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Hershey Rejects $23 Billion Acquisition Offer From Mondelez

Thu, 30 Jun 2016 18:43 GMT

Updated with additional details. Hershey's business may be looking too sweet to for one fellow food giant to ignore. Shares of the iconic chocolate maker were up 15% to $111.87 in afternoon trading Thursday following a report by The Wall Street Journal that fellow candy giant Mondelez  has made a $23 billion bid in cash and stock, or $107 a share, for the company. Shares of Mondelez were trading up 4.8% to $45.05 on Thursday.  Hershey confirmed the bid, but the company promptly rejected it, noting that its board determined that Mondelez's expression of interest provided no basis for further discussion. Hershey's rebuff could mean it is trying to secure a higher bid from Mondelez. According to an afternoon note by analysts at Stifel, Mondelez could bid end up bidding $120 to $130 to seal the deal for Hershey. A Hershey spokeswoman did not immediately return a request for comment. According to the WSJ, any acquisition of Hershey would have to be approved by the Hershey Trust, which holds 81% of the voting rights of the stock and 8.3% of outstanding shares, though Mondelez is prepared to work to win the trust's approval. But, the Hershey Trust has set a precedent of being unpredictable.  In 2002, the charitable trust that controls Hershey abandoned a $12.5 billion cash-and-stock offer from fellow candy-maker Wm. Wrigley Jr. Company in the final stages of approval.   Wrigley's offer represented a generous 42% premium over Hershey's stock price at the time, and Hershey's auction also attracted a joint bid from Nestlé and Cadbury Schweppes. Wrigley went on to be acquired by Mars for $23 billion in 2008 in a deal that was financed by legendary investor Warren Buffett. And Cadbury was acquired by Kraft Foods, which split off its confectionery business into Mondelez in 2012. Here's a brief look at what may have attracted the maker of Chips Ahoy, Oreos and Cadbury, among many other well-known brands, to Hershey.  1. Hershey is reinventing its business. Hershey recently acquired "snacking chocolate" brand Barkthins. TheStreet recently sampled several versions of Barkthins and can confidently report they are absurdly addicting and have a much better nutrition profile than a regular dark chocolate bar. Further, Barkthins have gobbled up some prime shelf space at major retailers such as Walmart lately as they play into the broader consumer trend toward snacking. Barkthins joined another interesting acquisition made by Hershey of Krave beef jerky last year. Krave has some of the most innovative flavors in the premium beef jerky market, and similar to Barkthins is receiving prime shelf space at major retailers due to their snacking qualities. Mondelez may appreciate the diversification beyond core chocolate bars.  2. Core Hershey products are being reinvented. Walk down most candy aisles today and you're likely to come across two new snack mixes from Hershey's -- the Reese's snack mix (peanut butter cups mixed with nuts in a 2-ounce package size), and the Hershey's snack mix (mini-Hershey bars mixed with pretzel and almonds in resealable plastic containers). These new products make ridiculous amounts of sense in this new snacking-crazed world. Ultimately, it's good to see the creativity around a storied name such as Hershey, and likely has Mondelez optimistic on further innovations in the not-too-distant future. 3., Cost-cutting continues. Like Coca-Cola , General Mills  Kellogg  and other big-name food companies, Hershey has not been reluctant to wield the ax to improve profit margins and the flow of new innovations. The company recently increased its annual savings target from cost-cutting to $100 million per year through 2019, from the previous $50 million to $70 million.  Mondelez may have confidence that under its umbrella, it could slash even more costs at Hershey, by, for instance saving on raw materials such as sugar and fuel. Clic[...]

Tiger Woods Is Falling Apart and so Is Nike Golf

Thu, 30 Jun 2016 13:10 GMT

With a surgically repaired back keeping golf's biggest spectacle Tiger Woods off the links, the Nike golf business he once put on that back is struggling. Nike reported this week that sales at its golf business plunged 8% to $706 million for the fiscal year ended May 31. Excluding the impact of the strong U.S. dollar, sales dropped 6% from the prior year. It was the worst-performing business for Nike in terms of sales last fiscal year. Weak sales for Nike golf -- which represents about 3% of total sales for the apparel and footwear giant -- has now become a recurring theme in recent years with the injury prone Woods being spotted less in riveting final rounds of PGA Tour events and other Nike product endorser Rory Mcllroy lacking the star-power of Woods. Sales for the Nike golf division fell 2% to $771 million for the fiscal year ended May 31, 2015. Excluding the impact of the strong U.S. dollar, sales were unchanged from the prior year. Nike golf didn't light up it up on the sales line the year before, either. Nike's golf division saw sales relatively unchanged at $792 million for the fiscal year ended May 31, 2014. Excluding the impact of the strong U.S. dollar, sales rose a meager 1%. Adding insult to injury for Nike here? People are back out playing more rounds of golf, which is spurring sales of new drivers, shoes and irons.  Earlier this year the National Golf Foundation reported, for the first time since 2012, the number of golf rounds played in the United States increased in 2015. Helped by a warmer than average winter, golf rounds played increased 5.5% in the first three months of 2016, according to Golf Datatech. In March alone, rounds played boomed by 13.2%. "Some brands came out with some really great product that captured the imagination of the golfer," said Dick's Sporting Goods CEO Ed Stack on a May 19 call with analysts. Stack praised all of the big names in golf product manufacturing but Nike for their latest innovations. "Taylor Made with the M1 and the M2 [drivers and irons], Callaway with the Great Big Bertha [driver], and there has been some new shoe designs out from FootJoy -- so, there has been some good products out there." Adidas is on the comeback trail not only in the sneaker business, but also in golf.  Same-store sales for Dick's Golf Galaxy chain rose 1.7% in the first quarter, while the golf business inside of Dick's stores did slightly better, according to the company.  One brand in particular may be hurting Nike golf at the moment: Adidas. According to Adidas, its Taylormade equipment brand returned to growth in the first quarter with sales up 6% from the prior year. Adidas credited momentum behind metal woods and irons. In addition, Adidas said sales for its broader golf business also increased during the quarter, driven by high single digit growth in footwear. Adidas golf apparel and Taylormade equipment is used by number one ranked golfer, and this year's U.S. Open champ Dustin Johnson and number two ranked golfer in the world Jason Day.  The trajectory of sales for Nike golf may not reverse in the near-term for several reasons. First, the harsh reality is that Woods may not play a single competitive tournament this year as he tries to recover from lower back surgery, meaning less face time on TV for Nike golf's biggest pitchman. Said Woods recently on the timetable for his return, "I just need to get to where, strength-wise, I can handle the workload of playing out here on a weekly basis, practicing after round, not having to go ice my back and all that kind of stuff -- I need to get to where I can play 18 holes out here and go to the range for an hour and work on my game," who then added, "Just not quite there yet.'' Not spotted at the summer Olympics: Nike's Rory Mcllroy Meanwhile, number-four-ranked golfer in the world Mcllroy has decided to skip the Olympic Games in Rio de Janeiro due to concerns about the Zika virus, while Woods will likely sit ou[...]

Jim Cramer -- Buy Some Constellation Brands Before, After Earnings

Wed, 29 Jun 2016 15:49 GMT

Constellation Brands  shares, at around $159, are on a momentum ride to the stars, up 12% so far this year and 37% over the past 52 weeks. That's why TheStreet's Jim Cramer is particularly interested in the beer, wine and spirits purveyor's earnings, expected Thursday before the open.  This is one of the few consumer packaged-goods companies out there growing sales at a double-digit rate, Cramer, co-manager of the Action Alerts PLUS portfolio, said Wednesday from the New York Stock Exchange.  The Modelo and Corona beer brands have really helped accelerate sales, he explained, as have Constellation's wine business and the recent acquisition of a craft beer company.  Here's a tip, he said: The stock tends to initially trade lower after earnings. Investors who want to be long Constellation should consider buying half a position before the results are released and half after the company reports, Cramer advised.  Shares are up nearly 40% over the past 12 months and a whopping 666% over the past five years. 

Click to view a price quote on STZ.

Click to research the Food & Beverage industry.


Chipotle Does Something It's Only Done Once Before in Its 23-Year History

Wed, 29 Jun 2016 13:00 GMT

Embattled Chipotle is hoping that a new menu item will help lure back in customers that have been reluctant to return because of a high-profile E.Coli outbreak and other health issues at the fast-casual giant last year. Chipotle will introduce spicy chorizo, which traditionally is made from seasoned pork but in Chipotle's version will include white meat chicken -- starting Wednesday at restaurants in Columbus, Ohio; New York City (Manhattan locations); Sacramento and San Diego, Calif.; one location in Denver, Colorado; and at Dulles International Airport in the Washington, DC area. The company expects to expand chorizo to all of its U.S. restaurants this fall. The fast-casual chain had previously tested chorizo in markets such as Kansas City back in June 2015. "It was very popular, it quickly became customers'... favorite protein," said Chipotle Founder and co-CEO Steve Ells on an Apr. 26 call with analysts when he teased the upcoming launch.   Chipotle's chorizo is made with a blend of pork and white-meat chicken and is seasoned with paprika, toasted cumin and chipotle peppers, according to the company. It will be cooked in each individual restaurant by searing it on a hot grill, and will be available in the company's burritos, tacos, burrito bowls and salads.   Historically, Chipotle has been reluctant to make any changes to its menu in the fear of upsetting customers and slowing up busy lines. In fact, it's only added one new food to its menu -- sofritas in 2014-- in its entire 23-year history.   This stands in marked contrast to many fast-food companies such as McDonald's  and Yum Brands' Taco Bell that routinely introduce new items to drum up publicity and buzz.   Chipotle has added new drinks from time to time, however. In April 2013, Chipotle debuted margaritas with Patrón Silver tequila, a more expensive offering compared to its "house" version. And more recently, the company debuted a new craft beverage program in its home market of Denver, Colorado.   But, with sales and traffic likely still sluggish, Chipotle may see little risk in betting that people will want to give its new chorizo a taste.   "Since we opened the first Chipotle 23 years ago, our menu has changed very little, and our focus has been on constantly improving the quality and taste of the food we serve," said Ells in a statement Wednesday, adding, "While we have never been opposed to changing our menu, we only do so when we think there's an opportunity to add something that is really unique but that fits within our overall menu, and where we can find ingredients that meet our high standards."   Chipotle's sales and stock price have been hammered by its health issues. During the first quarter of fiscal 2016, same-store sales plummeted by nearly 30%, and the company's stock has declined by almost 50% since last October.     And if customers don't want to visit Chipotle for chorizo, perhaps a new summer loyalty program will whet their appetite. Under the new program, which will be launched this Friday and could be extended beyond the summer, customers are rewarded for how many times they visit Chipotle and purchase a burrito or other entrée.   Customers will earn free meals after their fourth, eighth and eleventh entrée purchases each month. They can also earn additional rewards, such as free meals and catering, when they reach certain status levels. Click to view a price quote on CMG. Click to research the Leisure industry. [...]

