Category Archive for "Industrials/Basic Materials"

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Optimism Everywhere – A Look at the S&P 500

Last week, on the suggestion of several clients, we followed up on our research on the underperformance of Industrials and Basics companies where managements are too optimistic about earnings growth, by extending the analysis (at a 30,000ft level) to the

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Caution Abounds, But Guidance for 2013 Almost Certain To Be Wrong

As we move through earnings season this year, the dominant theme is caution and concern about the shape of the global economy.  There is little if any heroic guidance, and where we are seeing companies support strong year on year

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China Exports Rising – How Happy Should We Be?

The market seemed to like the news that China’s exports had increased dramatically in December.  But should we be that excited or should we be concerned? In all of our recent work, including our 13 picks for 2013 piece we

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Slower Growth – Harder Decisions

There appears to be reasonable consensus that the “cliff” bargain struck on New Year’s day, does not provide the resolution needed to take the uncertainty out of the minds of US corporate managements, and it constrains growth prospects in the

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FedEx – Incorrectly Packaged

Having now spent 26 years in the research business, equity and corporate, I know from bitter experience how unusual it is to get any form of immediate confirmation of a thesis (or a recommendation).  Consequently, I am incredibly grateful to

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Guarding Against Optimists

In recent work we have found a very strong inverse correlation between the levels of optimism that companies project to the market (vis-a-vis their expected earnings and earnings growth) and the performance of companies (as measured by many metrics).  Obviously,

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Optimism In Estimates At Odds With Economic Pessimism

As we look forward to 2013 we see the usual early optimism in company earnings estimates, which to us appear to be at odds with the economic reality.  In the Industrials and Basic Materials Sectors, the lowest growth estimate is

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The Fickle Face of Fuel and Feedstocks

Never put your trust in an energy commodity and certainly never let it hold on to your money while you go away for a few days. One thing that we have learned over the last 40 years is that energy

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Slower Growth – Companies talking the talk; will they walk the walk?

Today we have published our regular monthly Industrials round-up.  In that piece we referenced briefly the earnings season so far and one particular point of interest. The tone of the guidance and the discussion around the third quarter point to

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Slowdowns Breed Commoditization

It was interesting today to watch the two sides of the CAT story emerge; the “it’s a cyclical low” versus “there is something more sinister here on pricing” stories.   While we are not in a recession, we are in a

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