Author: Cornelio Ash

Cornelio Ash is a senior equity analyst and member of the U.S. Focus List and the Global Focus List Committees, which approves all equity recommendations for developed, emerging, and frontier markets. He is also a lead for the Technology sector and specializes in the Americas region. Cornelio joined the firm in 2005 and received his B.A. in Finance from California State University, Northridge. He holds a Series 65 securities license.

ServiceNow Inc

Posted on by Cornelio Ash

Key points from this report:

 

  • ServiceNow provides SaaS solutions to help enterprises manage, automate, and streamline IT operations and services.
  • The stock is consolidating after finding support along ~$250, which coincides with the lows of its prior base. Look for the stock to regain its 50-DMA and form the right side of a base. The stock is buyable post positive print on April 29.
  • ServiceNow’s SaaS based platform is resilient amid the COVID-19 disruption, as 94% of revenue is subscription-based.
  • Focus on Q1 FY20 (April 29) commentary around deal closures, billing growth, and guidance.

Software – Security

Posted on by Cornelio Ash

Key points from this report:

 

  • The work-from-home theme extends far beyond quality enterprise applications—Docusign (DOCU), Zoom (ZM), Atlassian (TEAM)—and includes cybersecurity
  • Cybersecurity is long-term beneficiary of the secular shift to the cloud, but the COVID-19 outbreak accelerates the need for enterprise cybersecurity as large businesses expand and/or develop a long-term work-from-home policy.
  • Annual global spending on cybersecurity software and services is poised to increase 52% over the next four years, from $124B to $189B in 2023, a CAGR of 11%.
  • Top picks: Fortinet (FTNT), Okta (OKTA), Qualys (QLYS), Crowdstrike (CRWD).

Tencent Holdings

Posted on by Cornelio Ash

Key points from this report:

 

  • Tencent is a global internet company with a 14% share of the global gaming market, a 39% share of the Chinese payment services market, and an 18% share of the Chinese cloud market.
  • The stock is emerging out of a one-year consolidation on volume and remains near pivot. Buy.
  • The COVID-19 disruption has been a tailwind for mobile gaming developers, including Tencent. See our recent Software–Gaming note.
  • Tencent’s fastest growing segment includes cloud computing and payments, which accounts for 27% of total revenue.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Packaging Corporation of America ( PKG ), OSI Systems ( OSIS ), Colfax ( CFX ), Proto Labs ( PRLB ), Allison Transmission ( ALSN ), Ormat Technologies ( ORA ), Apache ( APA ), Avalonbay Communities ( AVB ), Avantor ( AVTR ), Dunkin Brands ( DNKN ), SVMK ( SVMK ), Ryanair Holdings ( RYAAY ).

 

Developed: Brenntag (BNRX.DE; BNR GR), Schneider Electric (QT@F.FR; SU FP), Makita (ML@N.JP; 6586 JP), Barry Callebaut (BARN.CH; BARN SW), Henderson Land Development (HELD.HK; 12 HK), Mani (MAII.JP; 7730 JP), Rocket Internet (RKETX.DE; RKET GR), Ibiden (IBIN.JP; 4062 JP), China Mobile (CHT.HK; 0941 HK), Atos (ATO.FR; ATO FP).

 

Emerging: Klabin Units (KLU.BR; KLBN11 BZ), LG Household and Healthcare (LHH.KR; 051900 KS).

Software: Gaming

Posted on by Cornelio Ash

Key points from this report:

 

  • Due to the COVID-19 outbreak, gaming downloads are up 30% in Q1 FY20 versus Q4.
  • Daily time spent on mobile in China, the largest gaming market in the world, spiked 30% to five hours per day in February. This has been the highest increase compared with any other country including South Korea, 3.9 hours (+7%); Japan, 3.5 hours (+7%); Spain, 2.6 hours (+5%); and France, 2.5 hours (+7%).
  • Top gaming picks: Tencent ( TCNT.HK ), NetEase ( NTES ), and Sea Limited ( SE ).

Amazon

Posted on by Cornelio Ash

Key points:

 

  • The stock is emerging from a long consolidation after bouncing back from a recent pullback. It is under accumulation with an RS Rating of 92 and A/D Rating of B. Buy.
  • Focus on the significant increase in earnings growth, which is poised to accelerate further in the back half of FY20 and beyond.
  • Earnings improvement is due to the retail segment, both in North America and internationally, quickly approaching profitability.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Kennametal (KMT), News Corporation (NWSA), Sanderson Farms (SAFM), Cosan Ltd Cl A (CZZ), Everest RE (RE), Avanos Medical (AVNS), Echostar Corp (SATS), Appian Corp (APPN).

 

Developed: Nitto Denko (IF@N.JP; 6988 JP), Sandvik (SAND.SE; SAND SS), Relo Group (RESE.JP; 8876 JP), Beirsdorf (BEIX.DE; BEI.GR), Citic Securities (CSCY.HK; 6030 HK), H Lundbeck (LUN.DK; LUN DC), Ohsho Food Service (OSHO.JP; 9936 JP), Ibiden (IBIN.JP; 4062 JP), Telstra (TLS.AU; TLS AU).

 

Emerging: LG Household & Healthcare (LHH.KR; 051900 KR), Hua Nan Financial (HNB.TW; 2880 TT), Telekomunikasi Indonesia (RLK.ID; TLKM IJ).

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Vale SA Adr (VALE), OSI Systems (OSIS), Adtalem Global Education (ATGE), Madison Square Garden Company (MSG), Loews (L), Inspire Medical (INSP), Advance Auto Parts (AAP), Juniper (JNPR), Manpowergroup (MAN), Southwest Airlines (LUV).

 

Developed: Shandong Gold Mining ‘H’ (SHGM.HK; 1787 HK), SIG Combibloc (SIGN.CH; SIGN SW), Vivendi (EX@F.FR; VIV FP), Teijin (TJ@N.JP; 3401 JP), China Overseas Land Investment (COLI.HK; 688 HK), Ansell (ANN.AU; ANN:AU), Pandora (PND.DK, PNDORA DC), Wolters Kluwer (WSG.NL; WKL NA), Mtr (MTRC.HK; 66 HK).

 

Emerging: Voltas (VLT.IN; VOLT IN), Fomento Economico Mexicano (FMU.MX; FEMSAUBD MM).