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Fair Warning

Deluxe Corporation
The Deluxe Corporation provides products for business such as checks, marketing solutions, digital printing, web-to-print solutions, printed forms including deposit tickets, billing forms, work orders, job proposals, website development and hosting, email marketing, social media, search engine optimization and logo design. Industry peers include Harland Clarke Corporation, MDC Partners, and RR Donnelley and Sons.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $79.07, with an initial trailing stop at $73.93. Upward price movement will encounter resistance at $75.67 with final resistance at $77.53, while downward price movement will find support at $73.80 and $72.18 with final support at $71.12.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Act includes a transition rule to effect this participation exemption regime. As a result of the enacted legislation, taxpayers are required to include in taxable income for the tax year ending December 31, 2017, the pro rata share of deferred income of each specified foreign corporation with respect to which the taxpayer is a U.S. shareholder.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Deluxe Corporation, this legislation resulted in a net benefit of approximately $20.5 million to the company’s 2017 income tax provision. This amount included the net tax benefit from the remeasurement of deferred income taxes to the new federal statutory tax rate of 21%, which is effective on January 1, 2018, and revised state income tax rates for those states the company expects to follow the provisions of the 2017 Act, partially offset by the establishment of a liability for toll charges related to undistributed foreign earnings and profits.

As of December 31, 2017, the company intend to indefinitely reinvest the undistributed earnings of its subsidiaries located outside of the United States and, therefore, no deferred income taxes have been recognized for the tax effects of repatriation. After enactment of the 2017 Act, the tax effects would generally be limited to foreign withholding taxes on any distributions. As of December 31, 2017, the amount of cash and cash equivalents held by the company’s foreign subsidiaries was $40.0 million, primarily in Canada. If the company were to repatriate all of its foreign cash and cash equivalents into the United States at one time, they would incur a tax liability of approximately $2.0 million, based on current tax laws.

Insider Transactions
In the past 12 months, the company recorded 110 insider trades involving 619,179 shares of stock. Of the 110 insider trades, 55 were Buys involving 322,253 shares of stock, and 55 were Sells involving 296,926 shares of stock, creating an insider buy to sell ratio of 1.1 to 1.

Future Value
My future (5 year hold) target price for the stock is $174, which is an average annual return of 26%. A prior five year hold of the stock (2012-2017) would have returned an average of 28% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For Deluxe Corporation (NYSE: DLX) – FYE 12/2017 FAIRLY VALUED The stock is currently trading at levels in line with my most recent $77 fair value estimate. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Deluxe Corporation
Posted on 04/21/18


The Coca Cola Company, Inc.
The Coca Cola Company owns, or licenses and markets, more than 500 nonalcoholic beverage brands, primarily sparkling beverages, Coca-Cola, Diet Coke, Fanta and Sprite, but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. Industry peers include Pepsico, Inc., Dr Pepper Snapple Group, Inc., and Nestlé S.A.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $47.89, with an initial trailing stop at $43.65. Upward price movement will encounter resistance at $44.80 and 45.33, with final resistance at $45.73, while downward price movement will find support at $46.38 and $43.14 with final support at $42.72.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Act includes a transition rule to effect this participation exemption regime. As a result of the enacted legislation, taxpayers are required to include in taxable income for the tax year ending December 31, 2017, the pro rata share of deferred income of each specified foreign corporation with respect to which the taxpayer is a U.S. shareholder.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of The Coca Cola Company, Inc., the one-time transition tax is based on the company’s total accumulated post-1986 prescribed foreign earnings and profits estimated to be $42 billion, the majority of which was previously considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes were provided. The company recorded a provisional tax amount of $4.6 billion as a reasonable estimate for its one-time transition tax liability and a $0.6 billion provisional deferred tax of related withholding taxes and state income taxes.

Because of the complexities of the Tax Reform Act, the company is still finalizing its calculation of the total accumulated post-1986 prescribed earnings and profits for the applicable foreign entities.

Insider Transactions
In the past 12 months, the company recorded 94 insider trades involving 8,305,741 shares of stock. Of the 94 insider trades, 47 were Buys involving 4,459,477 shares of stock, and 47 were Sells involving 3,846,264 shares of stock, creating an insider buy to sell ratio of 1.2 to 1.

Future Value
My future (5 year hold) target price for the stock is $54, which is an average annual return of 4%. A prior five year hold of the stock would have returned an average of 6% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For The Coca Cola Company, Inc. (NYSE: KO) – FYE 12/2017 OVER VALUED The stock is currently trading at levels above with my most recent $6 sell target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of The Coca Cola Company, Inc.
Posted on 04/19/18


Bemis Company, Inc.
Bemis manufactures and sells packaging products with for the food industry, as well as the chemical, agribusiness, medical, pharmaceutical, personal care products, electronics, automotive, construction, and graphic industries markets. Industry peers include Amcor Limited, Avery Dennison Corporation, and Printpack, Inc.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $48.48, with an initial trailing stop at $44.24. Upward price movement will encounter resistance at $45.69 and 46.36, with final resistance at $46.96, while downward price movement will find support at $43.77 and then at $43.21.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Act includes a transition rule to effect this participation exemption regime. As a result of the enacted legislation, taxpayers are required to include in taxable income for the tax year ending December 31, 2017, the pro rata share of deferred income of each specified foreign corporation with respect to which the taxpayer is a U.S. shareholder.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Bemis Company, Inc., recorded a provisional discrete net tax benefit of $67.2 million related to The Act in the period ending December 31, 2017. This consists of a $77.8 million net benefit due to the remeasurement of the company’s deferred tax accounts for the corporate rate reduction and a net expense for the transition tax of $10.6 million. The company has not completed the accounting for the income tax effects of certain elements of the The Act TCJA at this time.

Insider Transactions
In the past 12 months, the company recorded 45 insider trades involving 222,590 shares of stock. Of the 45 insider trades, 31 were Buys involving 163,657 shares of stock, and 14 were Sells involving 58,933 shares of stock, creating an insider buy to sell ratio of 2.8 to 1.

Future Value
My future (5 year hold) target price for the stock is $72, which is an average annual return of 12%. A prior five year hold of the stock would have returned an average of 13% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For Bemis Company, Inc. (NYSE: BMS) – FYE 12/2017 FAIRLY VALUED The stock is currently trading at levels in line with my most recent $50 fair value estimate. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Bemis Company, Inc.
Posted on 04/19/18


American Railcar, Inc.
American Railcar is a designer and manufacturer of hopper and tank railcars as well as a provider of railcar leasing and railcar services which consist of railcar repair, engineering and field services. Listed competitors are The Greenbrier Companies, Trinity Industries, and Union Tank Car Company.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $41.05, with an initial trailing stop at $36.77. Upward price movement will encounter resistance at $37.95 and $39.29, with final resistance at $39.89, while downward price movement will find support at $35.77.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Act includes a transition rule to effect this participation exemption regime. As a result of the enacted legislation, taxpayers are required to include in taxable income for the tax year ending December 31, 2017, the pro rata share of deferred income of each specified foreign corporation with respect to which the taxpayer is a U.S. shareholder.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of American Railcar, Inc., the company had a net income tax benefit of $76.0 million, including a one-time tax benefit of approximately $107.3 million due to changes as the 2017 Tax Act resulting in an effective tax rate of (114.7)%, compared to income tax expense of $41.5 million and an effective tax rate of 36.4% in 2016. The 2017 Tax Act reduced the 2017 effective tax rate by 162.0% and resulted in total incremental provisional tax benefits of $107.3 million, primarily driven by a benefit of $107.9 million related to the re-measurement of deferred tax assets and liabilities for the reduction in the corporate tax rate from 35% to 21%, partially offset by the one-time transition tax expense of $0.6 million.

Insider Transactions
In the past 12 months, the company recorded 0 insider trades involving 0 shares of stock. Of the 0 insider trades, 0 were Buys involving 0 shares of stock, and 0 were Sells involving 0 shares of stock, creating an insider buy to sell ratio of 0 to 0.

