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Johnson Controls Inc’s (JCI) Automotive Group Focused on Margin Improvement

June 30, 2015

Dr. Beda Bolzenius, Vice President, Vice Chairman — Asia Pacific and President, Automotive Experience — of Johnson Controls Inc’s (JCI) says the Automotive Group is not focused on topline growth but rather margin improvement. He says the company is well positioned to report improved margins over the next two to three years. “We reacted to the market trend of component sourcing — customers buying the components of the seat separately and not buying the seat as a complete system — and were out of the starting block first,” Bolzenius says. “We made a lot of good acquisitions.” FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE...
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Tesla Motors Inc (TSLA) Shares Could Hit $400 in Next Year

June 29, 2015

Stifel, Nicolaus & Co. Analyst James Albertine says Tesla Motors Inc’s (TSLA) share price could reach $400 in the next 12 months. He says Tesla has remained successful despite plateauing demand for alternatively fueled vehicles. “I think one of the reasons why Tesla has proven to be successful and will continue to be — is it is by far the best product in the alternatively fueled segment,” he says. “It offers the best range, it offers the best performance, it offers the best customization and it offers, I think, the best customer service at the end of the day. It’s a luxury product, and I think for good reason they have chosen to brand themselves in that way, and that’s arguably helped to secure a more stable demand stream...
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Current Vehicle Cycle at a Sweet Spot for LKQ Corporation (LKQ)

June 29, 2015

Stifel, Nicolaus & Co. Analyst James Albertine says his current top stock recommendation is LKQ Corporation (LKQ). He says LKQ is the largest player – the 800-pound gorilla – in the collision and mechanical aftermarket parts distribution industry. “When a vehicle comes off warranty, the propensity to use alternative parts — be it recycled, remanufactured or refurbished parts — rises substantially,” he says. FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE. Based on where in the cycle of the space SAAR recovery is, Albertine expects to see growth in three- and four-year old vehicles at the beginning of next year. He says that should support the LKQ story for the next four to five years...
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CarMax, Inc’s (KMX) Same-Store Sales Could be Down to 4% This Year

June 26, 2015

Wedbush Securities analyst Seth Basham says he is cautious about auto retailers at this point. He says CarMax, Inc (KMX), which is near peak valuations, is one of the names he is cautious on. “Importantly, most other finance companies in auto finance have multiples somewhere below 12 times forward earnings; if you value CarMax’s finance earnings stream at 12 times, it would imply that their other businesses are being valued at a nearly 30 times forward earnings multiple, which would be the highest within our hardlines retail universe,” Basham says. FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE. Not only is CarMax expensive from a valuation standpoint, but Basham says the stock is also expensive on fundamentals...
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Advance Auto Parts, Inc. (AAP) on Track to Narrow Comp and Margin Gap With Peers

June 26, 2015

Wedbush Securities analyst Seth Basham says his top stock pick right now is Advance Auto Parts, Inc. (AAP). He says the company is starting to have some synergies drop to the bottom line after its landmark acquisition of General Parts. “At the same time, given the integration complexity, Advance hit a couple of speed bumps along the way over the course of the past six months, and that slowed their earnings growth in the first quarter, as well as their sales growth,” he says. FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE. That created an opportunity, of sorts, for investors. Basham says the stock “gyrated” over the last few months and then bounced up a bit after an earnings report that wasn’t as bad as many had anticipated...
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WABCO Holdings Inc. (WBC) Building $17 Million Facility in South Carolina

June 25, 2015

WABCO Holdings Inc. (WBC) CEO Jacques Esculier says the company is planning to spend $17 million over the coming year to build a 145,000-square foot manufacturing facility in Charleston, S.C. He says management decided to invest in the new facility because of opportunities it has identified in the U.S. “Contrary to the automotive world, where the level of technology used in a car built or assembled in China versus Europe or America is very similar, it’s exactly the opposite in the world of commercial vehicles,” Esculier says. “If you look at a truck in Europe, there is about $3,000 of addressable market for our products and systems. If you look at the U...
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Penske Automotive Group, Inc. (PAG) Targets Organic Growth in Parts and Service Business

June 25, 2015

Anthony Pordon, Executive VP of Penske Automotive Group, Inc. (PAG), says the company generated 4.6% organic growth in the first quarter. He says one of the most attractive areas for organic growth is the service and parts business. “Service and parts in the retail automotive business account for about 40% of our overall gross profit,” Pordon says. “We earned somewhere in the neighborhood of 59.5% to 60% gross margin in that business.” FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE. He says that with the growth in the new vehicle market, there has been an expansion of the zero- to five-year-old vehicle parc. In addition, he says there is an increasing complexity in the vehicles that are being produced by all the different OEMs and manufacturers today...
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Express Scripts Holding Company (ESRX) Grows Free Cash Flow Every Year

