Stock Market News, Outlooks, and Top Picks, Cappuccino Finance

Cappuccino Finance

Stock Market News, Outlooks, and Top Picks

Cappuccino Finance, provides Financial vignettes for your cappuccino break!

Fun & informational articles to read in 10 min or less.

Equity Bottom-Up

<ul><li>Sherwin-Williams is a dominant leader in the paint and advanced coating market. They have been a superb investment for about 150 years at this point</li><li>Waste Management is the leading provider of comprehensive waste management and environmental services</li><li>CrowdStrike was already growing at a rapid pace before the pandemic, and their revenue growth accelerated during the pandemic. CrowdStrike’s technology is best suited for this remote work environment</li></ul>

Sherwin-Williams is a dominant leader in the paint and advanced coating market. They have been a superb investment for about 150 years at this pointWaste Management is the leading provider of comprehensive waste management and environmental servicesCrowdStrike was already growing at a rapid pace before the pandemic, and their revenue growth accelerated during the pandemic. CrowdStrike’s technology is best suited for this remote work environment

British American Tobacco / Equity Bottom-Up

<ul><li>British American Tobacco is one of the leading tobacco companies in the world. They operate in 180 countries around the world, and have 12% of market share in the industry (2nd most)</li><li>Along with their biggest rival, Toronto-Dominion, Royal Bank of Canada is one of my favorite stocks. </li><li>Larger military budgets around the world means more revenue for defense contractors like Raytheon</li></ul>

British American Tobacco is one of the leading tobacco companies in the world. They operate in 180 countries around the world, and have 12% of market share in the industry (2nd most)Along with their biggest rival, Toronto-Dominion, Royal Bank of Canada is one of my favorite stocks. Larger military budgets around the world means more revenue for defense contractors like Raytheon

Top Picks for Dividend Growth Stock - Mar 2022

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

On June 14, 2019, we published an insight - <a href="https://www.smartkarma.com/insights/mergertalk-unitedtech-raytheon-it-s-the-utx-share-price-that-needs-adjusting-not-the-terms" target="_blank" rel="noopener">https://www.smartkarma.com/insights/mergertalk-unitedtech-raytheon-it-s-the-utx-share-price-that-needs-adjusting-not-the-terms</a>- on the proposed radical corporate restructuring at <a href="https://www.smartkarma.com/entities/united-technologies-corp" target="_blank" data-smartkarma-citation="entities:12750:1" rel="noopener">United Technologies (UTX US)</a>. Amid the coronavirus inspired market swoon that is currently decimating the global financial markets, the UTX restructuring  involving the spin-off to its shareholders of two significant assets and strong brands in their operating spheres - Carrier and Otis - followed by the merger of the stub (i.e., the aerospace business) with <a href="https://www.smartkarma.com/entities/raytheon-company" target="_blank" data-smartkarma-citation="entities:6453:1" rel="noopener">Raytheon Company (RTN US)</a>, continues as planned. The distribution of Carrier and Otis shares to UTX shareholders will be completed on April 3, 2020, prior to market open when both SpinCos will commence regular-way trade obn the NYSE. The first indication of  how the market values the SpinCos will present itself when when-issued trading for Carrier and Otis start on or around  March 18, 2020 continuing up to and through the distribution date.Below, we provide our detailed valuation theses for both Carrier and Otis, and an updated SOTP assessment of UTX. While it would be reasonable to anticipate continuing share price volatility in the present environment, the current crisis is temporal, not structural. Whether this crisis passes in a few weeks or a few months, we would expect the focus to return to fundamentals within this time frame. Our assessment indicates that a value opportunity in both UTX and RTN shares currently exists for market participants driven by the pending transactions.

On June 14, 2019, we published an insight - https://www.smartkarma.com/insights/mergertalk-unitedtech-raytheon-it-s-the-utx-share-price-that-needs-adjusting-not-the-terms- on the proposed radical corporate restructuring at United Technologies (UTX US). Amid the coronavirus inspired market swoon that is currently decimating the global financial markets, the UTX restructuring  involving the spin-off to its shareholders of two significant assets and strong brands in their operating spheres - Carrier and Otis - followed by the merger of the stub (i.e., the aerospace business) with Raytheon Company (RTN US), continues as planned. The distribution of Carrier and Otis shares to UTX shareholders will be completed on April 3, 2020, prior to market open when both SpinCos will commence regular-way trade obn the NYSE. The first indication of  how the market values the SpinCos will present itself when when-issued trading for Carrier and Otis start on or around  March 18, 2020 continuing up to and through the distribution date.Below, we provide our detailed valuation theses for both Carrier and Otis, and an updated SOTP assessment of UTX. While it would be reasonable to anticipate continuing share price volatility in the present environment, the current crisis is temporal, not structural. Whether this crisis passes in a few weeks or a few months, we would expect the focus to return to fundamentals within this time frame. Our assessment indicates that a value opportunity in both UTX and RTN shares currently exists for market participants driven by the pending transactions.

