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Author Archives: Chris Versace, Chief Investment Officer

About Chris Versace, Chief Investment Officer

I'm the Chief Investment Officer of Tematica Research and editor of Tematica Investing newsletter. All of that capitalizes on my near 20 years in the investment industry, nearly all of it breaking down industries and recommending stocks. In that time, I've been ranked an All Star Analyst by Zacks Investment Research and my efforts in analyzing industries, companies and equities have been recognized by both Institutional Investor and Thomson Reuters’ StarMine Monitor. In my travels, I've covered cyclicals, tech and more, which gives me a different vantage point, one that uses not only an ecosystem or food chain perspective, but one that also examines demographics, economics, psychographics and more when formulating my investment views. The question I most often get is "Are you related to…."
Anyone else smell something?

Anyone else smell something?

The smell we’re talking about is not the market — although frankly, we are finally seeing suspicions over the state of the global economy are finally catching up with revenue and earnings expectations.

No, the smell we’re talking about comes in the form of International Flavors & Fragrances (IFF), which we are adding to the Tematica Select Investment List today. We like the company’s flavors and fragrances business, which touches so many facets of daily life in both developed economies and, increasingly, in emerging markets. We also like management’s rising dividend policy, with an annualized $2.24 per share this year, up from $1.00 per share in 2010.
This week’s issue of Tematica Investing includes:

  • We are heading into the thick of earnings season this week and as expected it’s looking rather spotty with some upside surprises and a growing number of disappointments. We’ll continue to be cautious, looking for opportunities to either scale into existing positions or add new ones.
  • We are promoting shares of International Flavors & Fragrances (IFF) to the Tematica Investing Select List with a $145 price target. We will hold off setting a protective stop loss as we move deeper into September quarter earnings, preferring to improve our cost basis should the opportunity present itself.
  • To make room for IFF shares, we are closing out our position in the Consumer Discretionary SPDR ETF (XLY).
  • Updates – We’ve got a ton of them this week, including Amazon (AMZN), Costco Wholesale (COST), Under Armour (UA), Universal Display (OLED) and several others.

You can click below to download the full report.
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With Earnings Cracks Appearing in Market, We’ll Stay on the Sidelines

With Earnings Cracks Appearing in Market, We’ll Stay on the Sidelines

UPDATE: 11:00am Wednesday October 12, 2016

Earlier today, we sent out our weekly issue of Tematica Investing. (The original post is below).

We always love hearing from our subscribers when they tell us how much they enjoy Tematica Investing not only for its insightful investing thoughts and recommendations but because we try to keep it fun as well.

Believe it or not, we also like it when a subscriber drops us a line to point out something we missed — sometimes it’s a more than useful data point and sometimes it’s pointing out that a position was stopped out.

The latter happened today thanks to one of our loyal subscribers reminded us that AT&T (T) shares crossed through our $39 stop loss on Monday, which closed out the position with an 18 percent return. 

The bittersweet issue, however, is we were stopped out on the very day when owning the shares at the end of the day qualified us for the next $0.48 per share dividend payment on November 1.

If you didn’t set the price limit — well, then I guess it’s one of those cases like back in elementary school when you didn’t do your homework, but end up having a substitute teacher anyway. You live to see another day.

Here’s the thing…

Over the last several weeks, AT&T shares have drifted lower falling more than 10 percent in the process. We continue to like the company’s sticky and inelastic mobile business as well as its enviable dividend yield that currently sits just under 5 percent as it continues to invest in its soon to be released DirectTV Now video streaming service. In our view, that service puts AT&T in a much firmer competitive stance to battle Comcast (CMCSA) and Verizon (VZ).

Moreover, on the back of several negative earnings pre-announcements from Honeywell (HON), Dover Corp. (DOV), Illumina (ILMN) and Fortinet (FTNT) and Alcoa’s (AA) revenue shortfall and revised lower outlook, we are using the current weakness in AT&T shares to scale back into what we see as safer harbor as earnings season kicks into gear.

Our price target on the shares remains $44. We are holding off issuing a protective stop loss as we will use market volatility this earnings season to improve our cost basis should the opportunity arise.

I apologize for the confusion on this, and more importantly for the implications on returns.  But my stance is, and will always be, that we own up to our mistakes and set the record straight.

Thank you for your business, and let us know if you have any questions.

Chris Versace
Chief Investment Officer
Tematica Research, LLC

ORIGINAL POST: 10:00am Wednesday October 12, 2016

Well, how many more ways can we talk about the disparity between market valuations and earnings reality?

As is so often the case, a picture is worth 1,000 words (In our case, probably 25,000 words) and today the following image floated across our Twitter feed, which pretty much summed it all up:

beergoggles

Thanks to Danielle DiMartino Booth (@DiMartinoBooth ) for sharing it, and you can read more in her post on LinkedIn by clicking here.

