BEST IDEAS TO START THE NEW YEAR

January 4, 2016 BEST IDEAS TO START THE NEW YEAR January 4, 2016 Dear Valued Clients, 2016 marks the eleventh year for our Best Ideas list. As for o...
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January 4, 2016

BEST IDEAS TO START THE NEW YEAR January 4, 2016

Dear Valued Clients, 2016 marks the eleventh year for our Best Ideas list. As for our performance last year, it was the third time in ten years we underperformed the Russell 2000. For 2016, we hope our Best Ideas list once again outperforms the Russell 2000 and as the case every year, our goal is to drive Alpha— each of our 31 industry teams identifies the one stock they expect to outpace the performance of their industry, the Russell 2000 and the markets in general. Even though we did not recommend creating an investment portfolio based on the 2015 Best Ideas list, we have calculated a total return based on an initial $1,000 investment in each idea. For comparison’s sake, the 2015 Best Ideas list generated a return of -9.9% (as of 12/28/2015) vs. -3.44% for the Russell 2000. See page 3 for the Stephens 2016 Best Ideas list and page 4 for detailed 2015 Best Ideas list performance. In retrospect, since we began our Best Ideas list in 2006, our compounded annual return of 11.1% compares well to 6.91% for the Russell 2000. Over the last 10 years, our Best Ideas list has outperformed the Russell 2000 by an average of 420 bps. This performance does not take into account commissions or fees that an investor would incur with an investment portfolio following our Best Ideas in a brokerage or managed advisory account. The Stephens 2016 Best Ideas list is a compilation of the stocks with the best fundamental investment characteristics as selected by individual analysts from their covered companies. These selections are made without regard to the underlying characteristics of each industry. We look forward to adding value to your investment process in 2016.

Please see the glossary of terms and detailed risk section for Plains All American Pipeline beginning on page 48 of this report. Investors should also review the risk factors identified by Plains All American Pipeline as disclosed in the documents filed by Plains All American Pipeline with the SEC beginning on page 50 of this report.

*Past performance is not indicative of future performance.

See important disclosures and analyst certification on page 50 of this report. This report constitutes a compendium report (covers six or more subject companies). As such, Stephens Inc. chooses to provide specific disclosures for the companies mentioned by reference. T o access cu rrent d isclosures f or t he al l co mpanies in t his r eport, cl ients sh ould refer t o https://stephens.bluematrix.com/sellside/Disclosures.action or contact your Stephens Inc. representative for additional information.

