Tag Archives: USFD

U.S. IPO Weekly Recap: Dropbox Files For A $500 Million IPO

The year’s first “decacorn” is here: Dropbox (DBX) filed to raise $500 million on Friday. Investors got their first look at the cloud-storage provider’s financials ahead of an IPO that could come as early as March 22.

None of the week’s three expected IPOs completed their deals. Single-asset Aspen REIT (Pending:AJAX) and blank check company Crescent Funding (Pending:CFUNU) both officially postponed their IPOs. Another SPAC, Union Acquisition (LTN.U), is now scheduled to raise $100 million in the coming week.

Two SPACs and a Reg A+ are relatively insignificant to the broader IPO market. More importantly, new filing activity was relatively light at three companies and three SPACs. So despite the market’s quick rebound in the prior week, many IPOs have been put on hold. The VIX Volatility Index settled to a three-week low, but still closed above its 2017 high. But if Dropbox and cybersecurity unicorn Zscaler (Pending:ZS) are well received in March, that could open the floodgates.

To sum: We still expect the IPO market to open back up in early March, but at a slower pace than the record-breaking levels we saw in January. Biotechs should be the first to launch in the week ahead, an industry that boasts the year’s three best-performing IPOs.

IPO Pipeline update: Dropbox, IBEX and 3 SPACs

Valued at $10 billion in 2014, Dropbox plans to raise $500 million in what will be one of the largest tech IPOs in the past few years. Its impressive $1.1 billion in revenue (+31% YoY) is matched by an equally eye-popping accumulated deficit of $1.0 billion. While it is still highly unprofitable, it threw off $300 million in free cash flow in 2017. Outsourced customer support provider IBEX Holdings (IBEX) also filed to raise $75 million.

Some recent SPACs have come under pressure, but three more entered the pipeline this week: Terrapin 4 Acquisition (TRTLU), Opes Acquisition (OPESU) and Tiberius Acquisition (TIBRU). One of the largest and oldest IPOs in the pipeline, Albertsons Companies (NYSE:ABS) announced that it would instead list by merging with publicly-traded Rite Aid (NYSE:RAD).

6 Filings During the Week of February 19th, 2018









Web-based cloud storage provider.

IBEX Holdings




Provides outsourced customer support services.

Sunlands Online Education (STG)


Consumer Discretionary

Goldman (Asia)

Chinese provider of online courses for professional qualifications.

Terrapin 4 Acquisition




Blank check company formed by Terrapin Partners and led by Nathan Leight.

Opes Acquisition




Blank check company formed by Axis Capital Management to acquire a Mexican business.

Tiberius Acquisition



Cantor Fitz.

Blank check company formed to acquire a middle-market insurance business.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 2.2% year-to-date and the S&P 500 is up 2.8%. Renaissance Capital’s IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Snap (NYSE:SNAP) and US Foods (NYSE:USFD). The Renaissance International IPO Index is up 4.5% year-to-date, while ACWX is up 2.2%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) (OTCPK:DNNGY) and ASR Nederland (OTC:ARNNY).

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Amazon Will Be A Disruptive Player In Groceries Over Next 5 Years

Amazon Will Be A Disruptive Player In Groceries Over Next 5 Years

Analysts at Deutsche Bank hosted a panel of four experts to dissect Amazon.com, Inc. (NASDAQ: AMZN)’s proposed acquisition of Whole Foods Market, Inc. (NASDAQ: WFM). The analyst’s main takeaway from the discussion is that Amazon will become a “disruptive player” in groceries over the next five years with implications felt across the entire food sector.

Consumer Packaged Goods

Consumer packed good companies will be the most at-risk sector, Deutsche Bank’s Lloyd Walmsley said in a research report. CPG companies lack the vital direct access to customer data that Amazon has and the online giant could decide to “cut-off the flow of this data” to companies.

Doing so would give Amazon a notable advantage in which it can move more quickly in filling product gaps, the analyst continued. Amazon can also use the data to accelerate Whole Foods’ private brand sales within the fast-growing natural, organic and healthy space, which has been a key focus for CPGs as of late.


Last Mile Delivery

The experts expect Amazon to leverage Whole Foods’ stores and its logistics expertise to improve last mile delivery economics. The future of Whole Foods could consist of both grocery items and higher margin non-grocery items coupled with store automation to improve store-based economics.

Over the longer term, Amazon is expected to “re-engineer fulfillment” and distribution outside of the store footprint.

Not Much Clarity On Stores

Amazon will be experimenting very early with new designs and ideas on the storefront, including automated checkouts, Alexa devices placed throughout the store to help customers and non-grocery product offerings.

But Amazon’s ultimate end-goal would likely be turning stores into “centralized distribution centers for groceries” but “we err on the futuristic side given Bezos thinks big.”

Company Commentary Kroger Co (NYSE: KR) may be best positioned to counter Amazon’s threat given its own data analytics capabilities. SYSCO Corporation (NYSE: SYY) and US Foods Holding Corp (NYSE: USFD) are likely safe as Amazon won’t move into the foodservice distribution space which is very different from serving individual customers.

Related Links:

The Winner In An Amazon-Whole Foods Deal? Blackhawk Network

The Ongoing Saga Between Amazon, Bezos And Trump

Top Low Price Stocks To Watch For 2018

Source: ThinkstockUntil about 2008 or so, discussion about the future price of crude oil was directed by the concept of peak oil. That is, when does the world reach peak production, after which the price of crude will skyrocket. In less than a decade, the discussion is now focused on the concept of “peak demand,” the point at which global demand for crude begins to decline.

The recent Oil & Money conference in London sharpened the focus on peak demand. Saudi Arabia’s minister of energy and industry, Khalid Al-Falih, told conference attendees that cutbacks in capital spending on exploration, forced on the industry by low prices for the past twoyears, could mean that shortfalls in supply are coming.

