Consumer Discretionary- XLY October 11 th 2013 - January 18 th 2013 Kristen Hecht, Khalid Surur, Matt Vague, Alyssa Wood
CND-Last Semester
XLY vs S&P 500
Current State of Sector § Outperformed the S&P for all four quarters last year § Driven by strong earnings, and increased customer confidence § § § Index / Index Sector Russell 1000 CND § http: //finance. yahoo. com/news/consumer-recovery-russell-1000 -r-160203263. html 1 Q 2012 12. 3%. 4% 2 Q 2012 -3. 6% -2. 7% 3 Q 2012 5. 7% 7. 8% 4 Q 2012 -0. 5% 2. 0% 2012 13. 9% 23. 4% '13 YTD a/o 1/15 4. 0% 4. 9%
Impacts of recent news § Was resilient as a sector through the fiscal cliff § Retail sails in December grew by only. 7%, but improved inventory and promotional practices have increased margins § University of Michigan Consumer Sentiment Index dropped to 71. 3 in January from 72. 9 in December
Key Drivers/Valuation Multiples § Retail- Same store sales growth and revenue per sq. foot § Consumer Confidence Index and Consumer Sentiment Index § For high growth companies, PEG very relevant § Low growth companies, P/B and P/CF are more relevant
Biggest Movers (Oct. 11 – Jan. 18) § Positive: § Abercrombie & Fitch § + 48. 37 % § Ford Motor Co. § + 39. 15 % § Negative § JCPenney § - 27. 92% § Kohl’s § - 14. 33%
Largest Holdings 1. 2. 3. 4. 5. Comcast Corp 6. 95% Amazon. com Inc 6. 4% Home Depot Inc. 6. 36% Walt Disney Co 6. 02% Mc. Donald’s Corporation 6. 02 %
Short Term Outlook § Very Cyclical sector § Holiday season is over § Lots of earnings reports released this week (Starbucks, Coach, Mc. Donalds, etc) § Fiscal Cliff
Past Recommendations § Harley-Davidson Inc (HOG) : BUY § BUY (10/11/12) § +24. 37% § women, African-American and Latino customers, as well as to younger buyers, now account for 30 percent of bikes sold and are growing twice as fast as its core market. § Milwaukee-based Harley is introducing an enterprise resource planning production system at its York, Pennsylvania, facility to boost efficiency and allow Harley to better respond to fluctuating market demand.
Past Recommendations § Bed Bath & Beyond Inc (BBBY. O): § BUY (10/16/12) § -10. 11% § expects net sales to increase by 24% to 26% in the fourth quarter and by 15% for the full year § VF Corp (VFC): § BUY (10/18/12) § -14. 14% § Wrangler jeans are customizing for the motorcycle riding population of India and expect $1. 1 billion in revenue to its Asia-Pacific business over the next five years. § Missed 3 rd quarter revenue expectations and growth in its flagship company North Face.
Past Recommendations § Starbucks Corp (SBUX. O): § BUY (10/25/12) § +17. 42% § Starbucks Corp said it will set up its first outlet in Vietnam early next month as the U. S. chain continues to expand in fast-growing Asian markets. § Yum! Brands Inc (YUM): § NO BUY (11/01/12) § -7. 6% § KFC parent Yum Brands Inc said it had stopped using chicken from suppliers in China that are now under a government investigation before the review was even announced analysts said they expect the company to recover from the business hit in its biggest market.
Past Recommendations § Mc. Graw Hill § § November 6 recommendation: No Buy 2. 82% growth since New 52 -week high December 11 New “Smart. Book” technology § Coach, Inc. § November 8 recommendation: Buy § 14. 64% growth since § Earnings release January 23 -estimates are that COH will beat last year’s earnings -beat estimates last quarter
Past Recommendations § Game. Stop Corp. § § November 13 recommendation: No Buy 0. 09% growth since New 52 -week high on December 13 Analysts questioning if gaming consoles will become obsolete § Tiffany & Co. § November 29 recommendation: Buy § 6. 69% growth since § Extended stock repurchase program to January 1, 2014 -CEO/Chairman sold off 100, 000 of his own shares § Extended agreement with Elsa Peretti for at least 20 years -accounts for ~10% of sales
Past Recommendations § Time Warner Cable Inc. § December 4 recommendation: No Buy § 5. 87% growth since § Earnings release January 31—analysts optimistic, recommending a Buy § Continuing customer care and billing systems with CSG Systems through March 2017 § New 52 -week high on January 17
Works Cited § § § Finance. yahoo. com Reuters. com Seeking. Alpha. com Bloomberg. com Marketwire. com
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