Valens Conviction Long List – July 2018

Growth stocks top our July Valens Conviction Long List, with Facebook (FB) remaining at the top of our list. Our other picks this month are: COF, WGO, CTXS, GRMN, LRCX, PINC, GOOGL, GILD, ESV, PLNT, ZG, CRUS, DHI, AKS, SAFM, FSLR, LGIH, NOV, ICHR, BHC, THRM, and MYL.

 

• Facebook, Inc. (FB) remains our top pick, while the market is overreacting to headline risk, the company continues to show strong fundamental momentum and management confidence around the key drivers of the business

 

• Capital One Financial Corporation (COF) is in the second spot on the list, due to COF’s strong franchise that is driving ROE’. COF trades below peers, with improving returns, positive macro tailwinds, and growing management confidence per Earnings Call Forensics™

 

• With the valuations still suppressed since the pull back earlier this year, 13 Value names make up the largest portion of our Conviction Long List this month, and GARP make up the second largest group, with four names

 

• The sector with the most companies in the July list continues to be Information Technology, with eight firms included. Consumer Discretionary has six, Healthcare has four, Energy has two, and Consumer Staples, Finance, and Materials each have one company

 

• We added Premier Inc. (PINC), Ensco plc (ESV), and Sanderson Farms Inc. (SAFM) to the idea list this month. Premier Inc. is the Oracle of healthcare supply companies, pursuing a strategy of expanding from a necessity business to higher value businesses which is powering ROA’ expansion and strong growth.  Ensco is a company priced for bankruptcy with a smart, well aligned management team, and a much safer credit profile than the market recognizes.  Sanderson Farms is a company with 20%+ short interest and severe market pessimism about profitability, even as management executes on stabilizing returns and is growing more confident in their business