Thursday, October 21, 2021

An International Equity holding: Vestas Wind Systems A/S, (VWDRY, $11.81): “Inflationary Winds Are Howling” By: Holden Patterson, AIM Student at Marquette University

 Vestas Wind Systems A/S, (VWDRY, $11.81): “Inflationary Winds Are Howling”

By: Holden Patterson, 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:

  • Vestas Wind Systems A/S (ADR: VWDRY) is a Danish manufacturer, provider, installer, and servicer of onshore and offshore wind turbines. They derive revenue from two segments: Power Solutions (86%) and Service (14%). Their Power Solutions segment consists of the production and sale of their line of various wind turbines. This segment additionally encompasses the installation and development of wind power plants to be used for major alternative energy solutions. The Service segment consists of the sale of service contracts as well as the maintenance and inspections on their turbines and energy systems worldwide. Vestas Wind Systems A/S was founded in 1945, issued an initial public offering in 1998, and is headquartered in Aarhus N, Denmark.
  • The stock has depreciated 9.97% since being added to the portfolio. A large portion of this decline is tied to the stock falling 12.12% over the past week amidst inflation and energy news around the globe. The stock also saw a 5:1 stock split on May 7th.
  • Cost inflation in the industry sector has contributed to the recent decline in their stock price. Rising costs for the commodities needed for turbine production tied to other inflationary concerns have led to investor fears heightening.
  • June 2021 LTM Sales were recorded as $17.3 Billion, which is $430 million and 2.4% greater than 2020’s full year figure. Additionally, June 2021 LTM net income and EBIT is 18.9% greater than that of 2020 and EBIT increased 9.74% from 2020. We can take this slightly as their ability to recover from the pandemic and start to generate revenue from some of their major offshore projects.
  • At the end of the day if a longer-term mindset is held for the stock, many of the key drivers such as policy tailwinds, renewable favorability, and an infrastructure build out are still in tack and make a case for a valuable future ahead.  

Key points:

VWDRY was added to the portfolio in April of 2021 at around $65.71 per share. On May 7th a 5:1 stock split occurred, so therefore the adjusted price on the date of purchase is around $13.14. The stock has depreciated 9.97% since being added to the portfolio. From April to the end of September, the stock had been stagnant to moderately growing around 1-2%. From September 30th to October 5th the stock fell 12.12%. A large part of this was due to the affect of cost inflation in energy prices which has led to uncertainty for the near-future outlook for wind. Investor fears have heightened amongst uncertainty in the US regarding budget decisions and inflationary risk. Rising US and worldwide inflation have contributed to oil prices skyrocketing and the risk that wind costs will rise in the near future. This is affecting the sustainable energy and wind industry overall, and specifically has been a major factor in Vestas’ recent decline. Inflation and how key plays such as the US handle inflationary policy will a huge role in the recovery of the sustainability segment. If inflation continues to get out of control, costs for turbine product will go up while costs for more traditional energy sources such as gas have remained flat while prices are soar. Prices for commodities that are vital in turbine production such as steel and copper have been experiencing massive inflation as well. Additionally, Vestas lowered their profit outlook in their most recent quarterly results. One of their major competitors, Siemens Gamesa (SIEGY), made a statement that higher raw material costs is becoming a factor in their own lowered earnings projections. These risks have made wind energy companies like Vestas less appealing to the short-term investor, but the market overall is still projected to grow like crazy over the coming decade and beyond. Some on the street believe this could be a good time for long term investors to get in on a company like Vestas with a hopefully inflation bounce back, policy tailwinds supporting renewable prosperity, and infrastructure rollout paying off.

What has the stock done lately?

Since being added to the portfolio the stock has fallen 9.97%. As I mentioned above, the stock was positively performing up until the start of October, but over the past week the stock has fallen 12.12%. This decline did come alongside news of an energy crisis emerging in parts or Europe and the UK, where prices for natural gas have grown drastically, but the main theme still being macroeconomic inflationary risk. This has been one of the larger drops the stock has seen over the past couple years and has definitely frightened many investors.

 

1 Month Stock Chart

Source: FactSet

Past Year Performance:

Over the past year (October 2020 - October 2021), VWDRY has declined -0.08%. The 52-week high being $17.72 and the low being $10.66. On May 7th a 5:1 stock split occurred, so therefore the adjusted price on the date of purchase is around $13.14. Aside from the past weeks decline, the stock has experienced two major spikes and falls. The first being a 66% gain from 10/28/2020 to 1/07/2021, which did happen to follow their 2020 Q3 earnings release at the start of November. The second being a 31.95% gain from $11.11 on 3/8/2021 to $14.66 on 4/27/2021. This was slightly trailing the 2020 Q4 earnings release in February of 2021. This shows the potential for massive recovery’s they have experienced over the past year. 

