Hot Oil Service Companies To Buy Right Now

The abbreviated week's calendar has little important data. The economic news last week leaves open the timing of the next interest rate increase. As vacationing market participants yawn their way back to their desks and trading floors, what will be the focus? A look at the calendar and the end of summer will have them asking: Should we expect September mourning?

I borrowed the title from Alan Steel's excellent post on this subject. More from him in the conclusion.

Last Week

There was a lot of important economic news. The picture was mixed, but mostly promising. The Fed can move in September or delay until December.

Theme Recap

In my last WTWA, I predicted another week long focus on the Fed. I expected every economic data point to get special attention, parsed through the perceived eyes of the Fed. This was the story all week - even on the quiet Friday afternoon. I asked whether the Fed would get a signal to hike rates. At the end of the week, most were answering "no." I have had a good streak going on guessing the theme, but the week ahead is really a challenge.

Hot Oil Service Companies To Buy Right Now: Sherwin-Williams Company (The)(SHW)

Advisors' Opinion:

• [By Cameron Swinehart]

  I recently took profits in a few positions including Microsoft (MSFT), The Sherwin-Williams Company (SHW), Omega Healthcare Investors (OHI) and Wells Fargo (WFC). From my perspective, the economic outlook doesn't support continued investment in those companies. A softening U.S economy and high debt levels will push investors into safe havens and real assets.

• [By Ben Levisohn]

  Sherwin Williams (SHW) has gained 14% this year and is trading near it’s 52-week high. It’s still worth buying, says�Richard Chilton,�Chief Investment Officer, Chilton Investment Company who spoke at the SALT Conference in Las Vegas today.

  Chilton first bought Sherwin Williams�during the depths of the Great Recession. Why? “Paint is a good business,” he says. “There are 134 million homes in the US. I like knowing that when I got to bed at night…there paint will be peeling.” And while Sherwin Williams�has had quite a run, there’s a good reason to buy now: Its acquisition of Valspar (VAL).

  The deal, which was announced in March, makes a lot of sense, Chilton says. Both companies make paints and industrial coatings. sherwin Williams, though, has high profit margins in paint and lower margins in industrial coatings, while Valspar has high margins in industrial coatings and low margins in paint. Chilton expects the lower margins to rise toward the higher ones. He also expects it to trade up to $657 by 2021.

  “It’s just getting started,” Chilton says.

  Shares of Sherwin Williams rose 0.7% to $296.18 today, while Valspar ticked up 0.1% to $106.91.

• [By Keith Fitz-Gerald]

  Take�Sherwin-Williams Co.�(NYSE: SHW), for example.

  Most people know it as a paint company based in Cleveland, Ohio, that's been producing some of the best paints money can buy since 1866.

• [By Ben Levisohn]

  UBS analyst John Roberts and team consider whether Sherwin-Williams’ (SHW) pending purchase of Valspar (VAL) is a sign of peak pain in the U.S.:

  U.S. DIY (do-it-yourself) paint is at record levels. Raw materials have likely bottomed in 1Q16. In our view, this narrative is too simple. DIY is only ~15% of sales and most other paint segments are still below normalized levels. In addition,�Sherwin-Williams’ margins are as much (or more) sensitive to volume as raw materials. The impact of rising raw mats on 2009-2011 margins was exacerbated by volume decline, which was unusual as raw materials normally decline in down markets.

  Unquantified upside�Valspar tax and revenue synergies�Valspar is 44% ex-North America and, according to�Sherwin-Williams management, should allow some�Sherwin-Williams tax optimization over time. Revenue synergies (net of any loss from customer overlap) are also expected, as gaps in product lines & regions are filled. Only 20-25% of�Valspar is North American architectural (without any stores).�Valspar brings anchor architectural positions in Australia/New Zealand & China, and supports�Sherwin-Williams’ position in Europe. In addition,�Valspar also strengthens Sherwin-Williams in wood & general industrial coatings; and adds can & coil coatings.

  Still, Roberts and team are Neutral rated on Sherwin-Williams. In April, Barron’s Jack Hough recommended selling Sherwin Williams and buying Mohawk (MHK).

  Shares of Sherwin-Williams have gained 1% to $291.26 at 3:04 p.m. today, while Valspar has dipped 0.1% to $107.46. Mohawk has risen 0.8% to $197.47.

• [By Michael Flannelly]

  On Monday, Sherwin-Williams Company (SHW) announced that it has completed the acquisition of the U.S./Canada business of Consorcio Comex, S.A. de C.V. In the transaction, Sherwin-Williams paid $90 million in cash and assumed liabilities currently valued at about $75 million.

  Comex operations in the U.S. and Canada consist of 314 company operated stores–234 in the U.S. and 80 in Canada–and eight manufacturing sites–five in the U.S. and three in Canada. In addition, Comex supplies paint and coatings products to approximately 1,500 external retail locations in Canada.

  Sherwin-Williams and Comex are still working to secure regulatory approval from the Federal Competitor Commission of Mexico for Sherwin-Williams to complete the acquisition of the operations of Comex in Mexico.

  Sherwin-Williams shares were inactive during pre-market trading on Monday. The stock is up 13.72% year-to-date.

Hot Oil Service Companies To Buy Right Now: Bruker Corporation(BRKR)

Advisors' Opinion:

• [By Javier Hasse]

  Yet another stock experiencing a correction after the bell was Bruker Corporation (NASDAQ: BRKR), which lost 2.75 percent in after-hours, after having gained 4.5 percent during the day.

Hot Oil Service Companies To Buy Right Now: MINDBODY, Inc.(MB)

Advisors' Opinion:

• [By Peter Graham]

  The Q3 2016 earnings report for small cap online wellness services stock MINDBODY Inc (NASDAQ: MB) is scheduled for after the market closes on�Wednesday (October 26th). MINDBODY Inc along with�mid cap fitness�device stock�Fitbit Inc (NYSE: FIT) and small cap fitness center operator Planet Fitness Inc (NYSE: PLNT)�all�had IPOs�in the summer of 2015��� raising�talk of a fitness stock bubble brewing.�

Hot Oil Service Companies To Buy Right Now: Toro Company (The)(TTC)

Advisors' Opinion:

• [By Mitchell Clark]

   The Toro Company (NYSE:TTC) is one of my favorite small-caps for medium- to long-term investors. Selling specialized equipment for turf management and other industries, Toro is a proven winner that has provided very consistent growth in sales and earnings over the years.

  It’s not the fastest growing small-cap business, but it pays a decent dividend and has a loyal customer base in the golf course and contractor markets.

  Toro is now offering sprinkler refit equipment for water-starved jurisdictions like California. This company’s share price performance has been exemplary.

Hot Oil Service Companies To Buy Right Now: Enviva Partners, LP(EVA)

Advisors' Opinion:

• [By Manikandan Raman]

  There also some lesser known clean energy stocks that may witness downward movement on potential Trump win on negative sentiment. They include Pattern Energy Group Inc (NASDAQ: PEGI), Enviva Partners LP (NYSE: EVA), TerraForm Global Inc (NASDAQ: GLBL), Renewable Energy Group Inc (NASDAQ: REGI) and Ameresco Inc (NYSE: AMRC).