The Day Ahead: A Day in the Life

 | Feb 15, 2013 | 8:00 AM EST
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I do an array of fun things throughout any given market day. I'm totally lucky and appreciative that I get to do what I do. One interesting area of my life is to converse with trusted media contacts whom I have known for years.

These discussions have always led to the development of a ton of creative ideas on my end, either for content or stock recommendations. This value establishment reinforces time and time again a single stance I have on investing: There is more to an investing career than plugging numbers into a spreadsheet and hoping they fit a biased scenario.

On Thursday, I pumped out a ton of tweets, some with links, some without, as the news flow was hot and heavy. From Pepsi (PEP) earnings to the H.J. Heinz (HNZ) takeover, we truly landed a litany of topics that you the investor must understand from multiple angles.

Here is further insight behind the tweet stream:

Dollar-store stocks have been dead money for the past six months. I believe they are approaching value-stock status, given a very favorable long-term outlook. Recall that Nelson Peltz was interested in a transaction for Family Dollar (FDO) (the founding family got in the way). Family Dollar remains of interest to me in terms of a transaction; the company continues to plow money into capital expenditure but has little to show on the profit line. This is a great setup for long-term value creation that the market presently doesn't appreciate. Investment horizon: three to five years.

Yes, I know, Warren Buffett only likes to make acquisitions of businesses that have wide moats and that boast durable competitive advantages. However, it's interesting that despite the Nasdaq's lagging nature year to date relative to the S&P 500, there isn't any outward sign of interest in this sector based on perceived unrealized value.

Be careful about buying into Pepsi's post-earnings hype (this is also what I suggested immediately after Coca-Cola's (KO) earnings). The facts speak for themselves, and one really has to start wondering how much time Pepsi CEO Indra Nooyi has to show core operating profit margin improvement (bottom-line earnings beats being fueled by share repurchases and restructuring actions). Another factoid on Pepsi: The stock advanced 4.1% in 2012, yet the company poured $3.2 billion into stock repurchases.

Here is further insight behind press comments...

On Heinz to the Associated Press:

"Heinz's brands have power with shoppers that takes years to create and it has been able to raise prices even in the highly competitive grocery business," said Brian Sozzi, chief equities analyst for NBG Productions.

"There isn't going to be another Heinz brand," he said. "It has a durable competitive advantage."

On Coach (COH) to the Associated Press (yes, the CEO battled me a bit):

"They have to put out more fashionable product," said Brian Sozzi, chief equities analyst at NBG Productions. In that arena, "Kors (KORS) is a clear leader."

Frankfort defended Coach, saying the recent holiday quarter was just "a moment in time." He emphasized again Coach's plans to further develop a lifestyle brand focused on accessories.

Yeah, I hear you with the "moment in time." Listen, Michael Kors is the leader in the accessible luxury handbag market for simple reasons:

In the holiday quarter, its same-store sales destroyed those of Coach (Coach's decelerated sequentially, Kors' accelerated).

In the holiday quarter, Michael Kors' sales outperformed the growth rate in the U.S. women's handbag and accessories market, whereas Coach underperformed (this is the first time that has happened in the eight years-plus that I have covered the company). Michael Kors is the name to own in the handbag battle. It's worthwhile to pay up to own growth in this instance. 



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