Stockchase Insights

We would be comfortable buying today, being more aggressive below $230.
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EPS of $2.04 beat estimates of $1.95; revenue of $811M beat estimates of $792M. EBITDA of $374.6M beat estimates by 5%. Veeva topped consensus, with 3Q revenue rising 16% year over year to $811 million. Subscription services gained 17% on strong R&D Solutions and Crossix demand. Still, management expects about 14 of the top-20 biopharmas to adopt Vault CRM, slightly below its expectations. R&D Solutions sales, up 19%, remain the key growth driver, with momentum in eCOA and RTSM. Commercial subscriptions (39% of revenue) climbed 13% as Vault CRM added 23 new customers, bringing the total to over 115, including eight of the top-20 biopharmas. Management raised fiscal 2026 sales guidance to a midpoint of $3.168 billion from $3.137 billion, supported by expanded cloud adoption. Veeva AI’s agents will launch in December for CRM and commercial content, with broader R&D and Quality rollouts expected in 2026. We would consider the results good. Sellers of the stock seem to be concerned about customer retention, but 14/20 is still pretty solid. But it is that type of a market this month, where only perfection seems to be rewarded.VEEV has more than $6B in cash and we would consider it still quite solid overall at a low (for it) 30X earnings valuation. 
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SCR had disclosed in the summer that a special distribution of $10.00 per share if its takeover bid for MEG fails. The takeover bid for MEG was terminated by SCR in October. A meeting of shareholders is scheduled for November 27, 2025 to approve the plan of arrangement and special distribution. Its balance sheet is fairly strong, with an equity position of $6.6B, almost no net debt, cash of $1.3B, and a total debt/equity ratio of 0.2X. There are some concerns that its asset quality is not as strong as some peers, with general thoughts that MEG's Christina Lake SAGD asset could be higher quality than SCR's assets. Approval of the distribution seems likely given that the primary owner (WEF) intends to vote in favour of the plan. All else equal, the share price is likely to drop by approximately the same amount of the distribution, post-payment. We would be cautious around trying to time the market by selling between record date and payment date, as a lot of volatility can take place. We would be comfortable continuing to hold the name given its decent momentum recently, even if there is a post-distribution decline equal to roughly that of the distribution.
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Analysts expect EPS of $0.013 and sales of $34.48M. The earnings date has not been confirmed yet, but early estimates call for sometime in the next few weeks. We expect decent numbers on the sales front. Its earnings can be lumpy based on timing of contracts and execution, but we think that guidance will be strong.
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URI is in a bit of a drawdown like the rest of the market after hitting all-time highs in October. Nothing has really changed here and we would not be concerned witht he company. It is well run, has been through numeroud types of markets, increases the dividend, repurchases shares, and has a bit of a moat due to the size and scale of the business that is hard to catch up to. Recent earnings were fine with revenues ahead of estimates. EPS was a bit short of estimates but nothing particularly concerning. The company will have exposure to any broad economic slowdown but the valuation helps account for some of this and they have some support from the current AI infrastructure buildout in the shorter-term as well. 
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SCR had disclosed in the summer that a special distribution of $10.00 per share if its takeover bid for MEG fails. The takeover bid for MEG was terminated by SCR in October. A meeting of shareholders is scheduled for November 27, 2025 to approve the plan of arrangement and special distribution. Its balance sheet is fairly strong, with an equity position of $6.6B, almost no net debt, cash of $1.3B, and a total debt/equity ratio of 0.2X. There are some concerns that its asset quality is not as strong as some peers, with general thoughts that MEG's Christina Lake SAGD asset could be higher quality than SCR's assets. Approval of the distribution seems likely given that the primary owner (WEF) intends to vote in favour of the plan. All else equal, the share price is likely to drop by approximately the same amount of the distribution, post-payment. We would be cautious around trying to time the market by selling between record date and payment date, as a lot of volatility can take place. We would be comfortable continuing to hold the name given its decent momentum recently, even if there is a post-distribution decline equal to roughly that of the distribution.
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Analysts expect EPS of $0.013 and sales of $34.48M. The earnings date has not been confirmed yet, but early estimates call for sometime in the next few weeks. We expect decent numbers on the sales front. Its earnings can be lumpy based on timing of contracts and execution, but we think that guidance will be strong.
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URI is in a bit of a drawdown like the rest of the market after hitting all-time highs in October. Nothing has really changed here and we would not be concerned witht he company. It is well run, has been through numeroud types of markets, increases the dividend, repurchases shares, and has a bit of a moat due to the size and scale of the business that is hard to catch up to. Recent earnings were fine with revenues ahead of estimates. EPS was a bit short of estimates but nothing particularly concerning. The company will have exposure to any broad economic slowdown but the valuation helps account for some of this and they have some support from the current AI infrastructure buildout in the shorter-term as well. 
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Leverage and credit expansion

