>>> Accenture plc (ACN), a professional services company, provides strategy and consulting, industry X, song, and technology and operation services worldwide. The company offers application services, including agile transformation, DevOps, application modernization, enterprise architecture, software and quality engineering, data management; intelligent automation comprising robotic process automation, natural language processing, and virtual agents; and application management services, as well as software engineering services; strategy and consulting services; data and analytics strategy, data discovery and augmentation, data management and beyond, data democratization, and industrialized solutions comprising turnkey analytics and artificial intelligence (AI) solutions; metaverse; and sustainability services. It also provides change management, HR transformation and delivery, organization strategy and design, talent strategy and development, and leadership and culture services; digital commerce; infrastructure services, including cloud infrastructure managed, cloud and data center, network, digital workplace, database platforms, service management, and cloud and infrastructure security services; data-enabled operating models; technology consulting and AI services; and technology consulting services. In addition, the company offers engineering and R&D digitization, smart connected products, product as-a-service enablement, capital projects, intelligent asset management, digital industrial workforce, and autonomous robotic systems; business process outsourcing; and services related to technology innovation. Further, it provides cloud, ecosystem, marketing, security, supply chain management, zero-based transformation, customer experience, finance consulting, mergers and acquisitions, and sustainability services. The company has a collaboration with Salesforce, Inc. to develop Salesforce Life Sciences Cloud. The company was founded in 1951 and is based in Dublin, Ireland.
'Magnificent Seven' - >>> Investors brace for earnings from ‘Magnificent Seven’ US growth giants
July 14, 2023
By Lewis Krauskopf
NEW YORK (Reuters) - A handful of massive growth and technology names that have dominated the U.S. stock market in 2023 are set to report earnings in coming weeks, potentially determining the path for this year’s equity rally.
Lately dubbed the “Magnificent Seven” by investors, shares of the U.S. companies with the biggest market values soared between 40% and over 200% so far this year. Those moves have accounted for a lion's share of the S&P 500's 17% year-to-date rise and propelled the index to its highest level since April 2022.
The outsized gains have come with big earnings expectations for the seven companies: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms. BofA Global Research projects they will increase earnings by an average of 19% over the next 12 months, more than double the an 8% estimated rise for the rest of the S&P 500.
They will need strong results to justify premium valuations. Those companies trade at an overall trailing price-to-earnings ratio of about 40 times, versus 15 times for the S&P 500 excluding those companies, according to BofA.
Their results may be crucial to the market as a whole. Fueled by their recent gains, megacap stocks have climbed to dominate benchmark indexes, causing headaches for some managers of active funds. In the S&P 500, the seven stocks comprise 27.9% of the index's weight.
Investors will look beyond second quarter results, said Bill Callahan, an investment strategist at Schroders.
“It’s also how do these big companies, which are carrying the market ... guide for the rest of the year and into 2024,” he said.
Overall, the seven companies account for 14.3% of overall S&P 500 estimated earnings for the second quarter, and 9.3% of estimated revenue, according to Tajinder Dhillon, senior research analyst at Refinitiv.
Among the reports in the previous quarter, Nvidia was one of the standouts. The semiconductor company's revenue forecast blew past estimates as it said it was boosting supply to meet surging demand for its artificial-intelligence chips, further fanning the market's excitement over AI. Nvidia shares are up well over 200% this year
Tesla is the first of the growth giants to report, with earnings expected on Wednesday. The Elon Musk-led company this month said it delivered a record number of vehicles in the second quarter.
Microsoft and Meta are among the companies due to report the following week, and investors are expected to focus on how companies are seeking to harness AI.
While AI benefits may not immediately materialize for every company, investors are eager to learn "more about how they are going to convert that into money, essentially," said Thomas Martin, senior portfolio manager at Globalt Investments.
"It’s going to take some time for that to work its way through and to show up," said Martin, who is overweight some of the megacap stocks. "Along the way, people are going to want to see some sort of progress."
There are signs market gains are broadening beyond the megacaps. The equal-weight S&P 500, a proxy for the average stock, is modestly beating the S&P 500 over the past month -- up 3.6% versus about 3% for its counterpart. The equal-weight version trailed badly for most of 2023. Strong U.S. data have driven confidence the economy can avoid a long-feared recession. A so-called "soft-landing" could lift cyclical stocks such as industrials and small-caps that are trading at cheaper valuations. But many investors say the corporate giants are nevertheless here to stay as critical holdings. Yung-Yu Ma, chief investment officer at BMO Wealth Management said that while “there is a lot priced in” to megacaps’ valuations, that did not mean they are overvalued.
"If you think about the megacaps broadly ... they have gone from a core holding of a portfolio to an almost absolute necessary major component of the portfolio once you factor in trends such as AI," he said.
>>> Apple is Buffett's favorite
Jeremy Bowman (Apple): With a dividend yield of 0.5%, Apple isn't going to win any awards for yield, but this tech giant has a long track record of raising its dividend and rewarding investors (including with share buybacks).
Additionally, it has one of the widest economic moats in the business world, making it obvious why Buffett is so fond of the business. In fact, Apple now makes up roughly half of Berkshire's stock portfolio thanks to steady buying over the years and Apple's own stock appreciation.
The iPhone and Mac maker has built an unrivaled consumer tech ecosystem with an installed base of roughly 2 billion devices. Once you own one Apple product, it makes sense to buy more if you're in the market for another because they work seamlessly with one another and connect to software like iCloud and the App Store.
Apple's introduction of its new Vision Pro spatial computing headset at its Worldwide Developers Conference in June also puts it in a position to dominate the next era of computing.
While it's unclear yet if headsets like the Vision Pro and Meta Platforms' Quest will gain broad adoption, Apple seems like a good bet to be a leader in spatial computing considering its reputation for consumer hardware, integrations with devices like the iPhone, and the years of research and development that have gone into the device. Priced at $3,500, the Vision Pro is much more expensive than the Quest.
The tech titan has also been applying artificial intelligence (AI) tools like machine learning, meaning the company offers one of the best use cases for AI right now as well. Meanwhile, its market share continues to grow, further entrenching its leadership.
>>> PepsiCo, Inc. (PEP) manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, simply granola, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is headquartered in Purchase, New York.
Abbott Labs - >>> Antipodean dairy firms eye baby food supply to U.S. after Bubs Australia nod
by Harish Sridharan and Rushil Dutta
May 30, 2022
(Reuters) - Dairy companies in Australia and New Zealand are queueing to restock empty shelves in the United States with baby food, after the country recently relaxed its import policy to mitigate one of the biggest infant formula shortages in recent history.
New Zealand's dairy giants Fonterra and a2 Milk, and privately-run Australian firm Bellamy's Organic confirmed on Monday they had submitted applications to the U.S. Food and Drug Administration (FDA) for supplying baby food to the country.
This followed fellow Antipodean firm Bubs Australia inking a deal with the FDA to ship at least 1.25 million cans of its formula. Shares in a2 Milk closed more than 10% higher, while Bubs Australia shot up 40%.
