth rates of established products
- Strength of U.S dollar- broad exposure to foreign currencies
- Competitors: PepsiCo (Pepsi) Cadbury Schweppes (Dr. Pepper)
- U.S Economy added 295000 jobs in Feb, which is well above the 240000 expected by economists
- Unemployment rate dropped to 5.5% from 5.7% due to people dropping out of the workforce
- Job opening in the U.S rose 2.4% in Jan to 5 million, reaching a 14 year high
- U.S dollar recently yet again hit multiyear highs against the euro and also multiyear highs against Japanese Yen
- Sweden’s central bank recently further cut its key policy interest rate from -0.1 to- 0.25 and expanded its bond- buying program
- China shares climbed to near seven- year high
- Tencent’s net profit rose 50% from the same quarter last year. Profit mostly driven by online games and mobile games built on its mobile Wechat and QQ platform
- In the 4th quarter, 82% of Tencent’s revenue was from online games, while advertising revenue only accounted for 13%
Industry research general steps:
- Business model (product& services model, revenue model)
- Risk factor& macro environment (Top down, Bottom up)
- Case studies on a few companies
- Porter’s Five Forces
Types of Banks
- Commercial banks: deposits and loans: take deposits and make high interest from loans
- Investment Banks: underwrites stock and bond issues, trades, investment management, merger and acquisitions advisory
- Merchant banks: provide capital for equity
- Central banks: regulatory role, lender of last resort
2007-08 Financial& Economic Crises
- Banking Industry Consolidation
- Bail out and moral hazard
Post- Crisis Regulation
- Basel Accords (recommended international standard)
- Volcker Rule: against proprietary trading( Investment banks use their own money to invest instead of clients’ money)
CCAR (Comprehensive Capital Analysis and Review)
- Annul stress test
- Capital requirement
- Cost on risk management and compliance
- Mobile banking
- Predictive banking& Customer Analytics
- Digital and social selling
- New product development
Shake Shack and the Fast Casual Industry
Shake Shack: a Manhattan-based burger joint
IPO: Jan 2015
- With initial price of $21 per dollar
- Hit &45 on the first day of its debut
- Raised $ 105 million
- Operates 663 restaurants, only 31 company- operated
- Menu choices are very limited
Shake Shack’s successful IPO once again proved investors’ appetite for Fast Casual
the Fast Casual Industry
- High quality ingredients: fresh
- Convenience: fast service
- Customization: flexible offering
- A full view of how the food is prepared
- Higher price as compared to Fast Food Restaurants
- Fast Casual’s Competitiveness
- Consumers look for best value proposition, not necessarily cheapest price
- Emphasis on offering better product but still at an affordable price
- Caters to a heightened interest in healthy food
Risk Factors for Shake Shack:
Competition from similar burger joints
- The Habit restaurant
- McDonald’s and Wendy’s innovative items and attempts at customization
- Risk of over- expansion
- Goal of opening 450 stores may be ambitious
- Risk of lower profits, higher operating costs
- Over reliance on Manhattan for rev and profit margin
Risk of Beef Cost
- SHAK lost $1.4 million in the fourth quarter due to higher cost in beef
- Meat from producers that adhere to more stringent welfare practices and don’t use antibiotics or hormones.
As many of you may know, the student-run investment club Owl Investment Group gives annual donations to various Bryn Mawr clubs as a way of giving back to our community. If your club has upcoming projects or events that you think are beneficial to the Bryn Mawr community, and you still need funding for them, you can apply now for the OIG Club Donation Event. Please click on the link below to fill out a Request Form :
You may request a maximum of $1,000.00. The deadline for the OIG online donation application is this Friday, March 20th, 11:59 pm. Once the Form is submitted, we’ll get back to you as to when your club/organization may come in for a presentation of your request to the OIG club members by Sunday, March 22nd. If you are selected for a presentation, please submit your presentation powerpoint to us by March 25th, 11: 59pm . If granted an interview, your group MUST present your proposal by PowerPoint at an OIG members meeting. Your proposal must include a detailed budget for the funds requested. You can request donations on behalf of a club or as an individual student proposing a project or event.
