BRC Investment Management incorporates a combination of proprietary, quantitative, fundamentals, and behavioral valuation techniques to identify companies which are going to be beneficial for future earnings and are worth investing. According to the recent 13F filings on Dec. 31 2012, BRC Investment Management has taken twenty two new positions. Among these, I am picking up three stocks: QUALCOMM, Inc. (NASDAQ:QCOM), Church & Dwight Co., Inc. (NYSE:CHD), and Robert Half International Inc. (NYSE:RHI), which have posted better than expected 3Q12 results and have given an impressive outlook for 4Q12 results. BRC held 190,829 shares in church & Dwight, representing 2.51% of the portfolio, 364,563 shares in Robert Half, representing 2.85% of the portfolio, and 182,982 shares in Qualcomm, with 2.78% of the portfolio. Let us discuss these three stocks in detail.
Qualcomm: Recently, in CES 2013, Qualcomm announced a new series of 28nm Snapdragon 800 (currently S4) and Snapdragon 600 (currently S3) extending up to 4 Krait (ARM-based) cores. This 28nm quad core is integrated with improved 4G LTE efficiency and further is enabled with 802.11ac WiFi functionality. The next generation Snapdragon is expected to have an improved performance by about 75% as compared to the current S4 Pro family of chips, and 4G LTE Category 4 for data rates of up to 15 Mbps. With the S800 Qualcomm will be targeting ultra-high performance devices and will also reduce the power consumption by half as compared to the current S4 chips. The S600 will target mid to high end smartphones and tablets. And the integration of CAT 4 LTE in SOC’s will keep Qualcomm ahead of its competitors and give it a dominant position in LTE offerings in the near future. Qualcomm enjoys strong growth from Apple and Samsung, as both these companies use Qualcomm’s chipsets and further captures 85% of the market share together. Qualcomm has been a favorite to many investors, and Wall Street expects the company to post increased earnings for 1Q13. Revenue is anticipated to increase 26% to $5.9 billion for the quarter, as compared to $4.68 billion last year. Qualcomm has seen a double digit revenue growth in the last four quarters, and profits have grown in the last three quarters.
Church & Dwight
: The consumer products company posted impressive 3Q 2012 results despite the sluggish economic environment. EPS came in at $0.66, beating the consensus estimate of $0.59, sales grew 3.5% to $725.2 million, and organic sales increased by 4.5%, mainly driven by volume growth, product mix, and pricing. These figures, and its recent acquisition of Avid Health Inc, have raised up the confidence that the company will perform well in the near future. Church & Dwight acquired Avid, the maker of gummy vitamins and supplements, for $650 million in cash, which has helped the company in expanding its product categories. Moreover, this acquisition will help Church & Dwight in capturing a significant market share in one of the top growing segments. Avid generates ~$230 million of sales yearly and its health brands will be managed under its Consumer Domestic Segment. As per the BMO, Avid will contribute 9% to 10% sales growth from 4Q12 to 3Q13, or $280 million to $295 million in the next 12 months. The company will be ramping up its marketing efforts and has decided to spend 12.5% of sales on marketing initiatives in 2013. With the robust growth and increased margin expansion in 3Q12 it is anticipated that the company’s EPS will grow ~14% and will range from $2.74 to $2.79. The organic sales will also increase by 3% to 4%.