Tag Archives: request

Trend Lifts Auto-Parts Demand; AutoZone, O’Reilly Near Highs

Auto-parts stores have at least three trends working in their favor. First, low gasoline prices lead people to drive more, and that means more repairs. Second, the age of the average car and light truck is expected to rise to 11.6 years in 2016, according to research firm IHS Automotive. Old also means more repairs. Third, the number of truly old vehicles — 12 years and older — is expected to grow 15% by 2020. Also, currency translation, a problem for many companies now, generally isn’t a problem for the auto-parts chains. The stock market seems to have baked in these realities. During the market pullback, the auto parts group retreated less than the S&P 500. Six weeks ago, the group was No. 33 of 197 groups. As of Wednesday’s IBD, the group was No. 32. Two stocks in the group held up especially well. AutoZone ( AZO ) is only 7% off its prior high. O’Reilly Automotive ( ORLY ) is 11% off its high. The two stocks kept their consolidations fairly shallow, making a breakout from a new pattern possible. At an early December earnings call, AutoZone CEO William Rhodes said the company added 22 net new stores in the U.S. While do-it-yourself remains the chief focus, “Our commercial business continues to gain traction, growing sales 10%, with 55 net new programs open for the quarter,” Rhodes said. As of November, AutoZone had 5,635 stores in the U.S., Puerto Rico, Mexico and Brazil. Among top mutual funds in Q4, Fidelity Contrafund ( FCNTX ) upped its position by 10% and Fidelity Balanced Fund ( FBALX ) jacked up its stake about 122%. Contrafund also cranked up its position in O’Reilly by 6% in Q4. At the Oct. 30 earnings call, CEO Gregory Henslee said the company generated same-store sales of 7.9% in Q3. Earnings grew 25%, the 27th quarter in a row of EPS growth of at least 15%. O’Reilly Automotive expects to add 210 net new stores in 2016. As of Sept. 30, the company had 4,523 stores in 43 states. Q4 results will be released Feb. 10 after the close. The Street expects 18% earnings growth on an 8% revenue pop. The charts: AutoZone is working on a 14%-deep pattern. The stock is trying to retake the 50-day moving average. Previous breakouts since October 2014 led to gains of 11%, 12%, 7% and 6%. Pullbacks were in the 4%-to-14% range. O’Reilly’s pattern is 19% deep and first stage. The stock is finding resistance at its 50-day line. Previous breakouts since October 2014 led to gains of 24%, 9%, 8%, 12% and 8%. Pullbacks were in the 5% to 19% range. So, if an individual investor plans to trade the stock, the standard 20%-to-25% gain is probably unrealistic. Those who plan to buy and hold through several consolidations might get a bigger profit, if the pullbacks remain minor.

LinkedIn Just Imploded, Now Twitter Plans To Blow Itself Up

LinkedIn ( LNKD ) shares lost nearly half their value on the stock market today after the professional networker announced grim 2016 forecasts. Now Twitter ( TWTR ) reportedly is mulling a major shift with the hopes of winning over new customers, but potentially alienating its power users. Twitter will adopt a new algorithimic timeline, as soon as next week Buzzfeed reported late Friday. The new system would order tweets based on what Twitter thinks you want to see, rather than the current reverse chronological order. The goal is to make Twitter more attractive to new and casual users so they can see more targeted tweets, eliminating the unwanted posts. It’s unclear if Twitter will make the change optional or mandatory, Buzzfeed said. The latter would greatly upset power users such as journalists, who use the chronological timelime to spot and follow breaking news. Twitter was abuzz with angry posts Friday night. Twitter staff meeting: ‘Our stock is crashing. How do we fix Twitter?’ ‘Make the user experience worse every week?’ ‘Crazy enough to work!’ — Josh Jordan (@NumbersMuncher) February 6, 2016 Facebook has used alogrithims for years so people see posts from their favorite friends or sources. Facebook’s ongoing efforts have worked for the company, with more than one billion daily users — and still growing. Twitter’s To-Do List: 1) Algorithmic sorting that no one asked for … … … … … … … … … 173) Edit button that every asks for — Matt Mitovich (@MattMitovich) February 6, 2016 Twitter’s growth, meanwhile has basically stalled, though revenue has swelled due to higher ad revenue and other monetization. @ethanradd @BlackIrishI I hate Facebook! — Kevin Budds (@BuddsKevin) February 6, 2016 LinkedIn also is going through a strategy shift. Late Thursday, LinkedIn reported better-than-expected Q4 earnings. But it gave 2016 revenue and earnings targets far below Wall Street views. Part of the reason was LinkedIn’s decision to shut its Lead Accelerator business, which had technology aimed at helping marketers better target prospects. LinkedIn said the project wasn’t worth the time and money, but analysts said they may have to rethink LinkedIn’s prospects. Twitter reports earnings on Wednesday, with analysts expecting a 48% revenue rise to $709.9 million, with earnings per share ex items flat at 12 cents. #SuggestedTwitterAlgorithims Posting “your an idiot” takes you to a grammar basics cheat sheet. — Renna (@RennaW) February 6, 2016 Twitter shares fell 7% on Friday to a record closing low. LinkedIn crashed nearly 44% to a 3-year low. Facebook skidded nearly 6% on Friday and more than 7% for the week, despite hitting a record high on Tuesday.

