Archive for June, 2019

• CWS Market Review – June 28, 2019
  Eddy Elfenbein, June 28th, 2019 at 7:08 am

  “A good decision is based on knowledge and not on numbers.” – Plato

  Today is the last day of trading for the first half of 2019. This has been a pretty good start to the year. The S&P 500 is up 16.68%. Including dividends, the index is up 17.85%. It looks like the Dow is about to close out its best June in 81 years.

  Our Buy List, I’m happy to report, is beating the market again this year. Through Thursday, we’re up 19.30% for the year. I’ll have more details on our performance in upcoming issues. Best of all, we haven’t made one single trade all year.

  

  This week, our #1 performer proved why it got that title. FactSet beat Wall Street’s earnings estimate by 26 cents per share! The company also raised its full-year earnings guidance.

  This week, we also learned the name of Danaher’s dental spinoff. The new company will be called Envista. (Yuck!) Anyway, DHR shareholders will get shares of it later this year.

  I’ll get to all that, but first, let’s look at some recent economic news and what to expect when Q2 earnings season begins.

  Earnings Growth Looks to Decline in Q2 and Q3

  I was a bit surprised on Tuesday by the weak consumer-confidence report. This was the lowest report since September 2017. Some of that is clearly related to trade tensions, but it could have a wider impact.

  As is often the case, this is a game of expectations. Relatively speaking, consumer confidence is quite high. It’s just lower than people had expected. This could wane soon if a trade deal is reached between the U.S. and China at the upcoming G-20 meeting.

  That’s not all. Also this week, the Census Bureau reported that new-home sales fell in May to 626,000. That’s an annualized figure. The three previous months were revised down as well. We’ll probably see some improvement in these figures since mortgage rates have come down. In fact, Freddie Mac just reported that mortgage rates are at a 31-month low.

  It’s been eleven years since the housing sector went kablooey. Adjusted for inflation, home prices are still below peak.

  The second-quarter earnings season is set to begin in two weeks. Overall, the numbers will be so-so. Nothing terrible, but nothing great either. According to FactSet (not only a great stock, but a great source of data as well), earnings are expected to decline by 2.6% for Q2. Not only that, but estimates for Q3 have just turned negative as well, but only barely. At the start of the year, Wall Street had been expecting Q3 earnings growth of 3.4%. Now that’s down to -0.3%. Earnings in the tech sector are expected to fall by 9.3%.

  There’s a direct relationship between short-term interest rates and stock valuations. So we’ve seen share prices rise as earnings have flatlined. But at the same time, short-term rates are expected to fall soon. In other words, the valuations can mask the weakness in the market.

  There’s nothing wrong with a rise in valuations, but you have to keep in mind that it can be fleeting. I love seeing valuations rise for our stocks, but I’d much rather see stronger earnings growth.

  As we’re entering a period of meager earnings growth, it’s important for us to focus on high-quality stocks. If investors know they can count on steady earnings growth from companies like AFLAC (AFL) or Hershey (HSY), they’ll migrate to them.

  I also want to address an issue that’s gotten a lot of attention.

  President Trump has continued to rip Fed Chairman Jay Powell. I’ll skip the politics, but it’s quite clear that the president can’t fire Powell based on policy differences. Moreover, the FOMC is a committee. The president even said he wanted ECB President Mario Draghi as Fed chairman. (The ECB is expected to cut rates soon to -0.5%.)

  There’s a reason why the Fed members have 14-year terms, and Powell is hardly a rogue member. The recent policy statement to leave rates unchanged was supported by a margin of nine to one.

  I don’t believe the Fed will be swayed by any empty threats from the White House. In fact, fights between the Fed and the White House are nothing new. Lyndon Johnson wanted to fire William McChesney Martin. in the 19th century, Andrew Jackson and Nicholas Biddle fought constantly. The period is even known as the “Bank War.” I actually think Powell could be an ally to Trump if negative effects of the trade war become evident.