How to Trade Lockheed Martin, Northrop Grumman, General Dynamics Now

Wed, 29 Jun 2016 09:57 GMT

Defense contractors Lockheed Martin and Northrop Grumman did not experience major setbacks in reaction to Britain's decision to leave to European Union. The third major contractor, General Dynamics , took a minor hit. Based on this notion, military spending in the war to defeat ISIS appears to have trumped the adverse effects of the U.K. decision to leave the European Union. These three stocks began the year on Jim Cramer's list of 38 "anointed" stocks for 2016. This makes them important allocations to consider in a diversified investment portfolio. Cramer owns Lockheed in his Action Alerts PLUS portfolio. Cramer says this stock benefits from continued defense spending and also is known for its consistency in increasing dividend payouts.  Lockheed Martin is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells LMT? Learn more now. Let's take a look at the daily and weekly charts for these defense stocks and the guidelines on how to trade them. Here's the daily chart for General Dynamics.   Courtesy of MetaStock Xenith General Dynamics closed Tuesday at $133.94, down 2.7% year to date and up 10.1% above its Jan. 20 low of $121.61, but in correction territory 12.9% below its 52-week high of $153.76 set on Aug. 19. The horizontal lines are the Fibonacci retracement levels from the Aug. 19 high to the Jan. 20 low. The stock set its 2016 high of $147.16 on May 17, well above the 61.8% retracement of $141.49. The stock was below this retracement on June 21 before the "Brexit" vote. The stock closed below the 50% retracement of $137.68 on June 24 and after a low of $132.68 on Monday closed Tuesday above its 38.2% of $133.88. Here's the weekly chart for General Dynamics. Courtesy of MetaStock Xenith The weekly chart for General Dynamics has been negative since the week of June 17 with the stock below its key weekly moving average of $138.38 but well above the 200-week simple moving average of $112.32. The weekly momentum reading is projected to decline to 56.62 this week down from 67.21 on June 24. The weekly chart shows a red line through the weekly price bars is the key weekly moving average (a 5-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean". The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold. A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. Investors looking to buy General Dynamics should do so on weakness to $101.63 and $97.74, which are key levels on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $141.39, which is a key level on technical charts until the end of this week. Here's the daily chart for Lockheed Martin.   Courtesy of MetaStock Xenith Lockheed Martin closed Tuesday at $240.91, up 10.9% year to date and up 20.2% since setting its Jan. 26 low of $200.47. The stock set an all-time high of $245.37 on May 12. The stock has been above a "golden cross" since July 24, 2015 when the stock closed at $201.04. A "golden cross" occurs then the 50-day simple moving average rises above its 200-day simple moving average and indicates that higher prices lie ahead. The stock simply traded back and forth around its 50-day simple moving average of $237.77 in reaction to the Brexit vote. Here's the weekly chart for Lockheed Martin. Courtesy of MetaStock Xenith The weekly chart for Lockheed Martin is neutral with the stock above its key weekly moving average of $237.77 and well above the 200-week simple moving average of [...]

Toyota to Recall 2.3 Million Cars on Glitches in Airbags, Emission Controls

Wed, 29 Jun 2016 09:42 GMT

Toyota Motor said it will recall a total 2.3 million vehicles installed with defective airbags and emission controls, adding to a slew of recalls by automakers and auto parts manufacturers worldwide. The Japanese company said on Wednesday it will recall its Prius, Prius PHV, and Lexus CT200h models installed with cracked airbag inflators that could explode once the temperature inside the car rose, as well as its Prius, Prius PHV, Prius a, SAI, Lexus CT200h, and Lexus HS250h models installed with emission control devices with risks of gasoline leakage. The number of cars with the airbag inflator defects totals over 743,000 units, while those with emission control defects total approximately 1.55 million, according to the automaker's disclosure. Other reports have suggested higher figures. The glitches were found for cars manufactured between 2009 and 2015. The automaker will start the recalls from Thursday. Toyota's recall adds to a series of similar actions taken by its counterparts in recent months. Mitsubishi Motors  in February recalled vehicles with improperly installed right-turn indicator switches, while in April, Nissan Motor recalled cars installed with air bags with risks of not deploying. Worldwide, automakers including Ford , BMW , and General Motors  that adopt defective airbags manufactured by Takata have also been forced to make recalls over the last two years. On Wednesday, Toyota also said that its global output, including those for separately listed subsidiaries Daihatsu  and Hino , advanced 11.1% year-on -year. Toyota on its own enjoyed growth for the first time in two months for its domestic production and for a third consecutive month overseas. Daihatsu shareholders on Wednesday approved a bid from Toyota for the outstanding 49.8% stake despite some dissent about the valuation. Toyota in January said it would offer 0.26 of a share per Diahatsu share, or about Y399 billion ($3.9 billion) at the time for the outstanding shares. The takeover is due to close on Aug. 1. Shares in Toyota closed up 2.9% in Tokyo. The automaker, which has a large operational base in the U.K., has lost nearly 11% since the close of June 23, the day the country's voters chose to leave the European Union. The company has reportedly warned it employees that a Brexit would cause major risks for its U.K. business. Click to view a price quote on TM. Click to research the Automotive industry. [...]

Under Armour Wants to Prove 3D-Printed Sneakers Aren't Just a Gimmick

Tue, 28 Jun 2016 19:32 GMT

Everyone thought that Under Armour's first 3D-printed sneaker released in March was a glorified marketing tool.  Guess again, as the red-hot footwear and apparel maker is about to prove it could be a potentially lucrative business. The company will launch its second 3D-printed sneaker -- likely in the training category -- by the end of the summer, a source close to the matter confirmed to TheStreet. That release may be followed by several others before the end of the year. "What you will see [this year] is an increase in the number of units, colors and styles in the Architect [Under Armour's 3D printed shoe line] platform this year," Under Armour president of product and innovation Kevin Haley told TheStreet at the opening Tuesday of UA Lighthouse, the company's new center for manufacturing and design innovation in its Baltimore, Md. backyard. Haley didn't deny that at some point in the future a Steph Curry basketball shoe -- one of UA's hottest endorsements -- could be made using 3D-printing technology. For now, however, the focus remains on training sneakers. Several Under Armour sneakers that were made using 3D printers. "The training shoe [we created] is phenomenally stable but also cushioned, which is often hard to achieve at the same time," said Haley. "The [3D-printed] lattice structure is allowing us to create the holy grail of a super stable but also cushioned [sneaker] -- I think it has legs in lots of different end uses."  Back in March, Under Armour unveiled a limited-edition 3D-printed training shoe called UA Architechs. It featured a 3D-printed midsole and upper design that enhances the fit for consumers and is more lightweight. The training shoe came together after a a two-year research and development process that involved the study of geometric shapes and structures to come up with the midsole design, according to Under Armour. Only 96 pairs of the UA Architechs were made. The price? A cool $300, which was light years removed from the mostly $85 running sneakers Under Armour sold when it entered the footwear space back in 2008. But consumers apparently weren't turned off by the price for a product that is lighter and fits better. Said Haley, "I think the original shoe launched in March sold out in 18 minutes, so we think the demand is there despite the $300 price point." Scientists at Under Armour's new manufacturing plant show off some 3D printing technology. Under Armour's new push into high-priced 3D printed sneakers -- at a time when rivals Nike and Adidas have no competing versions on the market-- could provide a nice boost to an already hot footwear business. Under Armour's footwear sales in the first quarter skyrocketed 64% year over year to $264 million. For 2015, footwear sales increased 57% to $678 million. Footwear now makes up about 17% of Under Armour's business. "3D printing is the future -- imagine walking into a store and 3D printing your own footwear from your favorite brand," pointed out sneaker expert Clyde Edwards. "3D printing is not a gimmick," remarked one of the scientists guiding a tour of UA Lighthouse. He could well be right. Click to view a price quote on UA. Click to research the Consumer Non-Durables industry. [...]

Jim Cramer Wants to Know How Nike Is Doing

Tue, 28 Jun 2016 15:44 GMT

Shares of Nike have struggled so far this year and are down more than 15%. How is the company doing? Investors looking for insight won't have wait long because Nike is set to report quarterly results after the close Tuesday.  "Nike is a very difficult situation," TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said Monday from the floor of the New York Stock Exchange. The sports apparel company has such sprawling international operations -- including major businesses in the U.S., China and western Europe -- that it's hard to get a read on how it's doing.  Looking at other companies for a potential read-through on Nike is also difficult, he said. Finish Line reported good results, but investors didn't care for the earnings from Foot Locker .  There's also the resurgent Adidas brand to worry about, Cramer said. Nike's chart -- as outlined by Real Money's Bruce Kamich -- is also discouraging.  With all that being said, Nike stock is down significantly from its highs over $68, he said, adding that his favorite in the group is Foot Locker, simply because the stock has been oversold.  Analysts expect Nike to earn 48 cents per share on $8.28 billion in revenue. 