© 2016 Stephens Inc. 111 Center Street

Little Rock, AR 72201

501-377-2000

800-643-9691

www.stephens.com

Member NYSE, SIPC

January 4, 2016

2016 Best Ideas Table.............................................................................................................................. 3 2015 Best Ideas Performance ................................................................................................................. 4 Consumer – Food & Agribusiness: TreeHouse Foods, Inc. (THS) ...................................................... 6 Consumer – Healthy Living: ClubCorp Holdings, Inc. (MYCC) ............................................................. 7 Consumer – Restaurants: Buffalo Wild Wings, Inc. (BWLD) ................................................................. 8 Consumer – Retail/Broadlines: LKQ Corp. (LKQ) ................................................................................. 9 Consumer – Retail/Hardlines: Penske Automotive Group, Inc. (PAG) ............................................... 10 Consumer – Retail/Softlines: G-III Apparel Group, Ltd. (GIII) ............................................................. 11 Energy – Exploration & Production: Pioneer Natural Resources Co. (PXD)………………………… . 12 Energy – Exploration & Production: Rice Energy Inc. (RICE)………………………….….. ................ 13 Energy – Master Limited Partnerships: Plains All American Pipeline, L.P. (PAA)………………..….. 14 Energy – Oilfield Services: Flotek Industries, Inc. (FTK) ..................................................................... 15 Financial Services – Banks/Midwest: First Busey Corp. (BUSE). ...................................................... 16 Financial Services – Banks/Southeast & West Coast: Ameris Bancorp (ABCB). ............................ 17 Financial Services – Banks/Southwest: Bank of the Ozarks, Inc. (OZRK). ....................................... 18 Financial Services – Banks/Super-Regional & Midwest: First Midwest Bancorp, Inc. (FMBI) ......... 19 Financial Services – Real Estate Services: Bankrate, Inc. (RATE)……………………………….. ...... 20 Financial Services – Specialty Finance: Aaron’s, Inc. (AAN)…………………………………………….21 Healthcare – Diagnostics & Life Science Tools: Trinity Biotech Plc (TRIB)……………..……… ...... 22 Healthcare – Healthcare Services: AmSurg Corp. (AMSG) ................................................................ 23 Healthcare – Medical Devices: Endologix, Inc. (ELGX)…................................................................. . 24 Industrials – Building Materials: U.S. Concrete, Inc. (USCR) ............................................................ 25 Industrials – Industrial Products & Services: MasTec, Inc. (MTZ)....................................................26 Industrials – Transportation/Airfreight & Logistics/Maritime: Echo Global Logistics (ECHO)…... . 27 Industrials – Transportation/Less-Than-Truckload & Truckload: Knight Transportation (KNX) ..... 28 Industrials – Transportation/Railroad & Transportation Suppliers: Union Pacific Corp. (UNP)…. 29 Technology – Business Services: Fidelity National Information Services, Inc. (FIS) ........................ 30 Technology – Infrastructure Software & Security: Palo Alto Networks, Inc. (PANW)…………….. .. 31 Technology – Media: Gray Television, Inc. (GTN) ............................................................................... 32 Technology – Power & Industrial Technology: 3D Systems Corp. (DDD) ........................................ 33 Technology – Semiconductors: M/A-COM Technology Solutions Holdings, Inc. (MTSI) .................. 34 Technology – Software as a Service: HubSpot, Inc. (HUBS)…………………………………………… 35 Technology – Telecommunications Services: Frontier Communications Corp. (FTR)………………36 Prices in this report are as of 12/31/15 unless otherwise noted

Stephens Inc.

2

January 4, 2016 STEPHENS INC. RESEARCH 2016 BEST IDEAS Analyst

Ticker

Company Name

Aslam Atkins Bienvenu Bizzell Campbell Cooley Delco Duncan Edelstein Evans Green Grooms Hambly Hearnsberger Huff Jones Kumar Long Marietta McCarver McEvoy Nelson Olney Patel Ruykhaver Schmid Slabaugh Stafford Wyatt Zukin Zwick

THS ECHO LKQ AAN RATE ELGX KNX MTZ MYCC GTN PXD USCR AMSG DDD FIS TRIB MTSI UNP FTK FTR FMBI PAG OZRK GIII PANW PAA BWLD ABCB RICE HUBS BUSE

TreeHouse Foods, Inc. Echo Global Logistics, Inc LKQ Corporation Aaron's, Inc. Bankrate, Inc. Endologix, Inc. Knight Transportation, Inc. MasTec, Inc. ClubCorp Holdings, Inc. Gray Television, Inc. Pioneer Natural Resources Company U.S. Concrete, Inc. AmSurg Corp. 3D Systems Corporation Fidelity National Information Services, Inc. Trinity Biotech Plc Sponsored ADR Class A M/A-COM Technology Solutions Holdings, Inc. Union Pacific Corporation Flotek Industries, Inc. Frontier Communications Corporation Class B First Midwest Bancorp, Inc. Penske Automotive Group, Inc. Bank of the Ozarks, Inc. G-III Apparel Group, Ltd. Palo Alto Networks, Inc. Plains All American Pipeline, L.P. Buffalo Wild Wings, Inc. Ameris Bancorp Rice Energy Inc. HubSpot, Inc. First Busey Corporation

Price 12/31/2015 $78.46 $20.39 $29.63 $22.39 $13.30 $9.90 $24.23 $17.38 $18.27 $16.30 $125.38 $52.66 $76.00 $8.69 $60.60 $11.76 $40.89 $78.20 $11.44 $4.67 $18.43 $42.34 $49.46 $44.26 $176.14 $23.10 $159.65 $33.99 $10.90 $56.31 $20.63

