The Ninth Set of Fall 2020 Marquette AIM Program Student Equity Pitches / Q&A will be on Friday, October 30th

   AIM Class of 2021/2022 Joint Equity Research Presentations on Friday, October 30th

This weeks' presentations will feature the joint equity research assignment where senior mentors work alongside their junior mentees. 

Because of the Covid-19 pandemic, we are not pitching live in the AIM Room on Friday afternoons during the fall 2020 semester; however, you can still participate.  

 The 9th set of fall AIM equity presentations for the Class of 2021 on Friday, October 30, 2020. 

This is the link for the AIM equity write-ups (each week’s write-ups will be available on Thursday mornings): Write-ups 10/30/20

This is the link for the YouTube videos of the 8-minute student presentations (each week these will be posted on Thursday afternoons): AIM Video Presentations

If you would like to participate in the live Q&A session with the student presenters at 11:00 am CST on Teams, please email Jessica Hoerres at: jessica.hoerres@marquette.edu

Please feel free to submit questions to be asked of the students by emailing them to david.krause@marquette.edu

RWE AG ADR (RWEOY) by Sean O'Leary and Bob Thelen

Portland General Electric (POR) by Tyler Bomba and Logan Kreinz

Silk Road Medican Inc. (SILK) by Nick Shotkoski

B Riley Financial Inc. (RILY) by Riley Arnold and Andrew Tykhonov

Thor Industries Inc. (THO) by Ellie O'Donoghue and Madi Daleiden

Sony Corporation (SNE) by Riley Pollard and Justin Nguyen

A Small Cap Equity holding: Teladoc Health, Inc. (TDOC, $216.77): “Calling Hold on Teladoc” by: Mitch Kamm, AIM Student at Marquette University

Teladoc Health, Inc. (TDOC, $216.77): “Calling Hold on Teladoc”

By: Mitch Kamm, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary

•Teladoc Health, Inc. (NYSE:TDOC) provides care across numerous clinical specialties to help people resolve their primary care, acute, chronic and complex health needs. The company has a current market cap of $18.90 billion, and is headquartered in Purchase, NY.

• Teladoc’s recent merger with Livongo combines Livongo's chronic care management strategy, with Teladoc's telehealth network, which will allow for consumer’s health needs to be met on a long-term basis, allowing customers greater access to multiple professionals, digital assets and data science to further drive a shift in primary care to wholistic telemedicine.

• The COVID-19 pandemic has sped up adoption of telemedicine and remote patient monitoring. A September Piper Sandler Consumer/Tech Survey showed that 43% of consumers surveyed in September reported utilizing Telehealth during Q3 vs. 28% of consumers reporting Q2 utilization in their June survey.

• Teladoc has blasted through its February 2019 price target of $80.81, with further upside and value derived in the near term from their recent acquisition and changing consumer habits due to the pandemic.

Key points: 

Teladoc Health, Inc’s continued disruptive innovation has been further driven by the COVID-19 pandemic and worldwide “shelter in place” orders. The company remains in play due to the shifting nature of healthcare and consumer confidence with in-person visits. Last month, 86% of consumers stated that they believe Telehealth is equal to or better than in-office care. While demand of Telehealth services is not guaranteed to grow past the threat of COVID-19, shifting consumer demand and the pull of convenience and lower cost medical services provides a large growth opportunity for Teladoc.

Teladoc's acquisition of Livongo has allowed the company to shift and focus on wholistic offerings that change how people access healthcare. Teladoc focuses on providing virtual visits to patients. Meanwhile, Livongo has created health-management programs for individuals with chronic conditions. This merger will help offer more comprehensive insights into preventative care, since the companies will be integrating Livongo’s coaching services within Teladoc’s virtual care network. This comprehensive insight and building up of a large database of patient health information will be a driver for the company for the foreseeable future. 

Recent disruption to Teladoc’s business was almost nonexistent due to the nature of their business. In Q2 of 2020, Revenues increased to $241.03 million, up 80.5% from Q1, continuing a strong run of increasing revenues from quarter to quarter. Teladoc does not hold tons of debt on their books and cash flows have been increasingly positive as of late. The company currently holds free cash flow of $21.14 million.

