Bed Bath & Beyond – Watch and Wait

BBBY : NASDAQ : US$79.68
HOLD 
Target: US$73.00

COMPANY DESCRIPTION:
Bed Bath & Beyond sells a wide assortment of merchandise including home furnishings, domestics, giftware, health and beauty care items, and infant and toddler merchandise. BBBY operates around 1,010 Bed Bath & Beyond stores, 270 Cost Plus World Markets, 75 Christmas Tree Shops, 85 buybuy BABY locations, and 50 Harmon stores.
All amounts in US$ unless otherwise noted.

Consumer & Retail — Specialty Retail
CHALLENGES PERSIST IN Q4
Investment recommendation
BBBY’s Q3 EPS of $1.12 was $0.03 below our estimate and consensus. Q3 SSS increased 1.3% on top of +1.7% versus our +3% forecast. Higher couponing and mix shift led to a 60bps gross margin decline, worse than our -13bps forecast. Items below the EBIT line added $0.02 compared to our forecast. We downgraded shares to a Hold rating on 10/30/13, and we remain concerned about retail traffic trends and heavy couponing. BBBY reduced Q4 EPS guidance by $0.10 to $1.60-$1.67 after December transactions fell short of expectations. We remain on the sidelines with shares trading at 14x our FY14 EPS estimate and 8x FY14E EV/EBITDA based on the after-hours quote of $73.
Investment highlights
 We believe BBBY suffered its first market-share loss since the World Market acquisition in Q2/12. Based on home furnishings sales as reported by the U.S. Census Bureau, we calculate BBBY’s share slid 19bps to 22.3%.
 Weaker sales and greater margin pressure push our Q4 EPS estimate $0.16 lower to $1.64, versus prior consensus of $1.78. We lowered our Q4 SSS forecast 150bps to +2% on top of +2.5%. We reduced our gross margin outlook by 30bps and raised our SG&A expense rate forecast by 50bps.
 Our price target moves from $84 to $73 based on our updated DCF model.

BEST BUY – continues to search for meaning in an Amazon World

Best Buy sign

Best Buy sign (Photo credit: Ron Dauphin)

Oct 15

Amazon.com (AMZN : NASDAQ : US$242.75)

ABC: Always Be Closing. 

The Wall Street Journal reported on Friday that Best Buy planning to match the prices of Internet competitors such as Amazon.com (AMZN)

this holiday season, even as it plays down its concerns over shoppers browsing gadgets in stores only to buy them for less online. Best Buy said it wants to turn more shoppers into actual buyers.

The electronics chain also is preparing to offer free home delivery on merchandise that is out of stock in stores, according to a person familiar with the matter, in spite of recent remarks by new CEO Hubert Joly that “showrooming” by consumers has been blown out of proportion. The electronics retailer says it is taking these steps to improve the percentage of people who walk into their stores and leave with a purchase, which is about 40% of shoppers.

The Journal noted that Best Buy’s seemingly contradictory stance underscores the conundrum facing executives at many big-box chains. Aware that they need to adapt aging business models to the realities of mobile- and computer-aided shopping, they don’t want to overreact or lose sight of what made them successful – namely, selection and service.

 

 

S & P 12 Month Targets

What’s your crystal ball saying these days?
As you peer into the mist, do you see European Central Bank (ECB) President Mario Draghi standing idly by as the eurozone crumbles, dragging the global economy into a new recession? Do you see fourth-quarter earnings growth at S&P 500 companies faltering and missing current projections for a
robust 10.5% year-on-year gain?

DAVOS/SWITZERLAND, 29JAN10 - Jean-Claude Trich...

DAVOS/SWITZERLAND, 29JAN10 – Jean-Claude Trichet, President, European Central Bank, Frankfurt, speaks during the session ‘Rethinking Government Assistance’ in the Congress Centre of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 29, 2010. Copyright by World Economic Forum. swiss-image.ch/Photo by Remy Steinegger. (Photo credit: Wikipedia)

Can you glimpse an image of the U.S. economy driving obliviously over the “fiscal cliff” as partisan bickering in Congress grows even worse?
What about persistently high U.S. unemployment and a still weak housing market sapping consumer confidence?
If this is the regularly scheduled programming now being shown on your stock market predicting mechanism of choice, it may be time for an upgrade to a high definition model.

TARGETS
12-Month S&P 500 1500
S&P 500 EPS 2012 $103.18
Mid-Year 2013 S&P Euro 350 1100
Year-End 2012 S&P Asia 50 3400
Year-End 2012 Emerging Markets 1050
Fed Funds Rate 2012 Average 0.1%
10-Year Note Yield 2012 Average 1.8%
Real GDP Growth 2012 2.0%
Real GDP Growth 2013 2.0%
WTI Average/bbl. 2012 $90.23
WTI Average/bbl. 2013 $89.23
Source: S&P Capital IQ.