Click to view a price quote on NKE.

Click to research the Consumer Non-Durables industry.


Jim Cramer -- Stick With Apple but Don't Believe 'Super Cycle' Hype

Tue, 28 Jun 2016 14:24 GMT

Shares of Apple are up roughly 1% Tuesday after analysts at Cowen called the stock a buy. While Apple is a holding in Jim Cramer's Action Alerts PLUS portfolio, there was something in the report the co-manager does not like: forecasts for an upcoming iPhone "super cycle." "Don't believe the super cycle hype. Ever," Cramer said on CNBC's "Mad Dash" segment. The analysts outline that 2017 is setting up for a mega-year for the iPhone.  But Cramer said the term "super cycle" tends to lead to too much enthusiasm. Examples? Think of housing in 2007, coal in 2011 and fracking sand in 2012. All were simply too bullish, he said.  "I like Apple," he said, and the stock will likely go up because this report is so bullish. While shares are attractively priced and the balance sheet is strong, Cramer's trying not to get too caught up in the bullish hoopla.

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Click to research the Consumer Durables industry.


Brexit Comes at a Particularly Bad Time for Software Companies

Tue, 28 Jun 2016 13:41 GMT

For most publicly-traded companies, there was never a good time for the Brexit vote. But for the large software companies that market to corporate IT departments, the referendum at the close of the second quarter came at a particularly inopportune moment.  Slippage of large accounts from one quarter to the next is a landmine for software companies, resulting in earnings misses and making the last days of a reporting period crucial for sales. "[T]he timing of this exogenous market shock couldn't have come at a worse time," Credit Suisse analyst Michael Nemeroff wrote in a report, noting that "most  enterprise-focused software companies -- regardless of size -- sign a large amount of business in the final few weeks of each [quarter]." Nemeroff suggested that well-positioned stocks, given recent declines and their low exposure to Brexit fallout, include Ultimate Software and 2U , with 98% of revenues from the U.S. and none from the UK and Europe; Paycom , with 100% from the  U.S.; and Synchronoss , which generates 90% of its top line in the U.S. and 10% in the UK and Europe. Higher risk companies include Open Text and Verint Systems , each with more than 30% of sales in Europe; Cornerstone OnDemand , with 30% in Europe; and Adobe , with 3% in the U.K. and 22% in Europe. In an earnings call before the vote, Adobe CEO Shantanu Narayen told investors that Brexit had not been an issue in the company's sales meetings. "There isn't a customer on the planet that we go visit where digital disruption is not top of mind, it's a line item in everybody's budget and they are all talking about how they are going to aggressively transition to digital experiences," he said. In Adobe's favor, its quarter does not end in June. Kirk Materne of Evercore ISI suggested in a post-Brexit report that investors take a look at some of the "quality growth names that do not have a June Q end" like Adobe, , Veeva Systems , Splunk , and Palo Alto Networks .  Long-term risk to the sector is low, Materne added. While SAP SAP generates 44% of its business in Europe, the Middle East and Africa, most software vendors obtain about 21% of their sales from EMEA and just three to four percent from the U.K.   Tyler Technologies and Ultimate Software have "essentially no exposure" to EMEA, the analyst noted. Oracle and Microsoft have nearly 30% and 20% revenue exposure, respectively, to EMEA markets, Materne suggested, but are well positioned because of their balance sheets.   Cyber security companies Fortinet and Check Point Software generate 37% and 35%, respectively, of their sales from the EMEA, Gray Powell of Wells Fargo Securities noted in a report. Companies with less EMEA exposure include CyberArk (27%), Symantec (25%), Proofpoint (18%), Palo Alto (18%), and FireEye (14%).    Powell suggested that while Brexit will not likely have a great impact on second-quarter demand, it could weigh on guidance for subsequent periods. "[I]f market volatility remains in place through July -- then we would expect most security companies to guide Q3 conservatively," he wrote. "This is because August is always a slow month due to summer vacations which means that a higher-than-normal percentage of demand could be pushed into the month of September if July is soft." MKM Partners analyst Kevin Buttigieg created a Brexit-bucking "wish list" for software stocks. Pluses include higher exposure to smaller businesses that do more business in the U.S. and less in Europe, fewer dealings with the financial sector, recurring revenues and high margins and lower valuations.   Few firms can check all of those boxes, howev[...]

Facebook and Alphabet: Two Stocks to Buy Post-Brexit Volatility

Tue, 28 Jun 2016 13:04 GMT

As you seek safe-haven stocks in the aftermath of the Brexit meltdown, consider the tech giants,  Facebook and Google parent Alphabet  . They have the size and high-demand services to withstand downturns. To be sure, both companies suffered with the rest of the market Monday. But Facebook and Google should provide growth opportunities -- perhaps a 30% upside. Both companies have expanded their offerings. Facebook is projecting strong growth for the next five years. Alphabet can boast of high profit margins.  These stocks should be on your radar as "defensive growth" plays with considerable upside. Facebook is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells FB? Learn more now. Facebook Facebook has beaten earnings expectations for the last four quarters. Moreover, Facebook has expanded its portfolio of businesses with WhatsApp, Instagram, videos, news consumption and virtual reality platforms. The company is projecting 34% per year earnings per share (EPS) growth for the next half a decade. Trading at a PEG ratio of 0.91, Facebook shares are among the cheapest for a large tech stock. The company has 1.6 billion active users, and more importantly a growing ad business. It is also expanding its businesses in video and virtual reality. The 44 analysts offering 12-month price forecasts for Facebook have a median target of $145, pointing to the nearly 30% price appreciation potential from current levels. Investors who avoided Facebook because of the high stock price can now take advantage of the recent weakness. To be sure, the stock pays no dividends because it's on a growth curve. But its annual free cash flow is becoming stronger with each passing year. Churning out billions in rising FCF, Facebook is exactly where Apple was a decade ago. Facebook is a growth stock winner in what is likely to be a tough year for markets. Alphabet Alphabet shares are down 11% in 2016. The lower price offers an opportunity, though. The company offers mid-teen earnings growth. It has an upside potential in excess of 30% over the next year. Alphabet's ad/search business is a major cash cow.  ALPHABET is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells GOOG? Learn more now. Moreover, Alphabet is multi-faceted, including not only its popular search engine, but also ads, maps, apps, YouTube and Android and the related technical infrastructure. The company has been innovative, as well. It offers Google Fiber, which is likely to be a strong competitor to AT&T, Promoted Pins, Self-Driving Cars/Vans, Google Assistant and Google Home and a possible online TV service. While its Moonshot factory arguably hasn't done as well, that tiny business is a relatively small part of the overall landscape. But its strategy of adding other parts is a long-term growth positive. The company's massive cash war-chest, coupled with minimal debt, also makes Alphabet among the safest companies around. Its nearly 22% profit margin, high return ratios and projected revenue growth are other positives. At a PEG ratio of 1.23, Alphabet is Brexit-proof. Accumulate the stock at every dip and set yourself up for major gains. --- Post-Brexit anxiety is pummeling global markets. If you'd rather avoid stocks and bonds altogether during this period of extraordinary volatility, I know a way you can make a guaranteed $67,548 over the next 12 months. In fact, this moneymaking technique is so successful and simple, you might want to give up "conve[...]

Jim Cramer's Top Takeaways: Twilio, Idexx Labs

Tue, 28 Jun 2016 10:00 GMT

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways for today's trading. Twilio : In his "Know Your IPO" segment, Cramer took a look at Twilio, the cloud communications company that came public last Thursday at $15 a share only to rocket 94% to $29 by the close of its first day and another 3% today. Cramer explained that Twilio allows companies including Uber, Nordstrom and Facebook's What's App to add real-time communications services to their applications. The company offers everything from voice messaging, call recording, text messages and even embedded video services for developers of all sizes. Twilio boasts 28,000 active customers and charges fees based on customers' usage, meaning that as Uber and Facebook expand their user bases, Twilio shares in the profits. That's how the company saw 78% revenue growth in 2014 and accelerated that to 88% in 2015. Twilio is not without some risk factors, however. The company is not profitable and is playing in an unproven market. Twilio also derives 15% of its revenue from a single customer, Facebook, which could decided to built its own platforms. Then there's Twilio's valuation. The stock now trades at 13 times sales, or factoring in its growth rate, 7.5 times 2016 sales. That's higher than the current valuation of . But valuation aside, Cramer said he thinks Twilio is a winner on any weakness.   Idexx Labs : In an exclusive interview, Cramer sat down with Jonathan Ayers, chairman and CEO of Idexx Labs, an animal health products and services company. Ayers said when it comes to our pets and their care, the sky's the limit. That's how a company like Idexx can still see 5% organic growth in times of recession, as the company did in 2009. Pets are not just an American phenomenon. Ayers noted that Idexx sees Europe still as an emerging market for the company, while other countries, like Brazil, have 75 million pets and almost no veterinary care. Ayers went on to explain that Idexx' new urine analyzer for cats can give pets a voice and tell vets what's wrong in just three minutes, and is more accurate than traditional testing. Since testing is done on a continual basis, Idexx enjoys lots of recurring revenue. Cramer concluded that Idexx is the type of stock you buy when Brexit takes the entire stock market lower. To read a full recap of "Mad Money" on CNBC, click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. Click to view a price quote on TWLO. [...]