- 4th Quarter GDP data down to 2.2% from 2.6% and GPD is expected to be further revised down to 2%
- Auto sales rose in Feb despite poor weather: GM sales up 4.2%; Chrysler sales rose 5.6%
- Dollar continued to strengthen: Hit 11 year-high vs Euro, which fell to $1.1088
- Nasdaq fell below 5000 level on Tuesday
- China lowers growth target to about 7%
- ECB on Thursday is expected to unveil details of bond buying program: 60 billion euro of bonds each month for 18 month
- GDF Suez, a French Energy Company issues 2.5 billion euro of bond including zero coupon bond
- More about zero coupon bond:
- J&J is nearing a deal for cancer drug maker Pharmacyclics
- Pharmacyclics has won expanded approval from US health regulators on its breakthrough cancer drug Imbruvica, which is expected to achieve annual peak sales of up to $6 billion
- Shares of Pharmacyclics rose 6.3%
- Abercrombie& Fitch shares down 13.1%, though profit beats expectation
- Germany agreed to pay Airbus 623million euros in loans for the new Airbus A250 wide body jet.
- Airbus has received billions of euro in preferential loans from European government to support the development of new jetliner models.
Stock pitch: Coach (COH)
- Founded in 1941 and acquired by Sara Lee Corp. in 1985
- Products: Handbags, Accessories, Footwear, Jewelry, Wearables, etc.
- Main American luxury goods retailer
- Current Price: $41.95
- Market Cap: 11.85 B
- P/E: 20.93
- Debt/Equity Ratio: 2.27
- 2/15/2015: Quarterly cash dividend of 0.33375 over common share
- Global sourcing risks
- Dependency on global sourcing center
- Intellectual property protection
- Popularity of brand and fads
- Consolidation of retail business
- Coach lost lots of market share in the past years, the slowdown of competitors could mean a chance to gain back what it lost
- New styles reminiscent of recent fashions seen at current shows
- “Brand Transformation” has had positive outcomes on revenue as well as brand perception
- Recent acquisitions give leverage
- Plans to expand into South and Central America, as well as broadening line of men’s products
- Long term hold for at least a year
Congratulations on our first stock pitch this year!
- Euro zone GDP grew 0.3% in the 4th quarter， above the 0.2% growth expected by economists.
- The European Commission, the ECB and the IMF approved Greece’s 4 month bailout extension after the country submitted a list of reforms that were in line with expectations
- U.S stocks soar to new high; Dow was at record
- Demand for crude oil is growing. Saudi Arabia’s top oil official said, amid new data shows that the world is getting hungry again for petroleum products.
- Share of Nordstrom rose nearly 5% in the quarter, total sales increased 9% to 3.9 billion
- Macy’s ended 2014 with less than 1% revenue growth.
- Target posted its best sales growth in nearly three years which is a sign that shoppers are responding to changes under new Chief Executive.
- Research the employer: the position you are applying for; know the corporation culture
- Focus answers on the characteristics required by the employer
- Use powerful words to describe your competency in those characteristic
- Be concise- make a point, make it clear, and use precise wording.
- Setup: describe the situation, facts and information.
- Task: what was needed to be done?
- Action: describe your action.
- Results: what is the result?
- Similar format: PARADE: Problem; Anticipated consequence; Role; Action; Decision Making Rationale; End Result
Sample Interview Questions:
- What is the toughest group that you have had to get cooperate with?
- Give me an example of a situation in which you made your mind too rapidly.
- How do you determine what constitutes a top priority in scheduling your time?
- Describe your most difficult school course or work project.
- How do you deal with conflict.
- U.S Economy:
- U.S unemployment claims were up to 278000, but the increase is smaller than expected
- The U.S Economy Added 247,000 jobs in January, well above expectation
- Oil tumbled for the second day in a row, with the U.S benchmark slipping back below 50 a barrel.
- The ECB to stop accepting Greek debt as collateral
- China reported weaker than expected export(Downto 3.3%) and import data on Sunday, raising concern that China’s growth is slowing.
- Verizon: sell its wireless tower to American Tower for 5.1 bill and its local fixed line assets.
- Time Warner reported 1% decrease in revenue last quarter
- Apple’s market cap reaches 700 bill Giant as the first U.S Company with Market Cap exceeding 700 bill.
