Action Alerts PLUS added to its Starbucks (SBUX) position Thursday morning following a recent pullback in the stock's price, purchasing 300 shares at around $55.60 per share. The charitable trust now owns 1,500 shares of Starbucks, representing 3.3% of the portfolio.
"We view SBUX as undervalued relative to its long-term growth prospects, and despite a lower-than-expected recent quarter, it is trading at a steep discount relative to its prior-year's earnings forecast -- its current valuation of 26x next year's earnings represents a 25% discount to its October 2015 price-to-earnings, or P/E, multiple of 34x," portfolio co-managers Jim Cramer and Jack Mohr wrote in a note today.
Cramer and Mohr also estimated the company's 10% sales growth and 15% earnings growth algorithm appears intact.
The AAP team is also bullish on Costco (COST) as the fruits from its credit card transition to Visa (V) from American Express (AXP) in late June are finally being revealed after the first month-plus of sales.
"Importantly, however, when normalizing for a calendar shift that removed a day from July this year compared to last year, core comps actually increased 3.5%, above the consensus estimates range of between 2% and 3% (the calendar shift hurt total comps by 2.5% and U.S. comps by 3.5%)," Cramer and Mohr wrote in a note on July sales numbers. "Encouragingly, the uptick from June's +3% was driven by stronger core comps with the U.S. (+3.5% vs. June's +2%), indicating continued traction from the new Costco Anywhere Visa Card."
The company released its July sales report Wednesday evening, reporting that same-store sales (comps) fell 2% in the month, in line with analyst expectations for the period. Core comps, excluding gas and volatility effects, rose 1% in the period.
A Fortinet spokesperson reported in an email to CRN that, "To position Fortinet for success now and in the future, we continue to take necessary steps to ensure that our resources and investments are aligned and that we have the right talent in the right places to drive our strategy and growth. With our Security Fabric performance advantage and competitive differentiation, we are confident in our ability to take advantage of the opportunity ahead."
However, Versace and Hawkins stated that "Given the continued strong growth in sales, we aren't overly concerned with this news as we'd seen indications that some changes were in the works with the company's sales and marketing efforts. Nevertheless, we will be closely watching this one as more information is made available."