No Change in CSCO Thesis

A New York presenter maintains his bullish view on Cisco (NASDAQ: CSCO, $21.91).
The guidance last week was a little underwhelming, but the business remains solid. At the current price, the stock is trading at less than 11X non GAAP trailing EPS if the net cash of about $4 per share is subtracted. The presenter believes the difference between share buyback and option issuance should just be added as an ongoing expense.

Maudore Increases Reserve Estimates

A New York presenter argues that Maudore Minerals could be worth $10 right now based on the new resource estimate released today. The Quebec-based gold mining company reported results that indicate a more than 100% increase in high concentrate deposits in its Comtois project. The presenter believes that the next estimate expected in 6 months or so will show another very significant jump, based on the drill data reported since the February cutoff date for the last report.

Roulston Consumer Chair on Key Retail Trends

Craig Johnson, the chair of our Consumer group, has shared his perspective on the current trends in the retail space:

Flight to value resuming; post-post frugal fatigue: WMT, TGT both up only modestly, as F&C predominate, and as discretionary still lags. Winners: Dollar stores, TJX, ROST, ARO, F-21; COST/BJ’s; but now with first reappearance of barbell growth in 2 years.

Dollar stores emerging as C-stores without the gas pumps, rapidly expanding SF, units

High heat driving AC/Fan sales for WMT/TGT, COST, LOW/HD, BBY/HGG; best in several years, but not a make/break.

Unless Exclusive/Unique/New, Full price merch left on racks (ex URBN/Anthro, JCG-F, TIF).

Winners focus on Value, Speed, Productivity, Newness: VSPN

Needs/Wants/Desires: Necessities vs. Discretionary: e.g. COST Food/Cons’ YOY 61% to 65%; WMT 49% to 53%; BJ’s 68% to 71%. Discretionary categories were recovering most strongly, off of pent-up demand, but now taking a breather.

Women’s Wear rebounding from 2-3 year drought: TLB (going younger, ANN esp Loft, CWTR all up from deep ditch, but far below sales highs; JCG, CHS, Anthro/URBN, all much better, better comps with smaller fleets.

Deflation still strong in sectors: CE (Notebooks, Netbooks, GPS)—but FPT new generation of LED, 3D and IPTV Net-Connectivity will bring TV AUR’s up; Apparel deflation easing/reversing by 1-2% 1Q2011, with hikes tempered by sourcing into Bangladesh, Cambodia, VNam; and Food has bottomed, with dairy up and beef/corn going up; some product inflation

Private Label substitution, higher quality, but lower prices and thus Av. Tkt down.

More frequent trips continuing, with small AT’s

Home sector in major turnaround, 1Q best Q since 4Q2006, but 2Q softening again. WMS, BBBY, TJX/HomeGoods, and Home depts of broadlines strong (TGT, KSS, M, even WMT). HIP bottomed in Jan/Feb, all much stronger in March/April/May, best Spring since 3+ years, and still accelerating. Key has been the great outdoors: nursery, lawn & garden, and OPE

WSM strongest in several years, esp PB, PB/T-K sides. W Elm still work in progress, being tweaked by Mgt.

BTS shoppers delaying purchases till later in season; more looking vs. buying July MTD; waiting closer to need, and for sale prices/next mark

Thoughts about Back-to-School Season from Roulston’s Consumer Chair

Craig Johnson, President of Customer Growth Partners, and Roulston Research’s Consumer Community Chairman predicts this year will be a better back-to-school season than last year. “It will be pretty good, but only because last year was the worst since World War II," he says. His firm forecasts sales gain will average 5.2% for July, August, and September, compared with last year’s 3.3% decline.

No Change in Long-Term View for Schweitzer-Mauduit

A San Francisco presenter remains positive on Schweitzer-Mauduit'S (NYSE: SWM, $46.22) long-term prospects. The company lowered its 2010 guidance on today's earnings call, but the story is still intact. The thesis may take a bit longer to play out than originally envisioned, but SWM does have the dominant technology in the growing market.

Observations from Roulston Retail Expert

Arnie Cohen, former COO at J Crew and one of our retail experts, shared his thoughts on several retailers from his recent store visits and other channel checks. He says that Forever 21 is grabbing market share and doing extremely well with their high school and college shoppers. American Eagle is very strong in denim, but Abercrombie on the other hand is having real problems and struggling to reverse its slump.

Roulston/Dallas presenter likes Entropic(ENTR) Semi business home entertainment exposure

The multi room viewing options offered in Cable and Satellite is positioning ENTR technology is good market position for high revenue growth. Video streaming opportunities also will fuel longer term growth.