Looking forward, the outlook in the near term looks bearish as the COVID-19 pandemic does not seem to be going anywhere and people are still skeptical of in person medical visits. However, increasing competition in the Telehealth field will cause Teladoc to continue to innovate and consumers will likely start returning to in person medical appointments. In the mid term, the outlook looks better as consumer habits as Telehealth has shown consumers it can be a convenient option for their health. Long term, Teladoc’s move into wholistic preventative care medicine will enable them to seek new growth opportunities if they can continue to provide quality, low-cost Telehealth servicing. 

What has the stock done lately?

Teladoc’s 1-month performance is up 5.52% to 216.77 and its quarterly performance has been -4.62% , an underperformance of the S&P 500. Since the AIM Equity Fund purchased shares of Teladoc at $61.03 in February 2019, the stock has increased 264.13% in value.

Past Year Performance: In the year to date, Teladoc has seen a 158.92% increase compared to the S&P 500 benchmark return of 6.34%. In the last year, Teladoc has returned a whopping 213.16% besting the S&P 500 benchmark of 14.35%.

Source: FactSet

My Takeaway

The future for Teladoc is bright while still being uncertain. There is definitely growth potential with their expansion into wholistic Telehealth combined with Livongo, should allow them to continue to grab market space. Changing customer trends and demands due to the COVID-19 pandemic should allow Teladoc to grab a stronghold on the growing Telehealth industry. However, the growth for the company has been so strong I am not sure how long they can sustain it. I do not see the company losing value but I am not sure they will continue to grow at such a clip. Therefore, the recommendation is hold.

Source: FactSet

An International Equity holding: Bank of Nova Scotia (BNS, $56.39): “Has the Nova Faded?” by: Brett Selke, AIM Student at Marquette University

 Bank of Nova Scotia (BNS, $56.39): “Has the Nova Faded?”

By: Brett Selke, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article. 

Summary 

• The BNS is an international bank and financial services company located in Toronto, Canada. BNS is considered one of the Big 5 banks of Canada in addition to Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, and Canadian Imperial Bank of Commerce. BNS offers personal, commercial, corporate, and commercial banking in addition to wealth management, and insurance services. It primarily serves customers retail, commercial, and corporate customers. 
• BNS has developed a foothold in Canada as the nationwide premier mobile banking application as a result of their investment in FinTech technology. 
• BNS has continued to maintain strong liquidity throughout the pandemic as they reported a CET1 ratio of 11.3% in Q3 2020 which was an improvement on their Q2 2020 CET1 ratio of 10.9%. The CET1 ratio is a measure of liquidity and measures a bank’s capital against its assets. 
• BNS Canadian and International Banking segments had a poor performance in Q3 2020 with drops in revenue of 10% and 73% respectively. However, Global Wealth Management and Global Banking and Markets helped offset some of the banking losses by increasing revenue by 6% and 15% respectively in Q3 2020. 
• BNS has doubled down on their commitment to strategically grow in the Pacific Alliance Countries or PAC (Mexico, Peru, Chile, and Colombia) Subsequently BNS has sold operations in Belize, Puerto Rico, El Salvador, Thailand, and the Dominican Republic that did not align with their new PAC repositioning strategy. 

Key Points 

Alarmingly, in Q3, both BNS Canadian and International Banking had substantial drops in revenue of 10% and 73% respectively compared to Q2. The poor performance was attributed to credit losses on performing loans, lower interest income, and lower non-interest income as a result of COVID. BNS Canadian banking division pre-COVID was expected to post low revenue growth in the future due to its segment having matured in the industry even with the implementation of its FinTech investments. However its International Banking segment was expected to exhibit strong revenue growth in the future to offset the maturity of its Canadian Banking segment. 

International banking has been repositioned to target the emerging market PAC countries specifically. Only 54.7% of BNS revenue comes from the US and Canada whereas 32.8% of its revenue comes from the PAC countries. Unfortunately, the PAC countries make up 4 of the top 6 worst effected countries in all of Latin America and the Caribbean as of October 22^nd. The PAC countries are dramatically less equipped to fight a pandemic compared to Canada and only time will tell how the PAC countries manage COVID until a vaccine comes out. 

BNS improved its capital position in Q3 relative to Q2 by increasing its CET1 ratio from 10.9% to 11.3%. A strengthening of a company’s capitalization and liquidity during a pandemic is an inviting sign that BNS is in a strong position to continue business operations and to navigate the pandemic. Their improved internal capital generation and reduction of risk-weighted assets were the drivers behind the increased CET1 ratio. BNS is well capitalized as its CET1 ratio is 230 basis points above the OSFI minimum standard. 