1 Year Stock Chart vs. Benchmark
Source: FactSet

My Takeaway:

VWDRY should continue to stay in the AIM International Fund as although they are facings some adversity currently stemming from more macro inflationary issues, there is still a lot of potential for the key drivers to play out. The first, and biggest, upside factor is the projected growth in the wind market continuing to stay very strong. There is a lot of growth opportunities for both onshore and offshore wind, while efficiency is starting to improve. We are also still in a period where green policy is favoring renewables and creating a strong environment for Vestas to grow. I believe in the short term this is most definitely a hold to regain position and see how these risks play out. We do project upside in the future to justify a longer hold, but ultimately this decision should be made once their offshore infrastructure is rolled out over the next year and we can get a solid picture for how their sales benefit from this fact.  

 

An International Equity holding: Danone SA ADR (DANOY, $13.34): “Do’s and Danonet’s” By: Elise Olwig, AIM Student at Marquette University

 Danone SA ADR (DANOY, $13.34): “Do’s and Danonet’s

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

  • Danone SA ADR (OTC:DANOY) is a multinational food and beverage company that operates through the following segments: Fresh Dairy Products, Waters, Early Life Nutrition, and Medical Nutrition. Products include yogurts, milks, soy alternatives, infant formula, bottled waters, and more.
  • Margins have remained flat in the first half of 2021, as cost cutting measures through the Local First initiative helped to offset inflationary headwinds, although larger competitors are better equipped to weather the storm. 
  • Increasing pressures from early life nutrition competition and regulation in China pose a risk to the company’s growth prospects.
  • Antoine de Saint Affrique became the new CEO as of September. He has not announced any differing initiatives, although the market expects a margin reset.

Key Points

Danone reported steady Q2 results, with management reiterating margin guidance despite inflationary headwinds. The recent topline beat of +6.6% versus consensus growth of +5.1% was almost entirely attributable to price and mix, while volume growth of missed Street estimates. The margin beat was driven by productivity, as the negative impact from commodity inflation was offset entirely by pricing and efficiency. Margins are expected to remain relatively flat, with the potential for a margin reset in 2022 under the new CEO, Antoine de Saint Affrique, effective as of September 15th, 2021.

Inflationary pressure is truly the largest risk plaguing the food industry in 2021. The company’s cost base increased +7% in the first half of 2021, which is forecasted to accelerate by 8-9% in the second half. This mainly affects milk / milk ingredients and packaging / logistics. Key components of Danone’s strategy to keep margins under wraps include savings from their strategic Local First initiative, dissipation of abnormal COVID-19 related costs, and selective use of pricing.  The Local First Plan, implemented in 2020, aims to reduce SKUs by 20% and re-allocate decision-making power to five geographical levels to improve efficiency in those areas. The restructuring plan is largely on track, as 15% of SKUs have already been eliminated, and it is expected to contribute €1 billion of cost savings by 2023.

Another key risk to consider includes headwinds in China, where lower birth rates and increased competition from internal brands like Feihe pressure the high-margin Specialty Nutrition segment that has historically been a key driver of growth for Danone. There is intensifying regulation in the infant formula space, and China is seeing consolidation in the home market Additionally, Danone has high exposure to soy products in the dairy products and substitutes segment. Not only are consumers seeking out alternative plant-based options such as almond and oat products, but also soy is the slowest-growing ingredient in the plant-based market, deeming production less efficient. For further acceleration of adjacent plant-based products in faster-growing categories such as yogurt, ice cream, cheese, and creamers, which altogether represent ~33% category revenue, Danone will need to significantly increase advertising and promotional spend, which is difficult to achieve given the already increasing margin pressure from both inflation and competition.

What has the stock done lately?

Over the past month, Danone has returned (-5.05%), representative of market sentiment towards continued inflationary cost and pricing pressures. The stock has seen a continued, steady price decline since August. Danone trades on a 16x P/E and 11.5x EV/EBITDA versus European Foods 20x/14x due to higher operational volatility.