Exxon Mobil Corp. (NYSE: XOM) CEO Rex Tillerson disagreed:

Top Low Price Stocks To Watch For 2018: US Foods Holding Corp. (USFD)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Guggenheim’sJohn Heinbockel and team argue that a “purging of space is necessary” in retail, and recommend hiding in “industry leaders who canprofitably gain share and are not especially expensive,” like Michaels (MIK), Tractor Supply (TSCO), Restoration Hardware (RH), Kroger (KR),and US Foods Holding (USFD). They explain:

Top Low Price Stocks To Watch For 2018: Visa Inc.(V)

Advisors’ Opinion:

  • [By Asit Sharma]

    In the past year, PayPal has executed a strategy of forming alliances with potential rivals in the payments space. In a prominent example, last year the company announced a tie-up in the U.S. with card issuer Visa (NYSE:V). Earlier this month, the two parties revealed that they’ve extended the arrangement to the Asia Pacific region. The deal expansion means that banks in the region that issue Visa cards can allow their cardholders to check out online wherever PayPal is accepted. Brick-and-mortar retailers honoring the Visa symbol will now also be able to accept PayPal as payment.

  • [By Chris Lange]

    Visa Inc. (NYSE: V) reported fiscal second-quarter financial results after markets closed on Thursday. The company said that it had $0.86 in earnings per share (EPS) and $4.5 billionin revenue, versus consensus estimates from Thomson Reuters that called for $0.79 in EPS and $4.31 billion in revenue. The same period from last year had $0.68 in EPS and $3.63 billion in revenue.

  • [By Dan Caplinger]

    Visa Inc. (NYSE:V) and MasterCard (NYSE:MA) aren’t the only two players in the credit card and electronic payments space, but they are the biggest and best-known. Both Visa and MasterCard have extended their reach across the globe, and both have high expectations in their trajectories for future growth. Yet after a big push in the stock market that has sent both of these financial stocks to all-time highs, investors need to know which of the two leaders in the card industry is more deserving of their attention. Let’s take a closer look at Visa and MasterCard, comparing them using several different metrics to see which company’s shares are the better buy.


    This one could be the easiest of advances, both because credit losses are down big and because its credit-card brethren — Capital One Financial, Discover, Visa (V) and MasterCard (MA) — have all had significant rallies. I actually regard this stock as inexpensive and think it can be bought here now that it has fully absorbed the loss of the Costco (COST) business to Visa and Citigroup (C) .


    At the top of the list is global payments leader Visa Inc (V).

    Visa sits at the intersection of two of the most powerful trends in the economy today: the rise of the cashless society and the rise of the emerging market consumer. With every passing day, more people around the world are swiping their credit and debit cards in more places. And as the owner of the largest global payments network, Visa sits at the middle of this, like a toll booth operator.

  • [By Paul Ausick]

    Visa Inc. (NYSE: V) traded up 2.97% at $79.40. The stock’s 52-week range is $66.12 to $83.96. Volume was about 10% above the daily average of around 10.8 million shares. The company had no specific news Wednesday.

Top Low Price Stocks To Watch For 2018: Tidewater Inc.(TDW)

Advisors’ Opinion:

  • [By Lisa Levin]

    In trading on Friday, energy shares slipped by 0.20 percent. Meanwhile, top losers in the sector included Northern Oil & Gas, Inc. (NYSE: NOG), down 9 percent, and Tidewater Inc. (NYSE: TDW), down 8 percent.

Top Low Price Stocks To Watch For 2018: Gibraltar Industries, Inc.(ROCK)

Advisors’ Opinion:

  • [By Lisa Levin]

    In trading on Friday, basic materials shares fell by 0.82 percent. Meanwhile, top losers in the sector included Gibraltar Industries Inc (NASDAQ: ROCK), down 9 percent, and Yamana Gold Inc. (USA) (NYSE: AUY), down 9 percent.

trade stocks online

Usually, when a company announces that it will sell more shares, its stock prices drops (dilution and all that). Not so WPX Energy (WPX), which announced that it would sell 49.5 million shares worth nearly $500 million. Citigroup’s Jeanine Wai and team explain why investors haven’t been put off by the offering:


The $50/Bbl Question Is Answered In our June 2nd note entitled, Rethinking Risk/Reward on High Beta E&Ps, we highlighted that $50/Bbl is a critical level as it is around which many E&Ps have indicated they would begin either utilizing drilled-but-uncompleted (DUC) wells and/or increasing activity. Thus, with the NYMEX strip exceeding ~$50/Bbl in H216 and 2017, the question becomes, What will E&Ps do next? In our note we distinguished which oilier SMID Caps could organically accelerate at current NYMEX strip prices without further leveraging the balance sheet and which would still require higher oil prices. We ranked WPX third, behindOasis Petroleum (OAS) and Whiting Petroleum (WLL) in terms of its ability to accelerate through the drill-bit while keeping the balance sheet intact. For WPX we concluded that without increasing activity beyond our base case assumptions or higher oil prices, leverage would increase by 0.8x in 2017. However with accelerated activity and corresponding higher outspend (via more Williston DUCs and an addtl Permian rig), we forecast WPX could further grow production next year and keep leverage flattish at ~3.5x Net Debt/EBITDAX. We think todays announcements confirm our thesis, as WPX increased 2016 Williston activity and issued equity to facilitate this addtl spend plus potential activity acceleration in 2017/2018 without adding more debt.

trade stocks online: Rex Energy Corporation(REXX)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Our peer group is up an average of 46% over the past 4 weeks in response to a 30% rebound in the 12-month strip NYMEX oil price. Some of the largest gainers include Hold and Sell rated stocks that we would not chase such asDenbury Resources (Sell, +138%), Halcon Resources (HK) (Sell, +147%), Jones Energy (JONE) (Hold, +166%), Rex Energy (REXX) (Sell, +60%), Sanchez Energy (SN) (Hold, +93%), Ultra Petroleum (UPL) (Sell, +61%), andWhiting Petroleum (Hold, +103%), which have outperformed the E&P Index (+32%) over the same time period. Balance sheets and/or well level returns remain challenged for these companies despite improved oil prices. While we believe oil markets should re-balance over the next 12 to 15 months, the recent recovery to $40 could reverse during 2Q16 as bloated inventories continue to rise, new volumes from Iran pressure an oversupplied market, and a highly anticipated decline in non-OPEC supply (especially in the U.S.), is not as steep as expected. The risk of an oil price retracement, which would significantly pressure the recent out-performers, outweighs the upside in these stocks, in our view. However, we are raising our target prices on Buy ratedAnadarko Petroleum ($54 from $48), Concho Resources (CXO) ($120 from $109), Matador Resources (MTDR) ($22 from $21),Noble Energy (NBL) ($40 from $34), SM Energy (SM) ($22 from $15), Rice Energy ($14 from $12), Pioneer Natural Resources (PXD) ($155 from $135),Continental Resources ($32 from $28), and Parsley Energy (PE) ($24 from $23). We believe our Buy-rated stocks are better positioned to weather challenging oil markets.

