Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.71 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Emerging Markets Breaking Out

We see global equities (ACWI-US) going through a consolidation phase between support at $77 and resistance at $84. To reiterate, as long as ACWI-US is above $77 we are constructive and would be buyers. Our work suggests that $77 support is likely to hold based on current market dynamics, and we would flip to bullish on a breakout above $84.

· Emerging Markets Breaking Out. One of the many dynamics that supports our constructive outlook is that emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1-year highs -- a positive risk-on signal. Stocks doing business in China, India, Taiwan, and South Korea continue to be a major focus when it comes to individual stock recommendations... see chart below.

· Japan & Europe. Small- and large-cap indexes in Japan (TOPIX Small and TOPIX, respectively) remain attractive from a price perspective as RS shows signs of bottoming -- add exposure. On the other hand, Europe (EURO STOXX 50) faces an uphill battle from a price perspective, and RS remains in a downtrend -- underweight/be selective... see page 2.

· Actionable Theme: Growth-Focused Sectors. While we see a relative stalemate between growth and value in the US, that is not the case for global ex-US equities where growth remains leadership. For today's individual stock recommendations we turn to the following growth-focused Sectors: Technology, Services, Communications, and Consumer Discretionary.
Underlyings
Carnival Corporation

Centre Testing International Group Co. Ltd. Class A

CENTRE TESTING INTERNATIONAL GROUP CO., LTD., formerly CENTRE TESTING INTERNATIONAL (SHENZHEN) CO., LTD., is a China-based company principally engaged in the provision of technical testing services in trading goods, consumer goods, industrial goods and life science areas. The Company mainly provides hazardous substance testing, safety inspection, Electro Magnetic Compatibility (EMC) testing, environment security testing, reliability and failure analysis of electrical and electronic products, material reliability and failure analysis, metal and non-metallic materials analysis, testing for textiles, shoes and leather, toy testing, construction material and light industrial product testing and vehicle and spare parts testing, among others. The Company operates its business in domestic and overseas markets.

Cheil Worldwide Inc.

CHEIL Worldwide is engaged in the advertising, strategy and consulting, creative media promotion and sports marketing. Co.'s advertising, strategy and consulting services provide brand evaluation and measurement, brand communication and strategies and advertising/marketing strategies and implementation. Co.'s creative media services provide media planning and consulting, sales promotions and public relations promotions. Co.'s sports marketing services provide sponsorship strategic planning and consulting.

Dalata Hotel Group Plc

Dalata Hotel Group is a hotel operator in the Republic of Ireland. As of Dec 31 2016, Co. operates nine hotels in the United Kingdom.

Elecom

ELECOM and its subsidiaries are mainly engaged in the development, manufacture and sale of personal computer and digital equipment-related products. Along with its subsidiaries, Co. develops own brands products under the names of "ELECOM," "Logitec" and "HAGIWARA Solutions." Products offered include mouse, keyboards, network cameras, speakers, computer discs, computer bags, universal serial bus ("USB") hubs, game pads, hard disc cases, hard disc drives, digital versatile disc ("DVD") drives, liquid crystal display ("LCD") monitors, memory modules, USB flash memories, SD memory cards, wireless local area network ("LAN")-related products, in-vehicle recharges, media cases and mouse pads.

Experian PLC

Experian is an information services group. Co. has four businesses: Credit Services, which collects data to analyze the credit histories of people and businesses, sorting through information about the credit they applied for and how they repaid the credit; Decision Analytics, which combines Co.'s data with data from its clients and third parties, and uses software and analytics to access, organize and analyze this data to help its clients to minimize the risk of fraud; Marketing Services, which helps Co.'s clients to plan, build and deliver their marketing campaigns; and Consumer Services, which, among others, monitors the information in people's credit reports for suspected fraud patterns.

Hamamatsu Photonics K.K.

Hamamatsu Photonics is engaged in the manufacture and sale of photomultiplier tubes, imaging devices, light sources, opto-semiconductors, imaging and analyzing systems. Co.'s principal business segments are: Electron Tube; Opto-Semiconductor (Solid State); Imaging and Measurement Instruments (Systems); and Other. Co.'s principal products include photomultiplier tubes, electron multipliers, micro channel plates, image intensifiers, and x-ray products; silicon photodiodes, photo IC components, position sensitive detectors, infrared detectors; and cameras for scientific and industrial applications, as well as specialized instruments for use in fields such as pharmaceutical development.

Locaweb Servicos de Internet

Locaweb Servicos de Internet SA is a Brazil-based provider of Business-to-Business (B2B) technology solutions. The Company's activities are divided into two operating segments: Be Online/SaaS and Commerce. Be Online/SaaS division offers services of hosting, hosting reseller, domain registration, cloud computing and dedicated servers, as well as solutions related to email accounts, email marketing campaigns and Internet Protocol (IP) communication, through brands Locaweb, Locaweb Corp, All iN, KingHost, Cluster2Go and Delivery Direto. Commerce division is engaged in facilitating online retail operations, providing e-commerce platforms and payment solutions, through brands Tray, Tray Corp and Yapay. The Company owns several subsidiaries, such as ITCapital Servicos Tecnologia Ltda, Ananke Participacoes SA and LwK Hosting Participacoes Ltda.