Past Year Performance: 

Danone is up 3.89% YTD, with more bullish trends over the past 6 months.  Where one would typically expect a strong recovery scenario as COVID-19 cost and volume pressures gradually dissipate from the market, the stock is down (-6.77%). DANOY hit its 52-week high of $15.38 in August before retracting to current levels. Since being added to the portfolio, the stock has contributed a 9.71% return.

 

Source: FactSet

My Takeaway

Danone has a much shallower product portfolio compared to its larger, more diversified peers. While this has served the company well in the past, providing them with more flexibility to focus on core brand initiatives that align with consumer trends (e.g. the shift towards plant-based dairy alternatives), it is altogether riskier considering larger competitors have a greater ability to grow margins despite inflationary pressure as opposed to simply working to keep margins flat. Namely, Diageo, Pernod Ricard, and Nestle exhibit more premium portfolios, healthier pricing power, and higher margins, therefore deeming them more equipped to withstand current commodity headwinds. It is recommended that we liquidate our position to mitigate some of this current market risk through investing in a larger peer.

Source: FactSet


 

 

 

 

 

 

 

 

 

 

A Small Cap Equity holding: First Bancorp, Inc. (FBNC, $43.86): “First Choice for a Great Bank” By: Ben L’Empereur, AIM Student at Marquette University

 First Bancorp, Inc. (FBNC, $43.86): “First Choice for a Great Bank”

By: Ben L’Empereur, 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

  • First Bancorp (NC) (NASDAQ:FBNC) ) is a regional bank holding company that engages in the activities of accepting deposits and making loans primarily in North Carolina and Northeastern South Carolina.
  • The bank has weathered the economic fallout of the pandemic well, beating pre-pandemic quarterly performance in 2021.
  • On September 15th, FBNC announced a cash dividend of $0.20 per share, an 11.1% increase from the dividend rate from last year at this time.
  • On September 17th, shareholders approved an acquisition of Select Bancorp which is expected to close in the fourth quarter of 2021.
  • AUM have grown more than $1 billion since being added to the AIM Small Cap Fund in March 2021.  

Key points:

First Bancorp, Inc. still has a room to grow to fulfill the original investment thesis and max out their growth potential. FBNC is committed to growing their footprint in the Carolina region. Their acquisition of Select Bancorp (SLCT) is a keen indication of this strategy. SLCT has 22 branches throughout North and South Carolina. With the addition of these 22 branches, First Bancorp will now have 124 branches in these areas.

Not only is FBNC’s footprint in this region growing, so is the population. Over the past decade, the Charlotte region grew by 16.3%, outgrowing North Carolina as a whole (9.5%). The Charlotte area is expected to grow another 50% by 2050. This huge influx of people presents opportunities for FBNC to capture more customers moving into the area.

The risk associated with investing in banks due to the pandemic have also started to subside as well. Last year at this time, FBNC has a provision for credit loss of $19.3 million. This year, that number is only at $1.9 million. With interest income and fee income expected to grow slightly this year, this reduction in provision for credit loss should offer a nice increase to their bottom line.

FBNC also realizes the importance that technology has in the banking industry today. In 2020, they made much needed updates to their online and mobile banking applications, making access and the user experience more beneficial for their customers. This investment in technology is part of the strategy to be able to offer the same resources of larger regional banks but with the experience of a local community bank.

What has the stock done lately?

In the past month, FBNC’s stock has increased about 5.56% while the benchmark has decreased -3.25%. While the last couple of weeks have been hard on the markets, FBNC continues to post growth. This strong performance could be, in part, due to the increase in dividend payments to investors.

Past Year Performance: In the past year, FBNC has increased nearly 100%. While this increase can be attributed in part to the rebound from the pandemic, the company still has strong fundamentals that drive this growth. Compared to the benchmark, this company has rebounded quite nicely.

Source: FactSet
My Takeaway

With their existing branches and their acquisition of Select Bancorp, First Bancorp, Inc. is in a strong position to capture a large percent of the growing population in the North and South Carolina regions. The increase in their dividend payment also signals solid fundamentals of the company. I recommend that we hold FBNC to benefit from the acquisition of Select Bancorp and the growing population in the Carolinas.

