Today’s news: Apollo Global Management, LLC (APO) announced a corporate conversion; CF Industries (CF), Dow Inc. (DOW) and DowDuPont (DWDP) all reported first-quarter results.
Apollo Global Management, LLC (APO – yield 5.6%*) announced today that the company will convert from a publicly-traded partnership to a corporation during the third quarter of 2019. The benefit to Apollo is that its potential investing audience will grow substantially. Many institutional investors (pension funds, mutual funds, etc.) are prohibited from investing in shares of partnerships, as per their investment policy statements and prospectuses. One trade-off for Apollo is that the company will likely pay a higher income tax rate in the future. Shareholders can likely expect the variable quarterly distributions to become steady dividend payments.
Apollo, an alternative asset manager, received inflows of $25 billion during the quarter, bringing assets under management (AUM) to $303 billion, dispersed among credit, private equity and real estate investments.
APO is a mid-cap growth & income stock. There’s medium-term price resistance at 35. I’m very pleased that Apollo announced the corporate conversion. I will assess whether to Buy, Hold or Retire the stock as additional news and research emerges, in conjunction with price action. Hold.
*The payout varies each quarter with the total of the last four announced payouts equaling $1.91 and yielding 5.6%.
CF Industries Holdings (CF – yield 2.7%) reported first-quarter EPS of $0.40 vs. the $0.35 consensus estimate, while revenue came in on target at $1.0 billion.
The quarter included the wettest January-February period in the U.S. in a century, which disrupted the agriculture industry. The company expects strong nitrogen demand through the current quarter, and to continue benefiting from low natural gas prices throughout 2019. CF Industries is one of the world’s largest producers of nitrogen products.
From the press release:
“The CF team’s strong execution, along with generally higher nitrogen prices compared to the year before, helped CF deliver solid results in the first quarter despite lower sales volumes driven by wet and cold weather,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “Looking ahead, we expect a compressed planting season and transportation issues to create logistical challenges in the Corn Belt over the next two months. We believe that our in-region production and extensive transportation and distribution network are tremendous advantages in this environment, enabling us to reliably deliver products to our customers when and where they need it.”
CF is a cyclical mid-cap aggressive growth stock. The price chart exhibited a shakeout pattern this week, which is often a harbinger of a near-term run-up. CF could rise to 49, 53 or 55 in the coming months, depending on price action among its industry peers and within the broader market. Traders should buy CF now. Strong Buy.
Dow Inc. (DOW – yield 5.1%) reported first-quarter results this morning. Revenue of $10.8 billion came in a fraction above the consensus estimate. The company benefited from growth in silicones, polyurethanes systems and packaging applications and positive free cash flow. The company was adversely affected by margin compression in polyethylene, isocyanates and siloxanes. Investors may access first-quarter presentation materials on the Dow website.
There were no references to earnings per share (EPS) in the press release nor in the presentation materials. The number will likely emerge after analysts’ ask additional questions during the conference call. Second-quarter revenue guidance was $11.0-$11.5 billion vs. the $12.0 billion consensus estimate.
I’m very pleased with the profit projections, the dividend yield and the low P/E. The stock is in a neutral trading pattern right now. Strong Buy.
DowDuPont (DWDP) reported first-quarter results this morning. Adjusted EPS of $0.84 slightly missed the $0.85 consensus estimate. Likewise, revenue of $19.6 billion slightly missed the $19.9 billion estimate. Investors may read further in the press release. The stock is in an upward-sloping trading range, with six-month price resistance at 40. Buy.