瑞信-美股-投资策略-美国最佳投资选择-2019.1.11-71页.pdf

Credit Suisse Equity Research Americas/United States Top Picks Credit Suisse Top Investment Ideas in the United States January 11,2019 Credit Suisse US Equity Research Credit Suisse Global Product Marketing Arbin Sherchan,CFA equity.researchcredit- global.productmarketingcredit- arbin.sherchancredit-(877)291-2683 (212)538-4442 (212)325-8967 DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.2 Top Picks 110 Top Ideas:We highlight 100 Top Outperform and 10 Top Underperform Ideas.Ideas Across Style,Sector,and Size:We have grouped Top Outperform ideas by style(growth/value),sector and market cap on slide 7.What is New?1 New Sector Added:Medical Supplies&Devices.See recent research:Initiation of Coverage:No Disruption,No Alpha Where to Focus in Med Tech in 2019 and Beyond 10 New#1 Top Outperforms:8 Additions(AAP,ET,HON,INFO,INXN,MCHP,SAVE,SYK)and 2 Upgrades(CLR,NRZ).Recent Research on New#1 Top Outperforms:AAP,CLR,ET,HON,INFO,INXN,MCHP,NRZ,SAVE,SYK 18 Names Added to Top Outperform Ideas:AAP,ADI,EFX,EMR,ET,EW,GMED,HEI,HON,INFO,INXN,IQV,IR,MCHP,SAVE,SYK,TUSK,TXN 17 Names Removed from Top Outperform Ideas:ABC,ADP,ALLE,AMAT,ARMK,BBDb.TO,CONE,DAL,LNG,LRCX,MMM,MU,PUMP,PXD,SWCH,WPX,XYL 4 Names Added to Top Underperform Ideas:BPMP,LPI,WSM,ZBH.Recent Research on New Top Underperform Ideas:BPMP,LPI,WSM,ZBH 1 Name Removed from Top Underperform Ideas:SO Methodology“One-stop shop”for the research teams best ideas.Every US research analyst identifies and ranks up to three top stock picks based on a 6-to 12-month time horizon.For each name,we include a short summary of our analysts thesis as a starting point for further analysis.These should not be viewed as portfolios;they are simply a current snapshot of the analysts top picks in their coverage universes.3 Table of Contents Section Page#1 Top Outperforms 4 Summary of Top Ideas 5 Top Outperforms by Style,Size and Sector 8 Top Picks That Rank in Top 25%in HOLT Scorecard 9 Top Ideas by Sector/Industry Basic Materials 11 Consumer 14 Energy/Utilities 23 Financials 32 Healthcare 39 Industrials 48 Services 55 TMT 57 Valuation Tables 63 4#1 Top Outperforms BASIC MATERIALS Chemicals&Ag Sciences ASH Metals&Mining EAF Paper&Packaging CCK Click here for previous edition,12/7/18 CONSUMER Gaming CZR Homebuilding&Building Products FBHS Leisure HGV Packaged Food NOMD Retail:Hardlines AAP Retail:Softlines&Global Brands RL Retail:Staples&Distribution USFD ENERGY/UTILITIES Alternative Energy RUN E&Ps Large Cap MRO E&Ps SMID Cap CLR Midstream&MLPs ET Oilfield Services&Equipment HAL Refining&Marketing MPC Utilities EXC SERVICES Engineering&Construction FLR Machinery DE INDUSTRIALS Aerospace&Defense BA Airfreight&Ground Transport CSX Airlines SAVE Electrical Equipment&Multi-Industry HON FINANCIALS Asset Managers/Retail Brokers BX Banks JPM Insurance Life VOYA Insurance P&C/Brokers WLTW Mortgage Finance NRZ Specialty Finance SYF HEALTHCARE Biotechnology SMID Cap PTCT Healthcare Facilities HCA Healthcare Technology&Distribution CVS Managed Care UNH Medical Supplies&Devices SYK Pharmaceuticals MRK TMT Communications&Networking Equipment ANET Consumer Internet GOOGL Datacenter REITs INXN Semiconductors MCHP Software ORCL Telecom&Media ATUS New Top Pick Stock Moved Up in Rank Source:Credit Suisse SERVICES Business Services INFO 5 Analyst Top Outperform Top Underperform Removals#1#2#3 BASIC MATERIALS Chemicals&Ag Sciences Chris Parkinson ASH FMC DWDP Metals&Mining Curt Woodworth EAF HCC CSTM Paper&Packaging Lars Kjellberg CCK OI Gaming Cameron McKnight CZR Homebuilding&Building Products Susan Maklari FBHS SWK DHI Leisure Cameron McKnight