Price Target $105.00 $29.00 $37.00 $30.00 $17.00 $17.00 $30.00 $24.00 $27.00 $22.00 $170.00 $70.00 $97.00 $12.00 $80.00 $22.00 $50.00 $112.00 $20.00 $6.50 $21.00 $60.00 $57.00 $70.00 $225.00 $37.00 $190.00 $38.00 $20.00 $70.00 $25.00

Percentage Difference 34% 42% 25% 34% 28% 72% 24% 38% 48% 35% 36% 33% 28% 38% 32% 87% 22% 43% 75% 39% 14% 42% 15% 58% 28% 60% 19% 12% 83% 24% 21%

Market Cap. ($ Mil) $3,416.1 $646.4 $9,091.3 $1,637.0 $1,311.8 $1,311.8 $1,961.5 $1,412.4 $1,177.8 $1,039.8 $18,593.1 $764.1 $4,202.0 $976.2 $19,760.4 $19,760.4 $2,216.3 $67,057.0 $606.5 $5,443.9 $1,456.9 $3,827.9 $4,545.6 $2,056.0 $15,187.9 $9,151.7 $3,064.3 $3,064.3 $1,389.8 $1,968.4 $603.1

Source: Stephens Inc. and FactSet Research Systems

*”Percentage Difference” is the percentage return that would occur if the security listed increased in price from its current price (as of 12/31/2015) to its target price.

Stephens Inc.

3

January 4, 2016 STEPHENS INC. RESEARCH 2015 BEST IDEAS PERFORMANCE Analyst

Ticker

Aslam Atkins

PPC

Bizzell Campbell Cooley Delco Duncan

MATX SC FNF STE CVTI

2015 Best Ideas Pilgrim's Pride Corporation

Matson, Inc. Santander Consumer USA Holdings, Inc. Fidelity National Financial, Inc - FNF Group STERIS Plc Covenant Transportation Group, Inc. Class A

Cash Edelstein UNFI

United Natural Foods, Inc.

GTN RRC

Gray Television, Inc. Range Resources Corporation

BKD

Cash Brookdale Senior Living Inc.

Evans Green Grooms Hambly Hearnsberger

POWR

PowerSecure International, Inc.

Huff ADS

Alliance Data Systems Corporation

Jones Kumar Bienvenu Long Marietta

TRIB QRVO SUN WBC FTK

Trinity Biotech Plc Sponsored ADR Class A Qorvo, Inc. Sunoco LP WABCO Holdings Inc. Flotek Industries, Inc.

McCarver CSAL

Communications Sales & Leasing Inc

MNRO

Cash Monro Muffler Brake, Inc.

Naidu Nelson Olney

Cash Cash

Patel Quillin Ruykhaver Schmid

FTNT

Cash Fortinet, Inc. Cash

Slabaugh

Wyatt Zukin

KKD MRD MKTO

Krispy Kreme Doughnuts, Inc. Memorial Resource Development Corp Marketo, Inc.

Companies That Have Been Removed From Best Ideas List INT Cash

Cash WCC PWR TFM AWAY

VMC

Beginning Price

Current Price (as of 12/28/15)

Amount Invested

31.88 47.32

22.53

37.47 20.02 35.26 65.69 27.71 76.86 25.07

43.52 15.86 34.53 76.39 18.22

1000.00 1000.00 765.85 765.85 1000.00 1000.00 1000.00 1000.00 1000.00 882.12 761.41 1000.00 509.58 1000.00 1137.38 1000.00 1000.00 1235.23 1000.00 1000.00 1059.21 1000.00 1332.26 1000.00 803.71 1000.00 1000.00 1000.00 1000.00 932.37 1000.00 837.62 1000.00 912.78 1000.00 1000.00 1082.41 1000.00 1000.00 730.54 1000.00 1000.00 662.86 1000.00 1644.44 1644.44 1000.00 1000.00 1112.16

41.76 48.05 31.30 15.26 53.41 67.21

HMSY

36.67 36.14 16.15 34.28 258.17 6.47 17.83 68.33 49.05 107.12 20.11 17.09 30.73 25.65 21.67

LTXB

57.56 25.24

CALX

10.02

MWE

30.77 68.28

ESE TSS CERS

Cash SPN ZAYO

CHUY Cash

NOW

S&P 500 Russell 2000 Russell 3000 *Returns above include dividends and stock splits