 

This week’s issue of Tematica Investing includes:

  • A tough week of negative earnings pre-announcements for the stock market so far, we dig into which companies are finally coming to grips with reality and what it means for our investment themes and holdings.  Read More >>
  • With September quarter earnings just getting started, we are inclined to keep our inverse ETF positions intact to hedge against what we see as a volatile market ahead. Read More >>
  • To get ready for the earnings onslaught, we’re publishing the earnings calendar over the next few weeks for the Tematica Investing Select List to give you a heads-up as to which firms are announcing when. See Calendar >> 
  • Updates, Updates, Updates — AT&T (T), Costco Wholesale (COST), Sherwin Williams (SHW) and Universal Display (OLED)

 

You can click below to download the full report.
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When the market presents opportunity, we take it

When the market presents opportunity, we take it

To be successful in the markets, you often have to maintain the perspective that NFL commentators and analysts talk about on Sunday afternoons:  “take what the defense is giving you.”As we’ve turned the page from September and the third quarter of the year, there are certainly ample obstacles ahead: the presidential election, OPEC production, any potential move on Fed rates, aggressive earnings expectations — just to name a few.
It means we will continue to be prudent with the Tematica Investing Select List as we see to maximize returns ahead while minimizing risk. And if there was an underlying theme to this week’s issue — not an investing theme, but a theme in its truest sense — it would be “opportunity”.  Opportunity to shore up a few things ahead of the third quarter earnings storm that comes at us in full gale next week, and opportunity to make a key addition.

This week’s issue of Tematica Investing includes:

Taking another run at this Cash-strapped Consumer thematic position

Taking another run at this Cash-strapped Consumer thematic position

Including today, there are just three trading sessions left for the week, for the month of September and for the third quarter of 2016 — that will make for a neat and tidy wrap-up to things come Friday evening!

Last week, of course, we had the Fed standing firm with interest rates, which the market gladly welcomed with open arms. Then this week, the headlines have been dominated by Monday’s presidential debate, which according to Nielsen, averaged 84 million TV viewers — the most in the history of the debates. Add in the many millions who likely watched it via live streams on the web and you get a pretty hefty number.

Who won the debate?

That’s not a call for us to make. To some extent America won with so many people at least engaged in the process. We could question the motivations of many for tuning in — and frankly if America is really winning at all with this election — but at the very least an informed electorate is a better electorate and that is a good thing.

The reality is, it is going to be a close election, which means the markets will likely continue to move sideways until after the votes are tallied in November and Wall Street and the boardrooms across the country have a better handle on what the landscape will be for the next four years.

That doesn’t mean we’re standing still. 

This week’s issue of Tematica Investing includes:

  • HEADING BACK TO THE WAREHOUSE: After being stopped out of our position in Costco (COST) earlier in the year, we’re taking another run at this Cash-strapped Consumer play, adding it back onto the Tematica Select List. Read More >>
  • THERE IS SUCH A THING AS A BAD WIN: Nike posted results last night, and while results beat EPS expectations, it wasn’t a pretty win. The market reacted immediately, both when results were posted, and then again after the company earnings call. We have a plan for what we’re going to do with our position in this Rise & Fall of the Middle-Class position. Read More >>
  • END OF THE QUARTER MEANS OUR WORKLOAD RAMPS UP: while things don’t pick-up full bore until next week, the flow of earnings announcements have already started. We’re getting prepped for CalAmp’searnings, while also covering updates on SHW, WHR, T and DY. And lastly, in the quiet before the storm, we dig into one of the names on our Contender List that could soon be coming off the bench, Universal Display (OLED). Read More >>

 

You can click below to download the full report.

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As we’re waitin on Yellen, we review thematic data points

As we’re waitin on Yellen, we review thematic data points

While the decision appears to be a foregone conclusion, given all the data we’ve reviewed and re-reviewed here at Tematica Research the past few weeks, the reality is we’re all waiting in anticipation for Janet Yellen and crew to announce this afternoon what we already know — that the Fed will once again do nothing and leave interest rates remained unchanged.

Of course, the devil will be in the details, and the wording of the statement could lead to a ruckus in the market should the Fed be less than clear… again.

Yes, folks, the language in this afternoon’s official statement will be overly prodded, poked and dissected to determine what may come next, and unfortunately, as so often is the case lately, a jumpy Wall Street could very well fail to read between the lines and comprehend what Yellen and the other “Fed heads” are really communicating.

Ahead of that event, we are staying pat with the Tematica Investing Select List… for now. We’ll let the dust settle, and then decide what moves we want to make.

In today’s issue (a comparably short one to last week’s MONSTER 18-pager!) we recap favorable data points that add credence to our decisions to scale into several thematic positions last week. Later this week, we get more data points to watch in the form August Existing Home Sales and quarterly earnings from Finish Line (FINL), and so we dig into those a bit and dissect what we’ll be looking for.
You can click below to download the full report.downalod-pdf

PwC Data Confirms Our Content is King Investing Theme

PwC Data Confirms Our Content is King Investing Theme

We’ve touched on this aspect of our Content is King investing theme before, but nothing like data from PricewaterhouseCoopers to confirm it and the theme itself!