trade stocks online: Washington Federal, Inc.(WAFD)

Advisors’ Opinion:

  • [By Shanthi Rexaline]

    The six companies that met the criterion are:

    Oshkosh Corp (NYSE: OSK). Phillips 66 (NYSE: PSX). SpartanNash Co (NASDAQ: SPTN). Suncor Energy Inc. (USA) (NYSE: SU). Washington Federal Inc. (NASDAQ: WAFD). Barnes & Noble, Inc. (NYSE: BKS). Oshkosh

    Oshkosh is a manufacturer of specialty vehicles and vehicle bodies and is based in Wisconsin. The company operates under four business segments, namely access equipment, defense, fire and emergency, and commercial.

trade stocks online: Sealed Air Corporation(SEE)

Advisors’ Opinion:

  • [By Chris Lange]

    The S&P 500 stock posting the largest daily percentage loss ahead of the close Tuesday was Sealed Air Corp. (NYSE: SEE) which traded down about 9% at $42.33. The stocks 52-week range is $42.01 to $50.62. Volume was nearly 11 million versus the daily average of 2.1 million shares.

  • [By Benzinga News Desk]

    Morgan Stanley downgraded Chipotle (NYSE: CMG) to Equal-Weight.
    UBS downgraded AMC Networks (NASDAQ: AMCX) to Sell.
    Citi upgraded Sealed Air (NYSE: SEE) to Buy.
    Goldman Sachs upgraded Reinsurance Group (NYSE: RGA) to Buy.

  • [By Ben Levisohn]

    Sealed Air(SEE) has fallen 0.7% to $28.35 after the food-safety company was downgraded to Equal Weight from Overweight atBarclays.

    Towers Watson(TW) has dropped 0.5% to $102.49 after it was cut to Neutral from Overweight at JPMorgan. It was also upgraded to Buy from Hold at Deutsche Bank.

trade stocks online: Safeway Inc.(SWY)

Advisors’ Opinion:

  • [By Peter Graham]

    A long term performance chart shows shares of SUPERVALU underperforming the underperformance ofmid caps Whole Foods Market, Inc (NASDAQ: WFM) and Safeway Inc (NYSE: SWY). while large capKroger Co (NYSE: KR)had outperformed up until the last two years when performance has been more mixed:

trade stocks online: Expeditors International of Washington, Inc.(EXPD)

Advisors’ Opinion:

  • [By Monica Gerson]

    Benzinga's newsdesk monitors options activity to notice unusual patterns. These large volume (and often out of the money) trades were initially published intraday in Benzinga Professional . These trades were placed during Friday's regular session.

    PACCAR Inc (NASDAQ: PCAR) Aug16 52.5 Puts: 10000 @ ASK $1.70: 10k traded vs 335 OI: Earnings 7/26 $54.94 Ref Regeneron Pharmaceuticals Inc (NASDAQ: REGN) Jul16 345 Puts: 949 @ ASK $8.70: 1003 traded vs 55 OI: Earnings 8/2 $360.20 Ref NVIDIA Corporation (NASDAQ: NVDA) Fri 6/24 47.0 Puts (Wkly) Sweep: 689 @ ASK $1.12: 3758 traded vs 136 OI: Earnings 8/4 $46.69 Ref Medivation Inc (NASDAQ: MDVN) Sep16 55.0 Puts: 4000 @ Above Ask! $3.40: 5303 traded vs 716 OI: Earnings 8/4 $59.44 Ref Expeditors International of Washington (NASDAQ: EXPD) Aug16 47.0 Puts Sweep: 950 @ ASK $1.35: 973 traded vs 381 OI: Earnings 8/2 $48.15 Ref

    Posted-In: Huge Put PurchasesNews Options Markets

trade stocks online: US Foods Holding Corp. (USFD)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Guggenheim’sJohn Heinbockel and team argue that a “purging of space is necessary” in retail, and recommend hiding in “industry leaders who canprofitably gain share and are not especially expensive,” like Michaels (MIK), Tractor Supply (TSCO), Restoration Hardware (RH), Kroger (KR),and US Foods Holding (USFD). They explain:


Deutsche Bank, the Trump Organization’s largest creditor, said Monday that the Justice Department recently closed a criminal investigation into possible currency manipulation.

The Justice Department notified the German bank in a letter Feb. 13 that it was closing the investigation, Deutsche Bank said Monday in a public filing.

President Donald Trump’s Attorney General Jeff Sessions took office on Feb. 9.

In October, near the end of the Obama administration, the Commodity Futures Trading Commission dropped its own investigation into Deutsche Bank and currency manipulation.

Deutsche Bank has drawn special scrutiny in recent months because of its ties to Trump, which include billions of dollars of loans since the 1990s. Many of the loans have been paid off but four remain unpaid — on properties in Miami, Chicago and Washington, D.C.

The four loans were worth a total of $364 million when they were made, between 2012 and 2015, and are now worth roughly $300 million, according to an estimate by Bloomberg.

stockmarketquotes: Discover Financial Services(DFS)

Advisors’ Opinion:

  • [By Ben Levisohn]

    We get the bull case.American Express is a blue-chip Dow component with an iconic global brand. It generates >30% returns on tangible, but it is trading well below its historical multiple and has underperformed post the election. Costco is now in the rearview mirror, and the string of negative surprises that have weighed on the stock are now poised to abate and position the company to start surprising positively. With Capital One Financial (COF), Discover Financial Services (DFS), and Synchrony Financial (SYF) all trading near their historical peaks, some have concluded thatAmerican Express is headed back to its historical high above $90. While this thought process may sound logical, we believe it only works in a world where generalists are steering the ship, and view it as highly susceptible to unraveling when negative revisions hit. American Express is not the business it once was, it doesnt have the same earnings power, and, in our view, it doesnt deserve t o trade near its historical valuation.


    Like CVS, Discover has trounced the broad market over the long term but sold off recently. It’s down more than 15% this year. Costs rose early in the year in part due to one-time expenses related to anti-money-laundering efforts and other regulatory concerns. Analysts predict an offsetting decline in expenses next year. Don’t confuse Discover with a company that’s primarily in the business of running a credit-card network, like Visa (V) and MasterCard (MA). It’s basically a credit-card lender, like Capital One Financial (COF), that runs its own network to gain a competitive advantage.