  If you had paid attention to the talking heads, you probably would have been scared out of this market by any of the following: Iran, Russia, Trump, China, the Democrats, the Fed or half a dozen other boogeymen (boogeypeople?). Yet here we are at the halfway mark and our strategy is doing just fine. Good investing is boring. Now let’s look at a solid earnings report from our biggest winner this year.

  FactSet Beats Earnings by 26 Cents per Share

  Before the opening bell on Tuesday, FactSet (FDS) reported fiscal Q3 earnings of $2.62 per share. That creamed estimates by 26 cents per share. Compared with last year, it’s an increase of 20.2%. Organic revenue grew 7.3% to $366.3 million. FactSet’s operating margin increased to 34%.

  A key stat for FDS is Annual Subscription Value or ASV. Last quarter, that rose to $1.45 billion. The organic growth rate, which excludes the effects of acquisitions, dispositions, and foreign currency, was 5.6%.

  Also, the Board of Directors approved a $210 million increase to the existing share-repurchase program.

  “FactSet’s ability to perform well this year amid sector and industry headwinds serves as a proof point that our long-term strategy is working,” said Phil Snow, FactSet CEO. “We are encouraged that our smarter, connected data and technology solutions continue to resonate with clients as we help them drive efficiency and increase value in an ever-changing environment.”

  FactSet also updated its guidance for 2019. The company expects revenue between $1.42 and $1.44 billion, and operating margin between 32.5% and 33.0%. FactSet sees their earnings-per-share ranging between $9.80 and $9.90. That’s an increase to the previous guidance of $9.50 to $9.65 per share.

  The stock pulled back a little after the earnings report, but it was nothing too serious. This has still been a very big winner for us this year. Through Thursday, FDS is up 42.6%. This week, I’m raising my Buy Below on FactSet to $298 per share.

  Buy List Updates

  This week, Danaher (DHR) announced that its dental spinoff will be called Envista Holdings Corporation. Sometime in the second half of 2019, shareholders of Danaher will get shares of Envista.

  I’m not a fan of most modern corporate names. This one requires some explanation:

  Mr. Aghdaei stated, “Envista’s name is a combination of two Latin root words: ‘en’, a prefix meaning to be within, and ‘vista’, meaning a view. Our logo of concentric circles represents our ability to collaboratively achieve endless possibilities ahead. The Envista brand reflects the forward-looking energy that embodies our company culture.”

  As far as the Buy List goes, the spinoff shares will join the Buy List as our 26th member. That’s what we’ve done with previous spinoffs. I’ll decide whether we’ll keep it or not at the end of the year.

  Danaher will report earnings again on July 18. For Q2, Danaher expects earnings to range between $1.13 and $1.16 per share. For all of 2019, Danaher sees earnings coming in between $4.72 and $4.80 per share. Danaher is a buy up to $150 per share.

  

  Becton, Dickinson (BDX) got clobbered in April, and the earnings report wasn’t that good. In May I decided to lower our Buy Below price. Strong companies tend to manage their way through weak stretches. Sure enough, shares of BDX have rallied 12% since mid-April. I’m raising my Buy Below to $255 per share. Becton sees full-year earnings ranging from $11.65 to $11.75.

  Shares of Ross Stores (ROST) got pinged this week. The deep-discounter was downgraded by Goldman Sachs. I’m not too worried. The analyst downgraded Nordstrom as well. At one point, ROST was down 3.5% on Thursday. The last earnings report was quite good. As usual, the outlook was cautious. Ross Stores is a buy up to $106 per share.

  That’s all for now. The stock market will close at 1 p.m. on Wednesday, July 3. The market will be closed all day on Thursday, July 4 in honor of Independence Day. We’re open for business again on July 5. The ISM Manufacturing Index will come out on Monday. The ADP payroll report is on Wednesday. Then on Friday, we’ll get the big June jobs report. The jobless rate for April and May was 3.6%. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• Morning News: June 28, 2019
  Eddy Elfenbein, June 28th, 2019 at 7:01 am