15.81 24.30

18.65 15.23 278.14 11.86 52.89 37.70 101.79 11.72 19.92

65.98

31.79

19.80 18.14 18.75 67.85 29.03

Total Value of Stephens Portfolio

Benchmark Indices

40.88

15.15 15.90 28.91

Value When Taken Off YTD Performance Best Idea 765.85 765.85 882.12 761.41 509.58 1137.38 1235.23 1059.21 1332.26 803.71 932.37 837.62 912.78 1082.41 730.54 662.86 1644.44 1644.44 1112.16 -

-11.23%

-9.62% -20.78% 0.20% 17.75% -34.25%

-23.86% -56.65% 17.84% -54.20% 23.52% -49.14% -0.11% 43.53% -45.55% -22.60% -23.14% -4.98% -36.06% -34.95% -8.72% 15.64% 8.24% 0.00% -26.95% 3.31% -33.71%

37.34% -15.20% 10.76%

$30,000

-9.89%

30,000 30,000 30,000

1.98% -3.44% 1.09%

Source: Stephens Inc. and FactSet Research Systems **YTD performance priced as of 12/28/2015

Stephens Inc.

4

January 4, 2016

Note: The following changes to the Best Ideas list took place in 2015: Analyst Hearnsberger Lawrence Delco Naidu Grooms Duncan McCarver Evans Hearnsberger Marrietta Atkins Jones Slabaugh Zukin Slabaugh Edelstein Huff Duncan Atkins Duncan Quillin Marrietta Olney Evans

Company Removed Cash Cash Cash HMSY VMC WCC ZAYO ESE SPN INT CERS CHUY NOW Cash TFM TSS Cash Cash PWR CALX MWE LTXB AWAY

Date 1/13/2015 1/16/2015 1/23/2015 2/17/2015 4/13/2015 4/23/2015 6/6/2015 6/11/2015 7/21/2015 7/23/2015 7/31/2015 8/3/2015 8/7/2015 8/7/2015 8/12/2015 8/21/2015 9/3/2015 9/9/2015 9/29/2015 10/16/2015 11/24/2015 12/2/2015 12/9/2015 12/14/2015

Price $19.78 $82.72 $67.80 $25.74 $38.20 $18.59 $36.12 $5.20 $32.56 $75.46 $21.28 $45.47 $21.64 $7.32 $45.26 $27.32 $35.60

Replaced With ESE SUN CVTI Cash Cash Cash CSAL AWAY POWR FTK Cash TRIB Cash MKTO KKD UNFI ADS PWR MATX Cash Cash Cash Cash GTN

Date 1/13/2015 1/16/2015 1/23/2015 2/17/2015 4/13/2015 4/23/2015 6/8/2015 6/11/2015 7/21/2015 7/23/2015 7/31/2015 8/3/2015 8/7/2015 8/7/2015 8/12/2015 8/21/2015 9/3/2015 9/9/2015 9/29/2015 10/16/2015 11/24/2015 12/2/2015 12/9/2015 12/14/2015

Price $36.14 $49.05 $27.71 $25.65 $31.30 $16.15 $17.09 $17.83 $29.03 $18.14 $48.05 $258.17 $25.07 $37.47 $15.26

Source: Stephens Inc. and FactSet Research Systems

Other public companies mentioned in this report (prices as of 12/31/15):

Name Adobe Systems Incorporated C1 Financial, Inc. ConAgra Foods, Inc. Furmanite Corporation Jacksonville Bancorp, Inc. Keurig Green Mountain, Inc. LendingTree, Inc. Macy's Inc Marketo, Inc. Oracle Corporation Pulaski Financial Corp. Rice Midstream Partners LP salesforce.com, inc. Trivascular Technologies, Inc. Verizon Communications Inc. Wal-Mart Stores, Inc.

Ticker ADBE BNK CAG FRM JAXB GMCR TREE M MKTO ORCL PULB RMP CRM TRIV VZ WMT

Price $93.94 $24.21 $42.16 $6.66 $18.73 $89.98 $89.28 $34.98 $28.71 $36.53 $15.96 $13.49 $78.40 $6.65 $46.22 $61.30

Other private and foreign companies mentioned: Act-On Community & Southern Holdings Credit Karma Daimler AG InfusionSoft MailChimp Schurz

Stephens Inc.