Source: FactSet


A Small Cap Equity holding: Americold Realty Trust (COLD, $29.14): “Hot Drop, Cooler Future” By: Elisabeth Desmarais, AIM Student at Marquette University

 Americold Realty Trust (COLD, $29.14): “Hot Drop, Cooler Future”

By: Elisabeth Desmarais, 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

  • Americold Realty Trust (NYSE: COLD) Is a real estate investment trust that acquires, manages, and develops warehouses providing cold chain storage solutions. The company owns a total of 246 warehouses and covers over 1.4 billion cubic feet of storage. COLD generates its revenues from warehouse income (77% of FY20 revenue), third-party managed (15%) and transportation (7%). The Atlanta-based company operates in the US, Australia, New Zealand, Argentina, Canada, and Brazil.
  • The company’s stock price has dropped approximately 40% from same time last year when the company hit its 52-week high which can be explained by labor shortages in the food industry. Thus, impacting occupancy levels in the warehouses due to lower amount of product available to be distributed.
  • Since being added to the portfolio in October 2020, at $37.52 with a price target of $43.66, COLD’s performance has been volatile. It has produced a total return of nearly 1.1% for the portfolio and consists of approximately 10% of the domestic real estate sector. Instead of attempting to survive during the COVID-19 pandemic, like some companies, Americold has instead seen its revenues and growth increase. COLD has been growing and has experienced great performance it the past few years with 3-year revenue of 8.8% and 1-year growth of 11.1%. During the peak of the pandemic back in 2020, the demand for cold storage increased dramatically as well as the demand for fresh products to be delivered at customer’s doorsteps. These factors allowed the company to continue expanding its operations and increase their warehouse ownership.  In 2019, Warehouse Income, Third-Party Managed and Transportation segments, individually made up 77%, 15% and 7% of total revenue. Accordingly, the company has been stable and has seen these segment percentage remain almost the exact the same FY20.
  • Due to labor shortages, the company is expecting its full year 2021 Adjusted Funds from Operations (AFFO) to range from $1.15 to $1.20, which is lower compared to previous range of $1.34 to $1.40. FirstService had an excellent 2nd quarter FY20, where the Global Warehouse revenue and NOI increase by 35% and 20% individually. Additionally, the company increased its revenues, company posting revenue, EBITDA, and EPS growth of 15%, 25%, and 55% respectively versus 2019’s 4th quarter. When comparing FY2019 and FY2020 results we can see that the company was able to perform despite the COVID-19 pandemic. Accordingly, Americold was able to grow (Yoy) its revenue, EBITDA and FFO by 11.1%, 6.8% and 12.2% respectively.
  • The company has announced it third quarter dividend which will remain at $0.22, same as the second quarter announcement.
  • The company’s same store occupancy was down by 530 bps when compared to its previous year, which was caused by food producers’ shortage who were not able to provide enough products. However, management expect these levels to be back to normal by mid-2022, and bring the company back where it left off.

Key points:

The company invested significantly during 2020 despite economic complications and the challenging back drop of the COVID-19 pandemic. COLD completed $2.6 billion of acquisitions and started to develop numerous projects totaling $465 million. This resulted in a record year for the company in term of investments and external growth and led revenues to increase by 35%. COLD was also able to keep a low leveraged balance sheet and delivered AFFO per share growth of 10.3%. In May, Americold made two acquisition, one in New Jersey for KMT Brrr! and one in England for Bowman Stores for over $150 million. Furthermore, COLD also acquired 3 new projects in New York, Atlanta, Dublin, Ireland, which are expected to be completed between 2022 and 2023. The company wants to continue expanding and said to be continuously looking for new opportunities and potentially exploring the direct-to-customer business. One example is the closed acquisition of ColdCo’s which includes unique brands that focus on the direct-to-customer business.

What has the stock done lately?

Over the past three months, COLD’s stock value has decreased from $38.22 to $29.19, resulting in a drop of 31%. The stock’s value ranged from $28.15 to $39.30 over the past three months and has a 52-week range of $28.82 to $40.85. The stock recently hit a lower value this month which has not been that low since May 2020.

Past Year Performance:

FSV’s stock has decreased in price value compared to last year, thus the stock was trading at $35.80 in October 2020 and currently trades around $30. In the past year, the stock has performed well and remained healthy when excluding its recent drop to labor shortage and decrease in food production.