Future Value
My future (5 year hold) target price for the stock is $63, which is an average annual return of 14%. A prior five year hold of the stock would have returned an average of 7% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For American Railcar, Inc. (Nasdaq: ARII) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $66 buy target. Please See Linked PDF Worksheet

Disclosure
I no hold shares of American Railcar, Inc.
Posted on 04/17/18


Apache Corporation
Apache Corporation is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids. Industry peers include Anadarko Petroleum Corporation, BP plc, and Exxon Mobil Corporation.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $41.89, with an initial trailing stop at $40.18. Upward price movement will encounter resistance at $41.47 and $42.68, with final resistance at $45.16, while downward price movement will find support at $39.55 and $37.62 with final support at $35.96.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Act includes a transition rule to effect this participation exemption regime. As a result of the enacted legislation, taxpayers are required to include in taxable income for the tax year ending December 31, 2017, the pro rata share of deferred income of each specified foreign corporation with respect to which the taxpayer is a U.S. shareholder.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Apache Corporation, the company recorded a provisional net deferred tax benefit of $822 million to reverse a previously recorded deferred tax liability for unrepatriated earnings and to account for the transition rule under the new law. In addition and as a result of the decrease in the corporate income tax rate, the company recorded a provisional $516 million deferred tax expense in 2017 related to the remeasurement of the company’s December 31, 2017 deferred tax asset..

The company continues to assess other provisions of the Act including, among other items, the interaction between the deemed repatriation of foreign earnings and 2017 net operating losses as well as the applicability of new taxes on certain future foreign earnings. Provisional amounts for the income tax effects of the Act have been recorded as of December 31, 2017 and are subject to change during 2018.

Insider Transactions
In the past 12 months, the company recorded 180 insider trades involving 609,541 shares of stock. Of the 180 insider trades, 96 were Buys involving 446,094 shares of stock, and 84 were Sells involving 163,447 shares of stock, creating an insider buy to sell ratio of 2.7 to 1.

Future Value
My future (5 year hold) target price for the stock is $38, which is an average annual return of (-1%). A prior five year hold of the stock would have returned an average of (-9%) per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For Apache Corporation (NYSE: APA) – FYE 12/2017 the stock is UNDER VALUED and trading at levels above my most recent $82 buy target. Please See Linked PDF Worksheet

Disclosure
I no hold shares of Apache Corporation in my portfolio.
Posted on 04/17/18


The Western Union Company, Inc.
The Western Union Company is a global money movement and payment service. Industry peers include American Express, Moneygram International, and PayPal.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $21.10, with an initial trailing stop at $18.60. Upward price movement will encounter resistance at $19.02 and $19.53, with final resistance at $19.90, while downward price movement will find support at $18.68.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of The Western Union Company, Inc., with respect to the United States taxation of certain previously undistributed earnings of foreign subsidiaries, the determination of the amount of earnings, the amount of assets which are to be included as cash and other specified assets, and which are therefore subject to the higher effective tax rate specified in the Tax Act, and the related potential foreign tax implications are provisional and subject to further analysis, including the company’s completion of the calculation for the 2017 federal, state, and foreign income tax returns.

In addition, the company is completing this analysis for a significant number of its controlled foreign corporations, as the analysis must be completed for each of the subsidiaries and not consolidated at a higher level. Therefore, the amount of this tax may change until the company finalizes the calculation. The estimated tax provision amount related to this matter was $916 million in the year ended December 31, 2017.

The company recorded a provisional $87 million benefit for the remeasurement of deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. The company is still analyzing certain aspects of the Tax Act and refining the calculations, which could potentially affect the measurement of these balances, and the amount is also subject to the company’s completion of the calculation for the 2017 federal, state, and foreign income tax returns.

The company has provisionally estimated the total amount of outside basis differences with respect to its foreign subsidiaries as of December 31, 2017 to be $254 million (after giving effect to the Tax Act), and no deferred income tax effects have been recognized with respect to such outside basis differences. These outside tax basis differences primarily relate to the remaining undistributed foreign earnings not subject to the tax on certain previously undistributed earnings of foreign subsidiaries pursuant to the Tax Act and additional outside basis difference inherent in certain entities.

To the extent such outside basis differences are attributable to undistributed earnings not already subject to United States tax, such undistributed earnings continue to be indefinitely reinvested in foreign operations. Upon the future realization of the company’s basis difference, the company could be subject to United States income taxes, state income taxes and possible withholding taxes payable to various foreign countries.

However, determination of this amount of unrecognized deferred tax liability is not practicable because of the complexities associated with its hypothetical calculation. The amount of total outside basis differences and appropriate deferred tax effects are impacted by the application of the Tax Act and will be finalized during 2018.

Subsequent to the enactment of the Tax Act, the company must make an accounting policy election to account for the tax effects of global intangible low-tax income either as a component of income tax expense in the period the tax arises, or as a component of deferred taxes on the related investments in foreign subsidiaries. The company is currently evaluating these provisions of the Tax Act and the related implications and has not finalized its accounting policy election. The company will finalize its accounting policy election in 2018.

Insider Transactions
For FY17, the company recorded 53 insider trades involving 961,803 shares of stock. Of the 53 insider trades, 35 were Buys involving 719,740 shares of stock, and 18 were Sells involving 242,063 shares of stock, creating an insider buy to sell ratio of 3 to 1.

Future Value
My future (5 year hold) target price for the stock is $24, which is an average annual return of 6%. A prior five year hold of the stock would have returned an average of 9% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For The Western Union Company, Inc. (NYSE: WU) – FYE 12/2017 the stock is OVER VALUED and trading at levels above my most recent ($3) close target. Please See Linked PDF Worksheet

Disclosure
I no hold shares of The Western Union Company, Inc. in my portfolio.
Posted on 04/16/18


WPX Energy, Inc.
WPX Energy is engaged in the oil, natural gas, and NGL development and production business primarily in Texas, North Dakota, New Mexico and Colorado. The company specializes in the development and production from tight-sands and shale formations. Industry peers include Exxon Mobil Corporation, Occidental Petroleum Corporation, and EnCana Corporation.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $14.67, with an initial trailing stop at $15.01. Upward price movement will encounter resistance at $15.64, while downward price movement will find support at $14.76 and $14.31, with final support at $13.81.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of WPX Energy, Inc., the company continues to assess the impact of the tax reform legislation on its business and consolidated financial statements, the legislation does reduce the U.S. corporate tax rate from the current rate of 35 percent to 21 percent effective January 1, 2018.

This rate reduction results in a provisional estimate of a $97 million benefit offset by $5 million impact of equity based executive compensation to income tax expense in continuing operations and a corresponding reduction in the deferred tax liability. The Act provides for other significant tax law changes and modifications such as the repeal of the alternative minimum tax (“AMT”). Accordingly, AMT credits can be used to offset regular tax liability and/or can be refundable over tax years 2018-2021.

Insider Transactions
For FY17, the company recorded 53 insider trades involving 1,586,607 shares of stock. Of the 53 insider trades, 20 were Buys involving 1,069,508 shares of stock, and 33 were Sells involving 517,099 shares of stock, creating an insider buy to sell ratio of 2.1 to 1.

Future Value
My future (5 year hold) target price for the stock is $24, which is an average annual return of 12%. A prior five year hold of the stock would have returned an average of (1%) per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For WPX Energy, Inc. (NYSE: WPX) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $33 buy target. Please See Linked PDF Worksheet

Disclosure
I no hold shares of WPX Energy, Inc. in my portfolio.
Posted on 04/15/18


Royal Dutch Shell plc
Royal Dutch Shell is an independent oil and gas company engaged in bringing new oil and gas supplies on-stream from major field developments and growing its gas-based business through liquefied natural gas (LNG) and gas-to-liquids (GTL) projects. Industry peers include Exxon Mobile Corporation, Chevron Corporation, and Total Fina SA.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $69.05, with an initial trailing stop at $67.15. Upward price movement will encounter resistance at $69.99 and $71.56, while downward price movement will find support at $66.47 and $64.77, with final support at $63.29.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Royal Dutch Shell plc, the effects of the Act have been recognised in 2017 based on current interpretation of the Act and related assumptions. These may be subject to change in the event that further interpretative guidance on the Act is issued.

Insider Transactions
For FY17, the company recorded 0 insider trades involving 0 shares of stock. Of the 0 insider trades, 0 were Buys involving 0 shares of stock, and 0 were Sells involving 0 shares of stock, creating an insider buy to sell ratio of 0 to 0.