  The World’s Top Stock Market? Right Now, It’s Russia

  Trade Uncertainty Stops World Stocks in Tracks

  Saudi Arabia’s Hometown Ambitions Could Clip Wealth Fund’s Wings

  U.S. and China Angle for Trade Truce, but Both Insist the Other Will Back Down

  Trump Wants Fed to Weaken Dollar. Powell Says That’s Not His Job

  First-Quarter GDP Left at 3.1% as Stronger Business Investment Offsets Weaker Consumer Spending

  Fed Stress Tests Find Top Banks Are Strong, Setting Stage for Wave of Payouts

  A Major Police Body Cam Company Just Banned Facial Recognition Software

  Inside Apple’s Long Goodbye to Design Chief Jony Ivet

  A Unicorn Lost in the Valley, Evernote Blows Up the ‘Fail Fast’ Gospel

  Merlin to Go Private in $7.5 Billion Deal with Lego Family and Blackstone

  The Hotel Hackers Are Hiding in the Remote Control Curtains

  Lawrence Hamtil: The Compelling Case for Mid Cap Stocks

  Ben Carlson: Will Trend-Following Continue to Disappoint?

  Michael Batnick: Regret and Relief

  Be sure to follow me on Twitter.

• Danaher Announces New Dental Company To Be Named Envista Holdings Corporation
  Eddy Elfenbein, June 27th, 2019 at 10:50 am

  Press release:

  Danaher Corporation today announced that Envista Holdings Corporation will be the name of the separate company Danaher intends to create and take public via an initial public offering in the second half of 2019. Envista will be comprised of three operating companies within Danaher’s Dental segment: Nobel Biocare Systems, KaVo Kerr, and Ormco. These businesses have significant positions in dental implants, orthodontics, dental equipment and consumables, and include brands such as Nobel Biocare, KaVo, Kerr, i-CAT, Dexis, Metrex, Pelton & Crane, Ormco, Implant Direct, and Orascoptic. Envista will be led by Amir Aghdaei, who will become President and Chief Executive Officer. Mr. Aghdaei currently serves as Danaher Group Executive with responsibility for the Dental segment.

  Mr. Aghdaei stated, “Envista’s name is a combination of two Latin root words: ‘en’, a prefix meaning to be within, and ‘vista’, meaning a view. Our logo of concentric circles represents our ability to collaboratively achieve endless possibilities ahead. The Envista brand reflects the forward-looking energy that embodies our company culture.”

  Aghdaei continued, “Envista’s culture will be built on four core values: ‘Better Choices, Better Outcomes,’ ‘Relationships Built on Trust,’ ‘Innovation in Action,’ and ‘Continuous Improvement as a Competitive Advantage.’ Our Danaher heritage helped us shape these values and serves as a strong foundation for our business. The Envista Business System, which will be based on the Danaher Business System, will be our common operating model.”

  Envista intends to apply to list its common stock on the New York Stock Exchange. The stock symbol will be NVST.

  Envista will employ 12,000 people worldwide. The company’s website is www.envistaco.com.

• Morning News: June 27, 2019
  Eddy Elfenbein, June 27th, 2019 at 7:38 am

  U.S., China Agree Tentative Trade Truce Ahead of G20 Summit

  Happy Talk of Trump-Xi Truce Masks Twisting Path to a Trade Deal

  Trump Redoubles Attack on Fed Chair, Saying `I Made Him’

  What Micron Said

  Amazon Prime Day for July 15-16 Sparks Deal Frenzy from Ebay and Target & Walmart Joins the Amazon Prime Day Sale Fray

  Weaning U.S. Power Sector Off Fossil Fuels Would Cost $4.7 Trillion

  A $1,800 Drop in Minutes: Bitcoin Volatility Is on Full Display

  Boeing’s 737 Max Suffers Setback in Flight Simulator Test

  Drugmaker Deals Are Near Record Pace in 2019, but Investors Don’t Love Them All

  The Cars Are Newer, The Buyers Are Younger As Auto Collecting Moves Forward

  The Charmed Life of a Young Tiger Cub With a $4.6 Billion Fortune

  King of the Snitches: The Fashion Photographer Who Duped Drug Lords and the DEA

  Ben Carlson: Gathering Investment Lessons From the Headlines & How to Win Any Argument About the Stock Market

  Michael Batnick: Unlimited Upside & The Great Depression of 2073

  Joshua Brown: My Take on the Bernie Sanders Plan to Wipe Out Student Loan Debt & How We Roll

  Be sure to follow me on Twitter.