 

Source: FactSet

My Takeaway

Americold Realty Trust has been very strong over the years and has grown tremendously sine its foundation 115 years ago. Due to strong and experienced management, the company was able to expand across the world and continue to do so throughout the peak of the pandemic and now. COLD kept revenue growth consistent year after year despite harder economic and financial circumstances. Americold had completed various acqusitions in the past year and has invested significantly in new projects. Therefore, these investments are expected to pay off in the next year as well as in future years when these projects will be completed. The company need to continue its aggressive strategy of expanding and targeting new segments such as direct-to-customer to diversify its business model. Accordingly, I believe that COLD will continue having growth in the foreseeable future and see its price go back up to standard levels. It is recommended to keep Americold Realty Trust in the Small Cap AIM Portfolio.

Source: FactSet


 

 

A Small Cap Equity holding: Skyline Champion Corp. (SKY, $60.81): “The SKY is the Limit” By: Michael Ribaudo, AIM Student at Marquette University

 Skyline Champion Corp. (SKY, $60.81): “The SKY is the Limit”

By: Michael Ribaudo, 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

  • Skyline Champion Corp. (NYSE: SKY) is a manufacturer and retailer of mobile homes and manufactured housing. SKY operates in the United States and Canada. The U.S. accounts for 89% of total revenue.
  • SKY operates under the brand names: Skyline Homes, Champion Home Builders, Athens Park Model RVs, Dutch Housing, New Era, and many more.
  • Demand for affordable housing remains exceptionally high and housing prices continue to see increases, at a record pace, for the past four consecutive months.
  • Demand for manufactured housing is at an all-time high evidenced by SKY’s current backlog of $1.2 billion.
  • At the beginning of August, SKY reported Q1 ‘22 revenue of $510.2M beating street estimates of $443.93M and diluted EPS of $0.75 beating estimates of $0.53.

Key points: Skyline Champion Corp. has seen exceptional revenue growth over the past quarter. Q1 ’22 revenue has grown 85% over the same period in FY21. This is due to the extreme demand for affordable housing. With prices of homes increasing, SKY should see continued revenue growth and continued demand for its manufactured housing.

SKY’s backlog has increased 40% QoQ to $1.2B in Q1 ’22. This supports the high level of demand for this company's product.  SKY is being negatively impacted from turning enough product to meet the demand due to supply chain restrictions. SKY is actively working to expand production capacity by adding 4 new plants in North Carolina and Texas. These facilities are expected to be operational by the end of FY22. SKY has hired Dr. Roland Menassa as a VP of Manufacturing Technology to better automate its operation, increasing efficiency and lowering reliance on manual labor, increasing output. Previously, Dr. Menassa brings his past experience with Amazon, General Electric, and General Motors to SKY.

Although SKY has increased prices 16% YoY, it has struggled to keep margins up to due rising costs. Rising input costs are compressing margins and management is concerned as to how much of these increases can be passed to the consumer. Increased prices could lead to a decrease in demand. Management put through a price increase in September to offset inflationary costs. Lumber costs have decreased recently, but steel, resin, and freight costs have increased.

The demand for manufactured housing is still rising and SKY is rapidly expanding their manufacturing facilities to convert their backlog into sales. SKY’s growth is limited to what their supply chain can support with keeping margins intact. The increase in automation may help SKY ramp production leading to a lower backlog resulting in increased revenue. The improved automation should also decrease costs associated with manual labor, creating a positive impact to margins. 

What has the stock done lately?

The past 6 months have treated investors in SKY well. The stock has increased ~44% in the past 6 months. Most notably, the stock price increased ~20% due to a great Q4 earnings report in May. The stock price has been increasing since. The current stock price is hovering around $61.00 which is about ~10% off its 52 week high.

Past Year Performance: SKY has increased 120% in value over the past year. SKY’s share price has increased due to the rising home prices, growth in the first time home buyers segment,  and rising demand for affordable housing. Net income in FY21 increased 46% YoY. Revenue has increased 14% QoQ and net income in Q1 ’22 increased 27% QoQ. 

Source: FactSet
My Takeaway

Since being added to the AIM fund at $47.00, SKY has exceeded its price target of $55.07. The increased demand for manufactured housing, the increase in automation and technology, and increasing home prices all benefit SKY’s business. Their current backlog coupled with additional manufacturing facilities coming online in 2022, and the improved management of supply chain issues, position SKY to keep increasing in value. Holding this equity as part of the AIM Small Cap portfolio is the best option.