Porter’s Five Force
Porter’s Five forces is an analysis tool to analyze the competition level of a company. Here are the five forces:
- Easiness of entry for new participants
- Number and activity of the company’s rivals
- The possibility of new product
- Bargaining power of the industry suppliers
- The consumer’s bargaining powe
For more information on Porter’s Five Forces, please check the video posted on Investopedia:
MIT Asia Business Conference
Saturday, March 7th, 2015 8AM – 7PM
MIT Media Lab, 75 Amherst St. Cambridge, MA 02139
Target Audience: 500 (300 students, 200 professionals)
For more details, please visit:
ISM index is at 58.7 in Nov., which is a little lower than what it was in Oct.
In china, the HSBC purchasing managers index dropped to six months low, raising fears of a slowing Chinese economy.
Retail sales dropped 11% than last year during thanksgiving.
People’s Bank of China cut its one- year loan rate by 0.4percentage points
The ECB makes its policy announcement Thursday 11.21. Persistently low inflation and a flagging economic recovery have ramped up the pressure on the central bank.
GM and Chrysler on Tuesday posted their best Nov. U.S. sales figures in several years. Ford Motor Co. reported a decline.
Announced that it declined to cut oil production.
Oil price dropped significantly on Friday.
Life Time Fitness, Inc.
Estb. 1992 in Chanhassen, MN
13 fitness centers
Designs, builds and operates fitness and athletic centers
Prev. Close: 54.47
Industry Statistics 2013
US HealthClub Industry Revenue: 2.4% growth past 5 years
US Health Club Memberships: 2.5% growth past 5 years
Core Members 2% growth past 5 years
in Q3 2014, total revenue grew 6.6%
Total revenue for the first nine months of 2014 grew 6.6%
Membership dues: 6% increase
In center revenue: 9% increase
Operating Cash Flow: 245M
Debt: Equity = 0.49
Expect 6.6% increase in revenue due to holiday season and expansion.
In the News
Dec 3: Acquired ShapeMed- wellness and non- surgical aesthetics company
Jan1-4: Million Workout Weekend
Holiday season memberships expected.
They are expected to grow because of expansion
Suggest to be a short term holding
Monday: Japanese stocks suffered their worst daily drop in more than 3 months
The Nakkei Average tumbled 3%
U.S stocks mostly lowered on Monday due to Japanese recession
WMT’s revenue growth has slightly outpaced the industry average of 0.9%
Net operating cash flow has significantly increased.
Sales grew in the home goods, apparel and health categories, as well as at the smaller Neighborhood Market stores. Online shopping was another bright spot
Total sales increased 2.8%, beating the industry average
Gross profit at the U.S. segment inched up to 0.2%
Baker Hughes and Halliburton Merger
Halliburton, an oilfield- services provider, says it can slash 2 billion after acquiring its similar- sized rival
Actavis to buy Allergan
Bill Ackman’s stake in Allergan Inc. has almost doubled in revenue.
Actavis will purchase Botox maker Allergan in a 66 billion deal
The combined firm expects to have revenues of 23 billion in 2015
J&J Snack Foods
1971 Pennsauken, NJ
Consumer Goods; Processed& Packaged Goods
Manufactures, markets and distributes foods and beverages
U.S., Mexico, and Canada
Food Service, Retail supermarket and frozen Beverages
P/E 26.9 (little bit higher than industry)
Net sales increased 7% for the quarter and 6% for the year
Very low in debt
Operating cash flow(100 mill)
Sufficient to fund future growth
Acquisitions can be a potential growth
In the News
Partnership with Mondelez International
Oreo Churros (a new product):
The churros can be served with OREO cookie creme dip, supplied by J&J Snack Foods
Risk and Competitors
Part of the risk with any food/ beverage/ service company is the ever- present threat of a downturn in consumer sentiment/spending
Given subsidiaries located and operating Canada, Mexico- risk lie in those markets
Competitors with similar products: Snyder Lance& Mrs. Fields
Growth: 5.84% in 2015, 6.50% in 2016
PE: 25.35 in 2015, 23.83 in 2016