Far from buckling under the pressure of the global economy’s myriad  roblems, however, the stock market has been rallying lately and is now within sight of the post recession high set back in April, when a series of strong employment report suggested (at least temporarily) that the U.S. economy was
rapidly gaining strength.
“While fundamentals can’t be ignored” says Sam Stovall, S&P Capital IQ’s chief investment strategist, pointing to the consensus projection for a less-than-inspiring 0.85% gain in second quarter S&P 500 earnings per share and a downright worrisome 1.5% decline for in the third quarter, “Wall Street
may be baking in an economic and earnings per share recovery a year or so from now.”

What are you doing differently from last year ?

Don’t remain in denial – face your demons and move up to success .

All You Need To Succeed –

in 500 pages of Investing Strategy

and Selections Available now at Amazon.com

Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

S&P Canadian Index Changes will Add To AMP Picks

New Zealand 2007

New Zealand 2007 (Photo credit: Szymon Stoma)

The Semi-Annual Review of the S&P/TSX Venture 30 Index

TORONTO, Aug. 10, 2012 /CNW/ – S&P Canadian Index Services announces the results of the semi-annual review of the S&P/TSX Venture 30 Index effective after the close of trading on Friday, August 17, 2012.

 

ADDITIONS
Issue Name Symbol
Chesapeake Gold Corp. CKG
Energold Drilling Corp. EGD
GoldQuest Mining Corp. GQC
Great Western Minerals Group Ltd. GWG
Iona Energy Inc. INA
Mart Resources Inc. MMT
New Zealand Energy Corp. NZ
Newstrike Capital Inc. NES
Novus Energy Inc. NVS
Orko Silver Corp. OK
Pan Orient Energy Corp. POE
Pure Industrial Real Estate Trust AAR.UN
SilverCrest Mines Inc. SVL
Sterling Resources Ltd. SLG

 

 

DELETIONS
Issue Name Symbol
Belo Sun Mining Corp. BSX
Canaco Resources Inc. CAN
CB Gold Inc. CBJ
CGX Energy Inc. OYL
Galway Resources Ltd. GWY
Hana Mining Ltd. HMG
Intertainment Media Inc. INT
PetroFrontier Corp. PFC
Quest Rare Minerals Ltd. QRM
Rio Alto Mining Limited RIO
Roxgold Inc. ROG

Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.

Tiffany – Plenty Of Portfolio Profit Polish

Barron's (newspaper)

Image via Wikipedia

Tiffany (TIF : NYSE : US$67.96

Shares of Tiffany & Co. have fallen roughly 20% since last summer, in contrast to most luxury retailers due to macro concerns, reduced guidance and disappointing holiday sales.

Barron’s article published over the weekend says the company “still has plenty of polish.” The article notes that the company’s recent stumbles are the result of a bad bonus season on Wall Street and aggressive promotions by other jewellery chains as opposed to a fundamental issue. If the U.S. economy improves and Tiffany continues its store expansion,

Barron’s believes shares could regain their lustre. It opened 18 new stores from October 2010 to October 2011 and has plans to increase its European presence by 56% over the next five years.

Domestically, management hopes to see its store count rise to 150 stores from its current level of 87.An analyst  interviewed for the article said, “If you look  around the world, the environment is getting better for Tiffany.

Compared with six months ago, the world’s economies, by almost every measure, have gotten stronger and that bodes well for consumer spending.” He goes on to point to a strong correlation between the performance of the S&P 500 and Tiffany shares, which he expects to continue in 2012.

P.S. Please feel free to forward this along to friends, family, co-workers, or anyone else you think might be interested in this market letter ( http://www.amp2012.com)

Rule 1  Invest In Yourself

The E-book Apprentice Millionaire Portfolio is available on amazon.com

For the print edition  AVAILABLE NOW   – 500 pages soft cover

 Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012 

Send  your check or money order for $ 28.75 payable to Jack A. Bass  to:

 

Jack A. Bass

92-6887 Sheffield Way

Chilliwack, British Columbia

Canada V2R 5V5

Please Allow  3-4 weeks for delivery

New videos :

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the Ten Fastest Growing Companies in the S&P 500

Image representing Goldman Sachs as depicted i...

Image via CrunchBase

This is a useful chart from Goldman’s latest monthly equity chartbook.

It ranks the fastest growing companies in the S&P 500 (excluding financials and utilities) based on estimated 2012 revenue growth for this year.

fastest growing

Goldman Sachs

The two that you might be unfamiliar with are National Oilwell Varco (which builds supplies, technology, and offers services for oil and gas drilling) and CdntryLink (which is in the telecom space).

Other than those two, Caterpillar, and Halliburton, it’s all the big tech heavyweights you would expect.

Now what’s interesting is how this list is expected to change in 2013.

chart

Goldman Sachs

Apple falls to  6th place, with growth slowing precipitously.

P.S. Please feel free to forward this along to friends, family, co-workers, or anyone else you think might be interested in this market letter ( http://www.amp2012.com)

The E-book Apprentice Millionaire Portfolio is available on amazon.com

The print edition  AVAILABLE NOW   500 pages soft cover

 Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012 

Send  your check or money order for $ 28.75 to

 

Jack A. Bass

92-6887 Sheffield Way

Chilliwack, British Columbia

Canada V2R 5V5

Please Allow  3-4 weeks for delivery

New videos :

http://www.youtube.com/user/JackAssociates

Twitter @jack25bc

www.jackbassteam.com

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