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Following my appearance on Market Call Tonight, the following are summaries of the three “Top Picks” from last night’s show.  If you missed the show, check the Library section of this website for the links to the show. Agrium, $95.53 With crop prices being driven higher due to the North American drought, second half demand in international markets should allow Agrium to build on its excellent first half results.  In a rare move, the company twice increased its guidance prior to releasing its second quarter earnings on August 3rd and still surpassed the consensus estimate of $5.20 with earnings of $5.47 for the quarter.  These earnings were an increase of 19% compared to last year and position the company to meet or surpass the current consensus estimate for the year of $10.23 per share. Agrium is extremely well diversified by operating in both the production, wholesale and retail segments of the market, by...

Just a brief note today to alert you to my appearance on Market Call Tonight at 6pm on Monday night (Aug 13th) and a follow up on this quarter’s earnings reports which are just about completed. Overall, it was another better than expected set of results for the companies comprising the S&P 500 Index. Of the 430 S&P 500 companies that have reported, 43% reported in excess of 10% earnings growth and 65% of this group have exceeded consensus estimates.  The group of stocks that was listed in earlier issues has done even better in terms of exceeding estimates. Here are the up-to-date results with only TD Bank left to report this month: Date Company Estimate Actual July 17 Goldman Sachs $1.18 $1.78 July 19 Shoppers Drug Mart $0.70 $0.71 Google $10.04 $10.12 July 24 Dupont $1.47 $1.48 Paccar $0.82 $0.83 Rogers Comm. $0.86 $0.91 Apple $10.36 $9.32 July 25 Pepsi $1.09 $1.12 Caterpillar $2.28 $2.54 July 26 United Technologies $1.41 $1.62 Aug 3 Agrium $5.20 $5.47 Aug 9 Cdn Natural Resources $0.50 $0.55 Manulife Financial -$0.45 -$0.18   Early next week, the next issue of The Lato Letter will discuss my Top Picks from Monday’s show.  Enjoy the show and I will be...

Well, we are about half way through the current earnings reporting season and not surprisingly, results as a whole are better than expected.  Consensus estimates have decreased consistently over the year and particularly in the last few weeks. The chart below is from the noted economist, Ed Yardeni’s blog and it shows the continued lowering of estimates for the S&P 500 throughout the year. The second quarter estimates have flattened out over the last couple of weeks as companies have reported their better than expected earnings, but third and fourth quarter estimates have continued to decline.  For 2012, the current consensus estimate for the S&P 500 is $104.11 which implies a current price/earnings (p/e) multiple of 12.8X which is below average.  For 2013, analysts are currently expecting growth of 12% to bring the earnings to $116.41 or a p/e multiple of 11.5X; a very low multiple in the current interest rate environment. The...

As we head into the real start of the second quarter earnings season this week, I thought the following headline and opening paragraph from Friday’s report from JP Morgan’s strategist, Thomas Lee, summed things up pretty well. Expectations have been lowered significantly over the past quarter which could lead to a pleasant surprise as the worst fears are not realized. 2Q12 S&P 500 EPS: Poor Visibility + Pre-announce = NERVES 2Q tracking to $26. $105 EPS on track...

It is never easy to say that you are wrong, but there comes a time when reality must be faced and a mistake must be acknowledged.  I acknowledged that mistake earlier today by selling my clients’ positions in Research In Motion (RIM). With perfect hindsight, RIM was the “value trap” of all value traps.  Its decline began while earnings were still growing, albeit at a slower rate, but the Price/Earnings (P/E) multiple remained compelling.  Starting last April, RIM began a series of negative announcements including the release of an incomplete tablet (the Playbook), earnings misses, senior executive departures, the replacement of the co-CEOs, layoffs and then finally last week a very significant quarterly loss and more importantly the further delay of their new BB10 phone and operating platform. As the stock reacted negatively to each of these announcements, I maintained the position on the belief that the bad news was factored into...

Following my appearance on Market Call Tonight, the following are summaries of the three "Top Picks" from last night’s show.  If you missed the show, check the Library section of the Padlock website for the links to the show. Bauer Performance Sports, $8.15 In its previous incarnation as a public company, Bauer Performance Sports was known as Canstar Sports.  Canstar was acquired by Nike in 1995 and sold to a group led by the private equity firm, Kohlberg, Kravis & Roberts (KKR) in 2008.  In March 2011, Bauer once again became a public company as the group sold approximately 33% of the company to the public. Bauer is the leading hockey equipment company in the world with 39% of its sales in Canada, 36% in the United States and 25% in the rest of the world.  The recent Stanley Cup victory by the Los Angeles Kings will certainly aid Bauer’s presence in growing...

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