These U.S. Defense Stocks May Be a Haven in 'Brexit' Selloff

Mon, 27 Jun 2016 14:49 GMT

The United Kingdom's vote to leave the European Union sent traders on both sides of the Atlantic scrambling for the exits, adopting a "sell first, ask questions later" mindset that caused significant declines nearly across the board. There are bargains to be found in such indiscriminate selling, and U.S. aerospace firms are a good place to look. The U.S. spends more on defense than the next half dozen biggest spending countries combined, a stat to keep in mind when pondering how events in Europe could impact U.S. contractors like Lockheed Martin  and Northrup Grumman . Most all big-ticket defense items sold overseas are priced in U.S. dollars, further minimizing defense exposure to "Brexit" ramifications, and any economic decline in the region could arguably necessitate higher U.S. government European defense spending, offsetting any order weakness. Lockheed Martin is a holding in Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells LMT? Learn more now. Cramer and Jack Mohr, research director, noted Friday that the company "sits in an industry benefiting from serious secular growth," stating "stability and income generation will win out in this uncertain market and Lockheed fits the bill." Defense IT firms in particular would appear to be safe harbors during the Brexit storm, as they are primarily U.S. focused and have little commercial exposure. They also tend to be more levered than defense equipment makers and would enjoy more of a windfall from continued lower rates due to the economic uncertainty Brexit seems likely to cause. Leidos Holdings , which is in the process of combining with Lockheed Martin's IT and government services business, stands out as a potential beneficiary, as does CSRA  . Commercial aerospace is more of a mixed bag, as European heavyweight Airbus and large numbers of European airlines do business with U.S.-based suppliers. Cowen & Co. analyst Cai von Rumohr, in a note, said that the weakness in sterling and troubles in Europe are an issue for United Technologies  , which gets 4% of sales from the U.K. and 15% from other European nations. Boeing  is already the subject of investor concern over the sustainability of its massive order book, and weakness in Europe could further pressure the company's future orders. The company, in a statement Friday, said "we constantly manage changes in political circumstances and we will continue to do so now with the evolving situation in the U.K. and Europe." Boeing also has a substantial defense business with a book of orders that longs expect to deliver in the quarters to come, potentially offsetting any eventual declines in commercial jet orders. Von Rumohr said that flight control systems maker Moog  could be a beneficiary. The company generates about 5% of sales from Airbus, recording those sales in U.S. dollars but benefiting from some of the costs associated with those sales in now lower-valued British pounds. Jefferies & Co. analyst Howard Rubel noted that aircraft assembly maker Spirit AeroSystems generates 7% of revenue on pounds but also prices about 12% of its costs in the currency, "so any currency translation issues should be offset by lower costs." A wild card in thinking of defense stocks post-Brexit is business jets, with General Dynamics  and Textron with the most exposure there. Demand for business jets tend to be more closely linked to economic swings than demand for larger commercial jets or armaments, meaning a recession in the United Kingdom or in Europe as a whole could hit biz jets particularly hard. [...]

What's Next for the Stock Market This Week Post-''Brexit?'

Mon, 27 Jun 2016 13:06 GMT

Is the bear finally here? A week ago the weekly charts were flashing technical warnings despite the high probability that he U.K. would vote to stay in the European Union. Even with the Dow Jones Industrial Average closing above 18,000 on Thursday and with the S&P 500 within 1% of its all-time high, weekly momentum (12x3x3 weekly slow stochastics) continued to decline. This technical setup was a clear warning that stocks would be vulnerable given a vote by the U.K. to leave the European Union. The weekly charts are now negative for all five major U.S. equity averages, which is a clear signal that 2016 would be "the year of the bear." All five now have year-to-date losses. The Dow 30 is down just 0.1% with the S&P 500 down just 0.3%. The Nasdaq Composite NDAQ is down 6% year to date, with transports down 2.5% and the Russell 2000 down 0.7%. The Nasdaq and Russell 2000 ended the week in correction territory with declines off their all-time highs of 10% and 13%, respectively. Transports have fallen into bear market territory 21.4% off its all-time high. Here's how to trade the five major U.S. equity averages via the exchange-traded funds that track them. The Dow Jones Industrial Average can be traded using the SPDR Dow Jones Industrial Average ETF , aka Diamonds. The S&P 500 can be traded using the SPDR S&P 500 ETF Trust , aka Spiders. The Nasdaq is best traded using the ETF that represents the Nasdaq 100, the PowerShares QQQ Trust ETF , dubbed QQQs. The Dow Jones Transportation Average can be traded using the iShares Transportation Average ETF . The Russell 2000 can be traded using the iShares Russell 2000 ETF . Here are the daily charts and trading levels for the five stock market ETFs. Diamonds Courtesy of MetaStock Xenith The weekly chart for Diamonds stays negative with the ETF below its key weekly moving average of $176.26 and still well above its 200-week simple moving average of $162.42. The weekly momentum reading ended last week at 56.63 down from 67.04 on June 17. Investors looking to buy this ETF should hold off as the downside risk is to $145.45 by the end of 2016. Investors looking to reduce holdings should do so on strength to $174.99, which is a key levels on technical charts until the end of this week. Spiders   Courtesy of MetaStock Xenith The weekly chart for Spiders remains negative with the ETF below its key weekly moving average of $206.44 and still well above its 200-week simple moving average of $185.59. The weekly momentum reading ended last week at 66.64 down from 79.60 on June 17. Investors looking to by Spiders should hold off as the downside risk is to $163.38 by the end of 2016. Investors looking to reduce holdings should do so on strength to 206.91, which is a key level on technical charts until the end of this week. QQQ Courtesy of MetaStock Xenith The weekly chart for QQQ remains negative with the ETF below its key weekly moving average of $107.10 and still well above its 200-week simple moving average of $91.64. The weekly momentum reading declined to 54.15 down from 65.01 on June 17. Investors looking to buy QQQ should hold off as the downside risk is to $96.72, which is a key level for the remainder of 2016. Investors looking to reduce holdings should do so on strength to $206.91, which is a key level on technical charts until the end of this week. Transports Courtesy of MetaStock Xenith The weekly chart for the transportation ETF stays negative with the ETF below its key weekly moving average of $137/06 and just below its 200-week simple moving average of $132.46. The weekly momentum reading ended last week at 38.77 down from 46.16 [...]

Brexit Triggers U.K. Political Turmoil

Mon, 27 Jun 2016 08:45 GMT

British Prime Minister David Cameron once warned that the peace and stability of Europe were at risk if the people voted to leave the European Union. The warning came to be derided by the "leave" camp as his Armageddon speech. Well, the public duly voted to leave in last Thursday's shock referendum result. And, quicker than Cameron could possibly have imagined, Armageddon has broken out. The war is not on the battlefields of Europe, but in the bloody arena of British domestic politics. Nobody has any clue how to proceed. Other European leaders have been preparing their strategies for a possible Brexit. While they might not agree on how quickly to move forward, or whether to punish Britain or try to reach a pragmatic deal, there is little sign of fundamental disagreement on the principles. If the U.K. wants out, so be it. It cannot have access to the single European market without also accepting the free movement of labor. Membership of the single market implies the right of all Europeans, from Greece and Poland in the East to France and Portugal in the West, to live and work in Britain. There will be no concessions on that. And if Germans and Italians can't work freely in Britain, Britons won't be able to work freely in in Germany or Italy. On the British side there is no plan in place. The "remain" camp, led by the government, was unprepared to lose the referendum vote. The leavers, who campaigned on a promise that Britain would "take back control" from Europe, were unprepared for victory. Prime Minister Cameron himself has already fallen on his sword. The Conservative Party, which he first called on to "stop banging on about Europe" and, when that didn't work, tried to unite by calling his ill-judged referendum, is now tearing itself apart as it battles to replace him. In the turmoil, the hard work of planning is on hold. In the leadership struggle, much of the Brexit faction supports Boris Johnson, the charismatic former Mayor of London who led the "Vote Leave" campaign to a victory that seemed to take him by surprise. But Johnson is a journalist-turned-politician who in neither profession has ever let the facts get in the way of a good headline. So there is a powerful "stop Boris" campaign, supported by some more thoughtful and responsible Brexiteers as well as virtually everyone on the other side of the Conservative Party's great divide. He is seen as ill-suited to lead the country through a crisis largely of his own making. Exactly who would have the stature and support to stand against him is unclear, although there are plenty of names being thrown about. But Britain is about to embark on the most difficult and important negotiation in a generation. The threat is not just to our economy, to our ability to trade with and offer financial services to the vast market of 450 million people on our doorstep. It is a threat to the to the rights of our own people to travel and work in Europe. The rights of the 1.2 million Britons working or in retirement in the EU are in the balance. Brexit will restrict the future choices of our children. It will reduce the options for British scientists to work with their continental peers, for British universities to take part in international initiatives and exchanges for British qualifications in medicine or teaching to be recognized abroad. With so much at stake, Britain needs a leader with gravitas, not a shambling clown whose reputation with the crowd rests on his readiness to be photographed kissing a fish, waving a Cornish pasty, or hanging helplessly in mid-air after getting stuck on a zip-wire. The parliamentary opposition, t[...]

