AI driven 10Q / 10K filings analysis
Text discussions within financial filings contain material information - since there are always reasons when companies change their wordings, being alerted to these changes allows investors to realise potential risk factors and opportunities before they are reflected in the market, ideal for idea generation and portfolio monitoring. Recent highlights include Capri (market share fears / no more international expansion), Home Depot (rethinking dividend programme), Keysight Technologies (order cancellation & delays / competitors expand market position), Microchip Technology (ASP concerns) and Monroe (takeover target).
Edition: 164
- 07 July, 2023
India: Affordable housing market attracts a surge of finance companies
Financials
The Pradhan Mantri Awas Yojana (PMAY) has provided opportunities for low-income individuals to own homes in urban areas through the Credit Linked Subsidy Scheme. The scheme has benefited both home borrowers and real estate developers, as the government bears a substantial subsidy burden. The affordable housing market is thriving, especially in Tier 2 and Tier 3 locations, attracting a surge of finance companies. However, there are risks associated with above-average growth and credit decisions. Attrition rates are high and employee behaviour can impact loan disbursal. The market could be at a cyclical peak.
Companies covered include Aptus Value Housing, Aavas Financiers, Home First Finance, Capri Global, Mahindra Finance, AU Small Finance Bank, IIFL, Piramal Enterprises and Five-Star Business Finance.
Edition: 163
- 23 June, 2023
Aritzia (ATZ CN), Ross Stores (ROST), Michael Kors Outlet (CPRI)
Consumer Discretionary
In their weekly report A Line uses a proprietary ranking system to build individual company performance history. Companies are graded A-C based on factors including product design, promotional activity and store feedback. Key takeaways last week:
ATZ - Grade A; scores 28/30, +2pts vs. previous week. Consistently positive feedback across the stores. The Super Puff is flying off the shelves (gone TikTok viral).
ROST - Grade B; 18/30, +2pts. Improved traffic trends driven by markdowns. Discounts are deep (e.g. women’s jeans at $7.99, $3 cheaper than last year). Sales boosted by cold weather.
Michael Kors - Grade B; 14/30, -3pts. Oct has slowed vs. Sept (lack of tourists and domestic customers who are not shopping as much in anticipation for the holidays). Increasingly aggressive promotions.
Edition: 147
- 28 October, 2022
Around the Stores: Providing weekly insights into merchandising, promotions and sales trends…
Consumer Discretionary
Bed Bath & Beyond (BBBY) - Lacked inventory, energy, and sales help. Heard story after story about disappointed college shoppers.
Torrid Holdings (CURV) - Very under the radar. Website looks amazing with denim balanced with wear to work, dates and dresses.
Ralph Lauren (RL) - Very strong all around. Polo store looks outstanding and the Polo men’s assortments at Macy’s and Bloomingdale’s fantastic. Also found the Lauren sets in apparel and handbags in Macy's significantly improved.
Capri Holdings (CPRI) - Kors has some good new styles that break out of the logo story. Stores are cleaner promotionally than they have been. Versace was still very busy and is trending.
Edition: 144
- 16 September, 2022
Consumer Discretionary
Brian McGough outlines why he thinks CPRI is primed to triple again from these levels. The stock has been a winner for Hedgeye (been long since ~$20/share), but it's all come from earnings, with close to zero multiple expansion. Brian looks at the sustainability of the earnings recovery and the levers that the company is pulling to create value. He believes Versace is on its way to becoming a $2.5bn brand pushing a 30% margin. Among other salient topics, Brian also explores what the company is doing with all its cash, including going over the M&A landscape.
Edition: 130
- 04 March, 2022
Consumer: The recovery engine is reigniting as Covid threats once again wane
Consumer Discretionary
JJK looks for the consumer’s appetite to renew normal living to support upside across PVH, Victoria's Secret, TJX and Ulta Beauty. Demand driven by a return to work, social activities and travel should fuel continued demand strength for apparel, accessories and beauty. With strong evidence from the luxury players including LVMH and Capri Holdings, JJK expects the consumer’s strong demand for these categories to be sustained, with little resistance to elevated pricing.
Edition: 128
- 04 February, 2022
These retailers are primed for growth in 2022
Consumer Discretionary
Consumer stocks are climbing the wall of worry reflecting supply chain challenges, higher distribution expense, rising prices and tough comps. Hence, there is limited visibility on the consumer sector delivering yoy F22 earnings gains. JJK highlight a select few who are well positioned for growth, including the value focused off-price retailers (TJX, Burlington, Ross) and beauty leaders (Bath & Body Works, Estee Lauder, Ulta). Upgraded growth strategies and Europe’s emerging rebound should also drive strong upside at A&F, Capri Holdings, Lululemon, PVH, Ralph Lauren and Victoria’s Secret.
Edition: 120
- 01 October, 2021
Capri Holdings (CPRI)
Consumer Discretionary
Blowout quarter, stock remains a double in 1-2 years. CPRI’s earnings power continues to be underestimated and Brian McGough is comfortable being the outlier (by a long shot!) - he increases his EPS forecast for the year from an already very bullish $5.20 to $5.50 (vs. Street/company guidance of $4.50). He argues that CPRI should be valued on a SOTP basis - the current share price assigns no value to Versace (should be worth $4bn by next year and $10bn by Year 5 of Brian’s model). In addition, CRPI will be debt free within a year and generating $5-6bn in free cash over the next five years...what will it do with all the cash?
Edition: 116
- 06 August, 2021