June 24, 2015

Senior Fund Manager Colin McQueen of Sanlam FOUR Investments UK Limited says Express Scripts Holding Company’s (ESRX) free cash flow runs historically in a linear fashion. “Every year, through good times and bad, the free cash flow per share has grown. It has small variations over time, but the overall position is driven by the high return on equity that they have, and by the resilience of the business model, low cyclicality and relatively low reinvestment requirements,” McQueen says. FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE. McQueen first got involved with the company in 2013, when Express Scripts experienced some hiccups from a merger with Medco and sentiment became negative...
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Uncertainty for Ares Capital Corporation (ARCC) While Company Identifies New Partner

June 23, 2015

Doug Mewhirter, Equity Analyst at SunTrust Robinson Humphrey, says that some companies are not going to come out ahead as a result of the sale of GE Capital’s sponsor finance business. In the near term, he says Ares Capital Corporation (ARCC) is likely to be one of those companies. “Ares Capital has a very successful joint venture with GE Capital that has been a great source of very profitable loans that Ares has shared with GE Capital over the many years,” Mewhirter says. “It has been highly successful, and it is one of the things that many people have tried to copy, and no one has been really able to duplicate it with the success that Ares had...
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Total System Services, Inc. (TSS) Lands Major Bank Client

June 22, 2015

Stephens Inc. Analyst Brett Huff says Total System Services, Inc. (TSS) is his best idea at the moment. One of the reasons he is positive on the stock is the company’s recent contract with Bank of America (BAC), in which Bank of America switched from using an in-house system to issue credit cards to an outsourced system provided by TSS. “This is one of the largest outsourcing deals for credit cards that we’ve seen,” Huff says. “That has really driven some incremental growth that we think investors should pay attention to that will last here for the next three or four quarters.” FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE...
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Fidelity National Information Services (FIS) Expands in Europe

June 22, 2015

Stephens Inc. Analyst Brett Huff says he is observing a trend of bank tech and payment processing companies getting additional products and geographies via acquisition. As an example, he says Fidelity National Information Services (FIS) recently purchased Clear2Pay, a private company based in the U.K. “We think they bought the company to get a payment hub technology,” Huff says. “This is a product technology in which banks will over time consolidate many silo-ed payments functions into a few, or maybe even one, payment system. This new consolidated system, or payments hub, can be configured to handle different payment types.” FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE...
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Cybersecurity Concerns a Boon for Splunk Inc (SPLK)

June 17, 2015

Bhavan Suri, Partner and Co-Group Head of the technology, media and communications sector at William Blair & Company, says the rising incidence of cybercrime creates an opportunity for Splunk Inc (SPLK). He says about one-third of Splunk’s revenue is related to security use cases. “And they’re certainly growing nicely, at roughly 50% for their security offering, and so they’re benefiting from some of these concerns,” Suri says. FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE. At first glance, Suri says Splunk’s stock may seem expensive. It is trading at the high 30s on a free cash flow basis, he says. “But they’re growing free cash flow close to 80%,” he says...
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Veeva Systems Inc’s (VEEV) Vault Product Growing at 100%

June 16, 2015

Bhavan Suri, Analyst at William Blair & Company, says he thinks there is significant opportunity for Veeva Systems Inc’s (VEEV) Vault product. He says the product generates about $60 million in revenue and is growing at about 100%, with just 4% penetration. As such, he says the company’s overall growth rate of 30% is sustainable. “We just did a proprietary survey of 110 pharmaceutical companies; 4% of those use Veeva’s Vault, the Vault product specifically,” Suri says. “So we’re talking about low penetration; further, 52% of those companies surveyed plan on moving to a cloud-based solution for that functionality in the next 12 months...
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Tableau Software Inc (DATA) on Track for Solid Growth

June 16, 2015

William Blair & Company Analyst Bhavan Suri recently started recommending Tableau Software Inc (DATA). He says he has high conviction that the company is headed for solid growth. “So Tableau is a leading technology in the analytics visualization space,” Suri says. “They’re the clear leader by far in that space and the fastest growing, despite being the largest in the visualization and data discovery market.” FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE. Suri says Tableau’s investment in R&D is more significant than its competitors. And, he says their solutions address the use cases that traditional business intelligence does not...
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Solar Winds Inc’s (SWI) Recurring Revenue on the Rise

June 15, 2015

Solar Winds Inc (SWI) CEO Kevin Thompson says the company’s recurring revenue as a percentage of total is growing. In most quarters over the last two years, recurring revenue has grown at the same rate or faster than license revenue. “Now, we’ve added the subscription revenue stream, so it has been grow[ing] very quickly — well over 100% year-over-year growth for the last six or seven quarters,” Thompson says. “And the growth rate of that subscription revenue stream will continue to be very fast, so you should expect that recurring revenue as a percentage of a total will continue to grow.” FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE...
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