Box-office markets over the next few years are expected to grow more quickly abroad than in North America, where receipts have been relatively flat and are forecast to expand only modestly. That dynamic already is changing the way movies get made in Hollywood, as studios focus on big-tent productions like superhero epics that play across borders, or find story lines they know will fly in censorious countries.The Wall Street Journal used analysis by PricewaterhouseCoopers to give a fuller picture of the five fastest-growing box-office markets around the world.

Source: A Look at the Five Fastest-Growing Markets for Movies – WSJ

Using Market Flip Flops to Scale Several Positions and Add a New One As Well

Using Market Flip Flops to Scale Several Positions and Add a New One As Well

A hearty welcome back!

The stock market is moving a little faster and more volatile over the last few days, far different than what we saw through most of the summer. Inside this issue we recap the drivers for the flip-flopping — it’s a technical term, trust us 😉 — of the market and what’s  likely to be on investor radars next.

While some see pain as the market has fallen 2.5 to 2.7 percent depending on the index one is looking at, we see better prices for recently added positions like Sherwin Williams (SHW) and United Natural Foods (UNFI)even though their thematic tailwinds continue to blow. We’re doubling down on these two names and another — details inside.

We’re issuing a Buy rating on speciality contractor Dycom Industries (DY)and placing it on the Tematica Select List with a $115 price target, which offers more than 35% upside from last night’s closing price. While you may read speciality contractor and have a preconceived thought or two, Dycom is a crucial part in working with AT&T (T), Verizon (VZ) and Comcast (CMCSA)in expanding their existing networks and deploying the next and future generations. That makes Dycom a Connected Society contractor in our eyes. More details inside.

Any normal issue would not be complete without some updates on existing Tematica Select List positions. Because we’ve been away, we’ve got more than a few and that’s pushing this issue to the max (or at least 18 pages). All the latest and greatest, is just a click away.

You can click below to download the full report.

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FOX Sports GO Live Streaming App Offers MultiView on Apple TV 

Another step in the appification of TV that also offers the ability to watch multiple games at the same time. Paired with the new Papa John’s ordering app also on Apple TV, it’s another reason not to get off the couch once NFL season kicks into gear.

With FOX Sports GO, Apple TV users who receive FOX Sports TV networks through their pay-TV subscription can now access FOX Sports, FS1, FS2, FOX Sports Regional Networks, FOX College Sports, FOX Deportes, and FOX Soccer Plus on their Apple TVs directly through the app. In total, users can watch more than 3,000 live events — including content from the NFL, MLB, UFC, NASCAR, Big 12 and Pac-12 Football, Big East Basketball, FIFA World Cup, and UEFA Champions League soccer — along with hundreds of hours of studio shows and original content. In addition, FOX Sports GO on Apple TV offers several new features, including a 60 frames-per-second streaming rate and a Multiview Display option, which lets users watch up to four FOX Sports live streams on one screen at the same time.

Source: FOX Sports GO Live Streaming App Arrives on Apple TV | High-Def Digest

As food prices drop we make a move on a Foods with Integrity thematic opportunity

As food prices drop we make a move on a Foods with Integrity thematic opportunity

In this week’s edition of Tematica Investing:

  • Download Tematica InvestingWe are issuing a Buy on shares of United Natural Foods (UNFI) as part of our Food with Integrity investing theme. Our price target is $65, which offers more than 35 percent upside. We intend to build this position size over time and as such we are holding off issuing a stop loss recommendation at this time.  Read full report >>
  • We’ve got several Tematica Select List updates to share, including
    • AT&T (T)
    • CalAmp Corp. (CAMP)
    • Nike (NKE)
    • Under Armour (UA)
    • And several others. Read More . . .
  • Heads up! Just as you’ll be coasting into the last days of summer, after adding 5 new positions in as many weeks we too will be taking some time off to recharge our batteries before the final push for 2016 begins. So, there will not be an issue on Wednesday, September 7. Your next issue of Tematica Investing will be on September 14. 

 

You can click below to download the full report.

 

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Housing and remodeling data rebounds, so we make another Rise-Fall of Middle Class move

Housing and remodeling data rebounds, so we make another Rise-Fall of Middle Class move

  • While the market waits for Yellen and Draghi to speak at the Kansas City Fed’s 40th Economic Policy Symposium in Jackson Hole, Wyoming later this week, we continue to low expectations for anything new being said at the event. Read More >>
  • A pick up in New Home Sales bodes well for the Tematica Select List position in Sherwin Williams (SHW). We continue to rate SHW shares a Buy, and our price target remains $350. Read More >>
  • We are issuing a Buy on shares of Whirlpool Corp. (WHR) as part of our Rise & Fall of the Middle Class investing theme with a $232 price target. Much like Sherwin Williams, Whirlpool stands to benefit from robust repair & remodel spending over the next few years. Read More >>
  • Updates Updates Updates on Amazon (AMZN), CalAmp (CAMP), Under Armor (UA) and Nike (NKE) shares. Read More >>
You can click below to download the full report.

 

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