Friday, November 30, 2012

Key Earnings for The First Week of December

When we enter the first week of December everyone will have an idea of how their investing year is going to shape up. Nevertheless, for private investors it is not a time to rest on your laurels or panic if you are behind. For professional investors it is probably time to start dressing up their performance and holdings in line with trying to retain or garner new assets under management in the New Year. They may be tied to this nonsensical game, but for the rest of us it is a great time to stay focused/aggressive and find some great investments. Marvin Hagler never let up on an opponent at the start of the 12th round, so why should we?

I write this type of article in order to bookmark and then work off it as the week goes by, the idea being to research stocks as they give results. If anyone has any requests or suggestions as to how to make them more useful then please leave a message in the comments box or leave a message on a post of mine on Google+.


Conns (NASDAQ: CONN) is an interesting company. In some ways an electrical retailer really shouldn’t be doing this well. However, its combination of heavy exposure to Texas (a region relatively unscathed by the recession) and willingness and ability to provide in-house credit to customers has led it to massively outperform the likes of Best Buy. Similarly, the expansion of its home goods offerings is the right move at the right time. The stock doesn’t look particularly cheap, but it’s worth a good look over results.


I’m picking out three contrasting companies for Tuesday. Firstly, Autozone (NYSE: AZO) will give results. I covered the stock and sector in an article linked here. It is a difficult scenario right now. There is evidence of slowdown in same store sales growth at all the auto parts retailers. This fits with the thesis that a recovering new car sales market in the US will cause a negative marginal effect on sales of parts on older cars. On the other hand, the good winter weather probably created some pull forward of sales and less wear and tear on cars over the winter. This means that the first half numbers were probably a bit weak. Will we see a snapback in sales growth or is this sector set for a slowdown?

The other two companies are Big Lots and Toll Brothers. The former is a curious sort of company within a sector that has been on fire over the last few years but somehow the only sale that this closeout retailer has got right is its stock price. Nevertheless, there might be something for deep value hunters here. Toll Brothers will update on the housing market, and if recent history is right in the sector it will give good results and outlook and then be promptly sold off by profit takers.


Finisar (NASDAQ: FNSR) is a very useful stock to monitor because it reports in two segments. Datacom revenues will give a clue as to the ongoing strength of data center spending, and telecom revenues will do the same in the telco sector. There have been mixed signals from telco related companies recently. Cisco had some positive commentary, but as I outlined here it is not backed up by the CapEx outlook of the major carriers.

SAIC will update the market on prospects for US defense and intelligence spending.


The defense theme will continue when Esterline gives results. H & R Block will update its plans to develop its core tax preparation business in response to the onslaught of competition from Intuit and others. Thursday also sees two hot (but incredibly different) companies reporting.

Lululemon (NASDAQ: LULU) is the kind of stock that you won’t ‘get’ unless you do yoga. It’s the sort of thing (yoga gear) that outsiders will argue can just be replicated by an Adidas or a Nike and suddenly LULU’s revenues and margins start disappearing. On the other hand, if you actually talk to a yoga enthusiast (I suggest you do, they tend to be hot) then you will understand the devotion that its customers have to the brand and the lifestyle it represents.

On the other hand IT Security company Palo Alto Networks (NYSE: PANW) had a great IPO this year, and many investors are convinced it is grabbing share from incumbents like Check Point and Cisco. With some of the sector downgrading expectations recently, it will be interesting to monitor what PANW says about market conditions.

The final three of interest are Cooper Companies, which will update on the eye care market (which from other sources is running at a mid single digit rate), Smithfield (whose commentary on input costs will be useful) and Tuco’s favorite gun maker Smith & Wesson, which will give numbers and some indication on whether the gun market has peaked or not.