• Morning News: June 26, 2019
  Eddy Elfenbein, June 26th, 2019 at 7:12 am

  China Hacked Eight Major Computer Services Firms in Years-Long Attack

  Why ‘Maximum Pressure’ on Iran Could Backfire

  Mnuchin: ‘We Were About 90% of the Way’ on China Trade Deal and There’s A ‘Path to Complete This’

  Powell Says Economy Facing Growing Uncertainties

  U.S. Prosecutors Join Multinational Crackdown on Insider Trading

  A Drug Megamerger That’s Patently Interesting

  FedEx Sues Trump Administration as Huawei and China Trade War Intensifies

  U.S. Companies Find Legal Ways Around Trump’s Huawei Blacklist

  Mitsubishi to Acquire Bombardier’s Regional Jet Unit for $550 Million

  Regulators Have Doubts About Facebook Cryptocurrency. So Do Its Partners.

  Justice Department Investigates Chicken Industry

  Buy Low-Tops, Sell High-Tops: A Sneaker Exchange Is Worth $1 Billion

  Nick Maggiulli: Are Smarter People Better Investors?

  Jeff Carter: Value, Public vs Private

  My View On: Student Debt Forgiveness

  Be sure to follow me on Twitter.

• FactSet Earned $2.62 per Share
  Eddy Elfenbein, June 25th, 2019 at 7:19 am

  FactSet (FDS) released a very good earnings report today. For its fiscal Q3, the company made $2.62 per share. That beat estimates by 26 cents. Quarterly revenues rose 7.2% to $364.5 million. Organic revenue grew 7.3% to $366.3 million. Operating margin increased to 34%.

  A key stat for FDS is Annual Subscription Value or ASV. Last quarter, that rose to $1.45 billion. The organic growth rate, which excludes the effects of acquisitions, dispositions, and foreign currency, was 5.6%.

  Adjusted diluted EPS rose 20.2% to $2.62 compared with $2.18 in the prior period driven primarily by stronger operating results. Also, the Board of Directors approved a $210 million increase to the existing share repurchase program.

  “FactSet’s ability to perform well this year amid sector and industry headwinds serves as a proof point that our long-term strategy is working,” said Phil Snow, FactSet CEO. “We are encouraged that our smarter, connected data and technology solutions continue to resonate with clients as we help them drive efficiency and increase value in an ever-changing environment.”

  Here are their expectations for 2019:

  Organic ASV plus professional services is now expected to increase in the range of $70 million and $75 million over fiscal 2018.

  GAAP revenue is now expected to be in the range of $1.42 billion – $1.44 billion.

  GAAP operating margin is now expected to be in the range of 30.0% – 30.5%.

  Adjusted operating margin is now expected to be in the range of 32.5% – 33.0%.

  FactSet’s annual effective tax rate is now expected to be in the range of 16% – 16.5%.

  GAAP diluted EPS is now expected to be in the range of $8.90 – $9.00. Adjusted diluted EPS is now expected to be in the range of $9.80 – $9.90. The mid-point of this guidance represents a 15% growth over the prior year.

  FDS is up 1.7% in pre-market trading. As of yesterday’s close, it’s up 46.57% for us this year.

• Morning News: June 25, 2019
  Eddy Elfenbein, June 25th, 2019 at 7:08 am

  The Economy Is About to Hit a Record. Trump Says the Fed ‘Blew It.’

  Pain From Trump’s China Tariffs Spreads, Reshaping Global Trade

  Robots Can Now Decode the Cryptic Language of Central Bankers

  ‘Storm Approaching’: Firms Fear for Deliveries in Shipping Shakeup

  FedEx Sues US Commerce Department Over Export Restrictions that Affect Huawei

  Huawei’s U.S. Research Arm Builds Separate Identity

  Natixis’s H2O Lost $3.4 Billion in Three Days of Carnage

  AbbVie to Buy Allergan in $63 Billion Deal

  Lyft and Uber Were Duds, but the I.P.O. Market Is Having a Great Year

  Forget Tanning Beds. College Students Today Want Uber Parking.