Future Value
My future (5 year hold) target price for the stock is $65, which is an average annual return of (-1.3%). A prior five year hold of the stock would have returned an average of (-0.15%) per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For Royal Dutch Shell plc (NYSE: RDS-A) – FYE 12/2017 the stock is FAIRLY VALUED and trading at levels in line with my most recent $63 fair value estimate. Please See Linked PDF Worksheet

Disclosure
I hold shares of Royal Dutch Shell plc in my portfolio.
Posted on 04/14/18


WESCO International, Inc.
WESCO International is a distributor and supplier of wire, cable and conduit, communications and security, electrical distribution and controls, lighting and sustainability, and automation, controls and motors for industrial, construction, utility, and commercial, institutional and government (“CIG”) markets.
Industry peers include Anixter International, Graybar Electric Company, and WW Grainger.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $67.85, with an initial trailing stop at $60.68. Upward price movement will encounter resistance at $62.53 and $63.81, with final resistance at $65.32, while downward price movement will find support at $58.28 and $55.99, with final support at $54.48.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of WESCO International, Inc., in the third quarter of 2017, management determined that the company’s income taxes receivable and payable and other tax account balances were overstated as of December 31, 2016 by a cumulative net amount of $46.4 million, which related to multiple prior periods. The company also identified a $10.2 million understatement related to deferred income taxes and goodwill.

In accordance with Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108, management concluded that these misstatements are not material to the company’s previously issued annual and interim financial statements and correcting the effected financial statement line items in the year ended December 31, 2017 would have materially misstated the consolidated financial statements.

Also the company continues to assert that the earnings of its foreign subsidiaries are indefinitely reinvested. However, as a result of the Tax Act, the company is reevaluating its intent and ability to repatriate foreign cash based upon the available liquidity and cash flow needs of its foreign subsidiaries. Until the company completes this reevaluation, it is not practicable to determine the amount of any unrecognized deferred income taxes on these undistributed foreign earnings.

Insider Transactions
For FY17, the company recorded 30 insider trades involving 72,200 shares of stock. Of the 30 insider trades, 16 were Buys involving 48,124 shares of stock, and 14 were Sells involving 24,076 shares of stock, creating an insider buy to sell ratio of 2 to 1.

Future Value
My future (5 year hold) target price for the stock is $85, which is an average annual return of 8%. A prior five year hold of the stock would have returned an average of 0.1% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For WESCO International, Inc. (NYSE: WCC) – FYE 12/2017 the stock is FAIRLY VALUED and trading at levels in line with my most recent $59 fair value estimate. Please See Linked PDF Worksheet

Disclosure
I hold no shares of WESCO International, Inc. in my portfolio.
Posted on 04/11/18


W.R. Grace and Company, Inc.
W.R. Grace and Company, Inc. is engaged in the production and sale of catalysts and related products and technologies used in refining, petrochemical and other chemical manufacturing applications, and silica-based and silica-alumina-based materials used in coatings, consumer, industrial, and pharmaceutical applications. Industry peers include Albemarle Corporation, BASF Catalysts LLC, and Evonik Degussa GmbH.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $72.73, with an initial trailing stop at $64.77. Upward price movement will encounter resistance at $67.08 and $70.90 with final resistance at $72.53, while downward price movement will find support at $62.63 and then at $60.64.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of W.R. Grace and Company, Inc., the company has estimated its provision for income taxes and as a result of the Tax Act and has recorded a provisional income tax expense of $143.0 million. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $120.1 million. The provisional amounts related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings and the state and foreign taxes on the unremitted earnings were $37.4 million and $4.9 million, respectively.

The company is no longer indefinitely reinvested with respect to its historical unremitted earnings of its foreign subsidiaries. Additionally, the company provisionally released valuation allowances on a portion of its state net operating losses and federal tax credits of $2.0 million and $17.4 million, respectively. .

Insider Transactions
For FY17, the company recorded 30 insider trades involving 136,818 shares of stock. Of the 30 insider trades, 20 were Buys involving 96,475 shares of stock, and 10 were Sells involving 40,343 shares of stock, creating an insider buy to sell ratio of 2.4 to 1.

Future Value
My future (5 year hold) target price for the stock is $95, which is an average annual return of 9%. A prior five year hold of the stock would have returned an average of 1% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For W.R. Grace and Company, Inc. (NYSE: GRA) – FYE 12/2017 the stock is OVER VALUED and trading at levels above my most recent $1 sell target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of W.R. Grace and Company, Inc. in my portfolio.
Posted on 04/11/18


Valero Energy Corporation
Valero Energy Corporation produces conventional gasolines, premium gasolines, gasoline meeting the specifications of the California Air Resources Board, diesel fuel, low-sulfur diesel fuel, ultra-low-sulfur diesel fuel, CARB diesel fuel, other distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. Industry peers include BP plc, Chevron Corporation, and Exxon Mobil Corporation.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $96.59, with an initial trailing stop at $94.57. Upward price movement will encounter resistance at $98.43, while downward price movement will find support at $93.30, $90.46, and then at $88.14.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Valero Energy Corporation, the company recognized a an overall income tax benefit of $1.9 billion for the year ended December 31, 2017. The company remeasured its U.S. deferred tax assets and liabilities using the 21 percent rate, which resulted in a tax benefit and a reduction to net deferred tax liabilities of $2.6 billion.

The company also recognized a one-time transition tax of $734 million on the deemed repatriation of previously undistributed accumulated earnings and profits from their international subsidiaries based on approximately $4.7 billion of the combined earnings and profits from international subsidiaries that have not been distributed. This transition tax will be remitted to the Internal Revenue Service (IRS) over the eight-year period provided in the Code beginning in 2018.

Insider Transactions
For FY17, the company recorded 72 insider trades involving 1,327,604 shares of stock. Of the 72 insider trades, 25 were Buys involving 683,921 shares of stock, and 47 were Sells involving 643,683 shares of stock, creating an insider buy to sell ratio of 1.1 to 1.

Future Value
My future (5 year hold) target price for the stock is $260, which is an average annual return of 34%. A prior five year hold of the stock would have returned an average of 40% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. For Valero Energy Corporation (NYSE: VLO) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $126 buy target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Valero Energy Corporation in my portfolio.
Posted on 04/10/18


Trinity Industries, Inc.
Trinity Industries provides products and services to the energy, chemical, agriculture, transportation, and construction sectors. The company manufacturers and sells railcars and railcar parts, steel components, highway products, construction aggregates, inland barges, structural wind towers, steel utility structures, storage and distribution containers, trench shields and shoring products, as well as provides leasing, leasing management, and maintenance of railcars. Listed competitors are Clipper Windpower Holdings, American Railcar Industries, and Lafarge North America.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $36.09, with an initial trailing stop at $31.18. Upward price movement will encounter resistance at $32.19, and then at $32.83, with final resistance at $34.01, while downward price movement will find support at $30.25, $29.49, and then at $28.65.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Trinity Industries, Inc., the company has completed an initial assessment of the tax effects of the Act, and have made a reasonable estimate of the effects on its existing deferred tax balances. The company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to impact future tax returns. However, they are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts resulting in adjustments in future periods in 2018.

The impact of the Act may differ from the company’s estimate due to changes in the regulations, rulings, guidance, and interpretations issued by the IRS and the FASB as well as interpretations and assumptions made by the Company. For the items for which they were able to determine a reasonable estimate, they recognized a provisional net benefit of $476.2 million for the year ended December 31, 2017, which is included as a component of income tax expense.

Insider Transactions
For FY17, the company recorded 76 insider trades involving 6,203,658 shares of stock. Of the 76 insider trades, 61 were Buys involving 5,829,298 shares of stock, and 15 were Sells involving 311,360 shares of stock, creating an insider buy to sell ratio of 18.9 to 1.

Future Value
My future (5 year hold) target price for the stock is $51, which is an average annual return of 12%. A prior five year hold of the stock would have returned an average of 22% per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Trinity Industries, Inc. (NYSE: TRN) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $45 buy target. Please See Linked PDF Worksheet

Of Note
On December 12, 2017, the company announced that its Board of Directors unanimously approved a plan to pursue a spin-off of the company’s infrastructure-related businesses to Trinity stockholders. The separation is planned as a tax-free spin-off transaction to the company’s stockholders for U.S. federal income tax purposes. The transaction is expected to result in two separate public companies: (1) Trinity, the currently existing company, which will be comprised primarily of Trinity’s rail-related businesses and (2) a new infrastructure company, focused on infrastructure-related products and services (the “Infrastructure Company”).

Completion of the spin-off will be subject to, among other things, the effectiveness of appropriate filings with the Securities and Exchange Commission, final approval from the company’s Board of Directors, and other customary conditions. The company may, at any time and for any reason until the proposed transaction is complete, abandon the separation or modify or change its terms. The separation is expected to be completed in the fourth quarter of 2018, but there can be no assurance regarding the ultimate timing of the separation or that the separation will ultimately occur.