5

COMPANY SUMMARY January 4, 2016 Farha Aslam, Analyst 212-891-1778, [email protected] Changes

Previous

Rating Target Price

TreeHouse Foods, Inc. Current

---

Overweight $105.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$78.46 43.10 $92.92 $69.01 $3,381.6 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest:

436,941 41.9 45.4 $1.43 NA/NA $42.21 7.9%

EPS

2014A $0.38A $0.57A $0.47A $0.78A $2.23A 35.2x

2015E $0.41A $0.72A $0.65A $1.33 $3.10 25.3x

2016E $0.70 $0.67 $0.82 $1.05 $3.25 24.1x

Mar Jun Sep Dec FY P/E

2014A $0.80A $0.84A $0.89A $0.99A $3.53A 22.2x

2015E $0.59A $0.66A $0.86A $0.98 $3.10 25.3x

2016E $0.70 $0.67 $0.82 $1.05 $3.25 24.1x

Rev.

$2.95B

$3.24B

$6.46B

Mar Jun Sep Dec FY P/E Oper. EPS

TreeHouse Foods , headquartered in Oak Brook, IL, is a leading manufacturer of private label products in the United States and Canada focused on center-of-the-store, shelf stable food categories. Key categories include pickles, non-dairy powder creamer, salad dressing and soup.

THS – NYSE

2016 Best Idea INVESTMENT CONCLUSION: TreeHouse is our Best Idea for 2016 given our view that the CAG Private Brands transaction provides very compelling cost synergies, growth opportunities, and cash flow. The core business is well positioned given the growing healthy snacks platform, recovering K-cup business, and margin expansion opportunities. Our rating on the stock is Overweight and the price target of $105 is based on a base TreeHouse value of $75 per share and a deal value of $30 per share based on 20x year 3 accretion of $1.50. CATALYSTS: • The ConAgra Private Brands acquisition creates significant value. TreeHouse is solidifying the Company's leadership in the growing private label food industry via the acquisition of ConAgra's PB business. The acquisition is expected to close in the C1Q16 and was struck at an attractive valuation of 9.2x LTM EBITDA. The deal positions TreeHouse to deliver a 3-year double-digit EPS CAGR given the deal is anticipated to have year 1 EPS dilution of $0.25-$0.30, EPS accretion of $0.55-$0.70 in year 2, and an EPS contribution of $1.50-$1.65 in year 3. • The deal accretion numbers are likely conservative given only 100 bps of gross margin improvement over three years is factored into the guidance, whereas CAG PB business has experienced 600 bps of margin degradation since the business was acquired from Ralcorp. • Growing Healthy Snacks Business. The Flagstone Foods business is posting high-single-digit growth reflecting new customer wins. Note, Wal-Mart is rolling out a private label nut display in the produce aisle in 3,800 stores. Margins are anticipated to expand as a result of higher sales, as well as the successful execution of automation, hedging, and productivity improvement initiatives. • Recovering Coffee Business. TreeHouse's private label K-cup business was impacted by Green Mountain's grab for market share. THS is winning back lost customers and should benefit from increased household penetration of K-cup compatible brewers, given the increasing number of low-priced single cup brewers being marketed. • Margin Improvement Opportunities in Core Business. Gross margins in the core business are targeted to expand 100 bps annually, benefiting from benign commodity costs and the Company's simplification efforts. RISKS: • Increases in input costs, such as raw materials, packaging materials and fuel costs, could adversely affect TreeHouse Foods’ profitability. • The Company’s private label and regionally branded products may not be able to compete successfully with nationally branded products.

1 Year Price History for THS

Q3

Q1

2015

Q2

96 88 80 72 64 56

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

6

COMPANY SUMMARY January 4, 2016 Joe Edelstein, CFA, Analyst 312-292-5762, [email protected] Changes

Previous

Rating Target Price

Current

---

Overweight $27.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$18.27 64.75 $24.95 $16.84 $1,183.0 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest: EPS

ClubCorp Holdings, Inc.