    By saving on network fees, Discover can offer attractive card rewards, including a popular cash-back program. Any card lender can offer cash back, of course, but being too aggressive risks hurting margins. Discover has grown its portfolio of credit-card loans much faster than big banks have in recent years. And it has done so with industry-leading returns on capital. Rising growth could be on the way. Early this year, Discover went on a marketing spree. Last quarter, it reported its best card growth since 2007. Historically, new-card growth and loan growth have been closely correlated. In a November note to investors, Morgan Stanley analyst Cheryl Pate predicted accelerating loan growth within six months. Meanwhile, defaults remain low. Shares sell for less than 10 times projected earnings for the next four quarters, down from 12 times at the end of last year. They could rise 20% on a combination of earnings growth and a valuation rebound. The dividend yield is 2%. 

  • [By Matthew Cochrane]

    While a new year has been ushered in, it is clear PayPal’s philosophy has not changed. Last week, PayPal entered into another major agreement, this time with credit card issuerDiscover Financial Services (NYSE:DFS).

stockmarketquotes: Lincoln National Corporation(LNC)

Advisors’ Opinion:


    * The market bent yesterday but today it stabilized. (A good showing, all things being considered–but in no way decisive going forward).
    * Gold +$5/oz.
    * Crude oil +$0.50 and the rise is taking up some energy stocks.
    * The Russell returned to the spotlight.
    * Life insurance–particularly Lincoln National (LNC) (on an upgrade). Hartford Financial Services (HIG) gets a small lift.
    * Retail returned from the depths. The standouts–L Brands (LB) , Kohl’s (KSS) , Bed Bath (BBBY) , Nordstrom (JWN) and Gap (GPS) .
    * Ag equipment–after an analyst upgrade yesterday.
    * Brokerages.
    * Homebuilders catch a bid.
    * Day one of the Masters Golf Tournament.

  • [By Lee Jackson]

    Lincoln National Corp. (NYSE: LNC) also had the man at the top selling stock last week. Dennis Glass, the CEO of this insurance and retirement focused company, sold a block of 75,000 shares at between $71.00 and $71.28 apiece. The total for the sale was posted at $5 million. Shares closed Friday at $71.69, in a 52-week rangeof $34.16 to $73.71. The consensus price target is $73.17.

stockmarketquotes: BanColombia S.A.(CIB)

Advisors’ Opinion:

  • [By Lisa Levin]

    Foreign Regional Banks: This industry declined 2 percent by 11:00 am with Bancolombia SA (ADR) (NYSE: CIB) moving down 3.7 percent. Bancolombia’s PEG ratio is 4.51.

  • [By Monica Gerson]

    Bancolombia SA (ADR) (NYSE: CIB) is expected to post its quarterly earnings at $0.77 per share on revenue of $945.66 million.

    Cellcom Israel Ltd. (NYSE: CEL) is estimated to post its earnings for the latest quarter.

  • [By Javier Hasse]

    Analysts at Credit Suisse downgraded shares of Bancolombia SA (ADR) (NYSE: CIB) from Outperform to Neutral, while boosting their price target from $38 to $40.

stockmarketquotes: US Foods Holding Corp. (USFD)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Guggenheim’sJohn Heinbockel and team argue that a “purging of space is necessary” in retail, and recommend hiding in “industry leaders who canprofitably gain share and are not especially expensive,” like Michaels (MIK), Tractor Supply (TSCO), Restoration Hardware (RH), Kroger (KR),and US Foods Holding (USFD). They explain:

stockmarketquotes: Annaly Capital Management Inc(NLY)

Advisors’ Opinion:

  • [By Boniface Murigu]

    It’s no secret that mREITs such as American Capital Agency (NASDAQ: AGNC  ) (NASDAQ: AGNC  ) (NASDAQ: AGNC  ) , Annaly Capital Management (NYSE: NLY  ) (NYSE: NLY  ) (NYSE: NLY  ) ,and CYS Investmentshave gone through a very turbulent trading period, with all major players losing a sizable share of market value.

  • [By Dan Caplinger]

    Another tax-law provision gives favorable tax status to real-estate investment trusts. REITs make investments in real estate-related assets, and they’re required to pay out almost all their income to their shareholders annually. Simon Property Group (SPG) is one of the biggest REITs, focusing on shopping malls and paying a 3 percent yield. But other specialty areas of the REIT universe pay much higher dividends, with REITs like Annaly Capital (NLY) that invest in mortgage-backed securities topping the list with double-digit percentage yields.


    In the Lightning Round, Cramer was bullish on Salesforce.com (CRM) , Paccar (PCAR) , Cummins (CMI) , ConocoPhillips (COP) , Adobe Systems (ADBE) , Annaly Capital (NLY) and Hewlett Packard Enterprise (HPE) .

  • [By Ben Levisohn]

    Hatteras Financial (HTS) has jumped 9.4% to $15.60 after agreeing to be purchased byAnnaly Capital Management (NLY) for $1.5 billion.Annaly Capital Management has dropped 1.1% to $$10.30.

  • [By Amanda Alix]

    This development will likely give battered mREITs like Annaly Capital (NYSE: NLY  ) , Armour Residential (NYSE: ARR  ) , and American Capital Agency (NASDAQ: AGNC  ) a huge boost as investors begin to feel less panic regarding a tapering of the current QE3 program. Markets have responded to the Summers announcement by soaring skyward, apparently feeling relief and confidence about the fate of the taper.

stockmarketquotes: Halyard Health, Inc.(HYH)

Advisors’ Opinion:

  • [By Nelson Hem]

    Medical products maker Halyard Health Inc (NYSE: HYH) stumbled after its spinoff from paper products giant Kimberly Clark Corp (NYSE: KMB), according to “Halyard Health Shares Look Poised to Double” by David Englander. See why Barron’s thinks its shares could double as this Georgia-based company pursues acquisitions and expands its product lineup.

  • [By Nelson Hem]

    See what Barron’s feels are the prospects for Ingersoll-Rand PLC (NYSE: IR) despite the woes in energy, Michael Kors Holdings Ltd (NYSE: KORS) with its new products and international expansion, the Valvoline spinoff from Ashland Inc (NYSE: ASH), as well as Halyard Health Inc (NYSE: HYH) as it pursues acquisitions and expands its product lineup.

Top 10 Stocks For 2017

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With its alliterative moniker, the Panama Papers scandal has brought to light a colossal calumny of massive proportions.

