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What’s In A House – Sadly Not Enough

In research published yesterday, we look at the US New Home business and how it impacts the Industrials and Basic Industries sectors.  We also introduce research on the Building Materials group for the first time. Housing is a bright spot

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It’s Easy to Argue against Opinion – Much Harder against Data – Ask Tom

It may be Tom Cruise’s opinion that his wife wanted to remain married, but it’s hard to argue against the divorce filing.  Somewhat definitive.  Not dissimilarly, we are bombarded by opinions on the markets’ movements, with the bulls making arguments

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June Review: Still No Overall Reason To Get Excited, Plus A Quick Take on the ISM

The problem with a blog is that it is often unclear where opinion takes over and facts get left behind.   As we start a more formal approach to an Industrials and Basic Industries blog, we have every intention of expressing

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Sector & Sovereign Industrials & Basic Materials: Monthly Review June 2012

Despite a month of broad absolute and relative underperformance valuation changes in May did not do enough to alter our view. The Paper sector underperformed but remains very richly valued in our view, though commodity pricing in the sector is

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Inventory/Sales Follow Up

We respond to questions following our piece last week and conclude that our analysis is broadly supported by Bureau of Economic Analysis (BEA) data.  BEA data also shows that the Manufacturing Inventory to Sales ratio in the US is at

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Significant Downside Risk From An Inventory Correction – The Stars Are Aligned

The inventory to sales ratio for our covered sectors is at a 25 year high, having jumped since 2008.  There is risk that this corrects, lowering apparent demand and putting pressure on pricing and margins – valuations only discount this

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We Should Be Deal Shy

Eaton Corp’s plan to buy Cooper Industries (announced this month), reminds us that the Industrials and Basics group has flexible balance sheets and is generating plenty of free cash.  Outside Metals and Mining, companies in these sectors rarely generate shareholder

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Chemicals Skepticism – A Wide Divergence – Commodities vs Coatings

Extending our Skepticism Analysis (SSR Skepticism Index – SSRI) to look at the sub-industries within Chemicals we confirm lack of investor conviction in commodity chemicals – valuations underestimate current and expected returns.  History shows that this corrects through relative outperformance

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Introducing: The SSR Industrials and Basic Materials Skepticism Index

We have extended our “normal valuation” analysis to look at skepticism/optimism, defined as whether the valuation of a sector adequately reflects the underlying current profitability or expected profitability of the sector.  Because I have been covering basic industries for so

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Q1 So Far – Some Tears, Some Laughter, No Real Conviction

80 of the 132 companies that comprise our industry group indices have reported earnings for the first calendar quarter of 2012.  On average we have seen positive surprises (67 companies), but at the same time we have seen negative near-term

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