Disclosure
I hold no shares of Trinity Industries, Inc. in my portfolio.
Posted on 04/09/18


Tredegar Corporation
Tredegar Corporation is a manufacturer of polyethylene (“PE”) plastic films, primarily utilized in personal care materials, surface protection films and specialty and optical lighting applications, polyester (“PET”) films for use in packaging applications that have specialized properties, such as heat resistance, strength, barrier protection and the ability to accept high-quality print graphics, and aluminum extrusions which are high-quality, soft-alloy and medium-strength aluminum extrusions primarily for building and construction, automotive, consumer durables, machinery and equipment, electrical and distribution markets. Listed competitors are Rio Tinto Alcan, Griffon Corporation, and AEP Industries.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $19.28, with an initial trailing stop at $16.84. Upward price movement will encounter resistance at $18.08, and then at $18.60, with final resistance at $19.11, while downward price movement will find support at $16.48, and then at $15.94.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Tredegar Corporation, the company recognized a non-cash deferred income tax benefit of $4.4 million for the decrease of its net deferred income tax liabilities, resulting from the 14% tax rate reduction and other applicable tax law changes. No deemed repatriation tax was recorded on unrepatriated earnings of the company’s foreign subsidiaries as the company’s foreign subsidiaries have no net cumulative unremitted earnings due to historical repatriation.

The company expects that its effective tax rate for ongoing operations in 2018 will drop to 22% as a result of the TCJA, but how the TCJA will impact the overall competitive dynamics for the company’s businesses and markets is uncertain.

Insider Transactions
For FY17, the company recorded 36 insider trades involving 50,303 shares of stock. Of the 36 insider trades, 32 were Buys involving 43,337 shares of stock, and 4 were Sells involving 6,966 shares of stock, creating an insider buy to sell ratio of 6.2 to 1.

Future Value
My future (5 year hold) target price for the stock is $24, which is an average annual return of 8%. A prior five year hold of the stock would have returned an average of (-1%) per year. Please be aware that past and future gains are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Tredegar Corporation (NYSE: TG) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $64 buy target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Tredegar Corporation in my portfolio.
Posted on 04/08/18


Superior Uniform Group, Inc.
Superior Uniform Group manufactures and sells work uniforms, corporate identity apparel, career apparel, and accessories for the medical and health fields, as well as for the industrial, commercial, leisure, and public safety markets. The company also provides customers with multilingual telemarketing and total office support solutions. Industry peers include Cintas Corporation, G&K Services, and UniFirst Corpopration.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $27.64, with an initial trailing stop at $26.04. Upward price movement will encounter resistance at $27.57 while downward price movement will find support at $25.57, $24.53, and $23.24.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Superior Uniform Group, Inc., the impacts of these changes resulted in a provisional charge of approximately $4.0 million, which is subject to adjustment given the provisional nature of the charge. This resulted in an effective tax rate higher than the statutory rate in 2017.

As a result of the transition tax under The Act, the company will no longer consider its undistributed earnings from foreign subsidiaries as indefinitely reinvested and has provided a deferred tax liability primarily for foreign withholding taxes that would be expected to apply when the company dividends these earnings back to the United States.

The effective income tax rate in 2017 was 39.4% and in 2016 was 26.4%. The 13.0% increase in the effective tax rate is attributed primarily to the Tax Act (17.1%) and other increases (0.1), partially offset by an increase in the benefit of foreign sourced income (1.4%) and an increase in the excess tax benefit associated with share based compensation (2.8%).

Insider Transactions
For FY17, the company recorded 52 insider trades involving 447,353 shares of stock. Of the 52 insider trades, 25 were Buys involving 284,187 shares of stock, and 27 were Sells involving 163,166 shares of stock, creating an insider buy to sell ratio of 1.7 to 1.

Future Value
My future (5 year hold) target price for the stock is $74, which is an average annual return of 36%. A prior five year hold of the stock would have returned an average of 75% per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Superior Uniform Group, Inc. (NYSE: SGC) – FYE 12/2017 the stock is OVER VALUED and trading at levels above my most recent $18 close target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Superior Uniform Group, Inc. in my portfolio.
Posted on 04/07/18


Superior Energy Services, Inc.
Superior Energy rent and sell specialized equipment and tools for use with well drilling, completion, production and workover activities. The company also provides pressure pumping, fluid handling and well servicing rigs as well as providing services which enhance, maintain and extend oil and gas production during the life of the well. Industry peers include Baker Hughes, Parker Drilling, and Schlumberger Ltd.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $10.07, with an initial trailing stop at $8.32. Upward price movement will encounter resistance at $9.25, $9.68, and $10.17, while downward price movement will find support at $7.90.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Superior Energy Services, Inc., they recorded a provisional income tax benefit of $76.5 million during the fourth quarter of 2017. The provisional amount related primarily to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. Additional work is necessary for a more detailed analysis of our deferred tax assets and liabilities. Any subsequent adjustments to the provisional amount will be reported as component of income tax expense (benefit) in the reporting period in which any such adjustments are determined.

Insider Transactions
For FY17, the company recorded 19 insider trades involving 440,279 shares of stock. Of the 19 insider trades, 13 were Buys involving 404,543 shares of stock, and 6 were Sells involving 35,736 shares of stock, creating an insider buy to sell ratio of 11.3 to 1.

Future Value
My future (5 year hold) target price for the stock is $7, which is an average annual return of (-3%). A prior five year hold of the stock would have returned an average of (-11%) per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Superior Energy Services, Inc. (NYSE: SPN) – FYE 12/2017 the stock is UNDER VALUED and trading at levels below my most recent $17 buy target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Superior Energy Services, Inc. in my portfolio.
Posted on 04/06/18


Pitney Bowes, Inc.
Pitney Bowes provides a full range of mailing equipment, software, supplies and support services in addition to providing equipment and services that enable large enterprises to process inbound and outbound mail. The company also provides information management, location intelligence, customer engagement, shipping management and global e-commerce solutions to clients. Industry peers include Siemens AG, NEOPOST SA, and Xerox Corporation.

Short-Term Value
My short-term (3-6 week hold) target price for the stock is $13.45, with an initial trailing stop at $10.79. Upward price movement will encounter resistance at $11.29, $12.26, and $12.83, while downward price movement will find support at $10.41 and $9.82.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments applied to repatriated earnings and deferred taxes, may distort a companies earnings and consequently its fair value.

In the case of Pitney Bowes, Inc., they recorded a net provisional one-time non-cash benefit of $39 million, which is comprised of a provisional $130 million benefit from the remeasurement of net U.S. deferred tax liabilities arising from a lower U.S. tax rate, offset by a provisional $91 million charge related primarily to the U.S. tax on unremitted earnings of our foreign subsidiaries.

Their estimates of the impact of the Act are based on current calculations and interpretations, as well as assumptions and expectations relating to the Act, which are subject to adjustment based on further guidance and factual changes during the measurement period. As a result of the treatment of foreign earnings under the Act, they have reconsidered their permanent investment position and provisionally concluded they will no longer assert indefinite investment with respect to foreign unremitted earnings as of December 31, 2017.

Insider Transactions
For FY17, the company recorded 44 insider trades involving 215,919 shares of stock. Of the 44 insider trades, 25 were Buys involving 166,609 shares of stock, and 19 were Sells involving 49,310 shares of stock, creating an insider buy to sell ratio of 3.4 to 1.

Future Value
My future (5 year hold) target price for the stock is $16, which is an average annual return of 9%. A prior five year hold of the stock would have returned an average of 3% per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Pitney Bowes, Inc. (NYSE: PBI) – FYE 12/2017 the stock is UNDER VALUED, and is currently trading at levels below my most recent $13 buy target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Pitney Bowes, Inc. in my portfolio.
Posted on 04/06/18


Orbital ATK, Inc.
Orbital ATK is an aerospace and defense company. Prior to February 2015, the company was known as Alliant Techsystems. The company designs, builds and delivers space, defense and aviation-related systems both as a prime contractor and as a merchant supplier. Its main products include launch vehicles and related propulsion systems; satellites and associated components and services; composite aerospace structures; tactical missiles, subsystems and defense electronics; and precision weapons, armament systems and ammunition. Listed industry peers include Elbit Systems Ltd., Lockheed Martin, and Rockwell Collins.

Future Value
My short-term (3-6 week hold) target price for the stock is $142.21, with an initial trailing stop at $130.90. My future (5 year hold) target price for the stock is $362, which is an average annual return of 35%. A prior five year hold of the stock would have returned an average of 76% per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time deemed repatriation transition tax (the “Transition Tax”) on certain earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized; (6) capital expensing; (7) eliminating the deduction on U.S. manufacturing activities; and (8) creating new limitations on deductible interest expense and executive compensation.