The gargantuan document leak published by the International Consortium of Investigative Journalists indicts a "clandestine network" including Russia's President Vladimir Putin, a FIFA ethics committee member and other individuals previously accused for corruption by the United States.

Top 10 Stocks For 2017: Cencosud S.A.(CNCO)

Advisors’ Opinion:

  • [By Javier Hasse]

    “Right now, we are the only Latin American company in the retail segment, and the only ones with a real distribution chain assembled, selling in stores like Staples and others,” Caporale explained. “Stratasys, Ltd. (NASDAQ: SSYS)’s MakerBot had a few experiences in retail, but did not do very well: Cencosud SA (NYSE: CNCO)’s Jumbo supermarkets bought three printers [for its Argentina branch] and did not manage to sell any. The thing is, their machine costs about 90,000 Argentine pesos [about $6,000], and our machine goes for 32,000 pesos [about $2100].”

  • [By Jim Robertson]

    Today, our Under the Radar Moversnewsletter suggested shorting mid cap emerging markets retail stock Cencosud SA (NYSE: CNCO):

    There are a couple of things going on here to lead us to a bearish conclusion, but the biggest of these is today’s cross under the 200-day moving average line (green) at $8.46. For a brief while it looked like this long-term moving average line was going to play a support role – as it often does – but today’s second selling effort broke its back. Now that the floor’s out of the way, the selling just got a lot easier.

Top 10 Stocks For 2017: Natural Grocers by Vitamin Cottage, Inc.(NGVC)

Advisors’ Opinion:

  • [By Peter Graham]

    A long term performance chart for Whole Foods Market shows along with mid cap peerSprouts Farmers Market Inc (NASDAQ: SFM) and Natural Grocers by Vitamin Cottage (NYSE: NGVC) largely drifting lower with two price spikes:

  • [By Peter Graham]

    A long term performance chart for Whole Foods Market shows along with mid cap peerSprouts Farmers Market Inc (NASDAQ: SFM) and Natural Grocers by Vitamin Cottage (NYSE: NGVC) appearing to all be in downtrends that may or may not have leveled off:

Top 10 Stocks For 2017: Allot Communications Ltd.(ALLT)

Advisors’ Opinion:

  • [By Lisa Levin]

    Telecommunications services shares gained around 0.98 percent in trading on Thursday. Meanwhile, top gainers in the sector included Telefonica S.A. (ADR) (NYSE: TEF), and Allot Communications Ltd (NASDAQ: ALLT).

Top 10 Stocks For 2017: Nomura Holdings Inc ADR(NMR)

Advisors’ Opinion:

  • [By Maureen Farrell]

    Shortly after Lehman declared bankruptcy, Barclays (BCS) paid $1.3 billion for most of the firm’s North American operations, its Times Square headquarters, and about 9,000 employees. Nomura Holdings (NMR) paid roughly $200 million for Lehman’s operations in Asia.

Top 10 Stocks For 2017: Imprivata, Inc.(IMPR)

Advisors’ Opinion:

  • [By Lisa Levin]

    Shares of Imprivata Inc (NYSE: IMPR) got a boost, shooting up 31 percent to $19.01 as the company reached a definitive deal to be bought by an affiliate of Thoma Bravo, LLC, a private equity firm, for $544 million

Top 10 Stocks For 2017: Diana Containerships Inc.(DCIX)

Advisors’ Opinion:

  • [By Lisa Levin] Related Chardan Analyst Suggests An AveXis-Ionis Pair Trade Why The Biogen-Ionis News Is A Boon For AveXis AveXis' (AVXS) CEO Sean Nolan on Q4 2016 Results – Earnings Call Transcript (Seeking Alpha) Related CLBS Earnings Scheduled For March 17, 2017 15 Biggest Mid-Day Gainers For Thursday Caladrius Biosciences beats by $0.07, beats on revenue (Seeking Alpha) Gainers Caladrius Biosciences Inc (NASDAQ: CLBS) shares rose 20.2 percent to $6.13 in pre-market trading after the company reported a narrower-than-expected quarterly loss. Arbutus Biopharma Corp (NASDAQ: ABUS) rose 12.3 percent to $3.20 in pre-market trading after the company disclosed that it has licensed LNP delivery technology to Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) for use in single messenger RNA product candidate. AveXis Inc (NASDAQ: AVXS) rose 12.2 percent to $81.66 in pre-market trading after the company reported topline data from Phase 1 trial of AVXS-101. TOP SHIPS Inc (NASDAQ: TOPS) shares rose 10.5 percent to $2.43 in pre-market trading after surging 109.52 percent on Thursday. ChipMOS TECHNOLOGIES INC. (NASDAQ: IMOS) rose 9.8 percent to $17.45 in pre-market trading after declining 0.44 percent on Thursday. Sino-Global Shipping America, Ltd. (NASDAQ: SINO) rose 8.3 percent to $3.38 in pre-market trading after climbing 23.81 percent on Thursday. Diana Containerships Inc (NASDAQ: DCIX) rose 7.6 percent to $2.99 in pre-market trading after surging 12.55 percent on Thursday. Steel Dynamics, Inc. (NASDAQ: STLD) rose 5.2 percent to $37.25 in pre-market trading. Steel Dynamics expects Q1 earnings of $0.77 to $0.81 per diluted share. The company also declared a quarterly cash dividend of $0.1550 per common share. Adobe Systems Incorporated (NASDAQ: ADBE)
  • [By Wayne Duggan]

    DryShips isn’t the only shipping stock that has skyrocketed this month; the following stocks’ shares are all up between 320 and 720 percent since November 2:

    Diana Containerships Inc (NASDAQ: DCIX). Euroseas Ltd. (NASDAQ: ESEA). Globus Maritime Ltd (NASDAQ: GLBS). Sino-Global Shipping America, Ltd. (NASDAQ: SINO).

    One of the primary reasons for the extreme moves in DryShips and other shipping stocks is a combination of large short positions in the stocks and extremely low share counts. DryShips in particular lowered its share count from around 672 million to only around 1 million via a series of reverse stock-splits throughout the year. The splits were intended to allow the stock to maintain its Nasdaq listing after it had lost more than 98 percent of its value in the first 10 months of 2016.

