Investment Game 2016: What You Might be Looking at in the 2 Weeks to Come

Dear participants,

Our analysts have assembled a selection of companies across 5 industries that have certain important events scheduled or expected to occur in the near future. As we argued in our previous article on the trading strategies in Investment Game, event-driven trading might be a smart thing to do in this competition. We hope that this list will help you better focus your effort while analyzing equities. Not all of the companies here might be your best buy (or sell), but some of them are definitely worth your attention!

Good luck!

IT

Seagate Technology

What do they do?
They are an American data storage company, incorporated in 1978. They make such products as hard disk drives, hybrid drives, and solid-state drives.

Future events
Seagate Technology PLC is expected to report earnings on 04/15/2016. According to Zacks Investment Research, based on 11 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.62. The reported EPS for the same quarter last year was $1.08.

Netflix

What do they do?
Netflix is a global provider of streaming movies and TV series. As of 2016, it has over 75 million subscribers. Netflix recently expanding the list of countries they provide their services and currently are serving over 190 countries.

Future events
Netflix, Inc. is expected to report earnings on 04/18/2016 after market close. The report will be for the fiscal Quarter ending Mar 2016. According to Zacks Investment Research, based on 14 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.03. The reported EPS for the same quarter last year was $0.11.

Intel Corporation

What do they do?
Intel is one of the world’s largest and highest valued semiconductor chip makers, based on revenue. Intel supplies processors for computer system manufacturers such as Apple, Samsung, HP and Dell. Intel also makes motherboard chipsets, network interface controllers, integrated circuits, flash memory, graphics chips, embedded processors, and other devices related to communications and computing.

Future events
Intel Corporation is expected to report earnings on 04/19/2016 after the market closes. The report will be for the fiscal Quarter ending Mar 2016. According to Zacks Investment Research, based on 12 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.49. The reported EPS for the same quarter last year was $0.41.

Consumer Staples

Monster Beverage Corp (NASDAQ: MNST)

This stock is expected to return to 155 USD price (Bloomberg, December 2015). This is likely to happen as this year this beverage company made a very significant deal with Coca-Cola as its new distributor, thus being able to regain the market share of the dominant RedBull. The Street analysts rate this as a Buy because it also outperforms the industry in terms of revenue growth, profit margins (2015 Q4 report, published late February 2016) but no analysts have yet been able review the impact of Coca-Cola deal. Now the stock is priced at 133 and is expected to reach 155 in next 2 months.

Constellations Brands (STZ)

This stock may be safer to invest in because it showed a steady growth in 2015. As of now, the company produces Corona and Modelo which are two very popular brands of beer in the US and worldwide. The recent merger of industry giants Bud and Ambev made the antitrust division of the Justice Department force these two brands over to STZ. Therefore, combined with the steady growth and to antitrust division’s helping this is a sure buy.

Procter & Gamble (PG)

The third pick is based on the report by The Street analysts who rate this stock as A-. This is mainly based on a high net income increase (32.5%) that outperformed S&P 500 by 18.95%. In terms of growth in the next month, it is very likely to be robust because the stock price has been stable this year after high fluctuations in 2015. This has no other explanation as an increase in demand for this stock that keeps the price down.

The Kraft Heinz Company (NASDAQ: KHC)

It is the 5th largest food and beverage company in the world. The firm boasts a number of well-known consumer brands such as Kraft, Heinz, Capri Sun, Classico, Kool-Aid, Lunchables, and others. In 2015, the merger of Kraft Foods Group and Heinz created the Kraft Heinz company, which at this point is worth around 46 billion dollars. Both companies have different histories, but both have been on the market for about 100 years. At the moment, the stock price fluctuates around 78.4 dollars per share, but it might change when the company reports its earnings on 26th of April. Pepsico inc. (PEP) will release its earnings on the 18th of April, an event that is also expected to impact the prospects of Kraft Heinz. Another thing to look out for is the ongoing process of factory closures. Analysts forecast that earnings for the fiscal quarter will be $0.61 per share.