What has the stock done lately? 

At the Q3 earnings call on August 25th the stock price was $56.10 and as of October 22, 2020 the share price rose twenty nine cents to $56.39. The stock price has been relatively stable since June 1st settling at a price range of $54.13-$60.96 for last 4 and a half months even throughout the pandemic. 

Past Year Performance: 

The Canadian Banking industry has been hit hard by COVID. Within the last calendar year the stock price has lost 25% of its value. Compared to the other 4 major Canadian BNS stock price has been the most adversely effected by COVID in the industry. Big 5 Q3 average P/E ratio is 10.84x whereas BNS is potentially undervalued as its P/E ratio is 9.6x. Its Price-Book ratio of 1.1 is on par with the Big 5 Banks’s average P/B ratio of 1.22. 

1 Year Stock Chart vs. Benchmark from FactSet

My takeaway 

BNS was added to the portfolio because of their dominant fintech, consistent (although marginal) returns from Canada and their entry into developing markets. COVID has decimated BNS international banking segment and raises more questions than answers about its future. The PAC have great growth potential for BNS’s revenue however that comes at the cost of some substantial risk. The PAC countries are far less equipped to deal with a pandemic. The success of BNS International Banking is dependent on what government aid or stimulus packages are provided and the respective national responses and management of COVID until a vaccine is introduced. Due to COVID causing a great deal of uncertainty about the future, interest rates down worldwide in the foreseeable future, BNS missing their earnings dramatically, and BNS having lost a quarter of its stock price value this year; it is my recommendation that BNS be sold from the AIM International portfolio. 

1 Month Stock Chart vs. Benchmark from FactSet

 

A Small Cap Equity holding: Alarm.com Holdings, Inc. (ALRM, $60.40): "Investors Might be Alarmed by Alarm.com’s Q3 Earnings" by: Graham Pedersen, AIM Student at Marquette University

Alarm.com Holdings, Inc. (ALRM, $60.40): "Investors Might be Alarmed by Alarm.com’s Q3 Earnings"

By: Graham Pedersen, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary

• Alarm.com Holdings, Inc. (NASDAQ:ALRM) is a US based technology company that provides cloud based software platform solutions for smart residential and commercial properties in the United States and internationally. The company offers interactive security solutions to control and monitor their security systems as well as connected security devices. 

• Selected by Johnson Controls as its Global Interactive Services Platform. 

• Alarm.com's key feature of the MobileTech application, On My Way, was voted the 2020 CE Pro BEST Product award winner for the Tools, Testing and Calibration category. 

• ALRM now offers award-winning Smart Water Valve+Meter to service providers. 

• Several hedge funds have recently bought and sold shares of ALRM. 

Key points: ADT International, a Johnson Controls company, has chosen Alarm.com as its primary provider of Digital Services in 13 countries in Asia, Europe, and Latin America. The companies will collaborate on the consumer adoption of Alarm.com's services and business growth in these markets through this expanded partnership.

On My Way modernizes service appointment scheduling and consumer preferences. It uses the mobile devices of technicians to provide useful guidance to service and installation appointments, sends customers more accurate arrival time email updates, and allows service providers to assess their employee's performance. 

Introduced earlier this year at the Consumer Electronics Show (CES), the award-winning tool is an inexpensive Z-Wave water shut-off valve that integrates high-quality plumbing hardware with innovative technology. The Smart Water Valve+Meter intelligently reacts to large leaks, tiny drips, and leaky appliances that cause billions of dollars in property damage every year. Intelligence and insights are leveraged through deep integration with the Alarm.com platform to help minimize the risk of losses from water emergencies while also enhancing water conservation efforts.

In the 2nd quarter, Vanguard Group Inc. raised its stake in Alarm.com by 16.9%. After purchasing an additional 674,339 shares during the quarter, Vanguard Group Inc. now holds 4,665,265 shares of the software manufacturer's stock valued at $302,356,000. During the first quarter, Capital World Investors increased its holdings in Alarm.com shares by 27.3%. After purchasing an additional 687,300 shares in the last quarter, Capital World Investors now owns 3,208,000 software manufacturer shares worth $124,823,000. During the second quarter, William Blair Investment Management LLC increased its stake in Alarm.com by 343.7%. After acquiring an additional 1,733,703 shares during the last quarter, William Blair Investment Management LLC now owns 2,238,155 shares of the software manufacturer's stock valued at $145,055,000. Institutional investors and hedge funds own 95.06% of the company's stock.