  WarnerMedia Names Ann Sarnoff as CEO of Warner Bros

  Carlos Ghosn’s Lawyers Push for Reason Why Nissan’s Hiroto Saikawa Wasn’t Charged

  Howard Lindzon: The Trend Is Your Friend…and Kerplunk!

  Michael Batnick: Unlimited Upside

  Roger Nusbaum: Solving Life’s Problems & Bitcoin Is Back Baby!

  Be sure to follow me on Twitter.

• Morning News: June 24, 2019
  Eddy Elfenbein, June 24th, 2019 at 7:18 am

  Lira Rally Eases as U.S. Sanctions Risk Tempers Turkey Bulls

  Bitcoin: Could 100K Be New 10K?

  Facebook Won’t Launch Its Cryptocurrency Wallet in Its Biggest Market

  A Message From the Billionaires’ Club: Tax Us

  Daimler’s New Leaders Confront Old Issues as Diesel Bites Again

  Glare Falls on Nissan’s C.E.O. as Ghosn Fallout Spreads

  FedEx Slashes Prices to Fill Its Planes

  What Happens After Amazon’s Domination Is Complete? Its Bookstore Offers Clues

  5 Lessons From Microsoft’s Antitrust Woes, by People Who Lived It

  Eldorado Resorts to Merge with Caesars Entertainment in $17.3 Billion Deal

  FedEx Confirms Huawei Mail Ban as New ‘Mistake’ Reignites Chinese Ire

  Here’s Some Money Advice: Just Buy the Coffee

  Jeff Miller: Weighing the Week Ahead: Can US/China Trade Talks Save the Global Economy?

  Joshua Brown: Yes, Of Course Trump Could Fire the Fed Chairman

  Ben Carlson: Gathering Investment Lessons From the Headlines

  Be sure to follow me on Twitter.

• CWS Market Review – June 21, 2019
  Eddy Elfenbein, June 21st, 2019 at 7:08 am

  “Many FOMC participants now see that the case for somewhat more accommodative policy has strengthened.” – Federal Reserve Chairman Jerome Powell

  That little statement above sparked a party on Wall Street. What it means, basically, is that the Fed is leaning towards cutting rates. Wall Street responded with a big rally. On Thursday, the S&P 500 closed at a brand-new all-time high.

  Our Buy List also closed at an all-time high. We have a nice lead over the market as well. We’re now up over 21% on the year and 2019 isn’t even halfway done.

  

  In this week’s CWS Market Review, we’ll take a closer look at what the Fed’s plans are. I’ll also preview next week’s earnings report from FactSet. This stock has been a rock star for us this year. It’s our #1 stock this year, with a 50% gain.

  I also have some updates for our Buy Below prices. Thanks to the recent rally, our stocks keep busting past their Buy Belows. But first, let’s look at what the Fed had to say this week. Or more accurately, what they’re no longer saying.

  The Fed Is Patient No More

  The Federal Reserve met on Tuesday and Wednesday of this week. This was an important meeting because there’s been growing pressure on the Fed to help out the economy. The central bank decided against lowering interest rates.

  Going into this meeting, there was some speculation that the Fed could surprise us with a rate cut. Alas, that didn’t happen, but the Fed appears to be more open to cutting rates in the future. In fact, one member, St. Louis Fed President James Bullard, voted to cut rates immediately.

  In their policy statement, the Fed noted the overall strength in the economy. Importantly, the Fed removed a key sentence. The words “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal-funds rate may be appropriate to support these outcomes” were absent from this statement. Previously, the “patience” referred to the need to raise interest rates.

  The statement contained this sentence: “The Committee continues to view sustained expansion of economic activity, strong labor-market conditions and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes.” And it added: “but uncertainties about this outlook have increased.”

  That’s telling. The FOMC debates these words carefully. There are clearly Fed members in addition to Bullard who want to see rates go down soon.