Baker Hughes Rig Decline May Subdue U.S. Oil Tension After Brexit

Fri, 24 Jun 2016 17:33 GMT

After a three-week rally, Baker Hughes'  reports the number of active U.S. oil and gas rigs is down, falling to 421 this week, an decrease of 3 rigs over last week. U.S. oil rigs down significantly by 7 to 330 from 337 last week, while U.S. natural gas rigs were up 4 to 90 versus 86 last week and miscellaneous rigs came in the same at 1. The U.S. offshore rig count remained stable once again this week at 21, but is down 7 rigs year over year. While the recent increase of U.S. active rigs had been somewhat expected at this stage in the cycle and a fairly positive event in recent weeks, following U.S. and global crude oil's reaction to the United Kingdom's break from the European Union, the market could have been further stressed by the count's continued ascent. West Texas Intermediate crude futures, the U.S. benchmark, were down 4.7% to $47.77 at 1 p.m., while the global Brent crude benchmark saw futures down 4.6% to $48.54. In short, rigs being put back to work earlier than many analysts expected could signal operators are working their way through drilled but uncompleted wells, or DUCs, which therefore entails that U.S. production could see less of a decline than anticipated.   The International Energy Agency has hinted toward this outcome in recent weeks, leading many, including longtime oil market bear Goldman Sachs, to believe the commodity recovery remains in a fragile state. Prior to a commodity rally beginning in March, industry followers saw little hope for rigs going back to work in 2016, and even after prices seemed to stabilize near $50 per barrel, bullish analysts have only pulled up forecasts to the tail-end of 2016. But according to TheStreet's founder Jim Cramer, and as BHI's report demonstrated Friday, data that we're getting about oil continues to show a decline in the amount of drilling, leading him to believe oil remains between $45 and $50 per barrel, despite recent breakouts from powerhouses ExxonMobil and Chevron , which suggest oil is heading toward $80.  "I don't think [oil] is doing that," Cramer explained, adding that recent positive movement of oil stocks like Pioneer Natural Resources  despite oil's fall illustrates the lack of opportunities for buying oil stocks now. "I don't see any bargains in oil." A sooner-than-expected uptick in U.S. drilling, which has fallen dramatically as companies drastically cut capital expenditures through 2015 and into the first quarter of 2016 when oil prices hit a 12-year low, could halt improvement in a global oversupply of oil that has been dampened in recent months with exogenous production disruptions in Canada, Nigeria and elsewhere.  And while many analysts, such as the KLR Group's Darren Gacicia, insist that the supply-demand imbalance is headed toward correcting itself, others, including Cantor Fitzgerald's Brad Carpenter have opined that U.S. producers' insistence on adding rigs in a $50 oil world could prove self-defeating and cause a delay in a West Texas Intermediate crude oil rally that at one point did not see oil above that mark until 2018.  Nevertheless, the market could feel some relief Friday after seeing the U.S. lose the majority of what it gained last week in oil rigs, an event that signals continue volatility in the count and shines light on the looming theory that $50 may not be the magic number.  Click to view a price quote on XOM. Click to research the Energy industry. [...]

Cramer Says Steer Clear of Financials Amid 'Brexit' Fallout

Fri, 24 Jun 2016 17:05 GMT

While the financial sector took the biggest hit after the U.K. voted to leave the EU, the fallout and disruption in the global markets does not necessarily provide a buying opportunity in the sector. "Financials are not a buy," said Jim Cramer, adding that he is most concerned about the big international banks. "These are not the opportunities I've been waiting for to get people to buy stocks," said Cramer, TheStreet's co-founder and portfolio manager of the Action Alerts Plus portfolio. The S&P 500 dropped 3.08% lower to right around 2,050 midday Friday and financials saw a 4% decline. The Dow Jones Industrial Average dropped more than 500 points in mid-day trading. Lloyds Banking Group's New York-listed shares were down 24.74% at 3.27. Barclays traded down 20.13% at $8.93 per share midday Friday. Royal Bank of Scotland traded down 22.76% at $5.78. In other financials: JPMorgan traded down almost 5% at $60.92 while Goldman Sachs shares were down 5.33% at $144.53.  Cramer advises holding off on buying or selling in the current market conditions. The executives of several financials responded on Friday morning in attempts to reassure their workers and the public that they should remain confident in the banks' relationship with the UK. CEO of Barclays Jes Staley told his staff earlier that his company was not straying from its course, writing that "the strategy we announced on 1 March was not conditional on the U.K. remaining in the E.U. We are a transatlantic consumer, corporate and investment bank, anchored in the U.K. and the U.S. That remains the core of our strength and the Barclays of the future." Lloyds CEO Antonio Horta-Osorio told his employees Friday that the bank will "work at pace" on its contingency plans in an attempt to quell fears over Brexit. "As one of the U.K.'s best capitalised banks we remain committed to helping Britain prosper, continuing our support for the U.K. economy, and providing banking and insurance services that our customers rely on," he wrote. Douglas Flint, chairman of HSBC, stated that "our commitment to British businesses, customers and staff in the UK remains undiminished." See full Brexit coverage here. Click to view a price quote on LYG. Click to research the Banking industry. [...]

WTI Crude Plummets With Brexit; Oil-Levered Names Feel the Hurt

Fri, 24 Jun 2016 15:06 GMT

Just as the oil and gas industry started to see signs of renewed life in the U.S., the United Kingdom appears to have sent a title wave crashing down on commodity markets. West Texas Intermediate futures, the U.S. crude oil benchmark, were down more than 5% to $47.56 as the stock markets prepared to open Friday. Futures for the global benchmark, Brent Crude, were down nearly 5.4% to $48.18.  U.S. stock markets also saw their steepest decline in 10 months as the Dow Jones Industrial Average plummeted by 400 points to start the day, the S&P 500 opened down 37 points, and the Nasdaq Composite took its largest daily hit since 2011, beginning the session down 186 points, or 3.8%. While the effect of the so-called Brexit weighing heavily across the board, diversified oil and gas behemoths like ExxonMobil and Chevron took a relatively modest hit in share prices, both down less than 2% near 10 a.m. Friday.  Not surprisingly, oil and gas players that are more heavily levered to commodity prices, such as U.S. independent explorers and producers QEP Resources , Pioneer Natural Resources and Marathon Oil , were all suffering greater losses between 3% and 4% early Friday.  The drop in oil prices following Brexit can be largely linked to a bolstered dollar, which saw as much as a 3.7% increase Friday, as a stronger dollar typically depresses oil prices.  But fear not says BMI Research, a market analysis firm, in the long-term the UK's Brexit vote will have a limited impact on the global crude oil market. "Risk-off trading will depress prices in the coming days, but positive physical fundamentals - which remain unchanged in the wake of the vote - will see any losses quickly pared. However, we highlight strong downside risks to North Sea investments, due to renewed uncertainty surrounding Scottish independence," BMI analysts wrote in a Friday report. "Heightened volatility and broad risk-off sentiment pose further downside risk to prices [temporarily]. However, declines will be capped by firming fundamentals in the physical crude oil market and we expect any losses to be rapidly reversed." On the other hand, the firm also warns that the Brexit vote is "a potential trigger for wider and more sustained financial market weakness" and has raised the odds on other tail-risk events, such as a U.S. recession, Chinese yuan devaluation and a fiscal crisis in Japan.  Meanwhile, the commodities market could take another blow later today as Baker Hughes is set to release its weekly rig report at 1 p.m. After three consecutive weeks of reported rig increases, a fourth uptick in active rigs could mean operators are putting rigs back to work sooner than expected, and even though analysts have warned that production tends to lag increased rig activity significantly, some have noted that a lower-than-expected U.S. production decline could hinder a global oil rally.  Click to view a price quote on XOM. Click to research the Energy industry. [...]

Why 'Brexit' Isn't a Big Deal for McDonald's

Fri, 24 Jun 2016 14:20 GMT

For years, McDonald's has capitalized on the tepid economic growth and political unrest in the U.K. that has caused consumers there to seek out cheap fast food and deep discounts on clothing.  So, Brexit-related economic and political chaos shouldn't be too big an issue for the Golden Arches, which operates over 1,200 restaurants in the country. In fact, it may even help extend one remarkable stat: This year's first quarter marked the 40th consecutive quarter of same-store sales growth for McDonald's U.K. arm as it benefited from the introduction of new touchscreen ordering systems and premium burgers, as well as a continued focus on promotions. More recently, the division -- which is often used to incubate new food and customer service ideas -- launched new "flavor wraps," in addition to a burger with a bagel as a bun (below). And the performance of the U.K. division likely makes McDonald's CEO Steve Easterbrook particularly proud. Born in the U.K., Easterbrook first worked for McDonald's as a manager at a London location and eventually became CEO of McDonald's U.K., where he engineered a dramatic turnaround in results. Ok so this was sold at McDonald's in the UK as the New York Stack. Kinda a burger on a bagel things. — William Lumpkin (@Infojanitor) June 6, 2016 On Friday morning, shares of McDonald's were trading down 0.3% to $120.91, compared to a 2.1% decline in the S&P 500. While McDonald's U.K. is likely to serve up newly independent Brits tons of affordable fast food in coming quarters, performance at the company's largest market -- the U.S. -- may prove to a bit more mixed.   "Traffic is still negative at McDonald's as the chain continues to wrestle with a Dollar Menu hangover, and prices of its premium items that are perhaps too high for perceived quality relative to chains such as Chick-fil-A or In 'N Out," wrote RBC restaurant analyst David Palmer in a note to clients Tuesday. Palmer, who slashed his second-quarter sales growth estimate for McDonald's to 2.5% from 3.5%, added that "finding the right value message remains a struggle, which is leading to negative traffic and varied sales trends around the country." McDonald's eliminated its popular Dollar Menu earlier this year when it was no longer profitable for many franchisees. In its place, the company unveiled several new value menus designed to win over customers. The company launched the "McPick 2" menu in January, which lets customers select two items from a list of a double cheeseburger, small fries, a McChicken or mozzarella sticks for $2. But in February, McDonald's replaced that promotion with a McPick 2 for $5 menu that featured the Big Mac, 10-piece Chicken McNuggets, Filet-O-Fish and Quarter Pounder with Cheese. Meanwhile, McDonald's fast-food competitors have been more ruthless on the promotional front. In March, Yum! Brands' Taco Bell took the wraps off a new nationwide $1 breakfast menu that took aim at McDonald's pricier Egg McMuffin. The $1 breakfast menu -- which is permanent -- consists of 10 items. Domino's Pizza continues to market a medium two-topping pizza for $5.99, which arguably provides more value to a family than buying two Big Macs for $5. And Pizza Hut, also owned by Yum! Brands, has also found success lately aggressively marketing affordable pizza. On Wednesday, Nomura analyst Mark Kalinowski downgraded his rating on McDonald's to neutral from buy, citing slowing industry sales in the U.S. and t[...]