What has the stock done lately?

After the sharp fall from the 52-week high of $74.66 in July to $53.75 in late September, the share price has seen a steady increase during the last month's recovery. This change resulted in an 11.83% loss over the past three months and a 6.37% gain over the past month. The stock's 50-day moving average is $57.72, and its 200-day moving average is $56.52. 

Past Year Performance: Alarm.com has a 52- week low of $32.00 and a 52- week high of $74.66. The stock has incurred a YTD gain of 39.12% with a 52-week beta of 0.60. ALRM was nearly moving in tandem with the Russell 2000 (Figure 1), especially between March and June, during the market collapse. During the months of June and July, ALRM performed significantly better than the index. Over the past year, ALRM has outperformed the benchmark, generating a 52-week return of 22.53%, compared to that of the benchmark at 2.98%. Q3 earnings for 2020 will be announced on Nov. 5^th, 2020. 

Source: FactSet

My Takeaway

Along with the market, Alarm.com experienced a pull-back earlier this year in response to Covid-19, albeit the stock has made a strong recovery, providing investors with a positive return. Several equities analysts have weighed in on the company and altered their price targets and "buy" / "sell" ratings. With a majority of the analysts raising their price target and upgrading ALRM from a "hold" rating to a "buy" rating, the stock currently has a consensus rating of "Buy" and a consensus price target of $63.50. With constant technological innovation of their cloud-based software platform solutions, I believe ALRM represents a hold in the AIM small-cap equity fund. 

Source: FactSet

A Small Cap Equity holding: CSL Ltd. (CSL ADR, $105.04): “Can a global pandemic make you better off?” by: Andrew Duwa, AIM Student at Marquette University

CSL Ltd.  (CSL ADR, $105.04): “Can a global pandemic make you better off?”

By: Andrew Duwa, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary

·      CSL Limited. (ASX: CSL ADR) CSL Ltd. is a biotechnology company focused on developing biotherapy vaccines. Currently CSL is one of the leading developers of COVID-19 vaccines, plasma therapy treatment, and anti-body treatments, along with sickle cell anemia treatment, kidney disease, allogenic hematopoietic stem cell transplant, and influenza vaccines. CSL operates out of Australia as a global. 

 

·      CSL’s major sources of revenue come from the United States (50.2% FY 2019), Germany (9.0%), and Australia (8.2%), with the United States being the only major contributor to the revenue to have a positive trend over the past 3 years. 

 

·      CSL spent $921.8 million in research and design from June 2019 to June 2020, with $482.6 million coming in Q1 and Q2 2020. 

 

·      CSL’s Net Income has steady, positive growth from 2016 forward with 2018 as an outlier where growth was 29.3%.

Key points: 

·      CSL’s CFO, David Lamont, has resigned effective July 1^st, 2020. Lamont will be succeeded by Joy Carolyn Linton, formerly CFO of Bupa a health insurance company based in the United Kingdom. David Lamont resigned to take a position at another global company headquartered in Australia. This change in management should not have a substantial effect on the performance of the company but should be monitored. 

 

·      With recent news of struggles in other COVID-19 vaccine trials including the recent death of a volunteer patient in the AstraZeneca, the status of CSL’s COVID-19 drugs should be monitored closely. Currently CSL has not experienced any major roadblocks and all three of their products are in the Clinical Development stage but any stoppages like AstraZeneca is currently facing could be catastrophic. 

 

·      CSL has recently partnered with Biotest, BPL, LFB, and Octopharma for strategic development purposes to accelerate their COVID-19 plasma therapy treatment. Combining unique expertise with CSL’s ability to accumulate resources gives the group a major advantage in the development of this treatment over competition. 

 

·      CSL kicked off research on first the ever treatment for sickle cell anemia. Currently, all other drugs for sickle cell anemia are strictly prevention methods similar to HIV/AIDS options. The development and approval for this product would provide CSL with a major competitive advantage and the possibility of a competitive moat, depending on effectiveness, usage rates, and availability. 

