Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Our checklist of bullish indicators continues to grow as equal-weighted Financials (RYF), global Financials (IXG), global autos (CARZ), and the Dow Jones Transportation Average (IYT) are each decisively breaking topside critical resistance levels. These developments have led us to be incrementally more bullish.  In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Financials, and Manufacturing.</p>

Our checklist of bullish indicators continues to grow as equal-weighted Financials (RYF), global Financials (IXG), global autos (CARZ), and the Dow Jones Transportation Average (IYT) are each decisively breaking topside critical resistance levels. These developments have led us to be incrementally more bullish.  In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Financials, and Manufacturing.

U.S. Equity Strategy: Bullish Party Continues - Gold Losing Its Luster

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

<div class="content-highlight"><p style="text-align: center;"><strong>Autos have substantial exposure in no-deal Brexit, but valuations for select stocks look attractive.</strong></p></div><hr><p style="text-align: left;">While we lack the credentials to forecast the geopolitical outcome of U.K. and EU negotiations, we can provide investors with the impact to our auto sector fair values under a hypothetical disorderly, no-deal Brexit. Even though we estimate that this worst-case scenario would include recessionary light-vehicle demand, and even though the U.K. and EU automobile industry is highly integrated, we do not assume that a no-deal Brexit would have a material effect on our normalized, sustainable, midcycle assumptions. The auto sector has historically adapted to geopolitical issues, adjusting capacity and supply chains to optimize returns in the long run. Even so, we think the market has overly discounted some stocks relative to our no-deal Brexit worst-case scenario forecast, resulting in some investment opportunities.</p><h2>Key Takeaways</h2><ul>
<li>In a no-deal Brexit scenario, we estimate auto sector fair values would, on average, decline 12%.</li>
<li>U.K. and EU auto trade is substantial, with no-deal Brexit tariffs affecting vehicle and auto-parts prices.</li>
<li>Best Idea, narrow-moat-rated <a href="https://www.smartkarma.com/entities/21591" target="_blank" data-smartkarma-citation="entities:21591:1">Bayerische Motoren Werke Ag (BMW GR)</a> looks attractively valued, even in a no-deal Brexit scenario.</li>
</ul><p><em>Analyst: Richard Hilgert</em></p>

Autos have substantial exposure in no-deal Brexit, but valuations for select stocks look attractive.While we lack the credentials to forecast the geopolitical outcome of U.K. and EU negotiations, we can provide investors with the impact to our auto sector fair values under a hypothetical disorderly, no-deal Brexit. Even though we estimate that this worst-case scenario would include recessionary light-vehicle demand, and even though the U.K. and EU automobile industry is highly integrated, we do not assume that a no-deal Brexit would have a material effect on our normalized, sustainable, midcycle assumptions. The auto sector has historically adapted to geopolitical issues, adjusting capacity and supply chains to optimize returns in the long run. Even so, we think the market has overly discounted some stocks relative to our no-deal Brexit worst-case scenario forecast, resulting in some investment opportunities.Key Takeaways
In a no-deal Brexit scenario, we estimate auto sector fair values would, on average, decline 12%.
U.K. and EU auto trade is substantial, with no-deal Brexit tariffs affecting vehicle and auto-parts prices.
Best Idea, narrow-moat-rated Bayerische Motoren Werke Ag (BMW GR) looks attractively valued, even in a no-deal Brexit scenario.
Analyst: Richard Hilgert

Brakes-It: Automotive Coverage Worst-Case Scenario Implications

United States

Adient plc is a automotive seating supplier that designs, develops, manufactures, and distributes complete seat systems and their various components. The Company provides its products to the global auto industry for use in vans, pick-up trucks and SUV vehicles.

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Adient PLC (ADNT US)

U.S. Equity Strategy: Bullish Party Continues - Gold Losing Its Luster

Our checklist of bullish indicators continues to grow as equal-weighted Financials (RYF), global Financials (IXG), global autos (CARZ), and the Dow...

Vermilion Research

Brakes-It: Automotive Coverage Worst-Case Scenario Implications

Autos have substantial exposure in no-deal Brexit, but valuations for select stocks look attractive.While we lack the credentials to forecast the...

Morningstar, Inc.

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