TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| Genuine Parts: Great Way to Play Economic Recovery Genuine Parts (GPC) is a few weeks away from finishing its third quarter and will be reporting those results shortly after. I believe the stock looks very attractive, particulary if you are looking out to fourth quarter, for the following reasons: 1. GPC will benefit from a recovery in the US industrial base. Genuine Parts receives a third of its revenue from businesses tied directly to the highly cyclical industrial side of the economy. Industrial economic indicators such as ISM survey and Industrial Production reports have suggested a bottoming in this side of the economy could be in the works. Historically, I believe GPC’s industrial sales have had a high correlation with these statistics (r-squared=0.89 since 1999). 2. Canadian Dollar rally. A fall in the Canadian Dollar was responsible for an approximate 2% drag on total revenue in fourth quarter of last year and first quarter of this year. However, the Canadian Dollar has been appreciating steadily since this spring. Assuming a stable rate going forward, the drag in third quarter from the Canadian Dollar would be about half the previous drag and in fourth quarter the exchange rate would actually provide a modest boost to revenues. 3. Auto parts showing steady improvement. After a decline of 6.3% and 6.6% in fourth quarter of last year and first quarter of this year, the automotive parts distribution division (NAPA) showed improvement each month of second quarter and management suggested that should continue into the second half of this year. These +6% declines were not only the largest quarterly sales declines in this division for over ten years (as far as my model goes back), they were only two of three that occurred during this entire time. These declines have set up some easy comparisons for the company, which combined with positive external factors (improving exchange rates, stabilizing industry sales) and internal factors (sharper price points on targeted items, new leadership) should result in a return to growing sales in fourth quarter. 4. Earnings should start growing (year-over-year) by fourth quarter. Stabilized revenue trends and lower expenses should get earnings growing again. Fourth quarter of last year had several expenses not likely to reoccur in fourth quarter this year, including charges for pension, bad debt and costs related to a 5% reduction in its workforce. 5. 2009 earnings forecasts look conservative. The analyst consensus forecast for 2009 EPS is $2.40, slightly above the midpoint of company guidance for $2.25-$2.50. While no one has a crystal ball in this environment, guidance came in July after management had seen the worst of the current downfall. I suspect the company was prudently conservative in its guidance, including revenues where management predicted moderately improving trends each quarter only for the relatively stable auto parts business.6. Analysts look to be “sand bagging” numbers for fourth quarter. Analysts are forecasting a sequential decline in earnings to $0.56 in fourth quarter of this year from $0.65 in third quarter. However, a look at history shows earnings are not seasonally lower in fourth quarter, with last year and 2001 (another year that ended with a downturn) the only years in past decade to show more than a $0.02 sequential EPS decline from third to fourth quarter. This seems even less likely if you believe the economy is starting to come out of a recession, implying at least modestly improving results each quarter. 7. Reliable 4.5% dividend yield. Solid, steady cash flow and a 53-year track record of raising dividends give confidence you will get paid while you wait for this recovery to accelerate. Complete Story » seekingalpha.com |
Boeing's Dreamliner Is Finally Ready for Its First Test Run Jim Delaney submits: Today is the day! After over two years of component problems, delivery delays and almost every other snafu that could befall its delivery, Boeing (BA) has set today for the first test flight of its new 787 Dreamliner. The actual flight should be approximately 4-5 hours in duration taking off from Paine Field in Everett WA, where BA is based and ultimately landing about 30 miles away at Boeing Field, just south of Seattle. The 50% of the 787 that is made of composite material has caused the most consternation with “delamination” occurring in where the different components are joined together by things not so composite like nuts and bolts and rivets.Complete Story » seekingalpha.com |
Perceptron: Margin of Security and Improving Visibility Tom Armistead submits:Perceptron (PRCP), at Friday's closing price of 3.70, offers a good combination of margin of security and increasing visibility. Tangible book is 6.19, while excess current assets amount to 3.61 per share.An adequate recovery in the company's business (hammered during the downturn) would put the share price up around 7.50, a doubler from where it lies. It is small - market cap stands at 34 million - but it's sturdy and does business with major players.Complete Story » seekingalpha.com |
Ford: The Fundamentals Look Great ChartFacts submits:The Retail Sales numbers released last week showed that auto sales volumes were up 21.5% from the previous year in April. That was great news for an industry that was looking at 35% to 40% annual declines only a year ago. And, it looks like the recent strength should continue. Complete Story » seekingalpha.com |
FedEx Raises Outlook: Earnings Season Just Keeps Getting Better The Business Insider submits: Could it be that the whole reason earnings seasons started off poorly was an accident of the calendar and timing, and the fact that a few weaklings just happened to be scheduled first?Because starting last week, when we got into the real meat of earnings, things have been pretty good, and that continued Monday with FedEx (FDX) coming out with the following:Complete Story » seekingalpha.com |