Source: FactSet


Friday, October 15, 2021

An International Equity holding: Adyen N.V. ADR (ADYEY, $28.04) “Adyen, Amsterdam’s Ace” By: Brett Selke, AIM Student at Marquette University

 Adyen N.V. ADR (ADYEY, $28.04) “Adyen, Amsterdam’s Ace”

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

  • Adyen N.V. ADR (OTC: ADYEY) is a Dutch payment processing company allowing businesses to integrate and accept point-of-sale, e-commerce, and mobile payments. Its geographic revenue mix is: Europe (60% of revenue), North America (22%), APAC (9%), and LATAM (~8%). Adyen is continuing to see incredible growth from the United States, net revenue from the region increased 80% YoY.
  • Adyen is continuing to expand into new geographic markets. Since February, it has expanded its business to Singapore, Japan, and the United Arab Emirates. Additionally, it has continued to add new merchants such as Slice, Shiji, and Dick’s Sporting Goods.
  • MSCI upgraded its ESG rating from BB to A on June 28th citing Adyen’s improved sustainability efforts. Adyen added a new feature called Restore that allows customers the ability to pay merchants a slightly higher fee in return for offsetting the customer’s carbon footprint via a more sustainable delivery method. 
  • The US Federal Reserve granted Adyen a US federal branch license in San Francisco, California. The Office of the Comptroller of the Currency still has to approve the license. Adyen has had a pan-European banking license since 2017.

Key points

Adyen was pitched and added to the AIM International Fund in February of 2021. Since then, the company announced both its 2020 yearly earnings and its 2021 1H earnings. In 2020 Adyen reported $3.6B in revenue and $261M in net income, increases of 37.1% and 11.4% YoY respectively.  However, its 1H financial results were a mixed bag. Investors were optimistic that Adyen’s new merchants would contribute substantial revenue growth however, approximately 80% of revenue was generated from existing merchants. Additionally, net income growth for 1H 2021 was 12.1%, whereas net income growth for 2H 2020 was 86.6%. Adyen still had a terrific 1H 2021, investors estimate’s and outlook merely came back down to earth after its earning call.

Adyen announced a partnership with Afterpay, a global leader in the BNPL space to further improve its product offering to merchants. Almost immediately, Afterpay was integrated into Adyen’s product and drove revenues in H1 2021 to increase by 22.7% and 63.7% HoH and YoY respectively. However, Square announced in August that it would be acquiring Afterpay in a deal expected to be finalized in Q1 of 2022. Due to Square being a competitor of Adyen, it is unknown if Afterpay’s partnership with Adyen will continue.

The thesis drivers regarding the rise in e-commerce and merchant expansion are still intact. The COVID pandemic has caused many businesses around the world to move away from point-of-sale payments and accept mobile and e-commerce payments. Adyen has seen a twofold increase in point-of-sale transaction volume YoY however, it still makes up only 11% of all transactions. Adyen has continued to add more merchants and expand into new regions which will increase revenues over time. There has been no further development in the network token driver, although Adyen has been working on improving quality of life for its merchant’s customers and improving compliance strength. Adyen has improved its compliance strength through its risk engine and a compliance machine learning tool named Score. Adyen also launched Restore, which is a sustainability tool merchant’s customer can use to reduce their carbon footprint.

What has the stock done lately?

Adyen was pitched and added into the AIM fund at a price target of $60.05. The company announced on August 24th a 2-for-1 stock split, thereby reducing the price target to $30.03. A stock split is a very optimistic signal to investors. September was an uneventful month for the company and the stock has corrected itself the last few weeks after a whirlwind August.

Past Year Performance

Adyen has returned 31.4% since being added to the international portfolio. ADYEY has increased 50.5% in value in the past year and 22.13% YTD. The stock took a dive in May due to some headlines, but the announcement of the Fed granting them a charter was the catalyst Adyen needed. Since that announcement the stock has gone up 21.75%.

Source: FactSet
My Takeaway

There is a plethora of reasons to be excited about the future of Adyen, two of the original drivers in e-commerce growth and merchant expansion are standing strong. Its sustainability initiative and Fed branch license are two additional potential drivers for the company in the long-term. The street continues to be bullish on the company with an average upside of 12%. The AIM International portfolio should continue to hold their position in Adyen.