Colgate-Palmolive (NYSE: CL)

One of the largest household and personal product producers, Colgate-Palmolive includes such brands as Ajax, Softsoap, Palmolive, Colgate, and others. The company is an arch rival to Procter & Gamble (P&G), which is currently going through a transformational process, leaving them with just 10 product groups, albeit in 7 of those 10 groups they are the market leaders, Colgate-Palmolive could benefit from this in the short run, but in the long run, analysts predict a decline in their market share. We will see how the company started the year when the quarterly report comes out on the 28th of April. Currently, the company is traded at $71.4. P&G’s report is also just around the corner, meaning that a comparison of the two would be a sound idea.

Financials

Metlife

Metlife is a leading global provider of insurance, serving 90 million customers. The market capitalization of the company in 2011 was 60 billion USD.

Currently, insurance companies struggle with maintaining stable and decent return for client deposits. This results in more than 14 percent loss in stock price. However, the company’s price to book ratio is about 0.7 meaning that Metlife’s assets are trading at discounts of about 30 percent of their respective book values. This can lead to a big buying opportunity and the decent return on an increase in market price. On May 4 the first quarter 2016 results will be announced.

American Express

Also known as Amex, American Express is an American multinational financial services corporation headquartered in Manhattan’s Three World Financial Center in New York City, United States. The company is best known for its credit card, charge card, and traveler’s cheque businesses. Amex cards account for approximately 24% of the total dollar volume of credit card transactions in the US. BusinessWeek and Interbrand ranked American Express as the 22nd most valuable brand in the world, estimating the brand to be worth US$14.97 billion.

Upcoming event: Q1 2016 American Express Earnings Conference (April 20)

Because of the low performance by banking sector as well as a drop in equity for insurance companies, investors that are interested in the financial industry could look for alternatives – companies that provide financial services – such as Amex and Freddie Mac.

Freddie Mac

The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, is a public government-sponsored enterprise, located in the US. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with the Federal National Mortgage Association (Fannie Mae), Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.

Upcoming event: March 2016 monthly volume summary release.

Energy 

British Petroleum

One of the “Big-7” oil producers’ stocks have been plummeting throughout 2015, falling by more than 20% during year-to-date, being one of the outsiders of the energy industry. The group finalized the agreement with the US government concerning oil spill in the Mexican Gulf in 2012 on April 5, agreeing to pay $20bn for civil penalties and damages.

On April 14, the company holds Annual General Meeting where shareholders are expected to vote on board members reelection as well as the number of other resolutions. The financial results and dividends for the first quarter will be announced on April 26. Last time, the company reported an annual loss of $6.5bn – worst in history. Therefore, unexpected numbers for the first quarter, when the oil prices recovered for a while may influence the stock prices.

Schlumberger

The world’s largest oilfield services provider is expected to provide Q1 earning on April 22. Yet the company had a net loss in the last month of 2015, and the dividends have felt from $1.06 per share in the first quarter of 2016 to $0.66 in the last one. Analysts predict further decline to $0.42, although they have never guessed the earnings for the previous four quarters.

Bear in mind that recently the company has agreed to an acquisition of Cameron, an American-based provider of flow control and compression systems. The deal cost Schlumberger $14.8 bn in stock and cash.

Kinder Morgan

The largest oil & gas infrastructure company in the US has its stocks plummeted from 42 to 17 dollars during the previous year though there are no fundamental reasons for such a decline. The company controls more than 150,000km of pipelines in the US as well as dozens of terminals. The company will go bust, only if the whole oil transportation in the US will suddenly stop. Otherwise, it is a good company to look at on April 13, when it releases quarterly figures. Analysts expect the earnings to decline by 10% only quarter-on-quarter.

Healthcare

Pfizer

A pharmaceutical company established in 1849, currently present on the global market through the acquisitions of Warner-Lambert and Pharmacia and worth $193.93B (second large on the US market).

On April 6th, Pfizer Inc. announced that  “the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies.” After that decision, the stock price of the company increased by 3,5% from $31.85 per share to $32,95(current price on the 7th of April) and still growths steadily.

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Johnson & Johnson

Major pharmaceuticals, 127100 employees, more than 250 operating companies. The largest company by market capitalization, $300.63B.

Annual Meeting of Shareholders is taking place on Thursday, April 28, 2016. Currently, the focus of the market is on the size of the dividends JNJ announces. Some analysts tend to think that the dividends of this company, currently at 0.75$ per share, will rise in April. The graph below and strong financials for the past year suggest that the market should be pricing in some further increases.

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