Baidu Spending In Its ‘Online-To-Offline’ Push Will Be Focus In Q4

When Baidu ( BIDU ) reports Q4 earnings after the close on Tuesday, investors will get another look at how the aggressive online-to-offline e-commerce push of China’s largest search company is faring. In June 2015, Baidu announced that it would invest $3.2 billion over the next three years to bolster its lineup of O2O by fortifying group-buying website Nuomi, which Baidu acquired for $160 million in 2014. Baidu has said its big spending effort will pay off because its vast abilities in search will eventually translate to revenue from business commissions. The O2O business model aims to attract customers online, then direct them offline to physical stores and to services including health care and food delivery. “Ultimately, what Baidu is building and offering is much broader than a daily-deals business,” Baidu CEO Robin Li told analysts during a conference call after the company posted Q3 earnings in October. “We are creating an online-marketing and transaction-services platform, bringing to bear the power of our entire platform across search, maps, Nuomi, Takeout Delivery and Baidu Wallet. Our platform benefits from shared synergies, with traffic and data from search and maps enhancing the growth of our newer products.” Banking On O2O To Compete Baidu is banking on its O2O business to help it compete in China’s burgeoning e-commerce arena vs. China e-commerce leader Alibaba Group ( BABA ) and others. But Alibaba, too, has invested heavily to develop its online-to-offline retail capability. Other major China Web companies fortifying their O2O offerings include JD.com ( JD ) and Tencent Holdings ( TCEHY ). Analysts also want to find out how Baidu’s efforts to penetrate into the lucrative market of mobile apps are coming along. Baidu has been slow to advance into mobile apps, while China tech heavyweight Tencent has emerged as the top rival to Baidu in mobile search, according to a report on Jan. 22 from Nomura, which handed Baidu a price target cut and rating downgrade. ‘The Potential Threat’ “Who is the potential threat for Baidu on mobile? We believe it’s Tencent, rather than any of the existing search engines,” wrote Nomura analyst Jialong Shi in that industry note. “Baidu is trying to penetrate into mobile apps, but so far progress has been slow. Based on our checks with industry experts, the challenges for in-app search mainly lie in two aspects — immature technology and reluctance of app developers.” Nomura lowered its price target on Baidu stock to 180 from 200 and cut its rating on Baidu stock to neutral from buy. For Q4, Baidu has guided revenue of between $2.864 billion and $2.95 billion, up between 29.5% and 33.4% year over year in local currency, to between 18.2 billion and 18.75 billion Chinese renminbi. Analysts polled by Thomson Reuters are expecting Baidu to report Q4 revenue of RMB 18.59 billion, up 32% year over year in local currency, with Q4 EPS (GAAP) of RMB 6.60, down 26% year over year. For Q1, analysts polled by Thomson Reuters are expecting Baidu to report revenue of RMB 16.47 billion, up 29% year over year in local currency, with Q1 EPS (GAAP) of RMB 5.48, down 18% year over year. Internet Finance Initiatives Credit Suisse analyst Dick Wei boosted Baidu’s price target to 251 from 210 in mid-December, pointing to positive “traction” in both Baidu Nuomi and the company’s iQiyi video wing. Wei said iQiyi went from 5 million paid users in June to 10 million paid users on Dec. 1, while Baidu Nuomi had attained 11.2% of the online movie-ticket-booking sector. The company’s new Internet finance initiatives are also growing, Wei said. In November, Baidu announced its partnership with China Citic Bank to establish a direct sales bank, Wei said, while by the end of September, the number of registered users for Baidu Wallet reached 45 million, a 520% increase year over year. “We are positive on Baidu’s continued investment in this space,” he said. Baidu stock closed at 145.34 on Friday, down 4.8%. Instability in the Chinese stock markets and investor concern about the company’s O2O spending have helped drag down the price of Baidu stock 33% since this time last year.