E Thoughts On Growth Stocks: Apple, Sherwin-Williams, Disney

The lower priced SE is likely to attract price conscience smartphone consumers around the world including many in the U.S. I think that there are plenty of cost-conscious consumers who are willing to buy the SE because of its lower price. Some might be current iPhone owners looking to upgrade. Apple is also likely to experience some conversion from Android users to the SE to get a more powerful smartphone at a reasonable price.

Merger Painting a Nice Picture

Sherwin-Williams (SHW) is aiming to acquire Valspar (VAL) for $113 per share. Investors have an opportunity for a 7.6% gain if the deal closes successfully since Valspar is trading at $105. The merger will strengthen Sherwin-Williams' presence in the coatings market. Both brands complement each other on the shelves at Lowe's (LOW), thus making the merger a natural fit. Sherwin-Williams already was a leader in the Basic Materials sector. So, the merger will make the combined company a stronger presence in the sector.

Sherwin-Williams expects to gain $280 million in annual synergies from the merger. The synergies are expected to come from sourcing, SG&A and other operating efficiencies. The synergies will provide a boost to the bottom line, while Valspar adds about $4 billion to $5 billion in annual revenue to the top line. The additional revenue from Valspar represents over 34% of SHW's total expected 2016 revenue.

Sherwin-Williams is likely to continue its strong stock performance as it grows earnings at strong double-digit rates. The company is expected to grow earnings at 11% to 12% this year and at about 12% next year according to consensus. However, the synergies of the merger could boost those figures, depending on when the deal closes.

Disney Continues Success at the Box Office

Disney (DIS) rarely fails at the box office and the recent success of Zootopia reinforces this. The animated Zootopia movie is outperforming expectations by 50% to 60%. The movie earned a record $73.7 million for a Disney animation in its first three days. Those results were better than Frozen which earned $67.4 million in its first three days. The better than expected results should help boost the stock as the box office sales continue to grow.

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Disclaimer:This article represents the author's opinions.  Investors should do their own due diligence and consult with an investment advisor to determine which stocks are right for ...

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David P. Matthews 5 years ago Member's comment

Looking forward to more - added you to my follow list.

Joe Economy 5 years ago Member's comment

Although climbing in the past month or so, I do think that Apple's more or less stagnant stock will continue to edge up and down based on rumors of new and improved versions of the IPhone. But I will say it again that I think Apple needs to move beyond its dependency on a single product and branch out to other ideas. In car media might be the growth phenomenon that it needs to boost the company. There are a number of really good competitors out there including Android and Parrot so the in car media space remains to be played out in full as yet. I do believe Disney is a broader investment choice with more room to grow as it grows market strength in China and the developing world. It too is vulnerable to the successes of its latest movie productions which can be hot or miss but in the long run, its a better growth stock. Worryingly also is that Disney's stock is rather stagnant down around 5% year to date and seemingly stuck around the $100 level. Stock analysts are also cautious with 14 out of 34 recommending only a hold position, with 5 strong buys and 13 buys. Interesting to see if these 2 stocks can break beyond their comfort zones?

Susan Miller 5 years ago Member's comment

The $SHW and $VAL merger is certainly promising.

Kirk Sheffield 5 years ago Member's comment

Very good picks here. $DIS in particular has just been killing it lately with one major win after another. And they certainly know how to squeeze every last dollar from each box office hit.

Kurt Benson 5 years ago Member's comment

I agree @[Kirk Sheffield](user:24174) Elsa is outselling Barbie, Star Wars is king again and now everyone's crazy over Zootopia. I haven't seen it yet but did see the trailer at the Star Wars movie and it's on my list. I'm bullish $DIS & $AAPL.