  • [By Lisa Levin] Related CRMD Mid-Day Market Update: U.S. Stocks Turn Negative; AveXis Shares Spike Higher 12 Biggest Mid-Day Gainers For Tuesday CorMedix's (CRMD) CEO Khoso Baluch on Q4 2016 Results – Earnings Call Transcript (Seeking Alpha) Related BIOA Mid-Day Market Update: U.S. Stocks Turn Negative; AveXis Shares Spike Higher Mid-Morning Market Update: Markets Edge Higher; Tiffany Earnings Top Estimates BioAmber (BIOA) Q4 2016 Results – Earnings Call Transcript (Seeking Alpha) CorMedix Inc. (NYSE: CRMD) shares fell 27.5 percent to $1.50 after the company reported Q4 results and issued a business update. Bioamber Inc (NYSE: BIOA) shares tumbled 23.6 percent to $2.40. BioAmber reported FY16 adjusted loss of $1.07 per share on revenue of $8.3 million. The Medicines Company (NASDAQ: MDCO) shares dipped 20.9 percent to $41.62. Innocoll Holdings PLC (NASDAQ: INNL) shares fell 20.3 percent to $1.49. Innocoll posted a narrower-than-expected quarter loss, but revenue missed estimates. Stifel Nicolaus downgraded Innocoll from Buy to Hold. Rosetta Genomics Ltd. (USA) (NASDAQ: ROSG) shares declined 20.3 percent to $3.83. On Thursday, Rosetta Genomics disclosed a 1-for-12 reverse stock split. Esperion Therapeutics Inc (NASDAQ: ESPR) shares dropped 19.9 percent to $23.76. Esperion Therapeutics shares have jumped 106.19 percent over the past 52 weeks, while the S&P 500 index has gained 16.70 percent in the same period. AmTrust Financial Services Inc (NASDAQ: AFSI) tumbled 18.3 percent to $17.65. AmTrust Financial disclosed that it will delay its annual report filing for the fiscal year ended December 31, 2016. Qualstar Corporation (NASDAQ: QBAK) slipped 17.7 percent to $6.85. Qualstar reported a Q4 loss of $0.20 per share on revenue of $2.2 milli
  • [By Lisa Levin]

    Shares of Diana Containerships Inc (NASDAQ: DCIX) got a boost, shooting up 169 percent to $16.49. Diana Containerships shares climbed 276 percent, since the election.

Top 10 Stocks For 2017: US Foods Holding Corp. (USFD)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Guggenheim’sJohn Heinbockel and team argue that a “purging of space is necessary” in retail, and recommend hiding in “industry leaders who canprofitably gain share and are not especially expensive,” like Michaels (MIK), Tractor Supply (TSCO), Restoration Hardware (RH), Kroger (KR),and US Foods Holding (USFD). They explain:

Top 10 Stocks For 2017: NetApp Inc.(NTAP)

Advisors’ Opinion:


    NetApp (NTAP) was upgraded to buy from hold at Drexel Hamilton. $52 price target. The company continues to execute a successful business transition, Drexel said. 

  • [By Lisa Levin]

    Analysts at Piper Jaffray upgraded NetApp Inc. (NASDAQ: NTAP) from Neutral to Overweight and raised the price target from $37.00 to $46.00.

    NetApp shares rose 0.33 percent to close at $39.58 on Monday.

  • [By Brian Mathews]

     NetApp Inc. (NASDAQ: NTAP) is the third-largest vendor in the external-controller-based storage market that has been suffering from flat revenue growth the last two years. NetApp has shown growth opportunities related to the flash and clustered Data ONTAP in 2015. NTAP also demonstrates its technical superiority with newer technologies such as object storage and all-flash arrays. In fact, the company is developing FlashRay, which will be in high demand due to its compatibility with the Data ONTAP products. Also, the storage industry is expected to grow due to further security, control and regulations that limit data being held off-premise. Investors can see NTAP growing to $36 in next year.

  • [By Michael A. Robinson]

    Tech Wealth Gem No. 3
    The First Trust Cloud Computing ETF (Nasdaq: SKYY) is after a massive market. According to Statista.com, cloud computing has grown at a 16% yearly clip in the past five years. And Gartner Group says that $111 billion in tech spending was earmarked for the cloud in 2016 – a number that will hit $216 billion by 2020. Its holdings include Amazon, NetApp Inc. (Nasdaq: NTAP), and Netflix.com Inc. (Nasdaq: NFLX). Trading at just $38, SKYY has a 0.6% expense ratio. Last year, the fund gained nearly 20%; it’s up 7.4% since we first looked at it earlier this year, and it’s averaged profits of 15.4% over the past five years.

Top 10 Stocks For 2017: Xerox Corporation(XRX)

Advisors’ Opinion:

  • [By Paul Ausick]

    Xerox Corp. (NYSE: XRX) dropped about 23% on Tuesday to post a new 52-week low of $6.46 after closing at $8.73 on Friday. The dip was the result of the company’s completed separation into two firms this morning. After the early drop shares had gained around 17% by late afternoon, probably on the strength of a cash payment of $1.8 billion.

Top 10 Stocks For 2017: Plantronics Inc.(PLT)

Advisors’ Opinion:

  • [By Lisa Levin]

    Shares of Plantronics Inc (NYSE: PLT) were down 25 percent to $33.36. Plantronics reported better-than-expected third-quarter earnings, but the company’s revenue missed analysts’ expectations. The company announced a new 1 million share buyback plan and issued a weak earnings forecast for the fourth quarter.

financial investment

CarMax (NYSE:KMX) reported a disappointing second quarter that saw revenues and earnings come up short. Revenues increased 3.1% thanks to a mix of new store openings and decent same-store unit comps, but excess used car inventories continued to weigh on pricing. Average selling prices on used cars fell 2.3% y/y and wholesale pricing declined 4.1%. Gross profit per vehicle fell 0.3%, and SG&A per unit skyrocketed from $74 to $2,147 (largely due to higher stock-based compensation). We like KMX’s business model and we are optimistic about the long-term outlook; however, we would not recommend buying on the latest dip, as we think the US economy could be headed for a recession and KMX is a very cyclical business.