The Securities Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Orbital ATK, Inc., the company recognized income tax expense of $39 million for the year ended December 31, 2017 and a corresponding $39 million decrease in net deferred tax assets as of December 31, 2017 related to the remeasurement of deferred tax assets and liabilities to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, both which are complete under SAB 118.

The company’s accounting for the following effects of the Tax Act are not complete: (1) cost recovery, (2) limitation on the deductibility of certain executive compensation, (3) recovery of Alternative Minimum Tax credits and (4) valuation allowances against state tax attribute carryforwards. The Company was able to make reasonable estimates of certain effects and, therefore recorded provisional adjustments for such effects, none of which were material. The company expects to finalize all provisional and non-estimable amounts within the measurement period as described in SAB 118.

Insider Transactions
For FY17, the company recorded 101 insider trades involving 182,536 shares of stock. Of the 101 insider trades, 32 were Buys involving 102,483 shares of stock, and 69 were Sells involving 80,053 shares of stock, creating an insider buy to sell ratio of 1.3:1.

Fair Warning
Fair warning means that the time for bidding has ended and a sale is about to be concluded. In the case of Orbital ATK, Inc. (NYSE: OA) – FYE 12/2017 the stock is OVER VALUED, and is currently trading at levels above my most recent $42 close target. Please See Linked PDF Worksheet

Disclosure
I hold no shares of Orbital ATK, Inc. in my portfolio.
Posted on 04/05/18


MSA Safety Incorporated
MSA developments, manufactures and supplies products that are intended to protect users from hazardous or life threatening atmospheric situations. Their products are used by workers in the oil and gas, fire service, mining and construction industries, as well as the military. Listed industry peers include Sperian Protection, Abatix Corporation, and Lakeland Industries.

Future Value
My short-term (3-6 week hold) target price for the stock is $85.47, with an initial trailing stop at $81.70. My future (5 year hold) target price for the stock is $155, which is an average annual return of 17%. A prior five year hold of the stock would have returned an average of 17% per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please also be reminded that any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of MSA Safety Incorporated, the company has calculated its best estimate of the impact of the Act and has recorded income tax expense of $19.8 million during the fourth quarter of 2017, the period in which the legislation was enacted. Of this amount, $18.0 million related to the one-time transition tax and the remaining $1.8 million was related to the revaluation of U.S. deferred tax assets and liabilities.

Had there been no tax benefit the company’s 2017 earnings would have been $1.65 and my fair value estimate would have been $19.

Insider Transactions
For FY17, the company recorded 234 insider trades involving 1,203,673 shares of stock. Of the 234 insider trades, 95 were Buys involving 385,161 shares of stock, and 139 were Sells involving 818,512 shares of stock, creating an insider buy to sell ratio of 0.5:1.

Fair Warning
MSA Safety Incorporated (NYSE: MSA) – FYE 12/2017 OVER VALUED The stock is currently trading at levels above my most recent $22 close target. Please See Linked Worksheet

Disclosure
I hold no shares of MSA Safety Incorporated in my portfolio.
Posted on 04/04/18


Lawson Products, Inc.
Lawson Products serves the industrial, commercial, institutional and government maintenance, repair and operations market which is comprised of companies that buy and stock products in bulk and supply these products to customers on an as needed basis. Listed industry peers include Barnes Group, Fastenal Company, and MSC Industrial Direct.

Future Value
My short-term (3-6 week hold) target price for the stock is $28.15, with an initial trailing stop at $24.87. My future (5 year hold) target price for the stock is $45, which is an average annual return of 16%. A prior five year hold of the stock would have returned an average of 30% per year. Please be aware that past and future gains are based on actual and anticipated earnings. Please alos be aware that any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Lawson Products, Inc., the impact of the Tax Act, created a provisional net tax benefit of $19.6 million in the period ending December 31, 2017. The net tax benefit was primarily the result of the deferred tax valuation allowance reversal of $21.2 million recorded at December 31, 2017.

Had there been no tax benefit the company’s 2017 earnings would have been $0.62 and my fair value estimate would have been $1.

Insider Transactions
For FY17, the company recorded 49 insider trades involving 406,758 shares of stock. Of the 49 insider trades, 42 were Buys involving 290,068 shares of stock, and 7 were Sells involving 116,690 shares of stock, creating an insider buy to sell ratio of 2.5:1.

Fair Warning
Lawson Products, Inc. (Nasdaq: LAWS) – FYE 12/2017 UNDER VALUED The stock is currently trading at levels below my $86 buy target. Please See Linked Worksheet

Disclosure
I hold no shares of Lawson Products, Inc. in my portfolio.
Posted on 04/02/18


International Paper Company
International Paper is a producer of renewable fiber-based packaging, pulp and paper products, operating 29 pulp, paper and packaging mills, 170 converting and packaging plants, 16 recycling plants and three bag facilities. Listed industry peers include Ball Corporation, Packaging Corporation of America, and WestRock Company.

Future Value
My short-term (3-6 week hold) target price for the stock is $61.79, with an initial trailing stop at $52.63. My future (5 year hold) target price for the stock is $92, which is an average annual return of 14%. A prior five year hold of the stock would have returned an average of 15% per year. Past and future gains are based on actual and anticipated earnings. Any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of International Paper Company, the impact of the Tax Act, created a provisional net tax benefit of $1.22 billion in the period ending December 31, 2017. The net tax benefit primarily consists of a net tax benefit for the re-measurement of U.S. deferred taxes of $1.454 billion and an expense for the Transition Tax of $231 million.

Had there been no provisional tax benefit the company’s 2017 earnings would have been $5.96 and my fair value estimate would have been $79.

Insider Transactions
For FY17, the company recorded 35 insider trades involving 354,233 shares of stock. Of the 35 insider trades, 19 were Buys involving 271,310 shares of stock, and 16 were Sells involving 82,923 shares of stock, creating an insider buy to sell ratio of 3.3:1.

Fair Warning
International Paper Company (NYSE: IP) – FYE 12/2017 UNDER VALUED The stock is currently trading at levels below my $86 buy target. Please See Linked Worksheet

Disclosure
I hold no shares of International Paper Company in my portfolio.
Posted on 04/01/18


Las Vegas Sands Corporation
The Las Vegas Sands Corporation is a developer of destination properties (integrated resorts) that feature premium accommodations, world-class gaming, entertainment and retail, convention and exhibition facilities, and celebrity chef restaurants. Listed industry peers include Caesars Entertainment Corporation, MGM Resorts International, and Wynn Resorts Ltd.

Future Value
My short-term (3-6 week hold) target price for the stock is $76.66, with an initial trailing stop at $70.82. My future (5 year hold) target price for the stock is $116, which is an average annual return of 12%. A prior five year hold of the stock would have returned an average of 11% per year. Past and future gains are based on actual and anticipated earnings, any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Las Vegas Sands Corporation, the one-time repatriation of did not result in a cash tax liability for the company as the incremental U.S. taxable income was fully offset by the utilization of the U.S. foreign tax credits generated as a result of the repatriation. In addition, the repatriation generated excess U.S. foreign tax credits that will be available to be carried forward to tax years beyond 2017.

Insider Transactions
For FY17, the company recorded 44 insider trades involving 19,229,843 shares of stock. Of the 44 insider trades, 38 were Buys involving 11,198,410 shares of stock, and 6 were Sells involving 8,031,433 shares of stock, creating an insider buy to sell ratio of 1.4:1.

Fair Warning
Las Vegas Sands Corporation (NYSE: LVS) – FYE 12/2017 FAIRLY VALUED The stock is currently trading at levels in line with my most recent $74 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Las Vegas Sands Corporation in my portfolio.
Posted on 03/31/18


Chevron Corporation
Chevron Corporation, manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining operations, and power and energy services. Listed industry peers include BP plc, Exxon Mobil Corporation, and Royal Dutch Shell plc.

Future Value
My short-term (3-6 week hold) target price for the stock is $125.02, with an initial trailing stop at $110.42. My future (5 year hold) target price for the stock is $139, which is an average annual return of 5%. A prior five year hold of the stock would have returned an average of 4% per year. Past and future gains are based on actual and anticipated earnings, any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Chevron Corporation, the tax benefit for the year includes a provisional benefit of $2,020 million from U.S. tax reform, which primarily reflects the re-measurement of U.S. deferred tax assets and liabilities. This benefit increased earnings approximately $1.05 per share.

Insider Transactions
For FY17, the company recorded 50 insider trades involving 954,878 shares of stock. Of the 50 insider trades, 30 were Purchases involving 486,996 shares and 20 were Sales involving 467,882 shares, creating an insider buy to sell ratio of 1:1.