HGV Packaged Food Rob Moskow NOMD MDLZ BGS Retail:Hardlines Seth Sigman AAP WSM Retail:Softlines&Global Brands Michael Binetti RL VFC BURL Retail:Staples&Distribution Judah Frommer USFD PFGC DLTR Alternative Energy Michael Weinstein/Maheep Mandloi RUN NEP E&Ps Large Cap Bill Featherston MRO APC PXD E&Ps SMID Cap Betty Jiang CLR VNOM LPI WPX Midstream&MLPs Spiro Dounis ET BPMP LNG Oilfield Services&Equipment James Wicklund HAL WHD TUSK PUMP Summary of Top Ideas New Top Pick Stock Moved Up in Rank Stock Moved Down in Rank New Top Pick Stock Moved Up in Rank Stock Moved Down in Rank Source:Credit Suisse 6 Analyst Top Outperform Top Underperform Removals#1#2#3 ENERGY/UTILITIES Refining&Marketing Manav Gupta MPC Utilities Michael Weinstein EXC NI NEE SO Asset Managers/Retail Brokers Craig Siegenthaler BX BLK LPLA Banks Susan Katzke JPM BAC Insurance Life Andrew Kligerman VOYA MET ATH Insurance P&C/Brokers Mike Zaremski WLTW PGR AJG Mortgage Finance Doug Harter NRZ COOP STWD Specialty Finance Moshe Orenbuch SYF V AXP Biotechnology SMID Cap Martin Auster PTCT SRPT ALXN UTHR Healthcare Facilities A.J.Rice HCA Healthcare Technology&Distribution Erin Wright CVS IQV ZTS ABC Managed Care A.J.Rice UNH ANTM Medical Supplies&Devices Matt Miksic SYK EW GMED ZBH Pharmaceuticals Vamil Divan MRK AGN JNJ ABBV Summary of Top Ideas New Top Pick Stock Moved Up in Rank Stock Moved Down in Rank Source:Credit Suisse 7 Analyst Top Outperform Top Underperform Removals#1#2#3 INDUSTRIALS Aerospace&Defense Rob Spingarn BA HRS HEI BBDb.TO Airfreight&Ground Transport Allison Landry CSX UNP JBHT GWR Airlines Joe Caiado SAVE ALK UAL DAL Electrical Equipment&Multi-Industry John Walsh HON EMR IR ALLE,MMM,XYL Engineering&Construction Jamie Cook FLR JEC Machinery Jamie Cook DE CAT Business Services Kevin McVeigh INFO EFX IRM ADP,ARMK Communications&Networking Equipment Sami Badri ANET FFIV MSI Consumer Internet Stephen Ju GOOGL AMZN FB Datacenter REITs Sami Badri INXN EQIX CONE,SWCH Semiconductors John Pitzer MCHP TXN ADI AMAT,LRCX,MU Software Brad Zelnick ORCL CRM ZS Telecom&Media Doug Mitchelson/Brian Russo ATUS Summary of Top Ideas New Top Pick Stock Moved Up in Rank Stock Moved Down in Rank Source:Credit Suisse 8 Small Cap(4.3B,$28.7B)*Growth Stocks*Basic Materials OI ASH,CCK,FMC Consumer AAP,BURL,DHI,DLTR,FBHS,RL,SWK VFC Energy RUN CLR MPC Financials AJG,LPLA BLK,V Healthcare GMED,PTCT ALXN,SRPT AGN,ANTM,CVS,EW,HCA,JNJ,MRK,SYK,UNH,ZTS Industrials SAVE ALK,HEI,HRS,IR,JBHT,UAL,BA CAT,CSX,DE,EMR,HON,UNP Services EFX TMT ANET,FFIV,MCHP,MSI ADI,AMZN,CRM,EQIX,FB,GOOGL,ORCL,TXN Value Stocks*Basic Materials Consumer CZR MDLZ Energy APC,HAL,MRO,NI EXC,NEE Financials NRZ,STWD,SYF,VOYA BAC,JPM,MET,PGR Healthcare Industrials FLR,JEC Services TMT Top Outperforms by Style,Size,and Sector*Note:Market Cap cut offs and Style categorization are based on Russell classifications.Source:Credit Suisse 9 Top Picks That Rank in Top 25%in HOLT Scorecard Source:Credit Suisse Company NameTickerQualityMomentum Valuation BASIC MATERIALSWarrior Met Coal Inc.HCCaaaOwens IllinoisOIaaCONSUMERStanley Black&Decker,Inc.SWKaD.R.Horton Inc.DHIaNomad FoodsNOMDaaRalph Lauren CorporationRLaVF CorporationVFCaBurlington Stores,Inc.BURLaPerformance Food Group CompanyPFGCaENERGY/UTILITIESSunrunRUNaCactus,Inc.WHDaaMammoth Energy ServicesTUSKaaMarathon Petroleum CorporationMPCaaExelon CorporationEXCaNextEra Energy Inc.NEEaFINANCIALSBlackRockBLKaVoya FinancialVOYAaMetLifeMETaAtheneATHaaaWillis Towers Watson Public Limited CompanyWLTWaProgressive CorporationPGRaaArthur J.Gallagher&Co.AJGaNew ResidentialNRZaaaStarwood Property TrustSTWDaSynchrony FinancialSYFaVisa