"I've got more good news: 27.5 million bottles of safe infant formula manufactured by Bubs Australia are coming to the United States," President Joe Biden said in a Tweet
"We're doing everything in our power to get more formula on shelves as soon as possible."
The U.S. baby food shortage was triggered when Abbott Laboratories, the biggest U.S. supplier of powder infant formula including Similac, in February recalled dozens of products after reports of serious bacterial infections in four infants.
Abbott was on track to reopen its key baby formula plant in Michigan within one or two weeks, although FDA Commissioner Robert Califf told lawmakers a week later it would take until July before store shelves across the country were filled.
"In light of the current situation and revised FDA guidance, we have submitted an application to the FDA for approval to supply finished infant formula to parents in the U.S.," Fonterra, the world's biggest dairy producer, said in an emailed statement.
Emergency supplies from Europe arrived earlier last week after the Biden administration decided to urgently meet nationwide shortages by relaxing import rules.
>>> 16 big stocks near records before the New Year
by Brian Sozzi
December 30, 2021
The big keep getting bigger.
Troll the list of 52-week highs (see some names below) in the record-setting stock market right now, and it's a who's who of big cap, household name companies.
The stocks mentioned here reflect a couple themes being played by investors into 2022: likely increased at-home food/consumer products consumption with the Omicron variant raging (Hershey, Coca-Cola, McDonald's, Mondelez, Proctor & Gamble, Constellation Brands, Yum! Brands); solid health care plays amid the ongoing pandemic (Abbott, McKesson, Zoetis); economic recovery names (Norfolk Southern, Paychex, Hilton); the hot U.S. housing market continues (Home Depot, Sherwin-Williams).
Norfolk Southern (NSC)
Proctor & Gamble (PG)
Sherwin Williams (SHW)
Constellation Brands (STZ)
Yum! Brands (YUM)
CME Group (CME)
Home Depot (HD)
Of course, the moves higher in these big cap stocks come as the broader market remains in full Santa Claus Rally mode despite the fast-spreading COVID-19 pandemic. Hence, investors are feeling emboldened to bid up these stocks even as they are far from cheap from a valuation perspective.
The S&P 500 (^GSPC) notched its 70th record close of the year on Wednesday. It represented the second highest number of record closes for the S&P 500 in a calendar year. Back in 1995, the S&P 500 saw 77 record closing highs according to Bloomberg data.
Most on Wall Street expect the rally to continue into the early part of January, reflecting favorable seasonal factors such as money managers making new bets for the New Year.
"We encourage our clients not to get out, to stay in the market. When the recoveries hit, when the sentiment changes, it happens so quickly that often by the time you're able to get back into the market, you have already missed out," said Erin Gibbs, Main Street Asset Management chief investment officer, on Yahoo Finance Live.
In other words, the big ... may keep on getting bigger.
>>> Is Danaher a Buy in a Post-Pandemic World?
Analyzing the investment case for buying stock in the high-flying life sciences and diagnostics company.
by Lee Samaha
Aug 4, 2021
The pandemic has enhanced the company's long-term growth potential.
Current trading continues to exceed expectations.
Non-COVID-19 related revenue is back in growth mode.
Life science and diagnostics company Danaher (NYSE:DHR) is one of the big winners from the COVID-19 pandemic. Its diagnostic tests help detect the coronavirus, and its life sciences tools help medical bodies research and develop vaccines and therapies for it.
That said, what happens to the company's growth rate after the pandemic is over? Are investors in the stock about to be left holding a stock trading on a high valuation that's just about to see earnings growth prospects deteriorate?
Three reasons Danaher can keep on delivering
I think there's reason to believe that Danaher can keep growing at a very healthy clip, even in a post-pandemic environment.
Current earnings momentum is robust across all its businesses, COVID-19 related and non-COVID-19 alike.
Management's guidance for non-COVID-19 related revenue growth in 2021 has been upgraded and demonstrates underlying strength in the business.
The pandemic has strengthened the company's core business and growth prospects.
Strong earnings momentum
The company recently delivered its second-quarter earnings, and it managed to sail past management's previous guidance. For example, management had previously forecast second-quarter core revenue growth would come in within the mid-20% range, but it came in at 31.5%. As such, management upgraded its expectation for full-year core revenue growth from "high teens" to "approximately 20%."
As you can see below, the life sciences and diagnostics segments continue a powerful run, boosted by the pandemic (more on that in a moment), and the environmental and applied solutions (EAS) business is also back in growth mode. For reference, life sciences contributed $2.3 billion of operating profit in the first half compared to $1.3 billion from diagnostics and $565 million from EAS.
EAS is a collection of water quality and product ID businesses. During the earnings call, CEO Rainer Blair noted that both business platforms grew strongly in the quarter as the reopening of the economy increased sales and order rates as customers were investing in "larger projects" again.
Non-COVID-19 growth is strong too
The burning question on everybody's lips is, what kind of growth rate can investors expect after the pandemic? To help answer it, Danaher's management breaks out its guidance into COVID-19 related revenue and its "base business." As noted earlier, the full-year core revenue growth guidance was raised to "approximately 20%."
Going into more detail on the matter, Blair said "We anticipate that COVID related revenue tailwinds will be an approximately 10% contribution to the core revenue growth rate, and in our base business, we now expect that core revenue will be up 10% for the full year, an increase from our prior expectation of high single-digit."
In other words, the ramp up in the guidance primarily comes down to an increase in the guidance from the base business. That bodes well for Danaher's post-pandemic growth prospects.
The pandemic has structurally enhanced Danaher's growth
This is a subtle and critical point to understand. It's not just that the pandemic provided a temporary boost to Danaher's prospects. In life sciences, the investment made worldwide in vaccine and therapeutic science to combat the coronavirus is likely to spill out into broader-based research that can benefit Danaher for years to come.
Meanwhile, Blair outlined that monoclonal antibody-based therapies in development have increased 50% "from just five years ago." Turning back to COVID-19, there's always the possibility that a third booster shot and wide-scale vaccination of children will provide a near-term boost to Danaher's sales.
Danaher has increased its installed base of diagnostic platforms by over 40% since the pandemic started. That's important because the diagnostics business works based on the "razor/razor blade" business model. In other words, more platform sales lead to more opportunities for Danaher to sell new tests into the installed base. For example, Blair pointed out that assays (tests) for sexual health and hospital-acquired infections were up 30% in the second quarter. Also, Danaher is continually working on new assays.
Danaher is ramping up capital spending from $790 million in 2020 to around $1.5 billion in 2021, partly to build on the growth in assay development and fuel growth in the Cytiva biopharma business bought from General Electric in 2020.
Is Danaher a buy?
The exciting thing about Danaher's valuation is that it trades on roughly the same enterprise value (market cap plus net debt)-to-earnings before interest, taxation, depreciation, and amortization (EBITDA) valuation as it did before the pandemic started.
Therefore, if you believe in relative valuations, then Danaher is an attractive stock because the pandemic has enhanced its long-term growth potential. On the other hand, it's still a pretty hefty valuation to trade on, and cautious investors might want to wait for a dip to buy into a very attractive company.