E.U.'s Juncker Seeks Speedy U.K. Divorce Amid Appeal for Calm and Unity

Fri, 24 Jun 2016 12:34 GMT

European Commission President Jean-Claude Juncker is pushing for quick negotiations on the U.K.'s exit from the European Union, implying he doesn't want to wait until David Cameron steps down as Britain's prime prime minister this autumn. He told journalists should start the exit process "as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty.'' He added: 'We stand ready to launch the negotiations swiftly, swiftly with the U.K.'' Earlier at 10 Downing Street in London, Cameron had said he would step down by October so that a new Conservative prime minister would lead the exit negotiations, thereby injecting more uncertainty into the process. He said it would then be up to his successor to invoke Article 50 - the two-year process of negotiating a departure from the E.U. under the Lisbon Treaty, the bloc's governing legislation. The two-year divorce process applies only to ending the current relationship with the E.U. It does not apply to striking a new trade deal with the EU which would have to be negotiated separately. Other major players sang from different hymn sheets, with German Chancellor Angela Merkel calling for "calm and reflection" and French President Francois Hollande urging that "the procedures foreseen by the treaties will be rapidly applied." Earlier in Brussels as Europe was still waking up to a post-Brexit hangover, the heads of the E.U's other institutions called for sober calm and unity, as did the NATO secretary general. "It is a historic moment, but for sure not a moment for hysterical reactions," said E.U. President Donald Tusk, speaking at the Justice Lipsius building where E.U. summits are held. "As you know, the EU is not only a fair-weather project." "Today, on behalf of the 27 leaders, I can say that we are determined to keep our unity as 27," added Tusk, who served as Poland's prime minister from 2007 to 2014. "For all of us, the Union is the framework for our common future. He also offered reassurances that there will be "no legal vacuum," saying that "until U.K. formally leaves the European Union, E.U. law will continue to apply to and within the U.K. and by this I mean rights and obligations." Already next week, Tusk plans to propose that leaders of the E.U.'s 27 other member countries begin a "wider reflection on the future of our Union," starting with an informal gathering in the margin's of next week's previously scheduled E.U. summit. A bit later at the European Parliament down the road, the assembly's president Martin Schulz spoke of a "difficult moment" for both sides. He added: "We have to now from a legal and from a procedural point of view to assess what are the necessary next steps,' including what the vote means for triggering Article 50. Schulz said that E.U. legislators would hold an extraordinary plenary session next Tuesday, where they will vote on a resolution analysing the outcome of the U.K. referendum and the way forward. And at NATO on Friday, Secretary General Jens Stoltenberg said the U.K.'s position in the organization remains unchanged, and that the country will remain a "strong and committed ally, and will continue to play its leading role in our alliance." He also said that NATO remains committed to closer cooperation with the E.U., and will step up at that cooperation at next month's summit in Warsaw "because together we a[...]

Nikkei 225 Clocks Up 16-Year Record Decline

Fri, 24 Jun 2016 08:57 GMT

Asian markets plunged as it emerged the U.K. had voted to quit the European Union in Thursday's referendum. In Tokyo, investors fled to the yen in search for a safe haven, causing the stock markets to tumble. The yen soared against the pound by 11.13% to  yen 140.302 and against the euro by 6.02% to yen 113.59. Against the dollar, the yen strengthened 3.24% to yen 102.72. As the yen surged, the Japanese stock markets tumbled. The Nikkei 225 plunged 7.92% to close at 14,952.02--the lowest level in 20 months and the largest decline since April 17, 2000. The Topix fell 7.3% to 1,204.48. Major exporters suffered, with share prices down 8.7% for Toyota Motor  , 8.0% for Sony  , 16.5% for Sharp, 5.7% for Canon CAJ, 10.3% for Hitachi, 8.4% for Fuji Heavy Industries, and 10.2% for Murata Manufacturing. Fast Retailing, known for its Uniqlo brand, saw its share price plunge 10.4%. "USDJPY could trade stronger driven by risk aversion and lower yields," UBS said in a research note."In their estimates, a range of 94-102 would reflect the relevant risks, although a sharp move below 100 could invite a policy response. Policymakers made an effort to respond to the U.K. referendum outcome with calm. The Bank of Japan Governor Haruhiko Kuroda pledged to ensure stability in the financial market. "The BOJ will keep in close contact with the relevant authorities in Japan and overseas and keep a close watch on the impact the result of the referendum will have on the international financial markets," Kuroda said. "We will make efforts to stabilize the financial market by making use of the swap rule whereby the central banks of Japan, America, Canada, the Eurozone, Switzerland, and the U.K. accommodate currencies for one another, while at the same time take all possible measures to ensure liquidity." Elsewhere in Asia, the Shanghai Composite index was down 1.30%, the Hang Seng fell 4.06%, the CSI 300 index dropped 1.29%, the South Korean Kospi  fell 3.09%, and S&P/ASX 200 index in Sydney dropped 3.17%. One key focus following the vote will be how Chinese investors interact with the U.K. and Europe. "A key concern for many Chinese firms who have invested in the U.K. is that Brexit will see their business suffer because they will find it difficult to access EU markets from Britain," said University o fWarwick professor Kamel Mellahi. ""A significant number of Chinese businesses see the U.K. strategically placed as a gateway to EU markets, but with a Brexit they may put on hold investment in the U.K. until a clearer picture over trade deals with the EU emerges... . If one goes by what has been widely reported by Chinese corporate leaders, Brexit will dampen the appeal of the UK for Chinese investors." Click to view a price quote on TM. Click to research the Automotive industry. [...]

Take-Two CEO Discusses Company's Outlook Amid Robust Revenue, Profit

Thu, 23 Jun 2016 23:26 GMT

It has been game on for Grand Theft Auto publisher Take Two Interactive . The company, which also develops well-known titles Red Dead Redemption, NBA 2K, Civilization and WWE 2K, ended fiscal 2016 with its third consecutive year of stronger-than-expected sales and profit. Sales for the year-ended March 31 fell 6.4% to $1.56 billion, as last year benefited from a more extensive title release slate such as the launch of Grand Theft Auto V on PlayStation 4 and Xbox One. But sales outperformed the company's original outlook of $1.3 billion to $1.4 billion. Earnings for the year tallied $1.96 a share compared to an outlook of 75 cents to $1.00 a share offered at the start of the fiscal year. Sales in the fourth quarter clocked in at $342.5 million compared to guidance for $260 million to $310 million due primarily to stronger than expected results from Grand Theft Auto V and Grand Theft Auto Online. NBA 2K16 also exceeded Take-Two's sales expectations. The better-than-anticipated performance in what remains a crowded videogame space -- made no easier by the competition for consumer eyeballs with Netflix -- has led investors to snatch up Take-Two's stock. Shares have surged 30% over the past year, outperforming the Nasdaq Composite's 4.3% decline. With another solid year under its belt, attention has turned to when Take-Two will unveil Grand Theft Auto 6 to capitalize on GTA 5's success in selling over 65 million copies since its launch a couple years ago. So far, Take-Two has not issued a release date, instead focusing on continuing to upgrade the gameplay for GTA 5 in order to keep consumers hooked. But, seeing as GTA 5 has been on the market for over two and a half years, it's only natural to wonder what's taking Take-Two so long to launch the next iteration in the popular franchise. "We aim for perfection and that takes time," Take-Two Interactive chairman and CEO Strauss Zelnick told TheStreet, adding, "By resting our core products and not being on an annualized schedule we build anticipation." Zelnick pointed out that frequent new content releases for a title like Grand Theft Auto keeps people engaged and drives recurring consumer spending. Meanwhile, it's also natural to wonder if Take-Two's solid performance and bulging cash balance has caught the attention of fellow publishers who may want to bulk up via an acquisition. Take-Two is no stranger to being courted. Rival Electronic Arts made a hostile $2 billion bid for Take Two back in 2008, which was early on in Zelnick's leadership of the company. Now, Electronic Arts appears to be on the acquisition hunt again, and its CEO hasn't ruled out making a play for Take-Two. "For the last three years, we have been very focused on our company and getting it right in terms of culture and reinvigorating the company," Electronic Arts CEO Andrew Wilson told TheStreet in a recent interview when asked about revisiting Take-Two. Wilson, who was at Electronic Arts when it went hostile for Take-Two, added, "We are now at a place where we think we are in a really good position, and so we are open to acquisitions for the first time I would say in the last few years." Zelnick didn't completely kill the notion of sitting down with Electronic Arts, either. "We like being independent, and equally we are here for the shareholders -- I think we are really proud of the track record of building value for our shareholders, the stock just hit an all-time high,' said Zelnick. In the meantime, Take-Two will look to ca[...]