569,514 62.9 81.7 $1.16 $0.52/2.9% $2.78 5.0%

2014A ($0.06)A ($0.28)A $0.05A $0.49A $0.21A 87.0x

2015E ($0.07)A $0.00A $0.02A $0.12 $0.07 NM

2016E ($0.04) $0.08 $0.05 $0.20 $0.29 63.0x

2014A

2015E

2016E

FY EV/EBITDA

$196.4M 11.0x

$232.7M 9.3x

$250.4M 8.7x

Rev.

$884.2M

$1.05B

$1.13B

Mar Jun Sep Dec FY P/E Non-GAAP EBITDA

ClubCorp Holdings Inc. is the largest owner-operator of private golf clubs in the U.S. with clubs in 26 states, Washington D.C., Mexico and China.

MYCC – NYSE

2016 Best Idea INVESTMENT CONCLUSION: We like ClubCorp's 3-pronged growth strategy of organic growth, reinventions, and acquisitions. We are attracted to the highly recurring membership revenue model, and we believe the Company benefits from significant scale advantages. We expect 3%-5% annual organic top-line growth and 5%-7% annual organic EBITDA growth. The recent acquisitions of the Sequoia Golf portfolio and other clubs are expected to contribute meaningfully in 2016. We are attracted to the Company's $300 mil. EBITDA target and believe the Company is well on track to accomplish this goal by 2018. The stock is trading at 11.3x LTM EBITDA. Our target price is $27, based on 11x our NTM estimate. Total return opportunity is attractive with the 2.8% dividend yield. CATALYSTS: • Spring membership drives face easier comparisons against 2015's challenging weather. We note 100-year rain events in Texas and wet weather in other geographies kept prospective members from seeing, visiting, and joining a club last year. • The acquisition pipeline is very robust with our estimate of 40-50 clubs in MYCC's sights. The golf & country club industry remains highly fragmented. We view the recent debt raise as a supportive funding for potential transactions. • The Company spent $60 mil. on reinventions in 2015 across 30 clubs. The reinventions of the former Sequoia Golf clubs are on track and we anticipate benefits such as membership growth, dues increases, and greater club usage to drive food & beverage operations. • O.N.E. memberships penetration continue to increase. Approximately 49% of members have upgraded, but we note that new members sign on with a 75% take-rate. RISKS: • Club memberships and golf activities are discretionary items and subject to the consumer discretionary environment. • Acquisition growth is dependent upon identifying new clubs and operating them profitably. • The illiquid nature of real estate holdings may limit the Company's ability to monetize assets. • Unusual weather patterns and extreme weather events could adversely affect the value of golf courses or negatively impact business and results of operations.

1 Year Price History for MYCC

Q3

Q1

2015

Q2

27 24 21 18 15 12

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

7

COMPANY SUMMARY January 4, 2016 Will Slabaugh, Analyst 501-377-2259, [email protected]

Buffalo Wild Wings, Inc.

Billy Sherrill, Associate Changes

Previous

Rating Target Price

---

Current Overweight(Vol) $190.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$159.65 19.05 $205.83 $147.69 $3,041.3 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest:

566,974 18.8 0.0 $5.96 NA/NA $34.39 15.1%

EPS

2014A $1.49A $1.25A $1.14A $1.07A $4.95A 32.3x

2015E $1.52A $1.12A $1.00A $1.60 $5.25 30.4x

2016E $1.82 $1.39 $1.35 $1.93 $6.50 24.6x

Mar Jun Sep Dec FY P/E

2014A $1.54A $1.31A $1.22A $1.09A $5.15A 31.0x

2015E $1.55A $1.12A $1.00A $1.63 $5.31 30.1x

2016E $1.85 $1.42 $1.38 $1.95 $6.60 24.2x

Rev.

