Hasbro - Future Catalysts Post Sell-Off

Noah Kiedrowski - INO.com Contributor - Biotech


The Backdrop

Hasbro Inc. (NASDAQ:HAS) is the third largest toy marker in the world and develops many household brands and games such as the iconic Monopoly board game, G.I. Joe figurines, Play-Doh, and My Little Pony. Hasbro also has exclusive contracts with major movie studios such as Disney and Universal to develop and distribute toys. Hasbro develops toys for many of the multi-billion dollar movie franchises such as Marvel Universe, Star Wars, Disney Princesses, Frozen, Transformers and Jurassic World. Throughout 2017, Hasbro has witnessed a bullish run, up nearly 27% year-to-date however the stock sold off from its 52-week high of $116 to $93 or a 20% slide after reporting it most recent quarterly results. Hasbro has many catalysts in the near term with major movie franchises coming into the fray with upcoming Disney releases: Thor: Ragnarok and Star Wars: The Last Jedi to round out 2017. In 2018, Black Panther, Avengers: Infinity War, Star Wars Han Solo spinoff and Ant-Man and The Wasp to highlight a few major movies. Taking into account Hasbro’s growth, back-half of the year catalysts, trading at a P/E of ~20, boasting a 2.4% yield and initiatives within Hasbro Studios to propel growth further presents a compelling buy after this recent sell-off.

Major Disney Catalysts Ahead

With Q3 well under way and Q4 on the horizon (historically Hasbro’s strongest quarters), I think Hasbro can produce strong quarters moving into the back half of the year. It’s noteworthy to point out that Hasbro has exclusive rights with Disney to produce Marvel Comics and Star Wars toys which last through 2020 and Hasbro is also the licensed doll maker for the Disney Princess line (Moana and Frozen are included) which started on January 1st, 2016 (Figure 1). Continue reading "Hasbro - Future Catalysts Post Sell-Off"

Initiating a Position, Generating Income or Lowering Cost Basis - Covered Puts

Noah Kiedrowski - INO.com Contributor - Biotech


Levering cash with options

I’ve written numerous articles on options trading and how one can leverage options over the long-term to mitigate risk, generate income and accentuate returns. Leveraging options to supplement portfolio returns can make a meaningful impact on overall returns, especially over the long-term. Here, I’ll focus on covered puts, covered in the sense that one is backing his option contract with cash on hand. This strategy generates income in the form of a premium that’s received by the option seller. A topic that’s rarely covered is the different objectives or strategies and what to do about shares that are assigned from a covered put contract. Here, I’ll focus on covered puts and discuss the strategy involved before selling a put contract, objectives when engaging in these put options and if/when shares from the contract are assigned. Continue reading "Initiating a Position, Generating Income or Lowering Cost Basis - Covered Puts"

Disney's Long-Term Vision - Growth

Noah Kiedrowski - INO.com Contributor - Biotech


The Long-Term Vision – Growth and Direct to Consumer Offerings

The Walt Disney Company (NYSE:DIS) reported an information dense earnings report that included mixed numbers (as comparable numbers from the previous year were banner numbers), its vision for the future via streaming while cutting off Netflix (NFLX) in the process. As always, a conspicuous ESPN remained at the forefront of investors’ minds, serving as the root cause of this streaming initiative as profits and revenue from the Media Networks division have stalled out over the past few years. Simply put, Disney is going all-in on a Disney branded streaming service come 2019, more on that later. As investors digest the earnings report and fixate on the eroding Media Networks division, I think Disney is offering a long-term buying opportunity near ~$100 per share. Although ESPN makes up a disproportionate amount of the company’s revenue and income, all of its other franchises are posting robust growth hence Disney will be relying less on its ESPN franchise over the coming years. It’s noteworthy to highlight (when comparing year-end fiscal numbers) that in 2011 its Media Networks segment made up 70% of Disney’s income. That percentage has decreased to 49% at the end of 2016. It curtailed its Media Networks contribution to the company's income by 30% since 2011. Disney’s perpetual stock slump and roller coaster ride over the last two years has almost entirely been attributable to the decrease in ESPN subscribers and subsequent revenue slowdown. I feel too much of an emphasis is being placed on ESPN as it weighs less on overall profits. Disney is evolving to address this deteriorating business segment with initiatives put forth previously and doubling down during its recent conference call. Disney offers a compelling long-term investment opportunity considering the growth, pipeline, Media Networks remediation plan, diversity of its portfolio, share repurchase program and dividend growth. Continue reading "Disney's Long-Term Vision - Growth"

CVS Posts Robust Earnings - Compelling Long-Term Buy

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

CVS Health Corporation (NYSE:CVS) is fresh off reporting earnings for FYQ2 with beats on both the top and bottom line. EPS came in at $1.33 with revenue coming in at $45.69 billion, beating by $0.02 and $320 million, respectively. Since reporting earnings, the stock hasn’t moved as much of the pessimistic narrative was priced into the stock. Since its high of $112 in 2015, a slew of issues negatively impacting its growth and marketplace have plagued the stock. Firstly, the political backdrop was a significant headwind for the entire pharmaceutical supply chain from drug manufacturers to pharmacies/pharmacy benefit managers (i.e., CVS and Walgreens (WBA)) and the drug wholesalers in-between (i.e., McKesson (MCK), Cardinal Health (CAH) and AmerisourceBergen (ABC)). Secondly, marketplace trends forced CVS to cut guidance for Q4 2016 and the full-year 2017 numbers. CVS stated that “unexpected marketplace actions that will have a negative impact on our Q4 2016 results and a more meaningful impact on our outlook for 2017”. Thirdly, CVS lost a contract with the Department of Defense which carries tens of millions of prescriptions on an annual basis. A new restricted network relationship between Prime Therapeutics and Walgreens impacts CVS Pharmacy’s participation in selected fully-insured networks in several key states, and many cases make CVS Pharmacy a nonpreferred provider for Medicare Part D as well. These prescriptions tend to be the most profitable prescriptions as well. Lastly, Amazon’s purchase of Whole Foods and behind the scenes moves in the healthcare space has incited rumors that Amazon is looking to gain entry into the pharmacy area via leveraging the Whole Foods physical foot print of store fronts. I’ve written several articles contending that CVS presents a compelling investment opportunity in the ever expanding healthcare space. My investment thesis was based on an aging population and growth in long-term care facilities and the pharmacy benefit management segment. All of this in a backdrop of CVS being highly acquisitive, continuing to deliver robust earnings growth, revenue growth, growing dividends and has an aggressive share buyback program in place. It’s a matter of time before CVS will trend higher and in the meantime, investors will be paid to wait via dividends and share buybacks. The wildcard may be the Amazon threat with its first real pivot after acquiring Whole Foods with subsequent potential in entering the pharmacy space as well. Continue reading "CVS Posts Robust Earnings - Compelling Long-Term Buy"