  The Fed also released its economic projections for the coming few years. Here’s where things get interesting. Despite the market’s desire for rate cuts, a slim majority at the Fed sees no need to cut rates this year. After that, they only see one rate cut coming next year.

  Wall Street is far from this view. Very far. According to the latest futures prices, a cut at next month’s meeting is a foregone conclusion. I’m not exaggerating. The futures market has the odds of a cut priced at 100%. You can’t get much more certain that that! One month ago, the odds were at 20%.

  On top of that, they see the odds of a cut at the following meeting, in September, at 87%. I’m puzzled by this level of certainty. In fact, futures traders see a third rate cut coming before the end of the year.

  While it’s true that the Fed appears to have shifted its stance towards being more open to rate cuts, I think the market is greatly overestimating the Fed’s willingness to cut rates once, or even a few times. Whenever there’s a disagreement between market prices and a committee of economists, it’s usually a good idea to take the market’s opinion with greater weight. This time, I’m not so sure. It’s one thing to take back a wrongheaded rate hike in December. It’s quite another to cut rates by 1% over the coming year.

  For their part, the bond market is all on board for rate cuts. This week, the yield on the 10-year Treasury dipped below 2%. The yield is now back to where it was before President Trump was elected more than two-and-a-half years ago. In the last seven months, the yield has dropped 120 basis points.

  

  What this means is that the financial markets are very concerned about the sustainability of the economy. The most interesting part of the yield curve is the area around two to three years ago. Yields here have plunged very low in anticipation of Fed rate cuts. But it appears that investors aren’t expecting a prolonged cycle of lower rates. The yield curve starts to rise again after three years out.

  On Thursday, the price of gold had its best day in three years. Gold is now at a six-year high.

  Wall Street seems convinced on three points: we need three or four rate cuts, the Fed will oblige us and these cuts will be successful. Frankly, I’m a doubter on all three.

  What to do now? The Fed’s policy change has been very good for share prices. So far, this has been the best June for the S&P 500 since 1955. Despite my skepticism regarding the Fed’s willingness to help us out, we’ve been doing very well.

  There’s been a shift in the rally. Starting in June, the low-vol sectors started to lag. This comes after a few weeks of trouncing the market. In June, tech has done well, while areas like financials have lagged. This makes sense as banks like higher interest rates.

  Investors should continue to focus on high-quality stocks like those we have on our Buy List. Pay particular attention to stocks that pay nice dividends. This includes stocks like Hershey (HSY), Hormel Foods (HRL) and AFLAC (AFL). Now let’s look at a Buy List stock that recently raised its dividend for the 14th year in a row.

  Look for Good Earnings Next Tuesday from FactSet

  We’re now in the slow period for Buy List earnings reports. On Tuesday, June 25, FactSet (FDS) is due to report. After that, we won’t see our next earnings report until mid-July when the Q2 earnings season starts.

  FactSet has been on a tear for us this year. It’s our top-performing stock, with a YTD gain of more than 50.3%. On a side note, FactSet is one of our off-cycle stocks. Their last quarter ended in May. We have one other stock on the same fiscal cycle, RPM International (RPM), but they won’t report for another month.

  Business is going very well for FactSet. Three months ago, FDS reported fiscal Q2 earnings of $2.42 per share. That was nine cents better than Wall Street’s consensus. Quarterly revenue rose 5.9% to $354.9 million, and organic revenue rose 5.7%.

  

  The key stat for FactSet is Annual Subscription Value, or ASV. In Q2, ASV rose to $1.44 billion. I was also pleased to see FactSet increase its adjusted operating margin to 33.2% from 31.4% a year ago. That’s a good sign.

  As of the end of Q2, FactSet has a client count of 5,405. That’s an increase of 108. The user count increased by 6,854 to 122,063. Annual client retention is greater than 95% of ASV.

  In March, FactSet also updated its financial guidance. The company expects revenue to range between $1.41 billion and $1.45 billion. They see adjusted operating margin between 31.5% and 33.5%. They see full-year earnings between $9.50 and $9.65 per share. That was an increase of five cents to the low end.

