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Chevron Corporation (Ticker: CVX) Analyst: Edward Weagel

Chevron Corporation (Ticker: CVX) Analyst: Edward Weagel. Recommendation for Chevron (CVX). Recommendation: HOLD Target Price (12/31/2015): $124 Closing Price (05/11/2014): $117.03 Reasoning Behind the Recommendation CVX outperforms the other supermajors in profit per barrel.

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Chevron Corporation (Ticker: CVX) Analyst: Edward Weagel

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  1. Chevron Corporation (Ticker: CVX) Analyst: Edward Weagel

  2. Recommendation for Chevron (CVX) • Recommendation: HOLD Target Price (12/31/2015): $124 • Closing Price (05/11/2014): $117.03 • Reasoning Behind the Recommendation • CVX outperforms the other supermajors in profit per barrel. • The company is investing heavily in new US and International projects. • Barrels of Oil Equivalent (BOE) per day in production is projected to increase into 2017. • The company reliably pays the shareholders. • Why not a BUY? • Crude oil resources are depleting -- there is less “low hanging fruit” • The methods for exploration are becoming more technically challenging. • Exploration is becoming more expensive

  3. Strengths • Upstream Strengths • Greater than 90% of earnings come from 27% of revenue • Production per day is projected to increase to 3.1 million bpd of BOE. • New Projects • Angola LNG project started shipping its product. • Australia – Wheatstone LNG project • Delaware Basin • Kurdistan Region – 80% stake in QaraDagh Block • Marcellus Shale • Downstream Strengths • Demand is expected to rise for refined products in the next 15 years. • US Gulf Coast Petrochemicals Project

  4. Weaknesses • Risk-adjusted performance during the past 5 quarters • The sector performed worse than the S&P. • The company performed worse than the sector. • Upstream Weaknesses • Exploration expense is at a high for the past 5 years at $1.8 billion • Capital and Exploratory expenditures are at a high for the past 5 years • The increasing reliance on offshore drilling means more risks. • Downstream Weaknesses • Historically, the segment is vulnerable to low margins. • This segment contributes less than 10% to earnings • For both US and International, sales decreased for refined products.

  5. Questions?

  6. Recommendation for Honeywell International (Ticker: HON) Analyst: Benjamin Yang Recommendation: BUY Target price (12/2015): $103 Closing Price (4/14/2014): $90.92 2013 Sales: $39.1 B 2013 Net Income: $3.96 B

  7. Strengths Aerospace Global Economy ACS Construction PMT Green Technology Transportation Ties to industries with positive outlook High expected earnings growth through M&A-based competitive advantages

  8. Weaknesses Defense and Space (Aero) faces headwinds Net income margin improvement capacity uncertain beyond 2015

  9. Recommendation for Kinder Morgan Energy Partners LP (Ticker: KMP) Analyst: Robert Nagaki Recommendation: BUY Target price (12/2015): $90 Closing Price (4/14/2014): $77.70 Industry Overview -Energy Transportation and Storage Business Segments - Natural Gas Pipelines - CO2 Pipelines - Product Pipelines - Terminals - Kinder Morgan Canada *Source of basic data company 10-k

  10. Positives Tennessee Gas Pipeline El Paso Natural Gas Copano Pipeline Eagle Ford Gathering Cochin Pipeline Jones Act Tankers $14.8 billion in future growth projects

  11. Negatives Interest Rates Alternative forms of Energy Transportation Terrorist Attacks

  12. Questions?

  13. Recommendation for PepsiCo (PEP) Analyst: Chase Eggleston • Recommendation: BUY Target price (12/2015): $89 • Closing Price (mm/dd/yyyy): • Segments • PepsiCo Americas Foods • Frito-Lay North America (FLNA) • Quaker Food North America (QFNA) • Latin American food businesses (LAF) • PepsiCo Americas Beverage (PAB) • Europe • Asia, Middle East and Africa (AMEA)

  14. Reasons for Recommendation Positives: • Return to Shareholders • Share repurchases • Dividends • $2.27 per share to $2.62 per share • Size • Cash Flows • Revenue Volatility • Low Risk • Growth Potential • Shanghai’s DisneyLand • At home beverage production