Pepsico - >>> Questor: it may not be Tesla or Amazon but Pepsi is quietly delivering for shareholders
by Richard Evans
August 24, 2021
The recent history of corporate America has been dominated by a small group of charismatic, noisy “big men”: Jeff Bezos of Amazon, Tesla’s Elon Musk, Mark Zuckerberg of Facebook. But some of its stock market champions take a quieter approach to generating profits for their shareholders.
Questor doubts, for example, that many readers are familiar with the name of Pepsi’s chief executive, Ramon Laguarta. This is because Pepsi lacks a “big man culture – it is not the creation of one man, a Musk or a Bezos”, says Rob Burgeman of Brewin Dolphin, the wealth manager, which holds the stock of behalf of some of its clients.
“Laguarta is not someone who comes in and shakes everything up,” Burgeman adds. “Pepsi hasn’t suddenly got a new team at the top. For us, this illustrates good governance, good corporate culture, which has always been important at Pepsi.”
The company’s great rival is of course Coca-Cola, which is perhaps more firmly anchored in the public’s mind and can count Warren Buffett’s Berkshire Hathaway as a major shareholder. Buffett has said he will never sell a single share in Coca-Cola. But Burgeman says Pepsi offers investors the better opportunity.
“Right now the business case for Pepsi is stronger because it sells a greater variety of products,” he says. “Coca-Cola is pretty much beverages, whereas Pepsi offers a range of soft drinks, bottled waters and foods.” Its products include Gatorade, SodaStream and Quaker Oats and it can boast 23 brands that generate annual sales of more than $1bn (£700m).
“It’s a company you think you know but there is more to it,” Burgeman says. “And it is investing in growth. While its range of brands has not changed much in the past few years, it is always tweaking them so that they move along with the times. It is switching to low-sugar versions of its drinks, for example. Continuously investing money in your brands like this creates value. If you don’t do it you will start to go backwards.”
Pepsi’s efforts to grow also involve seeking new markets for its products. “Pepsi is more US-focused than Coca-Cola, so there is an opportunity to sell more beyond its home market,” he adds. “The company has proved itself to be a good allocator of capital, which allows it to make high returns on capital and generate lots of cash. In other words, it’s a good compounder.”
He acknowledges the threat from greater regulation as governments attempt to tackle obesity but says Pepsi has “dials it can twiddle” in response. “It could move towards baked versions of crisps, for example. Given enough time it could probably change its entire range to healthy products. But I can’t see snacks and drinks coming under the same kind of pressure as smoking,” he says.
“We like core blue-chip stocks and Pepsi is one of the first to go into the discretionary funds we run for our clients. There’s a lot to like about it.”
Questor says: buy
Ticker: Nasdaq: PEP
Share price at close: $155.89
Procter & Gamble - >>> What Investors Missed in Procter & Gamble's Latest Earnings
P&G is looking even more attractive as growth slows following the pandemic spike.
by Demitri Kalogeropoulos
Aug 11, 2021
Sales growth is staying elevated despite earlier pantry-stocking.
Margins are up, and cash flow is surging.
P&G sees a few big risks ahead, including spiking raw material costs.
Shares of Procter & Gamble (NYSE:PG) have been shunned during the market rally despite impressive operating results from the consumer staples titan. But P&G just keeps on getting stronger, even if Wall Street hasn't noticed.
The company just closed out another great fiscal year of market share growth coupled with solid financial metrics like cash flow and profitability. Let's look at three highlights from that performance.
1. It's not done growing
Investors have been worried about a growth pullback, and that's happening today. Sales gains slowed to 4% in the fiscal fourth quarter, which ended in June, compared to 7% for the wider fiscal year. P&G also posted some of its weakest volume growth since the pandemic started.
But the company is still growing compared to a booming prior-year period. It didn't suffer from as much of a demand hangover as rivals, either. While Kimberly Clark (NYSE: KMB) reported falling sales and declining volumes, P&G is winning share and attracting more customers in key niches like fabric care, skin care, and home cleaning supplies.
"Growth was broad-based across business units," CFO Andre Schulten said in a call with Wall Street analysts, "with each of our 10 product categories growing or holding organic sales [in fiscal 2021]." Sure, sales fell 1% in the U.S. market. But that's compared to a 19% spike a year ago as pantry stocking hit an unprecedented level.
2. Innovation matters
P&G's ability to consistently raise the bar on its products allows it to deliver faster growth and stronger profitability than its peers. While margins shrank this quarter due to inflation, those drops were smaller than what Kimberly Clark suffered. Average prices rose, too, in part thanks to a consumer trade-up to popular, premium offerings across the portfolio.
CEO David Taylor said a new NyQuil launch was a prime example of that process at work. "NyQuil Honey is the No. 1 new item in the U.S. respiratory market, and our Vicks share is up 90 basis points over the past 12 months despite the soft market due to the very weak cough-cold season."
Investors can see evidence of that innovation leadership mainly in P&G's market-thumping profitability. The company is careful to compete only in the most attractive niches that can lift margins through product improvements.
3. The risks ahead
P&G sees several major risks ahead that might make fiscal 2022 just as difficult as 2021 was in many ways. "Raw material and transport costs have risen sharply," Taylor said, and "increased social unrest and economic distress in many parts of the world are putting pressure on local GDP growth." The pandemic is still limiting consumer mobility and retailing and supply chains, too.
The company is still confident that it can grow sales by between 2% and 4% this year after last year's 7% spike. Kimberly Clark, for context, recently projected flat organic sales in 2021.
Executives see an enduring post-pandemic lift for several key categories like health and hygiene and home maintenance, which should help P&G outgrow the industry even after the COVID-19 threat ends. Investor returns will be further amplified by a rising dividend and stock repurchase spending, which together should land at about $16 billion in fiscal 2022.
Johnson & Johnson - >>> 4 Top Stocks to Buy and Hold for the Next Decade
These stocks could grow exponentially in coming years.
by Neha Chamaria
Aug 28, 2021
Investing in high-growth industries is the key to making money.
Utilities are safe investments, but some are also tremendous growth stocks.
Healthcare and clean energy offer mind-boggling investing opportunities right now.
COVID-19 vaccine could be a shot in the arm for this Dividend King
Johnson & Johnson (NYSE:JNJ) stock has proven to be a stellar performer for patient investors over the years, and that's unlikely to change.
Johnson & Johnson is a leader in the healthcare space with an exemplary mix of businesses -- while its globally renowned consumer health brands generate steady cash flows, its larger pharmaceuticals and medical devices businesses offer unending growth opportunities.
Just to give you some examples, several of Johnson & Johnson's products received regulatory approvals last quarter, including drugs for lung cancer, sclerosis, and myeloma, and a next-generation treatment procedure for cataract.
Johnson & Johnson's growth strategy has clicked so far because it has always prioritized organic growth via consistent spending on research and development (R&D), and spent remaining free cash flows on acquisitions, dividends, and share repurchases. So in 2020, it invested $12.2 billion in R&D, and paid out $10.5 billion in dividends.