Fair Warning
Chevron Corporation (NYSE: CVX) – FYE 12/2017 UNDER VALUED The stock is currently trading at levels below my most recent $129 buy target. Please See Linked Worksheet

Disclosure
I hold no shares of Chevron Corporation in my portfolio.
Posted on 03/27/18


CF Industries Holdings, Inc.
CF Industries is a manufacturer and distributor of nitrogen fertilizer and other nitrogen products to cooperatives, independent fertilizer distributors, farmers and industrial users. Additional nitrogen products include diesel exhaust fluid, urea liquor, nitric acid and aqua ammonia, which are sold primarily to industrial customers, and compound fertilizer products, which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus, and potassium. Listed industry peers include Agrium, Inc, Koch Industries, and Potash Corporation of Saskatchewan

Future Value
My short-term (3-6 week hold) target price for the stock is $42.71, with an initial trailing stop at $36.94. My future (5 year hold) target price for the stock is $46, which is an average annual return of 4%. A prior five year hold of the stock would have returned an average of 1% per year. Past and future gains are based on actual and anticipated earnings, any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of CF Industries Holdings, Inc., the company recorded a $491 million net favorable tax benefit for FY17 which increased net earnings by $2.10 per share.

Insider Transactions
For FY17, the company recorded 32 insider trades involving 213,102 shares of stock. Of the 32 insider trades, 21 were Purchases involving 184,731 shares and 11 were Sales involving 28,371shares, creating an insider buy to sell ratio of 7:1.

Fair Warning
CF Industries Holdings, Inc. (NYSE: CF) – FYE 12/2017 SELL HALF The stock is currently trading at levels above my most recent $27 fair value estimate, but below my most recent $43 close target. Please See Linked Worksheet

Disclosure
I hold no shares of CF Industries Holdings, Inc. in my portfolio.
Posted on 03/27/18


Chart Industries, Inc.
Chart Industries is a manufacturer of highly engineered equipment used for low-temperature and cryogenic applications which operate at low temperatures sometimes approaching absolute zero. Their products include vacuum insulated containment vessels, heat exchangers, cold boxes and other cryogenic components, primarily for the industrial gas, energy, and biomedical industries. Listed industry peers include Linde AG, Matrix Service Company, and Praxair.

Future Value
My short-term (3-6 week hold) target price for the stock is $54.79, with an initial trailing stop at $58.55. My future (5 year hold) target price for the stock is $82, which is an average annual return of 8%. A prior five year hold of the stock would have returned an average of (-6%) per year. Please be aware that past and future gains are based on actual and anticipated earnings, that any investment has the potential for loss, and that past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Chart Industries, the company recorded a $22.5 million net favorable tax benefit during the fourth quarter of 2017 related to the Tax Act which increased earnings by $0.55 per share.

Insider Transactions
For FY17, the company recorded 49 insider trades involving 98,508 shares of stock. Of the 49 insider trades, 34 were Purchases involving 84,490 shares and 15 were Sales involving 14,018. shares.

Fair Warning
Chart Industries, Inc. (Nasdaq: GTLS) – FYE 12/2017 OVER VALUED The stock is currently trading at levels above my most recent $36 close target Please See Linked Worksheet

Disclosure
I hold no shares of Chart Industries, Inc. in my portfolio.
Posted on 03/27/18


Anixter International, Inc.
Anixter International is a distributor of enterprise cabling and security solutions, electrical and electronic wire and cable products. Listed industry peers include Arrow Electronics, Ingram Micro, and W.W. Grainger.

Future Value
My short-term (3-6 week hold) target price for the stock is $82.46, with an initial trailing stop at $70.87. My future (5 year hold) target price for the stock is $105, which is an average annual return of 9%. A prior five year hold of the stock would have returned an average of 4% per year. Please be aware that past and future gains are based on actual and anticipated earnings, that any investment has the potential for loss, and that past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined.

It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Anixter International, Inc., the impact for FY17 was an increase in corporate income tax of $35.6 million.

Insider Transactions
For FY17, the company recorded 129 insider trades involving 489,401 shares of stock. Of the 129 insider trades, 85 were Purchases involving 202,495 shares and 44 were Sales involving 286,906 shares.

Fair Warning
Anixter International, Inc. (NYSE: AXE) – FYE 12/2017 OVER VALUED The stock is currently trading at levels above my most recent $65 close target Please See Linked Worksheet

Disclosure
I hold no shares of Anixter International, Inc. in my portfolio.
Posted on 03/26/18


Pioneer Natural Resources (NYSE: PXD)
Pioneer Natural Resources is an independent oil and gas exploration and production company that explores for, develops and produces oil, natural gas liquids (“NGLs”) and natural gas within the United States. The company operates primarily in the Permian Basin in West Texas, the Eagle Ford Shale play in South Texas, the Raton field in southeast Colorado and the West Panhandle field in the Texas Panhandle. Listed industry peers include BP plc, Chesapeake Energy, and Apache Corporation

Future Value
My short-term (3-6 week hold) target price for the stock is $179.43, with an initial trailing stop at $169.88. My future (5 year hold) target price for the stock is $313, which is an average annual return of 16%. A prior five year hold of the stock would have returned an average of 12% per year. Please be aware that past and future gains are based on actual and anticipated earnings, that any investment has the potential for loss, and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In addition, the Tax Act repeals the corporate alternative minimum tax (AMT) for tax years beginning January 1, 2018, and provides that existing AMT credit carryovers from 2017 and prior years can be applied against regular tax liabilities beginning in 2018. To the extent that AMT credit carryovers are not used to offset regular tax liabilities, these credits are refundable over four years beginning in 2018.

In the case of Pioneer Natural Resources, the changes that most impact the company include permanent reduction in the federal corporate income tax rate from 35 percent to 21 percent. The rate reduction is effective for the company as of January 1, 2018. The application of the rate change on the company’s existing deferred tax liabilities resulted in a $625 million income tax benefit to the company during 2017.

The corporate alternative minimum tax (“AMT”) for tax years beginning in January 1, 2018 has been repealed. The Tax Reform Legislation provides that existing AMT credit carryovers are refundable beginning in 2018. As of December 31, 2017, the company had AMT credit carryovers of $20 million that are expected to be fully refunded by 2022.

The Tax Reform Legislation preserves the deductibility of intangible drilling costs and provides for 100 percent bonus depreciation on personal tangible property expenditures through 2022. The bonus depreciation percentage is phased down from 100 percent beginning in 2023 through 2026.

Insider Transactions
For FY17, the company recorded 105 insider trades involving 350.775 shares of stock. Of the 105 insider trades, 41 were Purchases involving 191,465 shares and 64 were Sales involving 159,310 shares.

Fair Warning
Pioneer Natural Resources (NYSE: PXD) – FYE 12/2017 FAIRLY VALUED The stock is currently trading in line with my most recent $270 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Pioneer Natural Resources in my portfolio.
Posted on 03/24/18


EOG Resources, Inc. (NYSE: EOG)
EOG Resources explores for, develops, produces and markets crude oil and natural gas primarily in major producing basins in the United States, Canada, Trinidad and Tobago, the United Kingdom, and China. Listed competitors are Anadarko Petroleum, Apache Corporation, and Sonde Resources

Future Value
My short-term (3-6 week hold) target price for the stock is $110.98, with an initial trailing stop at $104.27. My future (5 year hold) target price for the stock is $183, which is an average annual return of 15%. A prior five year hold of the stock would have returned an average of 16% per year. Past and future gains are based on actual and anticiapted earnings. Please be aware that any investment has the potential for loss and past performance is no guarantee of future results.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In addition, the Tax Act repeals the corporate alternative minimum tax (AMT) for tax years beginning January 1, 2018, and provides that existing AMT credit carryovers from 2017 and prior years can be applied against regular tax liabilities beginning in 2018. To the extent that AMT credit carryovers are not used to offset regular tax liabilities, these credits are refundable over four years beginning in 2018.

In the case of EOG Resources, Inc., the company, remeasured its U.S. deferred tax assets and liabilities to reflect the effects of the tax rate change from 35% to 21%, and recorded a provisional reduction in the 2017 income tax provision in the amount of approximately $2.2 billion, most of which is related to the decrease in the tax rate. However, this amount may change based on further analysis of tax elections available to the company, as well as any additional clarification provided by the Internal Revenue Service.

The company also benefited from the repeal of the corporate alternative minimum tax (AMT). This repeal provides that existing AMT credit carryovers from 2017 and prior years can be applied against regular tax liabilities beginning in 2018. To the extent that AMT credit carryovers are not used to offset regular tax liabilities, these credits are refundable over four years beginning in 2018. The company estimates that its AMT credits being carried over to 2018 will total approximately $798 million.