Luxshare Precision Industry Co. Ltd. Class A

Luxshare Precision Industry Co., LTD. is a China-based provider of Internet solutions. The Company's products include computer interconnection products and precision components, automotive interconnection products and precision components, communication products and precision components, consumer electronics, as well as other connectors. The Company distributes its products within domestic market and to overseas markets.

Murata Manufacturing Co. Ltd.

Murata Manufacturing is mainly engaged in the development, manufacture and sale of electronic components and modules in Japan, North America and certain other Asian and European countries. Co.'s products are sold mainly to electronics companies for use as components in telecommunication, computer, audio, video, automotive electronics and other electronic products. Co. is engaged in the development, manufacture and sale of electronic parts and related products, including components for capacitors and piezoelectric products, as well as modules products; the provision of welfare services, personnel services, education and training services, as well as the leasing and management of real estate.

NICE Ltd

Nice is an enterprise software provider that enables organizations to improve customer experience, drive business performance, ensure compliance and fight financial crime. Co. helps companies understand their customers and predict their needs, optimize their workforce to drive greater efficiency, and identify suspicious behavior to prevent financial crime by capturing customer interactions and transactions across multiple channels and sources. Co. then applies best-in-class analytics to this data to provide real-time insight and uncover intent. Co.'s solutions allow organizations to operationalize this insight and embed it within their workflows and daily business processes.

Recruit Holdings Co. Ltd.

Recruit Holdings is a holding company. Through its affiliates, Co. operates in four business segments: marketing media, HR media, staffing, and other. Marketing Media segment is engaged in the provision of information on housing, bridal, post-secondary education for high school students, automobiles, lodging accommodation, restaurants, and beauty salons. HR Media segment is engaged in the provision of services that offer employment information to job seekers both in Japan and overseas. Staffing segment is engaged in the provision of staffing services in Japan and overseas. Other segment is engaged in the planning, operation, outsourcing, and other of digital content services.

Renesas Electronics Corporation

Renesas Electronics is a semiconductor solution provider. Co.'s solutions include electronic products and systems for communications, computing and peripherals, consumer electronics, as well as automotive and industrial sectors. Along with its subsidiaries and associated company, Co. operates in four business segments: automotive, industrial, broad-based and other semiconductors. Co.'s principal products are microcontrollers, microprocessors, smart analogs, secure MCUs (Microcontroller Units), embedded systems platform, software, tools, IPDs (Intelligent Power Devices), power MOSFET (Metal-Oxide-Semiconductor Field-Effect Transistors), analog and mixed-signal ICs, and transistors.

Rentokil Initial plc

Rentokil Initial is a holding company. Through its subsidiaries, Co. provides services that include pest control, hygiene and workwear, as well as a range of other services including plants, medical services, property care and hygiene. Co.'s businesses include: Pest Control, which consists of Rentokil Pest Control, a commercial pest control company; Hygiene, which consists of Initial Hygiene, a hygiene services company; Workwear, which consists of Initial Workwear, a provider of workwear services across the four main continental European markets of France, Germany, Belgium and the Netherlands; and Other, which consists of Ambius, an interior landscaping business.

Solaris Oilfield Infrastructure

Solaris Oilfield Infrastructure is a holding company. Through its subsidiaries, the company is a provider of supply chain management and logistics solutions for the oil and natural gas industry. The company's offerings include: system rental, which manufactures and rents equipment to manage the delivery, handling and storage of proppant and chemicals at the well site; field services, which provides trained personnel to maintain and support its systems, train its customers to operate the systems and assist in the transportation of its systems; and transloading services, which provides manifest and unit-train transloading services, as well as provides forward staging storage of regional and local proppant.

STMicroelectronics N.V. ADS

Teleperformance SE

Teleperformance is engaged in outsourced customer experience management. Co. delivers integrated solutions to corporations and administrative bodies worldwide to manage all aspects of the customer-relations cycle on their behalf. Co.'s activities include four core business areas: customer care (these are services provided as part of customer service management); technical support; debt collection; and business information and marketing actions. As of Dec. 31, 2013, Co. had approximately 110,000 computerized workstations across 46 countries. Co.'s client includes industries like Telecoms, Internet, Financial services, Technology/media, Insurance, Government sector and Utilities.

Thomson Reuters

Thomson Reuters provides source of news and information. Co. operates three business: Financial & Risk, a provider of news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals, as well as a provider of regulatory and operational risk management solutions; Legal, a provider of online and print information, decision tools, software and services that support legal, investigation, business and government professionals; and Tax & Accounting, a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.

Wisetech Global Ltd.

WiseTech Global is engaged in providing software solutions to the logistics industry across more than 125 countries. Co. develops, sells and implements software solutions that enable logistics service providers to facilitate the movement and storage of goods and information domestically and internationally. Co.'s customers range from small and mid-sized regional or domestic enterprises to large multi-national companies.

Yoshitake Inc.

Yoshitake is engaged in the manufacture and sale of automatic pressure-regulating valves. Co.'s products include pressure reducing valves, drain separators, safety and relief valves, strainers, solenoid valves, motor valves, air departed valves, temperature regulators, steam traps, radiator products, primary pressure regulating valves, expansion joints, flexible joins, sight glasses, air vents, air outs, noiseless heaters, vacuum relief valves, and fluid control products, among others.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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