In fact, Johnson & Johnson mainly lures investors with its dividends -- it's one of the best Dividend Kings to own, having increased dividends every year for 59 consecutive years. The stock yields a respectable 2.4%.
Now that Johnson & Johnson's single-shot COVID-19 vaccine could also potentially generate big sales, it's a stock you'd want to own for decades.
>>> Danaher Stock: Buy at the High?
The life sciences and diagnostic company is set up for another great year.
by Lee Samaha
Apr 27, 2021
Just about everything went right with life science and diagnostics company Danaher's (NYSE:DHR) first quarter. The company easily beat its guidance, raised its full-year outlook, and provided evidence that it could continue to grow strongly even after the peak of the COVD-19 pandemic has passed. There's a lot to like about Danaher in 2021 and beyond. But, trading at an all-time high, is the stock a good value?
Danaher's bumper first quarter
Every once in a while, a company delivers a set of earnings showing a company firing on all cylinders. All revenue, both related and not related to COVID-19, was substantially ahead of expectations, and management raised its full-year guidance for both. A favorable margin mix and the benefit of the acquisition of Cytiva, the former General Electric biopharma business, led to a 186% increase in operating profit on the back of a 58% increase in revenue.
Danaher's bumper first quarter
Danaher has been one of the big winners of the coronavirus pandemic. Its diagnostics segment provides COVID-19 tests, and its life sciences segment provides equipment and solutions for customers working on COVID-19 vaccines and therapies.
However, it would be a mistake to think of Danaher as simply benefiting from a one-off boost from the pandemic. As mentioned, management also raised its full-year guidance for its non-COVID-19-related revenue.
Firing on all cylinders
Digging into the details by segment, we see that the standout performer was life sciences. COVID-19-related vaccines and therapies drove a 41.5% increase in core revenue (115% on a reported basis with the inclusion of Cytiva). Still, CEO Rainer Blair noted on the earnings call, "Excluding the impact of COVID-related activity, our underlying biopharma business grew in the low 20s range."
Moreover, Blair said that the double-digit growth trend "we've seen over the last several quarters across non-COVID-related biopharma activity" was still in place. And the strength in COVID-19-related vaccines and therapies means management now expects Cytiva and Pall Biotech, its life sciences segment, to generate $2 billion in revenue in 2021, compared with a previous estimate of $1.3 billion.
Danaher core revenue growth
Core revenue grew 31% in the diagnostics segment, driven by surging demand for molecular diagnostics tests from subsidiary Cepheid. Blair outlined that half of the tests were for COVID-19-only tests, with the other half being the higher-priced 4-in-1 tests comprising COVID-19, flu, and respiratory virus tests. For a sense of the improvement in the outlook, management now expects to sell 45 million tests this year, compared with a previous estimate of 36 million.
Looking forward, the increased sales of life sciences equipment platforms is creating a long-term opportunity to sell more diagnostics tests, such as the 4-in-1, to new customers. Blair believes that patient volumes are now close to pre-pandemic levels, and consumables sales are "accelerating as a result."
Finally, the environmental and applied solutions segment is enjoying a growth rebound following the impact of the pandemic on capital spending on water treatment and product identification.
Danaher beyond 2021
The key question around the stock is not about 2021; it centers on 2022 and beyond. The lingering impact of the pandemic will ensure that Danaher's COVID-19 tests and research equipment will grow strongly this year. However, it will be difficult to trump these elevated demand levels in 2022.
The optimistic view would say that Danaher has significantly expanded its installed base of instrumentation platforms as a result of the pandemic. Also, the company has upside potential should children be vaccinated on a wide scale or a third booster jab is required. Furthermore, the level of investment in vaccine research may result in new vaccines produced in the future, and there's the possibility that the COVID-19 virus will become endemic.
Danaher's non-COVID-19 sales are forecast to grow at a high-single-digit rate in 2021, and the preceding chart shows a history of mid-single-digit revenue growth. As such, it's reasonable to assume the company can grow at a mid-to-high-single-digit rate in the future, with ongoing margin expansion as higher-margin consumables sales expand.
>>> Honeywell International Inc. (HON) operates as a diversified technology and manufacturing company worldwide. The Aerospace segment offers auxiliary power units, propulsion engines, integrated avionics, environmental control and electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, advanced systems and instruments, satellite and space components, and aircraft wheels and brakes; spare parts; repair, overhaul, and maintenance services; thermal systems; and connected solutions and data services for the aftermarket, as well as wireless connectivity, and management and technical services. The company's Honeywell Building Technologies segment offers advanced software applications for building control and optimization; sensors, switches, control systems and instruments for energy management; access control; video surveillance; fire products; remote patient monitoring systems; e-cooling heat transfer agents; and installation, maintenance, and upgrades of systems. Its Performance Materials and Technologies segment offers automation control, instrumentation, and advanced software and related services; catalysts and adsorbents, equipment, and consulting; and materials used to manufacture end products, such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, as well as Honeywell forge connected solutions. The company's Safety and Productivity Solutions segment provides personal protection equipment, apparel, gear, and footwear; gas detection technology; and cloud-based notification and emergency messaging; and mobile devices and software; supply chain and warehouse automation equipment, and software and solutions; custom-engineered sensors, switches, and controls; and software-based data and asset management productivity solutions. Honeywell International Inc. was incorporated in 1985 and is headquartered in Charlotte, North Carolina.
>>> Trianni and Zoetis Announce Agreement to Develop a Transgenic Antibody Discovery Platform for Use in Animal Health
July 7, 2020
SOUTH SAN FRANCISCO, Calif. and PARSIPPANY, N.J., July 7, 2020 /PRNewswire/ -- Trianni, Inc. (TRIANNI) and Zoetis (NYSE: ZTS) today announced a collaboration for the development of transgenic monoclonal antibody platforms for the discovery of new veterinary treatments.
"We are confident that the application of TRIANNI's proven transgenic human monoclonal antibody discovery platform technology to the veterinary field will add value to Zoetis' product development programs," said Matthias Wabl, Ph.D., Trianni's President and CEO.
"We appreciate TRIANNI's experience in the development of therapeutic antibody platform capabilities and look forward to working with them on innovations for animal health," said Catherine A. Knupp, D.V.M., M.S., Executive Vice President and President, Research and Development at Zoetis. "This collaboration will enhance our internally-developed pipeline of novel monoclonal antibodies and hasten the development of therapeutics that could transform the way veterinarians treat a range of diseases in animals."
No financial details were disclosed.
About Trianni, Inc.
Trianni, Inc. is a privately held biotech company specializing in antibody discovery technology. TRIANNI's lead technology, The Trianni Mouse®, is a next-generation platform enabling efficient generation of fully-human monoclonal antibodies. TRIANNI's transgenic platform leverages a novel approach to design made possible by advances in DNA synthesis and genomic modification technology, making it a best-in-class therapeutic antibody discovery platform. The company is headquartered in San Francisco, CA. Additional information about TRIANNI is available through its corporate website, www.trianni.com.
Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and precision livestock farming. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2019, the company generated annual revenue of $6.3 billion with approximately 10,600 employees. For more information, visit www.zoetis.com.
>>> Danaher Shares Gain 26% in 3 Months: What's Driving the Rally?
July 7, 2020
Shares of Danaher Corporation DHR have gained impressively in the past three months. We believe that the share price increase primarily reflects a healthy demand for the company’s products and the expectation for the second quarter.
The Washington, DC-based company belongs to the Zacks Diversified Operations industry. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past three months, Danaher’s shares have gained 26.1% compared with the industry’s growth of 9.6%. Notably, the S&P 500 has risen 16% during the same period.
Factors Influencing the Stock
In the past three months, Danaher has reported results for first-quarter 2020, with an earnings beat of 5%. It is worth mentioning here that earnings in the first quarter increased 6.1% from the year-ago quarter, while sales expanded 2.9%. Organic sales grew by 4.5%, driven by the expansion of Pall, Radiometer, ChemTreat and Cepheid businesses.
In addition to better-than-expected results, sound expectations for the second quarter and the overall revival in the broader market might have supported the price improvement. The company believes that solid demand for products — mainly those related to molecular diagnostics and acute care diagnostics — will aid its Diagnostics segment’s performance in the second quarter.
Also, it believes that the Environmental & Applied Solutions segment will gain from sales growth for consumer goods, water testing products, treatment consumable products, and products related to coding and marking of medicines. Further, growth in core sales for genomic, bioprocessing and automation products will boost performances of the Life Sciences segment.
In addition, acquired assets, shareholder-friendly policies, innovation of products and efficient workforce are other tailwinds for Danaher. In March 2020, the company acquired General Electric Company’s GE BioPharma business — now called Cytiva. The buyout is expected to aid the company’s biologics workflow solutions of the Life Sciences segment. Notably, Cytiva is anticipated to boost Danaher’s core sales by 2% in the second quarter.
Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $4.89 for 2020 and $5.74 for 2021, marking increases of 0.2% and 0.3% from the respective 30-day-ago figures. Notably, there was one upward revision for both 2020 and 2021 in the past 30 days.
Also, earnings estimates for the second quarter have improved from earnings of $1.02 to $1.03 per share in the past month. Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.
It is worth mentioning here that Danaher still has concerns related to the pandemic and has withdrawn projection for 2020.
Danaher’s Performance Versus Two Peers
The company outperformed two peers — including Thermo Fisher Scientific Inc. TMO and Abbott Laboratories ABT — in the past three months. During the period, Thermo Fisher and Abbott’s shares gained 24.4% and 9.4%, respectively.
NextEra Energy - >>> Top Utilities Stocks for July 2020
NRG, PNW, and NEE are top for value, growth, and momentum, respectively
By JASON FERNANDO
Jun 29, 2020
The utilities sector is made up of companies that provide electricity, natural gas, water, sewage and other services to homes and businesses. Many of these companies are heavily regulated, and include Duke Energy Corp. (DUK), Southern Co. (SO), and American Electric Power Co. Inc. (AEC). Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have underperformed the broader market, with a total return of -6.0% compared to the S&P 500's total return of 5.7% over the past 12 months.1? These market performance numbers and the statistics in the tables below are as of June 25.
Here are the top 3 utilities stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Utilities Stocks
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
BEST VALUE UTILITIES STOCKS
NRG Energy Inc.: NRG Energy is an integrated power company that produces, sells, and distributes energy and energy services. The company provides energy production and cogeneration facilities, thermal energy production, and energy resource facilities. On May 7, NRG reported a 7% decline in revenue and a 75% decline in net income for Q1 2020, which ended March 31, 2020. The company said that there has been a reduction in load across its markets due to COVID-19, and that uncertainty about demand will continue until the economy recovers.2?
PPL Corp.: PPL is an energy and utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On May 8, the company announced its Q1 2020 earnings, posting a 7.5% gain in net income per share even though non-GAAP earnings from operations declined about 4%.3?
Exelon Corp.: Exelon is a utility services holding company that, through its subsidiaries, engages in the generation and distribution of energy in both the United States and Canada. Its energy operations are diversified across various sources, including fossil fuels, hydroelectric power, nuclear power, and renewables.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
FASTEST GROWING UTILITIES STOCKS
Pinnacle West Capital Corp.: Pinnacle West Capital is a utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On June 23, the company said that it does not expect the COVID-19 pandemic to result in any disruptions to their customers’ power supply as it implements numerous steps to protect employees and maintain service. These include adding additional layers of backup personnel to help prevent potential service disruptions, and implementing new sanitation and hygiene practices. The company also said it's providing various concessions to customers who may be unable to pay their energy bills.4?
Sempra Energy: Sempra is an energy services holding company that, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project. The company announced on June 24 that it had completed the $2.2 billion divestiture of its Chilean assets, which were sold to the Chinese investment holding company, State Grid International Development. This is part of a broader effort to sell its South American assets, and Sempra thus far has raised approximately $5.82 billion, including the sale of its Chilean holdings.5?
Alliant Energy Corp.: Alliant Energy is a public-utility services company that supplies electricity, natural gas, and water to residential and commercial customers. The company serves customers in Illinois, Iowa, Minnesota, and Wisconsin. On May 26, the company announced plans to expand its solar energy infrastructure in Wisconsin, which ultimately would provide power to 175,000 homes per year.6?
Utilities Stocks with the Most Momentum
These are the utilities stocks that had the highest total return over the last 12 months.
UTILITIES STOCKS WITH THE MOST MOMENTUM
NextEra Energy Inc.: NextEra is an electric power and energy infrastructure company that generates electricity through wind, solar, and natural gas. Through its subsidiaries, the company also operates multiple commercial nuclear power units. CEO Jim Robo has said that the company's strong underlying businesses, along with about $12 billion in liquidity, should enable NextEra to deliver adjusted EPS near the "top end" of the company's expectations for the next 3 years.7?
Eversource Energy: Eversource Energy is a utility holding company that engages in the generation, transmission, and distribution of natural gas and electricity. The company earlier this year agreed to acquire the Massachusetts natural gas assets of Columbia Gas for $1.1 billion from NiSource Inc. (NI).8?
Dominion Energy Inc.: Dominion Energy is a producer and transporter of energy products. The company provides natural gas and electric energy transmission, gathering, and storage solutions. On June 18, the company announced several measures designed to help customers who are experiencing difficulty making their payments, due in part to the economic disruptions caused by COVID-19
>>> Accenture beats revenue estimates on digital push, shares rise
June 25, 2020
(Reuters) - IT consulting firm Accenture Plc beat analysts' estimates for third-quarter revenue and profit on Thursday and forecast strong bookings for the current quarter, sending its shares up about 8%.
The company has shifted its focus to offering digital and cloud services, which include managing clients’ social media marketing strategies and helping them move to cloud, in a bid to boost margins.