KMX’s latest quarter showed symptoms of a weakening economy. Comparable store used car units increased 3.1%, which was a strong improvement over the 0.2% increase in Q1, but a notable deceleration from last year’s Q2 when unit comps increased 4.6%. The y/y comparison is more meaningful given the seasonality in the auto industry and the fact that more people tend to drive in the summer months when the weather is nicer. The deceleration in unit comps was mainly due to lower traffic, particularly from customers at the lower end of the credit spectrum who are more sensitive to fluctuating economic conditions. Tier 3 customers accounted for 9.5% of used car volumes compared to 13.7% last year, while unit comps for non-Tier three customers grew at a healthy 8%. Management blames some of the slowdown from Tier 3 customers on Santander (NYSE:SAN) reducing its subprime lending, but also acknowledged that more of these customers are staying out of the market.

financial investment: Applied Materials, Inc.(AMAT)

Advisors’ Opinion:

  • [By Sean Williams]

    A final company income seekers would be wise to give a look is Applied Materials (NASDAQ:AMAT). Applied Materials provides manufacturing equipment to semiconductor companies, meaning its business tends to be highly cyclical. If the economy is performing well, Applied Materials is probably excelling. But if semiconductor spending is down, Applied Materials is likely struggling.

  • [By Chris Lange]

    Applied Materials Inc. (NASDAQ: AMAT) short interest rose slightly to 15.21 million shares. The previous reading was 15.17 million. Shares closed Friday at $31.88, in a 52-week range of $15.44 to $31.97.

  • [By Ben Levisohn]

    Applied Materials (AMAT) rose to the top of the S&P 500 today as semiconductor stocks rebounded from yesterday’s selloff.

    Getty Images

    Applied Materials gained 4.5% to $31.44 today, while the S&P 500 was little changed at 2,191.95. The SPDR S&P Semiconductor ETF (XSD) rose 1% to $52.80, while the VanEck Vectors Semiconductor ETF (SMH) climbed 1.6% to $68.77.

    My colleague Tiernan Rey at Barron’s Tech Trader Daily quoted B. Rileys Craig Ellis in a post today, who called the selloff yesterday an unusually attractive entry opportunity forApplied Materials andMicrochip Technology (MCHP) buyers.

    Applied Materials reported net income of $1.7 billion on sales of $10.8 billion in fiscal 2016.


  • [By Chris Neiger]

    Applied Materials (NASDAQ:AMAT) made investors very happy last year as the company’s stock price rose more than 74%. And that growth has continued into this year, with Applied Materials up more than 10% since the beginning of 2017.

financial investment: MannKind Corporation(MNKD)

Advisors’ Opinion:

  • [By Chris Lange]

    MannKind Corp. (NASDAQ: MNKD) saw the number of its shares short increase slightly to 98.71 million. The previous reading was 97.07 million. The stock closed most recently at $0.55, in a 52-week range of $0.41 to $2.24. Note that MannKind is one of the most shorted Nasdaq stocks.


    MannKind Corp. (MNKD) has developed a drug, Afrezza, which is a new form of inhalable insulin that is proving to have many benefits over existing mealtime insulins for diabetics.  

financial investment: PVH Corp.(PVH)

Advisors’ Opinion:

  • [By Ben Levisohn]

    PVH (PVH) slipped to the bottom of the S&P 500 today as consumer discretionary stocks fell.

    Getty Images

    Shares of PVH dropped 5.1% to $102.45 today, while the S&P 500 finished little changed at 2,191.95. The S&P 500 Consumer Discretionary Sector index fell 0.6%

    PVH reported better-than-expected earnings on Nov. 30, but offered disappointing guidance. In a note released on Dec. 1, Wunderlich analyst Eric Bederkept the faith with the stock:

    We are reiterating our Buy rating, $125 price target and FY18 EPS and raising our FY17 EPS to $6.75 (From $6.63) after PVH Corp. (PVH) once again handily beat conservative guidance for 3Q, driven by market share gains in the domestic wholesale business and strong international growth, and provided what we view as conservative guidance for 4Q. We believe the company has continued to make strides in driving solid upside despite material FX and related tourist traffic issues. Further, we believe PVH, with Tommy Hilfiger womens domestic business shifting to a licensed model, should drive further margin upside. We continue to view PVH as a key winner in the apparel segment and believe the company continues to have numerous levers to drive bottom line upside.

    PVH’s market capitalization fell to $8.2 billion today, from $8.7 billion yesterday.

  • [By Ben Levisohn]

    Today, the Wall Street Journal reported that Kate Spade & Co is considering a sale of the company, following pressure from activist investors given the volatile performance ever since Kate Spade became a mono brand company over 2 years ago. The article cites thatKate Spade has hired an investment bank and has reached out to possible buyers (including other retailers) althoughKate Spade has not responded. This comes at a time when brand houses like VF Corp. (VFC), PVH Corp. (PVH), Hanesbrands (HBI), Michael Kors Holdings (KORS), and Coach have said they are looking to make a branded acquisition, andKate Spade could be one of the strongest candidates. While other brands are seeing negative comps, pulling back on wholesale exposure or restructuring,Kate Spade continues to grow.

financial investment: Match Group, Inc.(MTCH)

Advisors’ Opinion:

  • [By Jeremy Bowman]

    In its first full year as a publicly traded company, online dating conglomerateMatch Group (NASDAQ:MTCH) surged past expectations, climbing 26%.

    A number of factors led to its standout performance, including blockbuster growth from Tinder, strong operating leverage, and consistently beaten earnings estimates. Let’s take a closer look at how things played out in 2016.

financial investment: US Foods Holding Corp. (USFD)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Guggenheim’sJohn Heinbockel and team argue that a “purging of space is necessary” in retail, and recommend hiding in “industry leaders who canprofitably gain share and are not especially expensive,” like Michaels (MIK), Tractor Supply (TSCO), Restoration Hardware (RH), Kroger (KR),and US Foods Holding (USFD). They explain:

financial investment: Welltower Inc.(HCN)

Advisors’ Opinion:

  • [By Brian Feroldi]

    Investors in their 60’s should start to favor low-risk stocks that offer up big dividend payouts. Below are three stocks — Waste Management (NYSE:WM), United Parcel Service (NYSE:UPS), and Welltower (NYSE:HCN) — that perfectly fit that description.

US Foods: Delivering More Than Just Foodservice Cases During 2016

Source: Google Images

US Foods Holding (NYSE:USFD) is the second-largest foodservice company, next to Sysco Corporation (NYSE:SYY). Many remember Sysco’s attempt to acquire US Foods, which did not pass regulatory hurdles. Soon after the deal was off, US Foods decided to go the IPO route as a public company.

My initial interest in US Foods was the company’s growth potential over the long term, combined with the opportunity for margin expansion resulting from consolidation and restructuring of the company’s operations. I had modeled US Foods over the long term providing investors with a double-digit return at the right stock price.