What has the stock done lately?

CSL’s recent performance has been very inconsistent, attributed to the COVID-19 pandemic, riding delays and setbacks in the development of treatments and vaccines within the entire industry. The price has been relatively unchanged, ranging from $204.37 to $209.90, maintaining a general increase outside of a dip occurring in early October from an announcement that trial dosing for COVID-19 treatments were halted due to testing site challenges in Australia. 

1 month stock price chart

Source: FactSet

Past Year Performance: CSL’s value has increased by 19.40% over the past year but peaked at an increase in of 35.87% in March, the beginning of the COVID-19 pandemic. In the past year CSL continuously outperformed the benchmark, currently by about 1400 bps, which is astronomically high. Additionally, with a 52-week high range of $172.23 to $243.26, CSL’s stock has experience growth but still has upside left. 

1-year Stock Chart vs. Benchmark

Source: FactSet

My Takeaway

CSL Ltd. has positioned themselves well by maintaining existing projects while also working on innovative solutions for the COVID-19 global pandemic. Even amidst a CFO change, CSL has continued to develop innovative products combating the current global pandemic and other life changing diseases. With multiple potential breakthroughs and a combination of resources with some of the top experts in the industry it is extremely likely that one will be a homerun. This makes CSL Ltd. much better off, resulting in an increase in price. 

 

 

An International Equity holding: Nomad Foods Ltd. (NOMD, $24.89): “Nomad-der What I Do, All I Think About is You” by: Quinn McDaniel, AIM Student at Marquette University

Nomad Foods Ltd.  (NOMD, $24.89): “Nomad-der What I Do, All I Think About is You”

By: Quinn McDaniel, AIM Student at Marquette University      

  

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary:

• Nomad Foods Ltd. (NYSE:NOMD) manufactures and sells frozen foods for human consumption under brands such as LUTOSA, la Cocinera, Birds Eye, Iglo, and Findus. Headquartered in Middlesex, the United Kingdom, Noam Gottesman and Sir Martin E. Franklin founded the company in April 2014. 

• The company operates through only one business segment which is Frozen Foods and is seen as a profitable, growing company.

• EPS growth for the last three years has been 38% which may seem quick, but seems to keep the excitement up for stock pickers. 

• Their long-term financial strategy is to deliver sustainable organic top and bottom line growth by transforming the frozen food industry, investing in their brands and acquiring new businesses in order to accelerate growth. 

• With a successful recent tender offer, management is happy to be efficiently returning excess capital to their shareholders. 

Key points: Nomad Foods Limited is a company with continuous growth and is catching the eyes of investors. Even with the COVID-19 pandemic, frozen food has proved to be one of the most durable consumer categories. Moving forward, the company expects their values to transcend beyond this current period and appeal to even more consumers in a post-pandemic world. 

Management believes that the company is uniquely positioned with their strategies, resources and execution of discipline in order to accelerate growth and drive abiding value creation for their stockholders. Pleased with their strong first half 2020 performance, they expect organic revenue growth to remain aloft. The company leans towards raising their guidance while enabling the acceleration of strategic investments as well. The end goal is to convert the adoption of frozen food and trial Nomad’s brands into permanent consumption behavior.

The recent quarter for Nomad Foods Limited portrayed several highlights such as sustained organic revenue growth even with relaxed European restrictions, increased factory output, improved customer service levels, gross margin expansion exceeding expectations, and robust adjusted free cash flow generation. These notables of 2020 have led the company to where they are today. 

There are multiple strategic drivers that supported the sustained organic revenue growth beyond the pandemic. New customer retention, investing behind their core portfolio, and their growth of the introduction of Green Cuisine. These drivers are the reason the company is in their 14^th consecutive quarter of organic revenue growth. 

What has the stock done lately?

The performance of the stock has shown growth consistently with their 3M change up 18.09%, 52W change up 31.26%, and 5 years change up 70.77%. Month by month, the company seems to hit all time high share prices which keeps the recommendation of analysts to buy, buy, buy. 

Past Year Performance: Nomad Foods Limited shows reported revenue growth of 7% for the past year as well as organic revenue growth of 2.1%, and adjusted EBITDA increase of 15%. While being a relatively newer company, these signs of growth over the past year show positive outcomes down the line.