New bookings grew 4% to $11 billion in the third quarter ended May 31, with digital, cloud and security-related services accounting for about 70% of them, Chief Financial Officer Kathleen McClure said in an earnings call with analysts.
Revenue slipped nearly 1% to $10.99 billion but managed to edge past analysts' average estimates of $10.87 billion, according to IBES data from Refinitiv.
Excluding items, the company earned $1.90 per share, beating analysts' estimates of $1.85 per share.
The online consulting and service provider, however, narrowed its fiscal 2020 revenue growth forecast to between 3.5% and 4.5% amid the coronavirus-fueled economic slump. The prior forecast was for a growth of 3% to 6%.
Accenture, which competes with Cognizant and major Indian IT companies such as Tata Consultancy Services and Wipro, expects foreign exchange rates to negatively impact its full-year results by 1.5% compared to fiscal year 2019.
Shares of the company were up at $217.19 in morning trade on Thursday.
>>> Equinix Unveils New Data Center in Dallas Infomart Campus
June 25, 2020
Equinix, Inc. EQIX added a new International Business Exchange (“IBX”) data center in the Dallas Infomart Data Center campus.
The $142-million data center is the 9th one for the company in the Dallas metro area and the 2nd building on the growing Dallas Infomart campus. Moreover, with this new data center addition, it expanded the footprint in the Americas — operating more than 90 IBX data centers across Brazil, Canada, Colombia, Mexico and the United States.
The initial phase of DA11 offers a capacity of 1,975 cabinets and a colocation space of around 72,000 square feet. Upon the completion of the future phases, the facility is anticipated to provide a capacity of more than 3,850 cabinets and colocation space, exceeding 144,000 square feet.
The company also launched its 5G and Edge Proof of Concept Center (POCC) at the state-of-the-art data center. Notably, Dallas serves as a core communications market for the Southern United States, with a concentration of telecommunications companies, many of which are part of Equinix’s dense and diverse ecosystem of carriers, clouds, and enterprises. Hence, launching POCC and 5G at the new data center is a strategic fit, since companies are on the lookout to test new 5G and edge innovations.
In fact, Equinix 5G and Edge POCC will accelerate 5G strategies of companies by offering a 5G and edge "sandbox" scenario. This will facilitate mobile network operators, technology vendors, cloud platforms and enterprises to directly connect with Platform Equinix to demonstrate complex 5G and edge deployment structures.
Being an important multi-tenant data center market in the United States, management expects Dallas to continue witnessing significant demand. Hence, with the opening of DA11, the company is positioned to leverage on the demand for connectivity and interconnection to its rich ecosystem of carriers, network and cloud providers.
Further, the new data center will help companies to accelerate their transformation from traditional to digital businesses by speedily scaling infrastructures, easily adopting hybrid multicloud architectures and interconnecting with potential business partners from the global ecosystem provided by Platform Equinix.
Although the expansion of the data-center portfolio is a strategic fit, it requires huge capital outlays and given the company’s significant debt obligations, these capital-intensive activities are concerning.
Moreover, shares of this Zacks Rank #3 (Hold) company have jumped 40.6% over the past year against the real estate market’s decline of 10.8%.
>>> These 60 large U.S. companies are ‘susceptible to a dividend cut,’ according to Jefferies
April 6, 2020
By Philip van Doorn
Investors who rely on income are already seeing companies reduce or eliminate dividend payouts as the coronavirus spreads
FedEx is among 60 S&P 500 companies that analysts at Jefferies believe are 'susceptible' to dividend cuts.
The deadly coronavirus is taking a toll on financial markets around the world. Stock-price declines have been swift and relentless.
Now there is intense pressure for companies to shore up cash reserves, not only by reducing investment and suspending share buybacks, but by cutting dividend payouts.
Jefferies global equity strategist Sean Darby has listed 60 companies in the S&P 500 SPX, +2.67% that he and his colleagues think are “susceptible to a dividend cut.”
Here’s the entire list, followed by explanations and more background from Darby:
COMPANY TICKER DIVIDEND YIELD DIVIDEND COVERAGE RATIO NET DEBT TO EQUITY
General Mills Inc. GIS, -0.03% 3.62% 1.49 177.3%
Evergy Inc. EVRG, +1.70% 3.42% 1.47 117.3%
Sempra Energy SRE, +5.94% 3.48% 1.46 120.0%
Qualcomm Inc. QCOM, -0.88% 3.59% 1.45 74.8%
PPL Corp. PPL, +4.35% 6.43% 1.44 171.9%
American Electric Power Co. Inc. AEP, +2.77% 3.34% 1.42 149.3%
Genuine Parts Co. GPC, +1.59% 4.78% 1.40 114.9%
Consolidated Edison Inc. ED, +1.30% 3.79% 1.38 117.1%
3M Co. MMM, +1.07% 4.27% 1.38 186.1%
International Flavors & Fragrances Inc. IFF, +4.36% 2.78% 1.38 64.3%
PepsiCo Inc. PEP, +1.40% 3.04% 1.37 187.6%
Duke Energy Corp. DUK, +2.86% 4.53% 1.36 130.8%
United Parcel Service Inc. Class B UPS, +0.51% 4.13% 1.33 683.1%
Eversource Energy ES, +1.97% 2.71% 1.33 117.6%
J.M. Smucker Co. SJM, +0.37% 3.18% 1.32 72.9%
Coca-Cola Co. KO, +2.03% 3.64% 1.30 156.3%
Becton, Dickinson and Co. BDX, -0.08% 1.42% 1.30 89.3%
Kellogg Co. K, +1.38% 3.83% 1.25 243.6%
Bristol-Myers Squibb Co. BMY, +1.74% 3.31% 1.20 60.7%
Equity Residential EQR, +6.99% 3.85% 1.15 84.7%
Las Vegas Sands Corp. LVS, +2.41% 7.27% 1.14 132.3%
American Tower Corp. AMT, +0.90% 1.72% 1.13 448.8%
Campbell Soup Co. CPB, -1.50% 3.01% 1.12 759.3%
Federal Realty Investment Trust FRT, +3.46% 5.60% 1.11 121.6%
FirstEnergy Corp. FE, +3.00% 3.85% 1.10 295.2%
Microchip Technology Inc. MCHP, +3.58% 2.13% 1.03 186.8%
Gap Inc. GPS, +9.43% 13.07% 0.96 181.6%
Kinder Morgan Inc Class P KMI, +6.09% 7.54% 0.96 93.4%
Hershey Co. HSY, +0.69% 2.24% 0.96 228.5%
AT&T Inc. T, +3.54% 6.88% 0.93 87.3%
AvalonBay Communities Inc. AVB, +5.65% 4.18% 0.92 67.3%
Extra Space Storage Inc. EXR, +1.88% 3.72% 0.92 179.9%
SL Green Realty Corp. SLG, +3.89% 7.68% 0.91 92.9%
Welltower Inc. WELL, +3.93% 7.38% 0.88 88.9%
Oneok Inc. OKE, +10.57% 18.66% 0.88 204.4%
NiSource Inc NI, +1.73% 3.22% 0.88 159.7%
Boston Properties Inc. BXP, +1.52% 4.22% 0.86 144.5%
Essex Property Trust Inc. ESS, +6.02% 3.68% 0.86 91.1%
AES Corp. AES, +7.89% 4.19% 0.83 306.6%
Simon Property Group Inc. SPG, +5.68% 14.84% 0.82 767.0%
Mid-America Apartment Communities Inc. MAA, +4.79% 3.73% 0.79 70.9%
FedEx Corp. FDX, +4.84% 2.09% 0.79 86.0%
Alexandria Real Estate Equities Inc. ARE, +2.13% 2.85% 0.79 67.5%
Kimco Realty Corp. KIM, +5.18% 11.09% 0.72 106.8%
Broadcom Inc. AVGO, +2.93% 5.41% 0.64 111.1%
Amcor PLC AMCR, +3.78% 5.64% 0.63 97.0%
Equinix Inc. EQIX, +1.78% 1.65% 0.61 129.0%
Regency Centers Corp. REG, +4.28% 5.96% 0.61 64.0%