Jim Cramer -- Bed Bath Needs Someone Who Knows What Customers Want

Thu, 23 Jun 2016 14:31 GMT

Bed Bath & Beyond  shares are up over 2% Thursday despite the company missing on earnings per share and revenue expectations. Guidance was unimpressive and inventories were a little high, too, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's "Mad Dash" segment. Comp-store sales results came in light while gross margins contracted. This was followed by a "not great conference call," Cramer added. Cramer is not impressed. What the company needs, he said, is "someone young" who knows what customers want and can make a big push online. Yes, management did discuss the company's recent acquisition of online retailer One Kings Lane, but didn't call it a savior, Cramer said. Bed Bath & Beyond is full of terrific merchants who know retail but they are just not getting it done anymore. Why? Because Bed Bath & Beyond, like Macy's  and other traditional retailers, continues to feel the pinch from online retailers starting Amazon . Unlike Macy's, however, Bed Bath doesn't have the type of dividend to keep investors interested, yielding just 1.15% to Macy's 4.5%. Instead, the company has been buying back a ton of stock, which now appears to be an obvious mistake, Cramer explained. The stock has dropped almost 40% on the year and is down 17% over the past five years. 

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Macy's Just Announced Who Will Be Its Next CEO

Thu, 23 Jun 2016 13:31 GMT

Updated from 11:39 a.m. with financial details and analyst comments. Department store Macy's , which has battled sluggish sales the past year and cries for big changes from an activist investor, has finally set in motion a long-awaited succession plan for its CEO post. The company announced on Thursday morning that current Macy's president, Jeff Gennette, who has spent 33 years at the company, will assume the role of CEO in the first quarter of 2017. Gennette was previously elevated to president in 2014. Gennette will take the baton from long-time Macy's chief Terry Lundgren, who helped create the modern-day Macy's as its CEO since 2004. Lundgren will continue to serve as executive chairman.  "I have been the CEO of Macy's for 13 years, and by the time I turn it over to Jeff next year it will be 14 years, and I will be 65 years old -- how many CEOs of Fortune 500 companies do you know have been around for as long as I have -- I would say very, very few," Lungren told TheStreet in an interview when asked if the announcement was a surprise. Added Lundgren, "We have planned this for over two years when we made Jeff president of the company, it was all part of our succession plan." Lundgren said he will stay on as executive chairman for as long he could be helpful to Gennette and the company. Current Macy's President and soon-to-be CEO Jeff Gennette. Gennette reinforced that philosophically, there aren't many differences between him and Lundgren when it comes to envisioning the future for Macy's. If anything, the department store retailer may be quicker to launch new ideas, hinted Gennette.  Shares of Macy's were up 3.1%, to $33.83, in afternoon trading on Thursday. The company's shares are down about 53% over the past year, compared to a 1.1% decline in the S&P 500.  "We anticipate the transition to be seamless as Gennette and Lungdren have been working together for a number of years," said Stifel analyst Richard Jaffe in a note, adding, "We view the change as a positive given Lundgren's continued involvement in the business and Gennette's experience at the organization." The news comes on the heels of another challenging quarter for Macy's. First-quarter sales fell 7.4% year over year to $5.77 billion, missing forecasts for $5.94 billion. Same-store sales declined for the fifth straight quarter, falling 5.6% compared to estimates for a 3.8% decline. Store traffic fell an alarming 7%. The company slashed its full year same-store sales guidance to a decline in a range of 3% to 4% vs. a previous estimate for a 1% drop. For the year, Macy's now sees earnings of $3.15 to $3.40 a share, down from $3.80 to $3.90 a share offered back in February. This story is breaking and will be updated.   Click to view a price quote on M. Click to research the Retail industry. [...]

Are Lululemon Executives Delusional About Its Future?

Wed, 22 Jun 2016 22:19 GMT

Despite Lululemon Athletica experiencing several years of slowing growth amid increased competition from Nike and Under Armour in the female athleticwear space, execs still oddly hold a pretty high opinion on its future. During an investor presentation Wednesday, Lululemon CFO Stuart Haselden said the company plans to double its sales -- and more than than double its earnings -- by the year 2020. That would roughly bring Lululemon to revenue and net profit of $4.6 billion and $600 million, respectively, using results from last year as starting points. What's more, the company anticipates doubling sales of its women's and men's businesses over that time-frame to about $3 billion and $1 billion, respectively. What's driving Lululemon's uber-bullishness other than typical executive hubris? Well, the company is keen on the benefits of an improved pipeline of innovative products, opening more stores in key U.S. and overseas markets, expanding the size of existing stores and partaking fully in the digital shopping age. Unfortunately for Lululemon, it may be hard for investors to buy into such an over-the-top outlook due to multiple factors. First, the trend has not been a friend to Lululemon. The company's gross and operating profit margin have declined for four consecutive years as its once enviable market share has been encroached on by larger apparel competitors and smaller upstarts. Further, the company has bore the brunt of internal operating inefficiencies. Same-store sales have risen by mid-single digit percentages in each of the past three years, down from the blistering double-digit percentage gains when it first burst onto the apparel scene in the mid 2000s. In fact, Lululemon barely doubled its revenue in the five years from 2011 to 2015 when it was on fire in the U.S. -- according to Bloomberg data, sales reached $2.03 billion last year compared to $1 billion in 2011.     Meanwhile, Lululemon's present-day performance has been tepid.  The yoga apparel maker reported first-quarter earnings fell 11.8% from the prior year to 30 cents a share excluding one-time items, missing Wall Street forecasts of 31 cents. Total revenue rose 17% to $495 million, narrowly surpassing estimates of $487 million. Comparable-store sales rose 3%, or 5% excluding the influence of the strong dollar. Total comparable-store sales, which include sales online, increased 6% or 8% when stripping out currency fluctuations. Sales online increased 17% in the first quarter from the prior year to $97.6 million. In the fourth quarter, total comparable-store sales and online sales increased a healthier 11% and 20.8%, respectively.   And Lululemon may be experiencing a further slowdown so far in the second quarter. The company forecast second-quarter earnings of 36 cents a share to 38 cents a share, below Wall Street estimates of 39 cents. Total same-store sales, on a constant currency basis, are seen increasing by a mid-single digit percentage, slower than the 8% gain in the first quarter. On a June 8 call with analysts, Haselden acknowledged that traffic to its stores were weak in May and remained soft into the early stages of June.    Lululemon went on to leave its full-year guidance unchanged likely as it banks on a bumper holiday season. It sees earnings of $2.05 to $2.15 a share, which was below Wall Street estimates for $2.[...]

Here's Why Facebook's Instagram Is Leaving Twitter in the Dust

Wed, 22 Jun 2016 20:37 GMT

Back in September 2013, Facebook -owned Instagram had just 150 million monthly active users (MAUs) to Twitter's 230 million. But as of December 2014, the story was very different: Instagram's user base had doubled to 300 million, while Twitter's had grown a relatively modest 25% to 288 million. Instagram's user growth. Source: TechCrunch Facebook and Twitter are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells FB or TWTR? Learn more now. Fast-forward to today, and the difference between Instagram and Twitter's growth trajectories is even more striking: Instagram has blown past 500 million MAUs, while Twitter was only at 310 million as of the first quarter. International growth is heavily responsible: 80% of Instagram's users are now outside the U.S., up from 75% last September. On top of this, Instagram says it now has over 300 million daily active users (DAUs), and that 95 million images are being shared daily. Twitter, which doesn't regularly update its DAU count, is estimated by analysts to have 140 million DAUs. DAUs are a better metric than MAUs for gauging how many users have made an Internet service part of their everyday lives. What accounts for the incredible difference between Instagram and Twitter's growth rates? Some of it is Twitter's fault: In spite of numerous product launches and feature changes, the company is still struggling to create an experience that appeals to -- and doesn't confuse or bewilder -- a broader base of social media users. But a lot of it also stems from the huge appeal of Instagram's photo- and video-rich experience to mobile users worldwide, and its laser-like focus on helping users create, view and discover quality photos and videos. Simply put, Instagram understands what it's good at, and what users are loading its app for, and doesn't care to be anything else. Facebook integration also hasn't hurt: New Instagram users are given a list of Facebook friends on Instagram to follow, and those friends are alerted to the new user's arrival on Instagram. Users also have the option of simultaneously uploading a photo on both Instagram and Facebook. With Facebook claiming 1.65 billion MAUs and 1.09 billion DAUs for its core service as of March, Instagram's parent is quite the helpful user acquisition tool. Massive user growth has been accompanied by equally-impressive ad revenue growth, as Facebook continues an all-out effort to monetize Instagram. This effort has featured everything from launching e-commerce and mobile app install ads and striking deals with big ad agencies, to integrating with third-party ad software and giving marketers access to Facebook's demographic data and advanced targeting tools. While Facebook doesn't break out Instagram's revenue, Instagram's ad growth is believed to be a big reason why Facebook's total ad revenue rose 57% Y/Y in both the first quarter and the fourth quarter of 2015, up from 45% in the third quarter of 2015. In April, Credit Suisse estimated Instagram would deliver 2016 revenue of $3.2 billion, a figure equal to 12% of Facebook's 2016 revenue consensus of $26.1 billion. And on Wednesday, MKM estimated Instagram could do $3.4 billion in 2016 ad sales if its ad revenue per user grew to match Twitter's. MKM thinks Instagram derived only about $2 per user last year ver[...]

