A Pair of Quick Ideas: General Mills & ADT

By: SumZero Staff | Published: January 02, 2014 | Be the First to Comment

Full gm 86b294b84c
General Mills

Quick Idea #1
Long on General Mills (GIS:US)
Contributor: Carl Aschenbrenner, Formerly at Stonebridge Capital Management, Inc.
Current Price: $49.40.
Target Price: $60.00.
Expected Return: 21.0%.
Timeframe: 2+ years.
Elevator Pitch: Healthy mix of snack foods favored by aging demographic. Good operating leverage vs. other consumer staples like soft drinks. One of best-performing, least volatile in S&P500 last 50 yrs.

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Quick Idea #2
Short on ADT Corp (ADT:US)
Contributor: Tatiana Vasilyev, Formerly at Balyasny Asset Management.
Current Price: $40.47.
Target Price: $25.00.
Expected Return: 38.2%.
Timeframe: 2+ years.
Elevator Pitch: US security services is a very saturated market. ADT pays about 20% of revenues to 3rd party agencies for just 1-2% topline growth, in addition to SG&A. All-in the model generates no cash.

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