Leverage is often blamed for the 1987 stock market crash, about 38 years ago. Rising use of borrowed money, such as margin debt in equities or high loan-to-value ratios in real estate, amplifies gains during bull phases and magnifies losses afterward. Easy credit or relaxed lending standards frequently accompany bubbles. Currently, there is a lot of concern about margin debt. According to the U.S. Financial Industry Regulatory Authority (FINRA), margin debt is at about US$1.1 trillion. Sure, it is a big number, and is at a record. It represents two per cent of total S&P 500 market value, and is up 35 per cent in the past year. But again, it may not be as bad as it sounds. The S&P 500 is up about 15 per cent in the past year so some margin expansion is expected. Lower interest rates also help investors manage their debt exposure. And, two per cent of the S&P 500 does not sound like a lot, considering expected earnings growth forecasts in the 10 per cent or more range for next year. Still, margin debt is certainly something to watch, and may be a sign of future troubles.
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SMCI guided higher again, even after doing so already very recently. It is riding a wave of spending, and remains cheap on most metrics and in comparison to peers. The party may not last forever, but it was a solid quarter with a solid outlook, and things look very good right now. The stock is up about 6% after market and is now up about 80% in 2024 alone. 
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SFTC has been relatively flat over the last year and part fo the reason could be attributed to lower hardware demand that is forecasted to rebound in 2024. Despite declining revenues in 2023, SMTC's gross profit margins have improved which is a good sign. Growth forecast for the next two years for revenue is quite marginal for revenue over the next two years while EPS growth is similar. We don't see SFTC having a huge growth profile going forward but the stock could still perform well in 2024. We think there are other more intriguing options.
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AEHR gets plenty of its sales from the EV market and demand there has been slowing, which the company has identified in its recent earnings report. AEHR lowered its guidance in its Q2 report which is part of the reason for the large pull back in share prices. The lowered guidance and forecasted demand drop would be the main reason for the decline.
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Case for Owning Equities Over the Long Term: 

This might make the prophets of doom quiver a bit. We ran a Bloomberg screen this week, using Jan. 9’s closing market prices, on every stock in North America. The market at that time had been open for a grand total of six trading days, yet we found 21 stocks that were up more than 20 per cent this year, ranging from a high of 106 per cent for Athena Bitcoin Global to 20.6 per cent for Structure Therapeutics Inc. Since we are on the topic of pie-in-the-sky news, how about annualizing those returns? Wow, that would be something.

For our screen, we only used companies with a market capitalization of more than $100 million. The two companies noted above are more than $1 billion each. If we take off our market cap restriction, we get even more early winners.
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Q4 EPS and revenue beat estimates but revenue declined by 0.6% year-over-year which was cause for concern and provides reasoning to LMT's pullback. There is definitely increased demand for defense contractors which should benefit LMT in the future, however the decline in sales offset that sentiment. Forecasts suggest modest revenue and EPS growth next year. We think despite the drop in revenue in Q4, LMT should continue to perform steadily, and looks to be good value with forward price-to-earnings ratio now coming down to 16.4x. 
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EPS of $2.41 beat estimates of $2.34 and sales of $8.6B beat estimates of $8.55B. Net income grew by 17% over the prior year, and its sales grew by 9%. Cross-border volume saw a large increase, of 16%, and management noted that it is off to a solid start with net revenues growing 9% and earnings growing even faster. It conducted share repurchases and dividends of $4.4B in the quarter, and the CEO sees strong opportunity across consumer payments and value added services. Operating expenses declined, leading to profit margin expansion, and its outlook for FY2024 is low double-digit revenue and operating expense growth, and a low-teens earnings growth rate. Overall, these were solid results, and while the stock dropped slightly today, it has been recovering.
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