Market Monitor – Tim Courtney

NBR: 11/16
Guest: Tim Courtney, Exencial Wealth Advisors, CIO
Topic: Market Monitor

Theme: Stocks that are not as vulnerable to a potential economic slowdown.

Names that can weather an economic downtown:

Starbucks (SBUX) Price Target: $75

Compelling consumer growth story, poised for top-line growth (high single digits to double digits) and margin expansion through menu innovations (new beverages like cold brew and tea infusion), sustainable cost advantages (through scale), and evolution into a diversified retail and customer packaged goods platform (products sold at stores).

Starbucks has great opportunity for growth in China. It is building one store a day every 15 hours. We think Starbucks has opportunity to grow in China over the decade. In addition, SBUX is introducing new delivery with its partnership with Alibaba and WeChat for digital payments.

In the U.S. there is opportunity to improve lunch and afternoon traffic with the introduction of a new food menu (salads, soups, among others).

Zoetis (ZTS): Price Target: $103

Leading company in the animal health and vaccine industry. It has a diversified portfolio of products to help improve the health of companion animals as well as livestock.

Companion animals (dogs, cats) are increasingly viewed as a family members, drastically increasing owners’ willingness to spend on pet medical expenses. The acquisition of Abaxis (#2 player in the diagnostic industry) provides a new venue of growth for Zoetis to pursue.

Xylem (XYL): Price target: $93

Global leader in water infrastructure services and equipment, an industry poised to benefit from favorable long-term demographic and economic trends.

The acquisition of Sensus in late 2016 provides a range of products including smart meters, networking technology, and advance analytics.

The United States, as well as emerging market governments, have under-invested in water infrastructure, and our team believes that those investments will increase in the future.

Disclosures: Courtney owns SBUX, ZTS & XYL for his clients

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