Three Stocks You Must Buy Seeing BRC
Shweta is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
BRC Investment Management incorporates a combination of proprietary, quantitative, fundamentals, and behavioral valuation techniques to identify companies which are going to be beneficial for future earnings and are worth investing. According to the recent 13F filings on Dec. 31 2012, BRC Investment Management has taken twenty two new positions. Among these, I am picking up three stocks: Qualcomm (NASDAQ: QCOM), Church & Dwight (NYSE: CHD), and Robert Half International (NYSE: RHI), which have posted better than expected 3Q12 results and have given an impressive outlook for 4Q12 results. BRC held 190,829 shares in church & Dwight, representing 2.51% of the portfolio, 364,563 shares in Robert Half, representing 2.85% of the portfolio, and 182,982 shares in Qualcomm, with 2.78% of the portfolio. Let us discuss these three stocks in detail.
Qualcomm: Recently, in CES 2013, Qualcomm announced a new series of 28nm Snapdragon 800 (currently S4) and Snapdragon 600 (currently S3) extending up to 4 Krait (ARM-based) cores. This 28nm quad core is integrated with improved 4G LTE efficiency and further is enabled with 802.11ac WiFi functionality. The next generation Snapdragon is expected to have an improved performance by about 75% as compared to the current S4 Pro family of chips, and 4G LTE Category 4 for data rates of up to 15 Mbps. With the S800 Qualcomm will be targeting ultra-high performance devices and will also reduce the power consumption by half as compared to the current S4 chips. The S600 will target mid to high end smartphones and tablets. And the integration of CAT 4 LTE in SOC's will keep Qualcomm ahead of its competitors and give it a dominant position in LTE offerings in the near future. Qualcomm enjoys strong growth from Apple and Samsung, as both these companies use Qualcomm's chipsets and further captures 85% of the market share together. Qualcomm has been a favorite to many investors, and Wall Street expects the company to post increased earnings for 1Q13. Revenue is anticipated to increase 26% to $5.9 billion for the quarter, as compared to $4.68 billion last year. Qualcomm has seen a double digit revenue growth in the last four quarters, and profits have grown in the last three quarters.
Church & Dwight: The consumer products company posted impressive 3Q 2012 results despite the sluggish economic environment. EPS came in at $0.66, beating the consensus estimate of $0.59, sales grew 3.5% to $725.2 million, and organic sales increased by 4.5%, mainly driven by volume growth, product mix, and pricing. These figures, and its recent acquisition of Avid Health Inc, have raised up the confidence that the company will perform well in the near future. Church & Dwight acquired Avid, the maker of gummy vitamins and supplements, for $650 million in cash, which has helped the company in expanding its product categories. Moreover, this acquisition will help Church & Dwight in capturing a significant market share in one of the top growing segments. Avid generates ~$230 million of sales yearly and its health brands will be managed under its Consumer Domestic Segment. As per the BMO, Avid will contribute 9% to 10% sales growth from 4Q12 to 3Q13, or $280 million to $295 million in the next 12 months. The company will be ramping up its marketing efforts and has decided to spend 12.5% of sales on marketing initiatives in 2013. With the robust growth and increased margin expansion in 3Q12 it is anticipated that the company's EPS will grow ~14% and will range from $2.74 to $2.79. The organic sales will also increase by 3% to 4%.
Robert Half: Robert Half came out with better than expected 3Q 2012 earnings, with its net income increasing to $57.7 million as compared to $44.2 million in 2011, whereas revenue rose 4.9% to $1.03 billion from $984.7 million in 2011. The company controls 25% of the market share, holding a dominant position in Finance and Accounting recruiting in the US, generating 75% of its revenue from this region. Protivity, a subsidiary of Robert Half, has a significant contribution in generating the company's revenue and operating growth. And to further enhance its capabilities, it has acquired SusQtech Inc to meet the increasing demand for the skilled workers as well as providing its major clients with the specialized software consulting companies. The SusQtech team will help Protivity in providing knowledge base in Sharepoint, ASP.NET, and Microsoft ERP and CRM applications. Additionally, the healthcare reforms starting in the second half of 2013 give more positive outlook for Robert Half, as it will increase the temporary demand, creating a significant opportunity for the company. Many companies will be hiring temps before hiring them full time for longer trial periods, while others may use temps to reduce the administrative burden of healthcare reforms. The strong 3Q12 results and its solid potential give a very positive outlook for the company. Robert Half is to post revenue of $1.04 billion in 4Q12, while the EPS is anticipated to be up 4% and 7% in 2013 and 2014, respectively.
To sum up, I feel that the three stocks above are positioned well with their growth fundamentals and can be considered for long term investment. Qualcomm holds a place in many major smartphones and is driving increased unit shipment growth, while Church and Dwight with its power brand will show a 14% upside in its EPS in 2013. On the other hand Robert Half will grow as the US economy recovers and the demand for temps increases.
ShwetaDubey has no position in any stocks mentioned. The Motley Fool recommends Robert Half International. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!