Ford, General Motors and Starbucks: Doug Kass' Views
Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
More Signs of 'Peak Autos'
Originally published July 22 at 11:00 a.m. EDT
Shares of Ford (F) - Get Report and General Motors (GM) - Get Report are trading near Wednesday's closing prices even though GM on Thursday night reported earnings that blew out analyst estimates.
I'll have more to say about "Peak Autos" early next week. (In fact, I plan to expand upon the theme.)
Position: Short F, GM.
Aiming to Buy More Twitter
Originally published July 22 at 10:46 a.m. EDT
Twitter (TWTR) - Get Report has fallen some 1.7% on Friday morning to around $18 a share on a Raymond James downgrade -- and I'll be a buyer at $17 to $17.50.
As a reminder, TWTR is on my "Best Long Ideas" list.
Position: Long TWTR.
No Thanks a Latte
Originally published July 21 at 4:59 p.m. EDT
One of the things I strive to do in my Diary is to highlight and explain my non-consensus analysis and variant (both positive and negative) views regarding some of the most popular and unpopular stocks.
Examples of this approach include nonconsensus shorts such as Disney (DIS) - Get Report and Netflix (NFLX) - Get Report and longs such as Radian Group (RDN) - Get Report and DuPont (DD) - Get Report .
Starbucks (SBUX) - Get Report is another of my variant views, this one on the short side.
I have been vociferous on this one, especially over the past few weeks and months.
The stock was placed on my Best Ideas List on Jan. 29, 2016, at $60.60. I have been adding to my short recently.
After the close the company reported in-line results that had some blemishes associated with them (more to come tomorrow after the company's conference call).
The shares are down about 4% in after-hours trading.
Here was a recent negative appraisal and update on the company:
Starbucks Looks Lukewarm to Me
By DOUG KASS
APR 25, 2016 ' 7:51 AM EDT
I'm maintaining my short of Starbucks after (SBUX) - Get Report last week's slight earnings miss relative to consensus expectations -- and as you might recall, I put SBUX on my "Best Short Ideas" list on Jan. 29 at $60.60.
Here are my concerns and observations regarding the coffee giant's latest earnings:
- Slowing U.S. sales and comps. Comps in SBUX's Americas segment slowed quarter over quarter to 50 basis points below their two-year average. Looking ahead, large comps (+4%) will also challenge forward sales.
- Moderating food sales. The contribution that food makes to comps is moderating, down to 16% in the latest period from a previous 20%. Food's contribution to aggregate comps also fell to 2% from an earlier 3%.
- Earnings quality. The quality of Starbucks' earnings is less than meets the eye. The company repurchased about $1.6 billion of shares in its latest quarter, or more than triple the amount from a year ago. Without the buyback, SBUX would have earned just $0.38 per share, falling below Wall Street consensus.
- A weakening global economy. SBUX investors' greatest fear should be the possibility of moderating global economic growth (or even a recession). If either of those happen, demand elasticity for the coffee chain's premium-priced products will face pressure.
The bottom line: Slowing growth at a peak multiple seems to like a bitter combination for investors to swallow.
Position: Short SBUX.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long F, SBUX and TWTR.