The exact amount of the AMT credit carryover cannot be currently determined, however, due to a federal budgetary provision known as “sequestration,” in which a portion of certain refunds are permanently withheld by the government. The sequestration rate, currently at 6.6%, is revised each year, and the company cannot precisely estimate the rate that might be applicable during the next four years. AMT credits may also be applied against future regular tax liabilities, which would reduce the amount of AMT credit refunds, as well as the corresponding amount of the sequestration charge. In 2017, the company recorded an accrual in the amount of $42 million related to the possible sequestration of refundable tax credits.

The Tax Act further provides for a tax on the deemed repatriation of accumulated foreign earnings for the year ended December 31, 2017. The deemed repatriation tax is based on the amount of post 1986 earnings and profits of the company’s foreign subsidiaries and the amount of foreign cash and cash equivalents. At the election of the company, the deemed repatriation tax liability can be paid over eight years beginning with 2017 on an interest-free basis. The company expects that it will pay its estimated deemed repatriation tax of approximately $179 million under this election.

The company cannot finalize the amount of the repatriation tax due to the possible impact of certain tax elections that require further analysis, the completion of its foreign earnings and profits study, and further clarification provided by the IRS.

The Tax Act also makes fundamental changes to the taxation of multinational companies, including a shift beginning in 2018 to a so-called territorial system of taxation that features a participation exemption regime. The company believes that under this new system it will not incur any significant amount of U.S. federal income taxes with respect to its foreign operating earnings. Prior to this change being enacted, the company had accrued U.S. federal deferred income taxes in the amount of $260 million related to its accumulated foreign earnings.

Due to this tax law change, the company reversed this accrual in 2017, resulting in a provisional reduction in its 2017 federal tax provision of approximately $43 million, net of the earnings impact of the repatriation tax. Although future foreign dividends should be exempt from U.S. federal income taxes, the company must still account for the tax consequences of outside basis differences in its investments in non-U.S. subsidiaries. While the company believes that no U.S. federal deferred income tax liabilities should be recorded for such outside basis differences, future IRS pronouncements may require that certain adjustments to the tax basis of its non-U.S. subsidiaries, resulting in the need to record additional U.S. federal deferred income tax liabilities.

Also, the Tax Act provides for 100% bonus depreciation on tangible personal property acquired and placed in service after September 27, 2017, and before December 31, 2023. It also provides for a phase down of bonus depreciation for the years 2023 through 2026. The impact of this provision will depend on the company’s future domestic capital spending which cannot be precisely determined at this time, but it is expected to have a favorable effect on the company’s cash tax position prospectively.

One other note regarding the Tax Act is that it includes certain limitations on the federal tax deductibility of interest expense, net operating losses and executive compensation. Even though the company does not currently believe that these changes will have a significant impact on its future tax provisions, additional analysis is required.

Fair Warning
EOG Resources, Inc. (NYSE: EOG) – FYE 12/2017 UNDER VALUED The stock is currently trading at levels below my most recent $260 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of EOG Resources, Inc. in my portfolio.
Posted on 03/24/18


Patterson-UTI Energy, Inc. (Nasdaq: PTEN)
Patterson-UTI owns and operates land-based drilling rigs and pressure pumping equipment, operating in the continental United States, and western and northern Canada. Listed competitors are Baker Hughes, Helmerich and Payne, and Nabors Industries Ltd.

Future Value
My short-term (3-6 week hold) target price for the stock is $21.61, with an initial trailing stop at $18.63. My future (5 year hold) target price for the stock is $29, which is an average annual return of 10%%. A prior five year hold of the stock would have returned an average of 5% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results. Past and future gains are based on actual and expected earnings.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Patterson-UTI Energy, Inc., the company, is still analyzing and refining its calculations, however, in certain cases, the company has made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax. For the items for which the company was able to determine a reasonable estimate, it recognized a provisional amount, in accordance with SAB 118, of approximately $219 million of tax benefit, which is included as a component of income tax expense from continuing operations resulting in the above impact to the company’s 2017 effective income tax rate.

Fair Warning
Patterson-UTI Energy, Inc. (Nasdaq: PTEN) – FYE 12/2017 UNDER VALUED The stock is currently trading at levels below my most recent $59 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Patterson-UTI Energy, Inc. in my portfolio.
Posted on 03/22/18


Oil States International, Inc. (NYSE: OIS)
Oil States is an oilfield services company and manufacturer of products for deepwater production facilities and subsea pipelines. The company is also a supplier of production-related rental tools, work force accommodations and logistics, oil country tubular goods distribution and land drilling services. Listed competitors include FMC Technologies, GE Oil and Gas, and Cameron International

Future Value
My short-term (3-6 week hold) target price for the stock is $28.64, with an initial trailing stop at $25.91. My future (5 year hold) target price for the stock is $24, which is an average annual return of (-2%)%. A prior five year hold of the stock would have returned an average of (-12%) per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results. Past and future gains are based on actual and expected earnings.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Oil States International, Inc., the company recorded a net charge of $28.2 million within income tax provision (benefit). This charge consisting primarily of incremental income tax expense of $41.4 million related to the one-time, mandatory transition tax on the company’s unremitted foreign subsidiary earnings (the “Transition Tax”) and a valuation allowance established against the company’s foreign tax credit carryforwards which were recorded as assets prior to the Tax Reform Legislation, offset by a tax benefit of $13.2 million related the remeasurement of the company’s U.S. net deferred tax liabilities based on the new 21% U.S. corporate income tax rate. The company does not expect to incur a material cash tax payable with respect to the Transition Tax.

Fair Warning
Oil States International, Inc. (NYSE: OIS) – FYE 12/2017 OVER VALUED The stock is currently trading at levels above my most recent $4 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Oil States International, Inc. in my portfolio.
Posted on 03/21/18


Noble Energy, Inc. (NYSE: NBL)
Noble Energy is an independent energy company engaged in worldwide crude oil, natural gas and natural gas liquids (NGLs) exploration and production. Listed competitors are EOG Resources Inc., Apache Corporation, and ConocoPhillips

Future Value
My short-term (3-6 week hold) target price for the stock is $30.85, with an initial trailing stop at $28.81. My future (5 year hold) target price for the stock is $30, which is an average annual return of 0.25%. A prior five year hold of the stock would have returned an average of (-8%) per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results. Past and future gains are based on actual and expected earnings.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Noble Energy, Inc., under US GAAP the company is required to recognize the effect of a rate change on deferred tax assets and liabilities in the period in which the tax rate change is enacted. Therefore, the rate change enacted by the Tax Reform Legislation resulted in the recognition of a deferred tax benefit of $500 million at December 31, 2017.

In addition, the Tax Reform Legislation provides for a transition tax (toll tax) on a one-time “deemed repatriation” of accumulated foreign earnings for the year ended December 31, 2017. Based on current interpretations of the law, the company has recognized additional taxable income of $767 million associated with the transition tax, which is fully offset by current year net operating losses and have recorded corresponding deemed foreign tax credits of $164 million, against which they have recorded a full valuation allowance.

Fair Warning
UNDER VALUED The stock is currently trading at levels below my most recent $105 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Noble Energy, Inc. in my portfolio.
Posted on 03/20/18


Murphy USA, Inc. (NYSE: MUSA)
Murphy USA is a retail marketer of refined petroleum products through a network of retail gasoline stations and unbranded wholesale customers. The company owned retail stations are almost all located in close proximity to Walmart stores. The company also markets gasoline and other products at standalone stations under the Murphy Express brand. Listed competitors are 7-Eleven, Exxon Mobil Corporation, and Royal Dutch Shell

Future Value
My short-term (3-6 week hold) target price for the stock is $81.23, with an initial trailing stop at $75.11. My future (5 year hold) target price for the stock is $110, which is an average annual return of 9%. A prior five year hold of the stock would have returned an average of 21% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results. Past and future gains are based on actual and expected earnings.

The Tax Act
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Act also allows for the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Murphy USA, Inc. the company has calculated its best estimate of the impact of the Act in its year-end income tax provision in accordance with its understanding of the Act and guidance available as of the date of the filing and as a result has recorded $88.9 million as a tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount relates primarily to the re-measurement of certain deferred tax assets and liabilities based on the rates of which they are expected to reverse in the future.