Inc.VaHEALTHCAREAlexion Pharmaceuticals IncorporatedALXNaaHCA HealthcareHCAaaCVS HealthCVSaaIQVIA Holdings,Inc.IQVaCompany NameTickerQualityMomentum Valuation HEALTHCAREUnitedHealth Group Inc.UNHaaaAnthem,Inc.ANTMaaaStryker Corp.SYKaEdwards Lifesciences Corp.EWaGlobus Medical,Inc.GMEDaMerck&Co.,Inc.MRKaaAllergan Plc.AGNaJohnson&JohnsonJNJaaINDUSTRIALSBoeingBAaHarris CorporationHRSaHeico CorpHEIaaCSX CorporationCSXaUnion PacificUNPaJB Hunt Transport ServicesJBHTaSpirit Airlines,Inc.SAVEaAlaska Air Group,Inc.ALKaUnited Continental Holdings,Inc.UALaIngersoll-Rand PlcIRaaFluorFLRaJacobs EngineeringJECaDeere&Co.DEaCaterpillar Inc.CATaSERVICESIHS MarkitINFOaTMTArista NetworksANETaF5 Networks,Inc.FFIVaaAlphabetGOOGLaaAmazon com Inc.AMZNaFacebook Inc.FBaaEquinix,Inc.EQIXaAltice USAATUSaThe HOLT scorecard calculates factors scores on a group relative basis.We indicate above where a company ranks above the 25th percentile in each of the categories:(1)Quality:A firms track record of earning returns on capital(CFROI)and managing growth.(2)Momentum:Revisions to consensus EPS estimates translated into cash flow impact(CFROI)and medium-term share price momentum.(3)Valuation:Based on the HOLT DCF framework and traditional valuation multiples Top Ideas by Sector/Industry 11 Chris Parkinson christopher.parkinsoncredit-(212)538-6286 Basic Materials Chemicals&Ag Science Top Outperform Rank Company Pricing Rationale 1 Ashland Global Holdings Inc.(ASH)HOLT Lens Price:$73.46 Target:$90.00 Mkt Cap:$4.6B Thesis:More visibility into cost-cutting initiatives,including speed of execution,margin acceleration on improving mix,and portfolio optionality(sale of businesses,debt pay down,potential take-out).ASH is our top pick,as we believe:(1)there is an improving price/mix on strong Pharma/PC demand(skin care,etc.),and(2)further cost-cutting optionality(CSe$50mm co target)/asset optimization opportunities are driving ASI margin expansion.CSe$1bln net proceeds from the sales of Composites and Marl(expected close prior to June 2019)will be used predominantly for debt reduction(CSe$40-50mm in interest savings),with buybacks representing longer-term optionality.ASH is also a potential takeout target(CSe$100/share),though not crux to our thesis.Potential Catalysts over next 3-6 months:Sale of the Composites and I&S(ex.Lima)businesses(June 19),cost-cutting progress,mix improvement,potential takeout.Valuation:Our price target for Ashland Inc.is$90,based on 11.0 x our 2020 EBITDA,discounted back.2 FMC Corporation(FMC)HOLT Lens Price:$79.43 Target:$113.00 Mkt Cap:$10.7B Our bull thesis is underscored by:(1)FMCs ability to outgrow CPC markets by 200-400bps,(2)ability to further expand long-term margins via mix,new MOAs and cost reductions,(3)further benefits from the DuPont asset integration/revenue synergies,(4)Central/SE Asian and EE growth potential,and(5)M&A/cap allocation optionality;this includes new molecule purchases.FMCs balance sheet provides a strong degree of upside optionality,with net debt/EBITDA 6.5 Bboe vs.our current estimate of 4.3 BBoe;and(3)disclosure of Northern Delaware type well economics.Valuation:MRO still trades at a 1x discount to peers on 2019-2020 EV/DACF,which we note is even wider than its historical average discount to the group when it had its Canadian oil sands mining business and before it acquired its Permian position(high multiple asset).2 Anadarko Petroleum Corp.