Today’s fourth quarter and fiscal year-end results were strong for the company. Net sales improved to $22.9 billion for the year and $5.7 billion in the fourth quarter. Investors should note that 2015’s numbers included a 53-week period versus the 52-week period during 2016. Apples-to-apples, net sales were up. Net sales were driven by three percent growth in total case volume, led by 6.6 percent growth in independent restaurant case volume.

More importantly, US Foods realized cost savings for cost of sales and operations. This translated to a 30-basis point (bps) improvement for gross margin and a 100-bps improvement for operating margin. On an adjusted basis, this led to a 130-bps improvement for diluted earnings per share (NYSEARCA:EPS). Profit margin on an adjusted basis came in at 1.4 percent, only 60-bps shy of the all-important two percent focal point.

In addition to the company’s net sales and profit margin, adjusted EBITDA improved by 12.5 percent. The company has continued to guide for adjusted EBITDA to grow over the mid-term by seven to 10 percent, but 2016’s performance exceeded these expectations. US Foods’ return on equity increased dramatically to 13 percent. Debt is now four times EBITDA on a gross basis, which is lower than Sysco and well on track to meet the three times goal in the near term.

Lastly, free cash flow came in strong for 2016 at approximately $400 million leading to a seven percent free cash flow yield for the stock price. Investors will remember that US Foods does not pay a dividend like some of its peers. But the company’s strong cash flows should allow for stock repurchases to improve adjusted diluted EPS growth. And a dividend may be on the horizon at some point in the near term.

As stated, my target for US Foods to be a solid long-term holding is for the company to attain a two percent profit margin. Ideally, this would occur on a GAAP basis, but the company’s calculation for adjusted net income has provided an adequate non-GAAP metric which still would provide investors with strong investment potential at a two percent margin.

US Foods computes its adjusted net income by first calculating EBITDA by adding interest expenses, income taxes and depreciation and amortization to GAAP net income. From this point, the company adds a variety of other line items including restructuring and impairments, share-based compensation, reserve charges, among others, to get an adjusted EBITDA. From here, the company simply subtracts out the previous EBITDA items for adjusted net income.

Source: US Foods, Q4 and Full Year 2016 Results, February 15, 2017

US Foods has provided analysts and investors slide 16 from the Q4 and full year 2016 results earnings call, which is an important one to model financial expectations. These expectations are what helps us to form an opinion regarding the stock’s valuation level for potential growth.

The problem is that US Foods earned $1.57 per share on an adjusted basis during 2016. For 2017, the company has provided a range of $1.26 to $1.40 per share. By considering growth expectations for net sales, adjusted EBITDA and net income, there are clearly no red flags as to the company’s core growth.

This is confusing as there is a precedent regarding US Foods’ adjusted EBITDA numbers being the last step before subtracting depreciation and amortization, interest expenses and income taxes to get adjusted net income and diluted EPS. If we work out the math from these assumptions, we get an adjusted dilut ed EPS number much higher than the range provided at approximately $1.85 per share.

If US Foods adjusted EBITDA were to grow at the midpoint of 8.5 percent for 2017, this would be applied to the $972 million generated in 2016, or $1.05 billion. Share dilution is not something that would appear to be on the horizon based upon the company’s strong cash flow. But investors will remember that a prospectus had been filed with the Securities and Exchange Commission (SEC) regarding a secondary public offering of another 36 million shares by Clayton, Dubilier & Rice, LLC ((CD&R)) and Kohlberg Kravis Roberts & Co. (NYSE:KKR), as selling shareholders.

Within this prospectus, the common stock outstanding as of December 31, 2016, was listed at 220.8 million shares. In addition to the original 36 million shares being sold, an additional 5.4 million shares were available for sale. On January 31, 2017, US Foods announced that the closing of the underwritten second ary public offering did indeed include the 41.4 million share total for CD&R and KKR as the selling shareholders. Based on this information, US Foods could have a significant increase in diluted shares for 2017. Just totaling the shares outstanding at year-end 2016, and the new total has increased to 262.2 million, a 19 percent increase in dilution.

When considering this number of shares outstanding, we get a number much closer to US Foods’ provided adjusted diluted EPS range at $1.50 per share US Foods did beat analyst estimates for the fourth quarter by $0.07 per share, so the company could very likely be providing conservative guidance.

Aside from the share dilution from the secondary public offering, US Foods’ growth projections for 2017 would generate a 30-bps improvement from the 1.4 percent profit margin to 1.7 percent on an adjusted basis.

When looking at US Foods’ current valuation level, the stock is trading 17.3 times adjusted earnings an d 9.5 times adjusted EBITDA, with a seven percent free cash flow yield. On a forward basis, US Foods is trading 18 and 15.4 times 2017 and 2018 adjusted earnings.

Sysco is trading 23 times adjusted earnings and 13.7 times EBITDA with a five percent free cash flow yield. On a forward basis, Sysco is trading 21.3 and 19.2 times 2017 and 2018 adjusted earnings. Both companies are witnessing expanding profit margins on an adjusted basis.

The share dilution does hurt US Foods, especially if the stock trades with a P/E multiple at 17 or 18 times adjusted earnings. Hopefully the market can get focused on US Foods now that CD&R and KKR have received a cool $1.7 billion in dividends and the secondary offering. In an economic growth cycle, I do believe that investors will be willing to pay over 20 times earnings. Sysco will likely continue to trade at a premium above US Foods.

As US Foods continues to approach a two percent profit margin, the company should se e an expansion for the P/E multiple. I do expect US Foods to eventually pay a dividend in the future. When this occurs, the stock may also see a higher valuation multiple.

For the time being, I expect US Foods to be range-bound somewhere between $26 to $27.50 per share. Over the next couple of years, if the company can meet its mid-term projections, a stock price approaching $35 per share is not unreasonable with a P/E at 20 times earnings. This target price provides the potential for 30 percent upside from today’s price level.

Over the long term, if US Foods can attain a P/E multiple at 20 times earnings, investors could expect to see annual stock price returns approaching 10 percent. This valuation level is not unreasonable, especially as Sysco has traded between 23 and 25 times earnings during the recent growth cycle. As the market continues to attempt to figure out US Foods, investors may look to enter or add to positions near the $26 per share level or low er to lower near-term market risk.

Disclosure: I am/we are long USFD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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