  15. Reasons for Recommendation Things to be aware of: • Consumer Trends • Commodity Prices • Currency Exchange • Competitors

  16. Sources IBIS World Mergent PepsiCo 2013 10-k PepsiCo2012 10-k http://seekingalpha.com/article/2059583-pepsi-tingyi-take-aim-at-coke-with-disney-win http://www.fool.com/investing/general/2014/03/17/pepsico-enters-at-home-carbonation-market-before-c.aspx http://seekingalpha.com/article/2018301-pepsico-ceo-discusses-q4-2013-results-earnings-call-transcript?part=single http://advisor.marketscope.com/SP/msa/reports.pdf?reportURL=/indsurv/fnb/fnb.pdf

  17. Recommendation for PPG Industries (Ticker: PPG) Analyst: Marin Decaudaveine Recommendation: SELL Target price (6/30/2015): $181 Closing Price (4/10/2014): $189.96

  18. 2013 PPG Overview

  19. Why selling PPG? • Very high return last year: 63.80% (S&P 500 return last year: 34.93%). Sell PPG to secure these gains • Transitions optical business separation, which was very profitable, and had excellent margins (29.2% versus 9.4% for the whole company) • Exposure to the risk of raw materials inflation. Titanium dioxide purchases are 70% to 80% of the cost of goods sold of the coatings business (84% of the total revenues of PPG in 2013). • Architectural coatings segment is weaker than other coatings segment, despite the construction market recovery. Due to fewer competitive advantages. • PPG’s performances are tightly linked to global economy.

  20. However, PPG has some strengths • Current PPG’s portfolio shift. Focus on coating activity (2004: 56%, 2014: 90%). Strong acquiring activity, and a lot of divestitures. Coatings manufacturing industry benefits from many positive points. Low capital intensive industry, stable earnings/cash, consolidating industry. High growth potential. Results improved in the long run. • 25% of the firm's sales are from emerging regions. It will drive growth, because the western regions expand at a slower rate. • High return of cash to shareholders ($1.35 billion in 2013), through buy-back and dividends.

  21. Questions?

  22. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney Recommendation: “Sell” Target Price: $60 Today’s Price: $56.77

  23. Rio Tinto (Ticker: Rio) Analyst: Garett Mahoney Segments: Iron Ore Aluminium Copper Energy Diamonds & Minerals

  24. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

  25. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

  26. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney China’s Influence

  27. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

  28. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

  29. Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

  30. Recommendation • China’s economic and political changes will negatively impact multiple segment revenues. • Significant impact on iron ore prices. • Development of GHOST Cities cannot be sustained. China’s consumption will be cut. • Aluminium demand and price increase will be overshadowed by Chinese policy changes. • Poor HPR and Risk-Adjusted Returns shows investment would be more beneficial in Sector ETF. • Target Price: $60

  31. Recommendation for Schlumberger Ltd (Ticker: SLB) Analyst: Jordan Fuentes Recommendation: HOLD Target price (12/2015): $114.00 Closing Price (4/14/2014): $98.46 Regions: Segments:

  32. Recommendation for Schlumberger Ltd (Ticker: SLB) Analyst: Jordan Fuentes • Recommendation: HOLD Target price (12/2015): $114.00 • Closing Price (5/07/2014): $97.34 • Positives: • Technological Innovation and Efficiency • Financial Performance against competition • Industry outlook quite positive • Negatives: • Highly Dependable on expenditures from Oil and Gas industry related to the Exploration and Production of hydro-carbons. • Subject to risk related to foreign exchange and geo-political events • Alternative Energy production • Competitors: • Halliburton Company (HAL) Baker Hughes Incorporated (BHI) • Weatherford International (WFT)

  33. Technological Innovation: SLB • 1.4 billion invested into R&E • Over 125 R&E facilities worldwide • Involved in optimization of hydro-carbon rigs. • Improved efficiency for customers • Shale, Fracking, Deep-water E&P • New drill bit can penetrate 92% further than traditional drills bits. • World Record for shortest time between Exploration and Production: 14 Months • Improved efficiency seen in production and financials. • Wearable Intelligence: • Google Glass