(APC)HOLT Lens Price:$47.91 Target:$73.00 Mkt Cap:$24.2B APCs free cash flow generation(assuming$54/Bbl)should enable it to deliver superior growth in cash flow per debt-adjusted share grow,and its large cash balance enables it to return cash to shareholders at an increased level while providing additional optionality.Meanwhile,APC currently trades at a discount to peers on both EV/DACF and price/NAV.Bill Featherston william.featherstoncredit-(212)325-6283 Energy/Utilities E&Ps Large Cap 25 Source:Credit Suisse;Data as of 9-Jan-19 Top Outperform Rank Company Pricing Rationale 1 Continental Resources(CLR)HOLT Lens Price:$47.20 Target:$57.00 Mkt Cap:$17.7B Why Now?CLR is our top pick among our SMID-Cap E&P coverage in a more tempered oil price environment.Among the resource E&Ps,CLR is one of the few that can still generate solid oil-driven production growth in tandem with free cash flow in a low price environment.Thesis:We see an attractive combination of(1)above-average cash flow per debt-adjusted share growth and a low break-even oil price needed to maintain flattish production;(2)Bakken well outperformance plus full field development in SCOOP driving oil weighted production growth,and(3)non-core asset sales further optimizing the portfolio.See recent research:Cutting Oil Price Forecasts;How to Position Heading into 2019.Potential Catalysts over next 3-6 months:We believe 2019 guidance should demonstrate CLRs differentiated ability to show growth and free cash flow in a sub-$50 environment.Continued well outperformance from Bakken wells,and ramping oil volumes from SCOOP/Springer play should increase market confidence in CLRs capital efficiency.Valuation:Our$57 TP is based on a blended average of 7.5x 2019 normalized EBITDX and 0.9x NAV.2 Viper Energy Partners LP(VNOM)HOLT Lens Price:$29.94 Target:$36.00 Mkt Cap:$1.5B The recently announced tax status and structure change marks a fundamental shift in the companys investment appeal as the only growth and high income vehicle exposed to the Permian,now in a C-Corp structure with no tax burden.Post change,VNOM will see a significantly expanded potential investor base which should help further accelerate their role as a natural consolidator of royalty acreage in the Permian.We forecast VNOM is capable of generating 14%annual organic distribution growth through 2022 while yielding 8%and 11%in 2019-2020 based on the CS price deck($54&$57/Bbl),which can be further enhanced by acquisitions.Betty Jiang betty.jiangcredit-(212)325-6259 Energy/Utilities E&Ps SMID Cap 26 Source:Credit Suisse;Data as of 9-Jan-19 Top Underperform Rank Company Pricing Rationale 1 Laredo Petroleum,Inc.(LPI)HOLT Lens Price:$4.19 Target:$4.00 Mkt Cap:$1.0B We believe that LPI is structurally challenged in a low oil price environment and that it will struggle to generate oil production growth while spending within cash flow at strip prices.The company is hampered by subpar cash generation given its gassy,high oil decline acreage in the eastern part of the Midland basin.Execution has also been mixed partly due to new wells underperforming as a result of higher density development and poor landing zone placement.Betty Jiang betty.jiangcredit-(212)325-6259 Energy/Utilities E&Ps SMID Cap 27 Source:Credit Suisse;Data as of 9-Jan-19 Top Outperform Rank Company Pricing Rationale 1 Energy Transfer LP(ET)HOLT Lens Price:$15.11 Target:$23.00 Mkt Cap:$39.5B Why Now?Despite its strategically strong exposure and robust growth outlook,ET trades at a discount to the overall Midstream space and against other large diversified peers.Thesis:ET offers irreplaceable exposure to the fast-paced Permian basin with one of the largest gas G&P footprints and extensive crude gathering.Together,these assets feed its gas,NGL,and crude systems(each among the largest in the basin)and represent an irreplaceable network that