Why This Warren Buffett Pick Is Headed for Disaster

Wed, 22 Jun 2016 19:03 GMT

If there's one stock hasn't turned to gold from Warren Buffett's Midas touch, it's Big Blue. Buffett's Berkshire Hathaway first invested in IBM back in 2011 and since then has consistently added to its position. But over the course of three years, from 2013 through 2015, the stock declined by a cumulative 30%. Interestingly, in the first half of 2015, IBM's stock rose only to crash in the second half. IBM is currently sitting pretty on a 12% year-to-date gain. Will history repeat itself, with the stock cratering in the second half of 2016? If you've followed IBM over the years, you would know it has managed to transform itself and stay relevant. By moving away from hardware such as PCs, hard disk drives, and DRAMs and focusing on higher-value, more profitable markets, IBM made a name for itself with higher profit margins and revenue growth. Cut to 2016, when the long-term strategic and financial success of initiatives like analytics and cloud computing has yet to be measured. IBM's strategic imperatives business segment (data analytics, social, mobile, security, and engagement), which makes up 35% of IBM's total reported revenue for 2015, has no doubt shown growth. However, unrelentingly high single-digit to low double-digit declines in some of its portfolio of legacy businesses has led to a degree of concern. Ratings major Moody's believes this will lead to another year of lower revenues in 2016. Profitability and cash flow will be flat to lower in 2016, it says. A major problem for IBM investors is that top-line growth is absent. Since hitting $106.9 billion in 2011, annual sales has dropped every successive year. Analysts project a 3.1% drop yet again in 2016, with revenues at $79.25 billion. Tracking earnings per share (EPS) can be confusing since IBM has spent $155 billion (more than its current market cap) to buy back shares since 2000. IBM is projected to report an earnings per share (EPS) of $13.51 for fiscal 2016, a year-on-year drop. Over the next five years, analysts do not expect any major trajectory change in terms of EPS growth (a 2.65% run-rate in next five years versus 2.5% in the previous period). IBM's ongoing, multi-year industry shift to cloud-based offerings from traditional, on-premises hardware and software solutions is incomplete. Whereas the company generated $17 billion-plus free cash flow in 2009, that number is expected to drop to about $11-to-$12 billion in 2016. While IBM continues to be aggressive with acquisitions, without a huge transaction there will be no major positive outcome, only the additional risk of integration. Our thoughts reflect concerns over IBM's ability to grow revenues and profitability as it "transforms" its broad portfolio. Competition is now emerging from different sectors as IBM is no longer focused on one area. For example, as a cloud infrastructure provider, IBM will face Amazon's AWS. In software, IBM has to rub shoulders with Microsoft, Oracle, and SAP. As a server vendor, IBM battles with HP Enterprise, Dell, Lenovo, and networking giant Cisco. With IBM's stock price already trading above the median estimate of as many as 22 analysts, targets need to be upgraded or the stock needs to decline. We are pretty sure that IBM shares will fall off quite a bit and possibly end 2016 on a sour note. At 10.9 times forward earnings, IBM is no [...]

After SolarCity Bid, Elon Musk's Powered-Up Tesla Faces Cold Reception on Wall Street

Wed, 22 Jun 2016 14:26 GMT

Tesla Motors  CEO Elon Musk took to the podium early Wednesday morning to explain the rationale for his company's $2.8 billion bid for SolarCity . He was met by a skeptical Wall Street audience. Shares of Tesla dropped more than 10% in after-hours trading Tuesday and premarket trading Wednesday after Tesla disclosed its bid, costing the company more in market capitalization than the total value it is offering to pay for SolarCity. The offer would combine two-thirds of Musk's current corporate empire under one roof, combining Tesla's business manufacturing electric cars and battery storage products with SolarCity's solar power systems for homes and businesses. Early Wednesday, Tesla shares fell 8.6%. Tesla, in a blog post late Tuesday, said it was prepared to offer between $26.50 and $28.50 a share in stock for SolarCity, which like Tesla counts Musk as its largest shareholder. The offer, which is subject to due diligence and a final agreement, represents a premium of 21% to SolarCity's closing price Tuesday. Given the overlap between the two companies, Tesla and SolarCity are making efforts to ensure any deal would be free of conflict. An offer would be subject to approval of a majority of "disinterested" stockholders at both companies with Musk and Antonio Gracias, like Musk a board member at both companies, recusing themselves from voting on the proposal. Tesla said it intends to proceed with the bid "only on a friendly basis." SolarCity said in a regulatory filing it would carefully evaluate the proposal, with CEO Lyndon Rive telling employees "there are tremendous synergies between these two companies." Musk, in addition to serving as CEO of Tesla, is chairman of SolarCity, and Rive and Musk are cousins. Tesla is pitching the deal as creating a one-stop shop for green-minded customers who would like to use SolarCity panels to generate enough energy to power their vehicles and, via Tesla storage units, power their homes. The company sees opportunities to cut costs and boost revenue by selling SolarCity gear in Tesla showrooms, and using SolarCity installers to set up battery storage units. "I have zero doubt about this," Musk said on an investor call Wednesday morning. "Arguably we should have done it sooner." But even if Musk has no doubts, a lot of people not involved in either company do. Tesla holder Ross Gerber, head of an investment management firm, said on Twitter Wednesday morning following the call that the firm is against the merger, saying, "We will not vote for this and we will encourage other Tesla shareholders." SolarCity has struggled of late, its shares losing more than half their value in the past 12 months prior to the Tesla bid after missing earnings and warning of weakness in the quarters to come. Critics including famed short-seller Jim Chanos has predicted cash burn above and beyond the $400 million SolarCity analysts expect this year, with Chanos calling SolarCity a "subprime" finance company due to the way it offers financial support to customers buying its units. Given Tesla's ambitious plan to ramp up production of its automobiles and bring its Model 3 to market in the quarters to come, the company seemingly doesn't need either the management distraction or the added debt bu[...]

Polymetal Could Be a Winning Ticket on the Gold Price Rollercoaster

Wed, 22 Jun 2016 13:18 GMT

Gold has been on a rollercoaster in recent trading sessions but brokers at Goldman Sachs are recommending investors hang on for the ride and grab a ticket for the thrills by investing in Polymetal International . "We expect Polymetal to remain one of the few global precious metal minders delivering meaningful volume growth with one of the lowest cash costs globally thanks to macro tailwinds and management focus on cost cutting," the broker noted this week as it upgraded its 12-month price forecast to 950 pence ($13.94), from 870 pence. Polymetal shares traded Wednesday at 860 pence, with a little more than 10% to go before it hits the Goldman Sachs target. Underpinning Polymetal's prospects are a pair of deals that appear well timed to benefit increases in the price of gold. The Kapan mine in Armenia and the Komarovskoye gold deposit in Kazakhstan, were secured in March and early April, suggesting negotiations took place just as gold was recovering from its turn-of-the-year lows of below $1,060 an ounce. Those acquisitions, coupled with the ramping up of its Kyzyl gold project in Kazakhstan will likely boost production by about 40% of the coming five years, or a compound average growth rate (CAGR) of about 6.9% until the end of 2020, Goldman predicts. That is almost twice the growth of  Fresnillo , which ranks second for growth among the big gold producers with a CAGR of 3.5%, while AngloGold is expected to add just 1.4% a year to output and Gold Fields is expected to shrink 2.2% a year, according to Goldman Sachs. Better still Polymetal is not growing at the expense of cost discipline. Its cash cost for an ounce of gold is expected to come in below $573 this year.  That is down 10% since 2014, and should fall to $551 in 2017, according to Goldman's note. By comparison, Gold Fields and AngloGold both spend more than $600 for each ounce they produce. All of that might suggest that Polymetal would trade at a premium to its rivals, yet the opposite is true. Shares are priced at about 12 times forecast 2017 earnings. Rival large gold miners trade at a median closer to 30 times 2017 earnings forecasts, though that figure is inflated by Fresnillo's valuation of about 45 times earnings. "We believe that such a discount for Polymetal vs. peers is unjustified given its superior growth potential and low cost of existing operations as well as assets under development," noted Goldman Sachs. Of course any investment in Polymetal is also a bet on the gold price, and that has been a white-knuckle ride in recent days. Gold traded Wednesday at about $1,268 an ounce, after slumping on June 20 and 21 from just over $1,298 as fears of a British exit from the European Union receded. Gold price volatility is all but assured until the results of that vote, which takes place on tomorrow, are released in the early hours of Friday. Yet Goldman said it is confident that support for gold is set to continue in the short term, driven by delays to a Federal Reserve rate hike, loose central bank monetary policy, devaluation of the Chinese currency and a flight to safety as the U.S. election nears. Click to view a price quote on POYYF. [...]

'Brexit' Worst-Case: Soros' Predicted 15% Slump in Pound vs. U.S. Dollar

Wed, 22 Jun 2016 13:15 GMT

What's the worst-case scenario if Britain votes to leave the European Union Thursday? A 15%-plus slump in the pound against the dollar, said Jasper Lawler, a market strategist with CMC Markets in London.. "We've had some fairly absurd theories thrown around in terms of the volatility a 'Brexit' could generate," he said, most notably, George Soros predicting that over 15% drop in the pound. "That is the worst-case scenario," Lawler said. This is the type of decline seen in 1992 when Britain exited the European Exchange Rate Mechanism. "That event was a complete shock. No one expected it coming," he said. "I think it would be very surprising should we see a move like that because we've known about [the Brexit possibility] for months and markets should be prepared for this." On Wednesday, the pound rose 0.16% against the dollar to $1.468. "There's an assumption still in [London] and I think that's being reflected in the British pound and the FTSE 100 that we're going to remain and that's why they're at their highest levels of the year," Lawler said. On Tuesday, Federal Reserve Chair Janet Yellen said a Brexit "could have significant economic repercussions," during her testimony before congressinal lawmakers, which continues on Wednesday. Lawler said one silver lining of a Brexit vote would be a delayed rate hike from the Fed, as record low interest rates have buoyed stocks in recent years. "At the moment, September is a bit of a consensus in markets [for the next hike] and I think that would be pushed back to the end of the year or the start of 2017" following a Brexit, Lawler said. He added the Bank of England may also add stimulus measures and "again, it would be central banks to the rescue."