SpinTalk:  United Tech Restructuring Update:Value Check For UTX, RTN Shareholders Amid Market Swoon

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

In my previous insight, <a href="https://www.smartkarma.com/insights/hexcel-woodward-another-aircraft-supplier-merger" target="_blank" data-smartkarma-citation="insights:35769" rel="noopener">Hexcel-Woodward: Another Aircraft Supplier Merger</a>, I mentioned that some Hexcel shareholders might be unhappy with the weak/non-existent premium offered in the Deal. Although both companies' shares have dropped slightly from post-announcement highs, the spread remains positive implying a low probability of a bump. However, in this insight, we take a closer look at the fundamentals to see if a bump is justified. The Deal which will see US-based aircraft component suppliers <a href="https://www.smartkarma.com/entities/hexcel-corp" target="_blank" data-smartkarma-citation="entities:6699:1" rel="noopener">Hexcel Corp (HXL US)</a> and <a href="https://www.smartkarma.com/entities/woodward-inc" target="_blank" data-smartkarma-citation="entities:11464:1" rel="noopener">Woodward Inc (WWD US)</a> combine in a US$6.4Bn all-stock merger of equals was <a href="https://investors.hexcel.com/investor-news/news-details/2020/Woodward-and-Hexcel-Announce-Merger-of-Equals-to-Create-a-Premier-Integrated-Systems-Provider-Propelling-the-Future-of-Flight-and-Energy-Efficiency/default.aspx" target="_blank" rel="noopener">announced</a> on Sunday 12th January. The transaction is expected to close in the third calendar quarter of 2020 and requires regulatory approvals and shareholder approvals from both companies. The grounding of the Boeing 737 Max has added more pressure to the industry of aircraft component suppliers who were already consolidating in preparation to meet future R&amp;D spending requirements. Despite this rush to consolidate, the Deal feels light considering the magnitude of benefits expected post-completion. So is a bump in terms justified?We think so... for a multiple reasons explained below.

In my previous insight, Hexcel-Woodward: Another Aircraft Supplier Merger, I mentioned that some Hexcel shareholders might be unhappy with the weak/non-existent premium offered in the Deal. Although both companies' shares have dropped slightly from post-announcement highs, the spread remains positive implying a low probability of a bump. However, in this insight, we take a closer look at the fundamentals to see if a bump is justified. The Deal which will see US-based aircraft component suppliers Hexcel Corp (HXL US) and Woodward Inc (WWD US) combine in a US$6.4Bn all-stock merger of equals was announced on Sunday 12th January. The transaction is expected to close in the third calendar quarter of 2020 and requires regulatory approvals and shareholder approvals from both companies. The grounding of the Boeing 737 Max has added more pressure to the industry of aircraft component suppliers who were already consolidating in preparation to meet future R&amp;D spending requirements. Despite this rush to consolidate, the Deal feels light considering the magnitude of benefits expected post-completion. So is a bump in terms justified?We think so... for a multiple reasons explained below.

On Sunday 12th January, US-based aircraft component suppliers Hexcel Corp and Woodward Inc <a href="https://investors.hexcel.com/investor-news/news-details/2020/Woodward-and-Hexcel-Announce-Merger-of-Equals-to-Create-a-Premier-Integrated-Systems-Provider-Propelling-the-Future-of-Flight-and-Energy-Efficiency/default.aspx" target="_blank" rel="noopener">announced</a> they would combine in a US$6.4Bn all-stock merger of equals to form "a premier integrated systems provider serving the aerospace and industrial sectors".Under the terms of this Offer, Hexcel shareholders will receive 0.625 Woodward shares per Hexcel share. On a fully diluted basis, the existing shareholders of Woodward and Hexcel will own 55% and 45%, respectively, of the combined entity. The deal is conditional on the receipt of antitrust clearance and approvals from the shareholders of both Hexcel and Woodward. The transaction is expected to be completed in the third calendar quarter of 2020.At the time of writing, the Deal is trading close to terms with a view to complete. That obviously includes a high likelihood of deal completion as-is, a small probability of dealbreak, and some probability of a deal bump.

On Sunday 12th January, US-based aircraft component suppliers Hexcel Corp and Woodward Inc announced they would combine in a US$6.4Bn all-stock merger of equals to form "a premier integrated systems provider serving the aerospace and industrial sectors".Under the terms of this Offer, Hexcel shareholders will receive 0.625 Woodward shares per Hexcel share. On a fully diluted basis, the existing shareholders of Woodward and Hexcel will own 55% and 45%, respectively, of the combined entity. The deal is conditional on the receipt of antitrust clearance and approvals from the shareholders of both Hexcel and Woodward. The transaction is expected to be completed in the third calendar quarter of 2020.At the time of writing, the Deal is trading close to terms with a view to complete. That obviously includes a high likelihood of deal completion as-is, a small probability of dealbreak, and some probability of a deal bump.

Hexcel-Woodward: Another Aircraft Supplier Merger

United States

Raytheon Technologies Corporation operates as an aircraft manufacturing company. The Company focuses on technology offerings and engineering teams to deliver innovative solutions such as aero structures, avionics, interiors, mechanical systems, mission systems, aircraft engines, power and control systems, radars, software, and other products.

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Raytheon Technologies (RTX US)

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Sherwin-Williams is a dominant leader in the paint and advanced coating market. They have been a superb investment for about 150 years at this point

Cappuccino Finance

Top Picks for Dividend Growth Stock - Mar 2022

British American Tobacco is one of the leading tobacco companies in the world. They operate in 180 countries around the world, and have 12% of...

Cappuccino Finance

SpinTalk: United Tech Restructuring Update:Value Check For UTX, RTN Shareholders Amid Market Swoon

On June 14, 2019, we published an insight -...

Robert Sassoon

Hexcel-Woodward: Is the Offer Fair?

In my previous insight, Hexcel-Woodward: Another Aircraft Supplier Merger, I mentioned that some Hexcel shareholders might be unhappy with the...

Janaghan Jeyakumar, CFA

Hexcel-Woodward: Another Aircraft Supplier Merger

On Sunday 12th January, US-based aircraft component suppliers Hexcel Corp and Woodward Inc announced they would combine in a US$6.4Bn all-stock...

Janaghan Jeyakumar, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)