Fair Warning
UNDER VALUED The stock is currently trading at levels below my most recent $166 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Murphy USA, Inc. in my portfolio.
Posted on 03/19/18


Cooper Tire and Rubber Company (NYSE: CTB)
Cooper Tire and Rubber specializes in the design, manufacture, marketing and sales of passenger car and light truck tires. The company also designs, manufactures, and sells medium truck, motorcycle and racing tires. Listed competitors are Bridgestone Corporation, Goodyear Tire and Rubber, and Cie Gen Des Ets Michelin.

Future Value
My short-term (3-6 week hold) target price for the stock is $37.55, with an initial trailing stop at $29.89. My future (5 year hold) target price for the stock is $68, which is an average annual return of 25%. A prior five year hold of the stock would have returned an average of 41% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Cooper Tire and Rubber Company the company has recorded a provisional tax liability, commonly referred to as the “Transition Tax,” of $35,378. The Transition Tax payable, will be paid over eight years in installments of $2,694 each year from 2018 through 2022 and the remaining liability of $20,201 in 2023 – 2025.

Fair Warning
SELL HALF The stock is currently trading at levels above my most recent $22 fair value estimate, but below my most recent $35 close target. Please See Linked Worksheet

Disclosure
I hold no shares of Cooper Tire and Rubber Company in my portfolio.
Posted on 03/16/18


ConocoPhillips (NYSE: COP)
ConocoPhillips is an independent oil and gas exploration and production (E&P) company, formed via a merger between Conoco Inc. and Phillips Petroleum Company. Listed competitors include Exxon Mobil Corporation, Royal Dutch Shell,
and BP plc

Future Value
My short-term (3-6 week hold) target price for the stock is $57.70, with an initial trailing stop at $54.11. My future (5 year hold) target price for the stock is $62, which is an average annual return of 2%. A prior five year hold of the stock would have returned an average of (-19%) per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of ConocoPhillips the Tax Act had no material impact against earnings.

Fair Warning
UNDER VALUED The stock is currently trading at levels below my most recent $195 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of ConocoPhillips in my portfolio.
Posted on 03/16/18


A.O. Smith Corporation (NYSE: AOS)
The company manufactures and markets residential and commercial gas, gas tankless and electric water heaters, specialty commercial water heating equipment, condensing and non-condensing boilers, water systems tanks, water treatment products primarily for the Asian market, and in-home air purification products. Listed competitors include Bradford-Qhite Corporation, Paloma Company Ltd, and Aerco International, Inc.

Future Value
My short-term (3-6 week hold) target price for the stock is $67.82, with an initial trailing stop at $64.66. My future (5 year hold) target price for the stock is $200, which is an average annual return of 41%. A prior five year hold of the stock would have returned an average of 58% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of A.O. Smith Corporation the company included provisional charges for income tax expense of approximately $81.8 million resulting from the deemed repatriation tax on undistributed foreign earnings and the re-measurement of its deferred tax assets and liabilities to reflect the recently enacted 21 percent U.S. federal corporate income tax rate.

The effect of this increase in taxes, lowered Net Income After Taxes by 26%, changing earnings per share from what would have been $2.15 to an actual $1.67. The tax increase also impacted fair value, moving it from what would have been $42 to an actual $31.

Fair Warning
OVER VALUED The stock is currently trading at levels above my most recent $31 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of A.O. Smith Corporation in my portfolio.
Posted on 03/15/18


Rudolph Technologies, Inc. (Nasdaq: RTEC)
Rudolph Technologies is engaged in the design, development, manufacture and support of defect inspection, advanced packaging lithography, thin film metrology, and data analysis systems and software used by microelectronics device manufacturers.

Listed competitors are Camtek Ltd., KLA-Tencor Corporation, and Nikon Corporation.

Future Value
My short-term (3-6 week hold) target price for the stock is $28.08, with an initial trailing stop at $29.21. My future (5 year hold) target price for the stock is $60, which is an average annual return of 21%. A prior five year hold of the stock would have returned an average of 16% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. It is important to note that income tax adjustments required on repatriated earnings will distort a companies earnings and consequently its fair value.

In the case of Rudolph Technologies, Inc. the company has not completed its accounting for the tax effects of enactment of the Tax Act. However, they have made reasonable estimates of its impact which totaled $9.5m. This amount has been included in the company’s provision for income taxes. The impact on Net Income After Taxes was $0.30 per share.

Fair Warning
OVER VALUED The stock is currently trading at levels above with my most recent $9 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Rudolph Technologies, Inc. in my portfolio.
Posted on 03/15/18

Pilgrim’s Pride Corporation (NYSE: PPC)
Pilgrim’s Pride is engaged in the production, processing, marketing and distribution of fresh, frozen and value-added chicken products to retailers, distributors and foodservice operators. Listed competitors include Perdue Farms, Sanderson Farms, and Tyson Fresh Meats

Future Value
My short-term (3-6 week hold) target price for the stock is $30.29, with an initial trailing stop at $25.38. My future (5 year hold) target price for the stock is $103, which is an average annual return of 60%. A prior five year hold of the stock would have returned an average of 87% per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings.

The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. In addition, the FASB requires that companies include in their financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. Paying the calculated charges on repatriated income can distort a companies earnings and consequently its fair value.

In the case of Pilgrim’s Pride Corporationthe company is currently estimating a zero tax liability on foreign unremitted earnings due to a net earnings and profits deficit on accumulated post-1986 deferred foreign income. Therefore, the company has not accrued any amount of tax expense for the Tax Act’s one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings.

Fair Warning
FARILY VALUED The stock is currently trading at levels in line with my most recent $41 fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of Pilgrim’s Pride Corporation in my portfolio.
Posted on 03/15/18


National-Oilwell Varco, Inc. (NYSE: NOV)
National Oilwell Varco is a provider in the design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations, and the provision of oilfield services to the upstream oil and gas industry. Listed competitors include Akastor ASA, Oil States International, and Dril-Quip.

Future Value
My short-term (3-6 week hold) target price for the stock is $37.99, with an initial trailing stop at $36.75. My future (5 year hold) target price for the stock is $33, which is an average annual return of (-2%%). A prior five year hold of the stock would have returned an average of (-8%) per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. The Federal Accounting Standards Board (FASB) has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. Paying the calculated charges on repatriated income can distort a companies earnings and consequently its fair value.

In the case of National-Oilwell Varco, Inc. the company is evaluating the impacts of the Act on its business model and have not yet made any accounting adjustments or policy decisions regarding this new source of incremental US taxable income. Due to the timing of the enactment and the complexity involved in applying the provision of the Act, the company has made reasonable estimates of the effects and recorded provisional amounts in its financial statement. As the company collects and prepares necessary data, and interprets the Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, adjustments may be made to these provisional amounts. The company recognized an income tax benefit of $242 million in the year ended December 31, 2017 associated with the revaluation of its net deferred tax liability. This provisional estimate of the one-time transition tax resulted in no additional tax expense and has been considered in the disclosure of undistributed earnings. The accounting for the tax effects of the Act will be completed in 2018.

Fair Warning
OVER VALUED The stock is currently trading at levels above my most recent ($-5) fair value estimate. Please See Linked Worksheet

Disclosure
I hold no shares of National-Oilwell Varco, Inc. in my portfolio.
Posted on 03/14/18


MRC Global, Inc. (Nasdaq: MRC)
MRC Global is an industrial distributor of pipe, valves and fittings and related products to the energy industry. The company serves the upstream sector (exploration, production and extraction of underground oil and natural gas), the midstream sector (gathering and transmission of oil and natural gas, natural gas utilities and the storage and distribution of oil and natural gas) and the downstream sector (crude oil refining, petrochemical processing and general industrials). Listed competitors are Ferguson Enterprises, Wilson International, and W.W. Grainger.

Future Value
My short-term (3-6 week hold) target price for the stock is $18.41, with an initial trailing stop at $17.85. My future (5 year hold) target price for the stock is $24, which is an average annual return of 6%. A prior five year hold of the stock would have returned an average of (-3%) per year. Please remember that any investment has the potential for loss and that past performance is no guarantee of future results.

Repatriation
The Tax Cuts and Jobs Act of 2017 significantly changes U.S. tax law by, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law provides companies that have unremitted foreign earnings from investments in foreign subsidiaries and currently hold those earnings overseas, the opportunity to repatriate those earnings by paying a one-time net charge related to the taxation of those unremitted foreign earnings. Paying the calculated charges on repatriated income can distort a companies earnings and consequently its fair value.

In the case of MRC Global, Inc. the company currently has the intent and ability to indefinitely reinvest the cash held by their non-Canadian foreign subsidiaries and, pending further analysis of the impact of the Tax Act, there are currently no plans for the repatriation of t