Molson Coors Beverage Co. Class B TAP, +2.80% 5.66% 0.57 63.5%
Digital Realty Trust Inc. DLR, +5.10% 3.20% 0.55 100.7%
Realty Income Corp. O, +5.14% 5.26% 0.51 81.1%
Newell Brands Inc NWL, +1.98% 6.74% 0.47 121.1%
Williams Companies Inc. WMB, +8.98% 11.58% 0.47 135.7%
UDR Inc. UDR, +6.30% 3.82% 0.46 111.1%
Dominion Energy Inc D, +4.40% 4.90% 0.46 112.3%
Crown Castle International Corp. CCI, +3.24% 3.24% 0.39 226.3%
Iron Mountain Inc. IRM, +3.05% 9.96% 0.38 711.8%
Ventas Inc. VTR, +5.35% 11.01% 0.37 113.7%
Wynn Resorts Ltd. WYNN, +8.53% 6.55% 0.31 533.9%
Healthpeak Properties Inc. PEAK, +6.14% 6.08% 0.06 95.5%
The table is sorted by declining dividend coverage ratio, which was calculated by the Jefferies analysts by dividing the firm’s estimated earnings for the companies over the next 12 months by the expected dividend payouts based on the current dividend rates. A higher coverage ratio is better. However, a high ratio of net debt to equity is of concern. The net-debt-to-equity ratio was calculated by subtracting cash from debt and dividing by equity.
When asked in an email why he used earnings instead of free cash flow for the dividend coverage ratio, Darby replied: “Many companies will smooth dividend payments, so if we look at earnings measures, we can get an idea of how confident they are about future payments.”
One company that would have made Darby’s list was Macy’s M, +2.77%. However, the retailer suspended its dividend March 20 after temporarily closing all of its stores March 17. Macy’s placed the “majority” of its employees on furlough this week.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on March 27. Companies that borrow from the federal government will be unable to pay dividends for a year after the loans have been repaid in full.
Of course, companies that don’t receive federal assistance will be able to continue paying dividends and even buying back shares. But in this new climate, management teams have to be careful.
“As companies become more aware that they are running their businesses for the bond holders (and credit markets) rather than for the equity investors, their focus will turn to managing cash rather than earnings,” Darby wrote in his report March 30.
He explained that debt issuers with sub-investment-grade ratings (below BBB) appeared not to have access to the Federal Reserve’s Primary Market Corporate Credit Facility (PMCCF) or its Secondary Market Corporate Credit Facility (SMCCF), which were established March 23.
Darby went further, pointing out that the ratings firms might cut their ratings for BBB-rated bond issuers, making them likely to lose access to those programs.
So there are all sorts of reasons for companies to think ahead and shore up cash any way they can, by suspending share buybacks, cutting capital expenditures and cutting or suspending dividends.
In a report listing large-cap stocks with “safe dividends,” Goldman Sachs analyst Cole Hunter predicted dividends for the S&P 500 would decline by 25% in 2020.
>>> NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also develops, constructs, and operates long-term contracted assets with a focus on renewable generation facilities, natural gas pipelines, and battery storage projects; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets. As of December 31, 2018, the company operated approximately 24,500 megawatts of net generating capacity. It serves approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,200 circuit miles of transmission and distribution lines and 645 substations. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida.
Next Era Energy, Visa, Amazon - >>> 3 Growth Stocks to Buy and Hold for the Next 50 Years
by Neha Chamaria, Chris Neiger, and Maxx Chatsko
November 21, 2018
Growth stocks outperform the market because they're able to grow revenues at a faster pace than the industry average year after year. How long can such growth last, though? The answer could surprise you.
There are some great companies out there that can potentially grow bigger and better for not just years, but decades, thanks to a strong footing and innovative approach to growth in an industry with a huge addressable market. They're the kind of growth stocks you'd want to buy and hold for as many as 50 years. Here are three that our Motley Fool contributors have identified: NextEra Energy Partners (NYSE: NEP), Visa (NYSE: V), and Amazon (NASDAQ: AMZN).
Read along to learn what makes these stocks such terrific long-term buys.
A fast-growing, high-yielding renewable energy stock
Maxx Chatsko (NextEra Energy Partners): It's easy to be pessimistic when it comes to humanity's response to climate change, but that has a lot to do with pessimistic headlines. The trajectories of renewable energy technologies -- which are exponential, not linear -- suggest humanity could actually end up crushing long-term clean energy and climate goals. And it's all supported by cold, hard data.
Onshore wind power is set to replace hydropower as the top renewable energy source in the United States in 2018 -- one year ahead of the most ambitious estimate... from 2017. Current trends indicate wind and solar could combine to generate 25% to 30% of total U.S. electricity by 2030. That doesn't even include an estimated 24,000 megawatts of offshore wind power currently in the nation's pipeline or the very real possibility that nearly all of the country's coal-fired power plants might be retired by 2040.
That's great news for companies with leading positions in renewable energy and ambitious plans to plow full steam ahead into the future. NextEra Energy Partners is one such business. It owns 4,700 megawatts of wind and solar to go along with 4 billion cubic feet per day of natural gas pipeline capacity in South Texas. In other words, it's all over the future of energy in America -- and it's only getting started.
The company's close association with NextEra Energy, which expects to grow its renewable energy asset backlog to 40,000 megawatts by 2020, provides easy access to great growth assets. The pair just completed a transaction that added $1.275 billion in wind and solar assets to the portfolio of NextEra Energy Partners. That provides enough firepower to grow the dividend (currently yielding 3.8%) at least 12% per year through 2023.
That's a big reason why management thinks it can deliver total returns of around 16% per year between now and then. That means an investment of $1,000 today would grow to $2,100 by 2023 -- if management delivers. While it could fall short in the next five years for any number of reasons, investors have to like the chances for growth in the next 50 years.
Fintech is the next big thing to profit from
Neha Chamaria (Visa): As the world goes digital, a company that's investing in the next wave of digital payments should have a bright future. That's why I believe in Visa, a company whose branded cards you're probably already using, thanks to your bank, which probably issued them.
