Four stocks that have reported (as I write) over the last 24 hours in the US market - and which I have written about in recent months - are Visa, Amazon, Moody's and Stanley Black & Decker. Any takeaways or opportunities from the numbers just released?
First Visa. At the end of June (link here) I wrote an extensive study concluding:
'In hindsight the sub US$200 print on Visa back in April/May was an opportunity. At this level the share was trading around x14 EV/ebit which for a double digit growth company with some structural tailwinds and a good balance sheet is very reasonable'.
It is with interest that I note the shares are once again approaching US$200 (US$214, down c. 4% on the day as I write) following a results disclosure that negative FX issues would push revenue growth potentially to a (high) single digit level:
Fundamentally however the growth of the stock (17.5-18.5% EPS growth), free cash flow generation and structural opportunities in a world of increasing non-cash focus still shines through. I still like the sub US$200 level as discussed last month but do note that the company bought shares back at an average price of US$207 during the last quarter which is an interesting signalling level.
Another stock I wrote up reasonably recently was Amazon where I established a position sub US$300 a couple of months ago when the stock was particularly weak. Further weakness has occurred today however the stock is not back to those May levels yet:
The reason for the big fall today is nicely captured by this chart - unanticipated operating losses.
I may have purchased Amazon well (so far still) a couple of months ago but I feel a bit of frustration with Stanley Black & Decker. My hoped-for US$75 level may did not quite hit (very, very close on two occasions year-to-date) and hence I missed out on a solid re-pricing as shown below:
Still with flat pricing and sequentially poorer organic sales growth trends in all regions the share price bump (assisted by higher margins and hence a push up in guidance) looks to have factored this in. At prevailing not one that interests me.
As for missing out on the trading opportunity for the sake of a US$1 or so on the share price - that's the way it goes in investments sometimes.
Finally Moody's. Earlier in the year I opined on both Moody's and its great peer/competitor McGraw-Hill Financial concluding with the former that:
'...the repeat nature of much of their business aligned with a relatively small number of peers provides a good underlying combination for continued progress...Watch for the mid US$70s. At the margin Moody's slightly preferred due to its lower legal risk. Mr Buffett appears to agree - he is a shareholder in this name too (albeit with a reduced position - well it has doubled etc in the last year)'
Since then there was a flirtation with that level in April but generally the share has responded well and trades in the early US$90s now...having also handsomely outperformed its peer McGraw Hill Financial handsomely too (less overt litigation risk as detailed at the above link):
Numbers for the full year were upgraded following another very solid mid-teens growth period:
Thoughts? The story rolls on although given what I previously described as 'leftfield risks' still exist I do not really want to pay more than say x12 EV/ebit. This would suggest a sub US$80 share price. Keep watching - and McGraw-Hill Financial too (for a sub US$75 print). Volatility is opportunity in this grouping.