Source: FactSet


An International Equity holding: Toronto-Dominion Bank (TD, $67.07): “Dominating Toronto” By: Matt Schembari, AIM Student at Marquette University

Toronto-Dominion Bank (TD, $67.07): “Dominating Toronto”

By: Matt Schembari, 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

  • Toronto Dominion Bank. (NYSE:TD) provides financial products and services to customers located all over the world. Most of the revenue comes from Canada and the United States, but other revenue sources come from China, Japan, Germany, India, United Kingdom and France.
  • TD Bank strategy is to continue to prove its business model and have a forward focus on expanding.
  • TD Bank has a plan to shape the future of banking by using digital adoption. They have had a forward focus thinking with digital users in Canada increasing by 8.0% YoY. In the United States they increased this number by 13.2% YoY.
  • TD Bank has been able to increase its net income in the wholesale banking industry by 25% YoY while decreasing its expenses by 5%.
  • TD Bank is on the higher side of its 52 week range, which ranged from 42.90-73.85. This is not shocking as last year TD Bank had to deal with COVID-19 and the effects of that..

Key points: TD Bank Net Income is brought in by 4 different segments over the last year. TD Bank brings in money from its Canadian Retail Bank (the most), the US Retail Bank, Charles Schwab, and the wholesale banking segment. .

Canadian Retail net income increased by 68% compared with the third quarter last year. TD Bank was able to increase its revenue by 9%. They were able to increase the revenue by increasing non-interest income by 13%. This increase was mainly from a higher fee increase and higher insurance volumes. TD Bank also was able to increase its loan by 7% and increase its deposits by  13% in the Canadian retail segment. .

Toronto Dominion Bank in the US Retail segment grew its revenue for the quarter by 5%. The Interest income decreased during this quarter, but once again the non-interest income saw a strong growth. This 28% non-interest income growth  was primarily from fee income and the increasing of customer activity. TD Bank was also to limit the increase in expenses for increasing its deposits by 10% and an 18% on personal deposits..

TD Bank also was able to increase the wholesale banking segment of the bank. The wholesale banking net income increased by nearly 25%. This came from the decrease in expenses. TD Bank has been trying to make its shareholders constantly happy. TD Bank had consistent dividend growth. The Bank has been able to increase its dividend yield over the last 25 years. Over the last 25 years the dividend growth grew about 11% annualized. .

What has the stock done lately?

Over the last month TD Bank hasn’t seen too much movement. TD Bank's value has increased by almost two percent. Most of this increase has happened over the past week. Since September 24th the stock has moved up 1.5%.

Past Year Performance: TD has increased 18.61% in value over the past year. The stock started off a year ago at $56.25. This was the lowest the stock has been in the last year. At the end of May it reached the stock high of the year of $73.33. The stock dropped mid July and has been fluctuating since remaining around $67, its current price.

Source: FactSet
My Takeaway

TD Bank is at a good spot currently. The bank had very strong numbers in quarter three. The focus on technology and always trying to increase its mobile users will lead the bank to increase its customers. The bank also reported strong numbers for non-interest income. The fees and charges increase will bring another source of revenue besides interest income. This will let TD Bank separate itself from other banks.

Source: FactSet


Thursday, October 14, 2021

Andrew Duwa- Calliditas Therapeutics (CALT) AIM Equity Presentation

Bob Thelen-Taiwan Semiconductor (TSM) AIM Equity Presentation

Christian Wilber- Polkadot (DOT) AIM Equity Presentation

Elizabeth Desmarais-PLYMOUTH INDUSTRIAL (PLYM) AIM Equity Presentation

Jacob Kello -CleanSpark Inc. (CLSK) AIM Equity Presentation

Natalie Frey- Rekor Systems (REKR) AIM Equity Presentation

The Sixth Set of Fall 2021 Marquette AIM Program Student Equity Pitches/Q&A for Friday, October 15th

 

AIM Class of 2022 Student Equity Presentations on Friday, October 15th

Due to continuing restrictions, live pitches will temporarily not be held in the AIM Room on Friday afternoons; however, you can still participate.

This is the link for the AIM equity write-ups (each week’s write-ups will be available on Thursday mornings): AIM Write-ups 10/15/21

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

If you would like to participate in the live Q&A session with the student presenters on Friday at 1:00 pm 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



Wednesday, October 6, 2021

The Fifth Set of Fall 2021 Marquette AIM Program Student Equity Pitches/Q&A for Friday, October 8th

 

AIM Class of 2022 Student Equity Presentations on Friday, October 8th

Due to continuing restrictions, live pitches will temporarily not be held in the AIM Room on Friday afternoons; however, you can still participate.

This is the link for the AIM equity write-ups (each week’s write-ups will be available on Thursday mornings): AIM Write-ups 10/08/21

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

If you would like to participate in the live Q&A session with the student presenters on Friday at 1:00 pm 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