As cashless modes of payment and e-commerce gather steam, more banks will scramble to issue debit, credit, and prepaid cards. With nearly 3.3 billion cards in circulation across the globe, Visa is a top choice for merchants and banks alike. For Visa, every additional card issued on its payments-processing network adds value to its business. Visa earns transaction and volume fees every time someone swipes its card to make a purchase.
Emerging markets are a hotbed of opportunities for Visa, and the company is going all out to exploit them. For example, Visa recently renewed its relationship with India's leading private and public sector banks, even as it bought a stake in Billdesk, one of the nation's largest online-payment gateways. The Indian government's aggressive cashless drive makes the nation one of the largest potential markets for Visa. Likewise in Latin America, Visa recently struck deals with a leading travel agency and card issuer.
Visa also is tapping new technologies and trends such as mobile payments. Examples include Visa Checkout, which allows users to make payments through Visa with a single-click option on integrated digital wallets, and the company's collaboration with tech giant IBM to use the latter's Internet of Things platform to embed payments into devices and home appliances.
Each of these moves is futuristic, which, when combined with Visa's network effect moat and a high-margin business, makes it a compelling stock to own for decades to come.
Amazon just can't stop winning
Chris Neiger (Amazon): If you look at Amazon's stock price over the past six months, you'll notice it's relatively flat. But don't let the steep share-price drop that happened in October fool you -- this company's best days still are ahead of it.
I think Amazon is a stock to buy and hold for the next five decades because of its ability to enter new markets and dominate them. For example, there's no question that Amazon is an e-commerce powerhouse, with about 49% of all online sales in the U.S. happening on the company's platform. That's impressive, but how does Amazon plan on keeping its competitive advantage? By keeping customers tied to its platform by selling Prime memberships that offer free two-day shipping, video- and music-streaming services, and more.
That's not just a service -- it's a way to get users hooked on using Amazon for more of their retail needs, and the data shows they spend more on Amazon's site once they become members. The great news is that in 2019, more than half of American households will have Prime membership.
While retail brings in most of Amazon's revenue, the company also has invested heavily in its Amazon Web Services (AWS) cloud-computing platform, as well. This gives the company a completely different business than retail to benefit from -- and with better margins -- and provides the company with a bigger chance of having staying power for decades to come. AWS is the No. 1 public cloud-computing company, far outpacing its No. 2 rival Microsoft, and the market is expected to grow to $302 billion by 2021.
If all of that wasn't enough to help give Amazon staying power, the company just recently became the third-largest digital ad platform in the U.S. That's notable because in the next few years, Amazon's advertising operating income could surpass Amazon's AWS operating income and become an even more significant part of the company's overall business.
Amazon is one of those rare companies that can evaluate a new market and enter it, then beat nearly every competitor in that space -- and then go and do the same thing a few years later in a completely different area. For that reason, I think Amazon is a great buy-and-hold stock for the next 50 years.
>>> American Tower Corporation (ATC) is a holding company. The Company operates as a real estate investment trust (REIT), which owns, operates and develops multitenant communications real estate. ATC's segments include U.S. property, Asia property, EMEA property, Latin America property, Services and Other. Its primary business is property operations, which include the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries. Its U.S. property segment includes operations in the United States. Its Asia property segment includes operations in India. The EMEA property segment includes operations in Germany, Ghana, Nigeria, South Africa and Uganda. The Latin America property segment includes operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. Its services segment offers tower-related services in the United States. <<<
>>> American Tower Corp. operates as a developer of wireless and broadcast communications real estate, which engages in leasing antenna space on multi-tenant communications sites to different providers. It operates business through the following segments: U.S., Asia, EMEA, and Latin America. The U.S. segment handles operations in the United States. The Asia segment manages the properties in India. The EMEA segment offers services in Germany, Ghana, Nigeria, South Africa, and Uganda. The Latin America segment operates in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru. The company was founded in 1995 and is headquartered in Boston, MA <<<
Reynolds American - >>> These 3 Companies Could Be Bought in 2017
There's buyout buzz around Reynolds American, GNC, and Michael Kors
Jan 8, 2017
The stock market's upside potential might seem limited as the major indexes hover near historic highs, but a few stocks could still rise this year on big takeovers. Let's examine three companies that might be acquired soon -
Reynolds American, the second-largest domestic tobacco maker after Altria, rallied over 20% last year as low fuel prices apparently boosted cigarette sales as people had more money to spend and its acquisition of Lorillard boosted its top-line growth. Reynolds was well-insulated from the strong dollar because it generates most of its revenue domestically, and many investors bought the stock as a dependable dividend play in a low-interest rate environment.
With interest rates set to rise, Reynolds might seem vulnerable as bonds become more attractive income plays. However, Reynolds' trailing price-to-earnings ratio of 15 is much lower than Altria's P/E of 25 and the industry average of 21. Its Newport menthol brand, Vuse e-cigarettes, and "additive-free" Natural American Spirit brand are also the dominant players in their respective markets.
Those qualities make Reynolds an attractive takeover target for bigger tobacco makers. British American Tobacco (NYSEMKT:BTI), which already owns 42% of Reynolds, offered to acquire the rest of the company for $56.50 per share last October. Reynolds rejected the initial offer, fueling speculation that higher bids could follow. That buyout interest, along with Reynolds' ability to keep cutting costs and raising prices to offset weaker shipments, should help it outperform its industry peers this year.
>>> General Electric Company (GE) operates as an infrastructure and financial services company worldwide. The company?s Power segment offers gas and steam power systems; maintenance, service, and upgrade solutions; distributed power gas engines; water treatment, wastewater treatment, and process system solutions; and nuclear reactors, fuels, and support services. Its Renewable Energy segment provides wind turbine platforms, and hardware and software; offshore wind turbines; and solutions, products, and services to hydropower industry. The company?s Oil and Gas segment provides turbomachinery solutions; surface and subsea drilling and production systems, and equipment for floating production platforms; measurement and control products; and compressors, pumps, valves, and natural gas solutions. Its Energy Management segment offers industrial and grid solutions; and power conversion systems. The company?s Aviation segment designs and produces commercial and military aircraft engines, integrated digital components, electric power, and mechanical aircraft systems; and provides aftermarket services. Its Healthcare segment offers diagnostic imaging and clinical systems; products and services for drug discovery, biopharmaceutical manufacturing, and cellular technologies; and healthcare information technology products. The company?s Transportation segment provides freight and passenger locomotives, parts, wreck repair, software-enabled solutions, mining equipment and services, marine diesel engines, stationary power diesel engines and motors, and overhaul, repair, and upgrade services. Its Appliances & Lighting segment sells and services home appliances; and manufactures, sources, and sells lighting solutions. The company?s Capital segment offers commercial lending and leasing, factoring, energy financial services, and aircraft financing and leasing services. General Electric Company was founded in 1892 and is headquartered in Fairfield, Connecticut <<<