  More good news came last month when FactSet raised its dividend by 12.5%. The quarterly payout increased from 64 to 72 cents per share. The stock keeps churning higher. Last week, FDS broke above $300.

  The consensus on Wall Street for next week’s earnings report is $2.36 per share. Look for another beat. I’ll probably increase our Buy Below on FDS, but I want to see the earnings report first.

  Buy List Updates

  I have some comments on a few other stocks. This week, the Verge ran an expose on the content monitors at Facebook. It’s a disturbing story about how they have to watch graphic content on the Internet for hours on end. While the employees work at Facebook, they work for Cognizant Technology Solutions (CTSH).

  I want to be clear that there are no specific allegations of wrongdoing, but it’s not a flattering story. Cognizant is wisely staying ahead of the news. The company released a statement reiterating their support for workplace safety.

  This shouldn’t have any impact on the company’s financial health, but I wanted to make you aware of the latest news.

  There’s not much to add after the fallout from the Raytheon (RTN)/United Technologies (UTX) deal. In Barron’s, Andrew Bary said that the deal has pulled off a rare feat: it’s upset both sets of shareholders. He’s right. If someone pulled the plug on the deal, both stocks would rally.

  If there’s a silver lining, it’s that the recent dip in share price has made RTN a good value here. According to Bill Ackman, UTX is using their undervalued shares to buy us out. I don’t see a way that the merger can be called off. We’re stuck with it.

  With the market’s recent surge, I want to adjust a few of our Buy Below prices. Hershey (HSY), for example, has been rallying steadily for a few weeks. Since April 24, shares of HSY are up more than 18%. The chocolatier is a good example of a defensive stock. It does best when people are scared. I’m raising our Buy Below to $145 per share.

  Stryker (SYK) is now a 30% winner for us this year. This is one of the most consistent long-term winners you’ll find. The stock got up to a new 52-week high on Thursday. More good earnings news should come next month. I’m raising our Buy Below to $208 per share.

  Danaher (DHR) will report its Q2 earnings in July 18. The company expects earnings to range between $1.13 and $1.16 per share. Earlier, Danaher lowered its full-year guidance from $4.75 – $4.85 per share to $4.72 – $4.80 per share. This reflects the share dilution to buy GE Biopharma. The deal should close sometime in Q4. This week, I’m raising my Buy Below on Danaher to $150 per share.

  That’s all for now. Next week is the final trading week of the first half of the year. We’ll get a few important economic reports. On Tuesday, the new-home sales report comes out along with consumer confidence. On Wednesday, we’ll get the latest report on durable goods. On Thursday, the government will update the Q1 GDP numbers. The last report showed that the U.S. economy grew, in real terms, at a 3.1% clip in the first quarter. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• Morning News: June 21, 2019
  Eddy Elfenbein, June 21st, 2019 at 6:40 am

  Brexit’s Fearmongers May Finally Be Right⁠

  Does Trump Have the Legal Authority to Demote the Federal Reserve Chairman?

  Foxconn’s Billionaire Founder Urges Apple to Move Plants From China

  With Slack’s Buzzy IPO, Email Takes Another Hit

  Boeing Shocks With 737 MAX Announcement

  GE’s Viral Gaffe: To Reset Smart Bulb, Turn Off, On, Off, On…

  A ‘Sorceress’ in Brazil, a ‘Wink’ in India: Walmart Pleads Guilty After a Decade of Bribes

  Gold Bursts Past $1,400 as Bulls Buoyed by Dovish Central Banks

  Delta Invests In Korean Air To Defend Their JV And The Cho Dynasty

  Goldman Slashes Tesla Price Target by $42 on Demand Concerns

  DISH’s Biggest Risk Factor May Disappear Next Week, Stock Could Surge

  Seeking $2.1 Million After a College Chain’s Collapse (to Repay Its Guardian, not Students)

  Roger Nusbaum: No, You Won’t Retire To A Van Down By The River

  Ben Carlson: Which is Harder to Follow: Fitness Advice or Financial Advice? & Why Do We Need Inflation?

  Michael Batnick: When All You Feel Is Reward & The Paradox of You

  Be sure to follow me on Twitter.