The auto part retailers have long been the darlings of the retail industry with consistent earnings growth, the highest margins in the sector, and protection from online players. And as a result, the stocks have been rewarded with a high valuation and market outperformance. However, there's a looming technology that could disrupt the industry that I don't think is being accounted for by investors.
Read MoreJohnson and Johnson: Pharma Segment Key to JNJ Performance in 2017
Johnson and Johnson stumbled a bit in the second half of 2016. The stock declined slightly 11% from July to late January as investors began to focus in on the Pharmaceutical segment and its growth trajectory. The segment, which represents 47% of sales, has driven much of JNJ's top-line growth over the last four years with over 10% organic growth each year. However, growth in this segment began to slow noticeably to 2% in 4Q16. Additionally, management gave segment guidance that implied growth of just 2-3% in 2017. In turn, street estimates were lowered.
What has been driving the growth moderation and the investor concerns?
Read MoreTesla: Tesla and the Blind Spots of Wall Street
As part of a shift in my writing, I am going to start talking a bit more about my own views on stocks (and stuff outside of stocks) and on the trades that I've made. I'll start with my latest trades on Tesla, where I bought some shares in late November and early January.
Read MoreChipotle: Will Customers Come Back to Chipotle?
A lot has happened to Chipotle since I last wrote on the stock back in October of last year. As is well known, Chipotle faced a number of health-related issues that forced the closure of numerous stores. Many restaurants have faced similar outbreaks in the past, but those restaurants did not have consecutive strings of outbreaks, nor did it happen during a time when social media allowed news to spread quickly. As a result, sales dropped off a cliff and the stock has declined by 45% since the initial reports. For those who hold very strong beliefs on the future of a company, the outbreaks serve as a stark reminder that the future for any company is never certain.
Read MoreRestoration Hardware: One of the Few Exciting Transformations in Retail
Restoration Hardware is currently undergoing a massive real estate transformation. The company is in the early innings of a shift from small, 7,000 foot stores to large, 35,000 - 60,000 square foot "full line design galleries" (FLDGs). The company eventually hopes to triple or quadruple its square footage over time as it adds 70 of these massive stores throughout the country.
Read MoreFacebook: What Investors are Focused on Ahead of FB's 3Q Results
Have you ever seen a company beat consensus EPS estimates, but the stock still goes down? This happens because institutional investors focus on many other line items besides earnings. Here are the key issues (beyond the obvious EPS estimate of $0.52) that investors will be focused on.
Read MoreFacebook: Detailing FB's Longer-Term Revenue Drivers and Bear Case
Facebook is a widely loved stock among both the buy-side and sell-side analysts. One of the reasons for the optimism is Facebook's near-term revenue growth drivers in video and Instagram, as I detailed yesterday. Beyond these factors, the company also has a number longer-term sources that hold a significant amount of potential. Specifically, Facebook's messaging apps, Facebook Messenger and WhatsApp, have an even greater number of users than Instagram and could unlock further growth beyond 2016. Additionally, Facebook's virtual reality company, Oculus, holds potential beyond PC and mobile as the next computing platform.
Read MoreFacebook: Detailing FB's Near-Term Revenue Drivers
The FB bull thesis is made up of a number of revenue drivers that could drive advertising revenue and EPS upside. In the near-term, investors see a number of positives that could benefit sales, including easing comparisons and FX headwinds. Beyond these superficial tailwinds, investors are most bullish on the opportunities from video and Instagram, which are not fully baked into consensus estimates for next year.
Read MoreBed Bath & Beyond: Investing to Stay Relevant
Over the last year, Bed Bath & Beyond has declined 12% vs the S&P 500's 5% gain. I detailed the bear case for Bed Bath and Beyond back in mid February, and the bear case has largely played out since that time. Going forward, a key issue will rest on whether BBBY will be able to re-accelerate its top line growth, and how quickly.
Read MoreApple: 4Q15 Results Largely As Expected; 1Q16 Guidance Positive
Apple reported fiscal 4Q15 results after market close yesterday, and investors reacted positively (Apple is currently up +1% in the premarket). While the quarter's results were largely in line with investor expectations, investors were generally positive on Apple's 1Q16 guidance for positive iPhone revenue and unit growth. However, many investors remain concerned that growth could decline the rest of the year in fiscal 2016. A key question going forward will be whether Apple will be able to grow iPhone units and revenue in 2016 on top of the highly successful prior year.
Read MoreStarbucks: Tech Initiatives Expected to Drive Continued Growth
Key Issue 1: Mobile Order & Pay and its impact on sales
Key Issue 2: Next Thursday's 4Q report
Key Issue 3: Valuation is not inexpensive
Read MoreAmazon: 3Q Results Demonstrates Ability to Grow Profitably
Going into 3Q results, investors feared that Amazon's recent string of strong results had led to impossibly high expectations for the company to achieve. However, Amazon's recently reported 3Q results managed to exceed even these expectations, with results that were strong across the board.
Read MoreChipotle: 4Q Guidance Disappoints Investors
Chipotle reported 3Q earnings after market close, and the pre-market is indicating an opening price down 8%. The company reported 3Q EPS of $4.59, which fell slightly short of consensus estimates of $4.62. Results were short largely due to lower-than-expected operating margins. However, the investor focus was primarily on management's commentary on sales trends.
Read MoreLowe's: Back-Half Guidance in Focus
Key Issue 1: Confidence in comp guidance for the back-half of the year
Key Issue 2: Confidence in margin guidance for the back-half of the year
Key Issue 3: Closing the HD/LOW Gap
Key Issue 4: Invest in HD or LOW?
Read MoreApple: Performance in China is Key
Apple reports earnings next Wednesday, October 27th. Here are the key discussion points among professional investors.
Read MoreGoogle: Alphabet Restructure Leads to Sum of the Parts Valuation
Key Issue 1: With the new Alphabet structure, how will the stock be revalued?
Key Issue 2: How will the core Google search business fare in 3Q?
Read MoreHome Depot: Debate Centers on Valuation
Home Depot is a widely admired company on Wall Street. Overall sentiment among Wall Street analysts is bullish, with the majority of analysts holding largely positive views on the stock. While there aren't many bears, there are analysts that believe the stock has run its course. Below are the key issues that these analysts are talking about.
Read MoreAmazon: Amazon Surpasses Walmart; 2Q Exceeds Expectations
Back in mid-June, I wrote about Amazon's 38% stock increase on the heels of a strong 4Q and 1Q. Since then, AMZN reported blowout 2Q results, and the stock has increased another 34%, for a total of a 72% increase since January 29. Amazon's market cap now stands at $250 billion, surpassing Walmart's $230 billion market cap. What has led Amazon to surpass the largest retailer in the world?
Read MoreBed Bath & Beyond: The Risks to Online Sales Growth
Last week, I wrote about Bed Bath & Beyond's 1Q15 results and about some concerns surrounding the company's guidance for the year. Specifically, I wrote that Bed Bath & Beyond may miss its top-line guidance due to difficult comparisons. In response, some have noted that online sales should account for that 2-3% growth; if one breaks out comps by online vs. retail, the company would only need brick and mortar to break even, as it did last quarter, and for online to contribute another 2-3% to comps.
Read MoreLowe's: LOW Presents an Interesting Opportunity - If You Believe Management
While its sexier competitor Home Depot gets all the attention, LOW is an interesting play at current levels. Lowe's currently trades at a similar multiple to Home Depot despite having a stronger outlook on earnings. The key to the story is whether LOW will be able to achieve its guidance (set forth by management) for the year.
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