On Wednesday we used the coming Chinese New Year, which is today, to have some fun looking at names that might be appropriate for each of the years that make up the Chinese Zodiac.
This year is the Year of the Horse, which had us racing to Churchill Downs (CHDN), for instance, while the Year of the Dog put us into a Dogs-of-the-Dow fund. Today we will have fun with the remaining six signs.
We will take some poetic license with the year of the Rat and turn our attention to the Mouse House, Walt Disney (DIS). The Mouse has had a stunning run out of the Great Recession -- especially for a company of its size -- appreciating from $17 at the 2009 low to more than $70 today. That sort of recovery for a collection of premium goods is a testament to the franchise DIS has built over the past century. Disney should book $48 billion in revenue and $3.94 EPS, putting its multiple at a premium, but not excessive, 18x.
As always, Disney is a bit at the mercy of a mix of economic forces that usually wash out, but not always. Domestic box office, domestic and international travel and the retail environment all impact results in the short term. But over years, DIS should demonstrate a durable and valuable franchise.
The year of the Ox should give you the energy to look at Occidental Petroleum (OXY). Oxy has held its value over the years, but never broke out to the extent of its oil-producing peers, perhaps in part due to its permissive compensation practices. Having said that, analysts are looking for some restructuring initiatives that could lower costs and generate some upward earnings revisions and a pop in the stock. I figure Oxy is good for a trade in the months ahead, but find it hard to get overly excited unless it becomes a higher-dividend yielder (the yield now is 2.9%).
In the year of the Tiger, you will be roaring over the Asia Tigers Fund (GRR). You may also be roaring with joy over your returns in the out years, as this fund gives you direct exposure to the fastest-growing Asian emerging markets. Notice I qualify my opinion with "out years," since most emerging markets are under attack at the moment and, in fact, GRR has gotten killed in the last year as EMs rolled over. Put it on your radar screen to find a good entry point and then hold it, because looking out a decade you can feel comfortable that the economies of developing Asia will be far larger.
Back in the day, the year of the Rabbit would have been an easy one: Bunny, also known as Burlington Northern, symbol BNI. Warren Buffett robbed us of one of the Street's most-favored nicknames when he acquired the railroad, so we instead will look at Annie's (BNNY), the Berkeley-based organic food company. Annie's went public in 2012 and trades at a $600 million market cap. In contrast to Whole Foods (WFM), BNNY is food processor that sells wholesale across the U.S. Annie's is definitely on trend for today's consumer.
The year of the Dragon is always fraught with strength and promise, and so is the long-shot company DragonWave (DRWI). This dual-listed Canadian tech company is just emerging, with a market cap of $90 million, but its high-capacity microwave network equipment is starting to, well, make waves. DRWI just announced a deal to supply Gogo, the high-profile in-flight Internet provider. The company is still losing money, but has a surprising amount of coverage with seven analysts (mostly Canadian) tracking its progress.
Finally, in the year of the Snake, we return to the healthy snack theme, embracing the prospects for Inventure Foods (SNAK). This Phoenix-based company markets healthy/natural snack food products under well-known names such as Jamba smoothie kits. At a $250 million market cap, with $289 million of revenue and $0.51 EPS, the company looks reasonably valued for solid growth and an on-trend market segment.
On this Chinese New Year Day, Xīnnián hǎo! May you have a happy, prosperous and healthy 2014!