Looking At Mastercard, Dell, ATT, J&J and Dollar Tree - A Common Sense Fundamental Roundup

MasterCard

• Stock performance (YTD:  +19%, 6M: +36%)
• The stock is expected to give reasonable and consistent growth over a long-term
• The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters
• Increase in electronic payments, forecasted in 2012 and thereafter, should continue to benefit the company
• Multiple growth opportunities for MasterCard include

1. 1. International expansion
   2. Debit cards
   3. Mobile payments
   4. Prepaid cards.

• The company had a strong balance sheet, no long-term debt and $3.7 billion in cash at year-end 2011
• As of March 2012, of the 35 analysts followed by Thomson/First Call, 14 have strong buy recommendations and 12 have buys, with nine holds
• The upcoming boom in mobile payments are a double edged sword for this company. Signifantly more transactions will be on the table, but it will be chased by ever more aggressvie competition as well.

Dollar Tree

• The company continues to generate robust same-store sales growth with its focus on low-priced and essential commodities. The rise in comparable sales is attributable to increased traffic, reflecting continued growth
• The company's recently announced accelerated share repurchase program reflecting management's continued confidence in the business and the consistency of its cash flow generation
• Both operating margin and gross margin increased
• Stock performance (YTD:  +19%, 6M: 22%)
• In our opinion, the stock has the potential to do well, particularly in the current environment, due to focus on essential, low priced products. Considering the fallacy of the US somehow decoupling from an imploding Europe is now being shown to be just that - a fallacy - well run low priced retailers may see their day in the light
• As of Apr 20, 2012, the consensus forecast amongst 24 polled investment analysts covering Dollar Tree, Inc. advises that the company will outperform the market. This consensus improved from ‘hold’ in February 2012.

AT&T

• The company has been making slow but steady growth in its revenues and profits
• The US market is nearing saturation, resulting in increased competition with Verizon Wireless and Sprint Nextel Corp
• Net attributable income rose to $3.6 billion, or 60 cents per share, from $3.4 billion, or 57 cents per share in the year-ago quarter.
• Consolidated revenue rose nearly 2 percent to $31.8 billion
• The company has been witnessing growth in its ARPU and subscribers numbers, although moderate.

1.  The U.S. mobile provider added 187,000 subscribers in the quarter
2. Average monthly revenue per AT&T contract subscriber, or ARPU, increased 1.7 percent to $64.46
3. Amazingly enough, after 5 years this company is finally coming to its senses and reducting even further the amount of subsidies it is paying for Apple's iPhone. It has realized what I have been saying all along, the iPhone is not as profitable for carriers as its negative margin competition even though it moves more than individual vendors hardware products on unti basis. Remember, its not how much you sell but how much you make from selling. The company has actually made more money since losing its iPhone exclusive and throwing more marketing muscle into the Android camp. Verizon is coming to the same conclusion, which is the impetus for the bearishness in the sell side for US iPhone sales last quarter.

• Stock performance (YTD:  +3%, 6M: 12%)

Johnson & Johnson

• As the baby boom generation ages, the entire spectrum of Johnson & Johnson's products should benefit from the increase in health-care needs
• Company 1Q2012 earnings-per-share of $1.37 was just above the consensus estimate of $1.35
• Revenues for the quarter at $16.1 billion were marginally lower than the expectations of $16.26 billion
• Johnson & Johnson updated its earnings guidance for fiscal 2012 to $5.07-$5.17 per share to reflect the positive impact of current exchange rates

• Stock performance: 6M: +1%   and YTD: -2%
• The company should see steady growth in its performance over the coming periods but will not see aggressive pops that are sought after by the CNBC crowd.

Dell

• Company announced that for fiscal 2013, it expects non-GAAP earnings per share (EPS) to exceed the record $2.13 it delivered in fiscal 2012 and expects to continue strong execution, with cash flow from operations exceeding net income
• For the first quarter of 2013, it expects revenue to decline approximately 7% sequentially
• It’s software segment and service segment are expected to perform better than the Desktops segment. The enterprise is the only net positive that I see for Dell, although I admittedely have not performed a forensic analysis of this company nor any others listed on this page. Desktop is sluggish in comparison to that fruit company and mobile computing has seen several dead ends with no end to it in sight.
• Fresh, dynamic, plugged in management should take the company in the smartphone direction by buying out RIMM's key hardware/server assets (potentially available for next to nothing soon) and creating a truly Enterprise ready smartphone. The problem with that strategy is that RIMM will play hardball until its no longer worth even negotiating with them.

1. Slow down in PC sale is expected to weigh on the company. The company derives 22% revenues from desktops sales

• Dell fourth-quarter profits fell 18 percent, based mostly on falling revenue from its consumer PC division. All the major PC makers are facing the same sales issues
• Stock performance: 6M: +5% and YTD: +12%
• Overall outlook on the stock is stable as the company’s performance in one segment will get supported by other performing segments