Source: FactSet

My Takeaway

Being someone who is interested in profitable, growing companies, Nomad Foods Limited is a smart buy for investors. With the company’s earnings continually taking off, this sort of growth is eye-catching and a large investment held by insiders is a positive sign. With this strong growth, the hope is that it can bring about a significant improvement in the business economics. Frozen foods don’t seem to being going anywhere and not even a worldwide pandemic can stop this company’s growth. 

Source: FactSet

A Small Cap Equity holding: BJ’s Wholesale Club Holdings, Inc. (BJ): “The Best Club to Hit Up During a Pandemic: BJ’s Wholesale Club” by: Elise Olwig, AIM Student at Marquette University

BJ’s Wholesale Club Holdings, Inc. (BJ): “The Best Club to Hit Up During a Pandemic: BJ’s Wholesale Club”

By: Elise Olwig, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

·      BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is a membership-only warehouse club chain that provides fresh and packaged groceries, household products, cleaning products, small appliances, electronics, gasoline, seasonal goods, and apparel that operates on the East Coast of the United States as well as Ohio and Michigan. 

·      VIP Access: Membership fee income for BJ’s increased 6.8% in 2019, contributing an additional $19.3 million to fiscal year revenues. Membership renewal rate was 87%. 

·      New girl in town: BJ continues to expand both its brick-and-mortar locations and e-commerce presence, as well as its product offerings. 

·      Private club: In 2019, BJ increased their private label offerings, which represented over $2.0 billion of annual sales. 

·      Weathering the storm: Management reported that the pandemic has had positive impacts on their results of operations. 

Key Points : 

BJ is the leading club warehouse operator on the East Coast of the United States, and management has remained steadfast in its initiatives to gain and retain members and provide additional private label offerings. A key indication of success of a membership-only club warehouse is increased members and high retention rates, which alludes to customer satisfaction and loyalty. In 2019, membership fee income increased 6.8% from $282.9 million to $302.2 million. Additionally, membership renewal rate was a solid 87%. In 2019, BJ opened a total of three new clubs and six gas stations, which is on-target with its goals to average one club opening and three to five gas station openings per year. BJ’s private labels, Wellsley Farms and Berkley Jensen, yield higher margins than competing brands and drive customer loyalty. By increasing private label offerings in 2019, BJ was able to capitalize on these high margins to contribute to BJ’s total revenues of $13.2 billion. Looking to the future, BJ continues to forge positive relationships with suppliers and always looks to expand and diversify product offerings. For instance, Beyond Meat began selling its burgers at BJ’s earlier this year, which has allowed BJ to tap into the upward trending, $140 billion alternative-meat markets. 

The COVID-19 pandemic of 2020 has created immense challenges for businesses across the world, and BJ has proven that it is well-equipped to weather the storm. In fact, BJ is experiencing some of the highest sales growth on record (24.2%). Although merchandise and services demand has significantly declined, it is entirely offset by the increased demand for grocery products. In addition, BJ’s mobile app saw a huge usage surge (almost 300%), as more people sought alternative options to in-store shopping. Income from operations drastically increased to $106.7 million for Q2FY2020, which represents a 96.5% year-over-year increase. Management concluded that COVID-19 has positively impacted BJ’s operations due to heightened demands for their products. 

What had the stock done lately?: Since BJ released its annual report in March 2019, stock price has steadily increased from $30.13 to $39.05. The stock price jumped to $47.11 in August after solid earnings showed that BJ operations were benefiting from the pandemic. This month, BJ stock price hit a high of $41.62 and a low of $39.07. 

Past Year Performance: YTD, BJ outperformed the Russel 2000 immensely. BJ experienced a YTM change of a whopping 73.88% compared to the Russel’s -3.79% change. BJ continued to reap the benefits of the high consumer demand for groceries and other related products due to the unpredictive nature of a world amid a global pandemic. 

One-year stock chart vs. Russel 2000 (Source: FactSet)

My Takeawa: BJ was added to the AIM portfolio with a price target of 35.22, which its current price of $39.05 surpasses. Management has continually delivered on its goals to increase membership and membership retention rates and has proved capable of weathering huge economic downturns such as that from the COVID-19 pandemic. Thus, I would expect to see continued growth in the future, and I recommend that AIM buys more shares of BJ. 

One-month stock chart vs. Russel 2000 (Source: FactSet)