  34. Financials Advantage • Expanding Margins • Double Digit EPS growth • FCF Growth unmatched by competition • Improved 2013: Asset Utilization, Inventory Management

  35. Recommendation Stryker Corporation (Ticker: SYK) Analyst: Bryan Deshayes • Recommendation: BUY Target price (12/2015): 93 • Closing Price (5/07/2014): 82.14 • Company Overview • 2013 Revenue : $9.02 Billion • 4.2% Increase from 2012 • Segments • Reconstructive (4.8% increase) • MedSurg (2.9% increase) • Neurotechnology and Spine (5.6% increase)

  36. Stryker Corporation • Strengths • Recent Acquisitions : MAKO, Trauson, Pivot, Patient Safety Technologies • Fastest Long-Term Growing Dividend • Research and Development • Future Outlook • Reduced Cost Trend for Healthcare Providers • Lower Expenses (Reduced Non-Recurring Costs)

  37. Stryker Corporation • Opportunities • International Expansion : Emerging Markets • Aging Population (Over 65 to double by 2030) • Increased Obesity • Threats - New Entrants in the Market/Competition • Regulation • Litigation/Lawsuits

  38. Stryker Corporation Questions?

  39. Recommendation for Union Pacific Corporation (Ticker: UNP) Analyst: Kathy Hollingsworth • Recommendation: BUY Target price (12/2015): $206 • Closing Price (5/0/2014): $184.84 • 2013 Performance • Revenues • $21,963 (+5.%) • Net Income • $4,388 (+11.3%) • 20% Net income Margin (+1.2%) • Earnings per Share Diluted • $9.42 (+13.92) • Dividends • $2.96 (+18.88%) • Payout ratio 30% • Feb qtr $.91 (+15%)

  40. Strengths/Opportunities • Current leader in the industry • Strong Brand Recognition • Operations are tied to the economy • Diversified commodity mix • Only railroad to have all six ports to Mexico • Dividends increase, 1-3x p/ year PO ratio low 30s • $60 million buybacks until 2017 • Outperformed rail industry and S&P 500 • Balance sheet healthy-Lowest debt-to-equity ratio .5 • Investing capital into networks and infrastructure to grow • More manufacturing in Mexico (especially cars) • Investing in technology for locomotives

  41. Weaknesses/Threats • Legacy contracts • Railroad Unions • Revenues tied to industry commodity performance • Volatile fuel costs • Burlington North Pacific has parallel lines • Enforcement of fuel surcharges • Pending law suits regarding price fixing • Coal Industry/Natural Gas Competition • Pipelines

  42. Conclusion • Union Pacific Corporation • Leading the Rail Industry • Maintains strong financials • Best choice among industry competitors as fuel costs rise • Prepares itself to grow with the forecasted economic rise • Taking care of their investors • It’s a buy.

  43. Walgreens Company (WAG)

  44. Walgreens Company (WAG) Analyst: Thai Yaparwong • Recommendation: BUY Target price (12/2015): $76.00 • Closing Price (5/07/2014): $65.43 • Company Overview • Over 8,600 Locations • - 408 Healthcare Clinics • Revenue: $72.2 B (+0.8%) • Net Income: $2.3 B (+10.6%) • Prescription Drugs • Front End Products

  45. Walgreens Company (WAG) Analyst: Thai Yaparwong • Recommendation: BUY Target price (12/2015): $76.00 • Closing Price (5/07/2014): $65.43 • Reasons for Recommendations • Strategic Partnerships • Alliance Boots • Europe, Asia & Africa • AmerisourceBergen • 10yr. Distribution Agreement • Global Platform Synergies • 2014 Projected: $425M • 2016 Goal: $1B

  46. Walgreens Company (WAG)Analyst: Thai Yaparwong Recommendation: BUY Target price (12/2015): $76.00 Closing Price (5/07/2014): $65.43 • Market Presence & Reputation • Balance Rewards Program • Household Name • Key Drivers • Creating a Well Experience • Advancing Community Pharmacy • Establishing an Efficient Global Platform • Risks • Uncertainty of Government Regulation • Uncertainty of International Economies

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