$1.52B

$1.85B

$2.22B

Mar Jun Sep Dec FY P/E Adj. EPS

BWLD – NASDAQ

2016 Best Idea INVESTMENT CONCLUSION: We are making BWLD our Best Idea in restaurants for 2016 given our conviction that fundamental trends remain intact and belief that both numbers and sentiment should improve throughout the year. Our core bull thesis includes 1) a continuation of positive traffic growth (which we think was hidden by a bad World Series lap in the QTD period), 2) lower wing/boneless prices, 3) improving labor and G&A controls and 4) accretion from the recent franchisee acquisition. We believe the combination of such events will ultimately culminate into upside to current consensus expectations and expanding valuation. We maintain our OW/Vol. rating and $190 price target. CATALYSTS: We believe, despite 3Q's quarter-to-date commentary regarding current trends, that traffic remains on a positive trajectory at Company-owned stores, leaving upside to the Street's current +3.4% SSS estimate. Furthermore, we look for steadily improving operating margins as wing inflation subsides, mgmt. locks in lower boneless wings (breast meat) YOY, and the Company realizes more meaningful cost synergies from the recent franchisee store acquisition than most expect. We would also point out that the Company has historically been very effective in offsetting unforeseen cost pressures through G&A controls. RISKS: Broadly speaking, the casual dining industry has seen weakening traffic trends amid a softening of discretionary spending, which we credit to rising monthly payments (autos, homes, etc.). This has resulted in a fairly dramatic push toward value promotions in the industry, which is somewhat concerning. While we maintain our belief that these trends are not exerting as much of a meaningful impact on the lower-price point destinations, should this macro headwind impact BWLD, our optimism around upside to estimates and sentiment would be misguided. Furthermore, while we are not modeling outright deflation in the price of traditional wings in 2016 (though we believe it is entirely possible), should prices continue to dramatically inflate, we would have to reassess our current margin assumptions.

Based in Minneapolis, MN, Buffalo Wild Wings, Inc. offers guests a flexible dining experience featuring Buffalo, NY-style chicken wings complemented by 14 signature sauces and a unique menu of sandwiches, entrées, and desserts. Each restaurant offers a family-friendly, multimedia-rich dining experience and features numerous large screen televisions and interactive trivia games to complement its sports bar atmosphere.

1 Year Price History for BWLD

Q3

Q1

2015

Q2

220 200 180 160 140 120

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

8

COMPANY SUMMARY January 4, 2016 Ben Bienvenu, Analyst 501-377-8511, [email protected] Changes

Previous

Rating Target Price

---

Current Overweight(Vol) $37.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$29.63 305.49 $32.25 $22.90 $9,051.7 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest: EPS

1,473,228 279.0 40.7 $0.38 NA/NA $9.94 1.5%

2014A $0.34A $0.34A $0.30A $0.26A $1.24A 23.9x

2015E $0.35A $0.39A $0.33A $0.31 $1.37 21.6x

2016E $0.42 $0.44 $0.38 $0.36 $1.60 18.5x

Mar Jun Sep Dec FY P/E

2014A $0.35A $0.35A $0.31A $0.27A $1.27A 23.3x

2015E $0.36A $0.39A $0.34A $0.31 $1.40 21.2x

2016E $0.42 $0.44 $0.38 $0.36 $1.60 18.5x

Rev.

$6.74B

$7.26B

$7.93B

Mar Jun Sep Dec FY P/E Oper. EPS

LKQ Corp., headquartered in Chicago, IL, is the largest nationwide source for recycled auto parts. The company provides reconditioned, remanufactured, aftermarket, and self-service auto parts. LKQ has recently added a heavy truck division and continues to grow its remanufacturing capabilities.

LKQ Corp.

LKQ – NASDAQ

2016 Best Idea INVESTMENT CONCLUSION: We think LKQ is a compelling investment given its dominant position in an industry that is experiencing solid secular tailwinds related to improving employment rates, lower gasoline prices, increased miles driven, and accelerated growth in vehicles in the 3 year to 8 year age range. Additionally, given the lapping of headwinds experienced last year related to FX and declining scrap steel prices, we think LKQ has an opportunity to return to mid-teen revenue and EPS growth in FY16, which has led to valuation expansion in the past. We currently have an OW/V rating and a $37 price target, which is based on 23x our FY16 EPS estimate of $1.60. CATALYSTS: Quarterly Earnings Beats. Better-than-expected execution in the base business could lead to better-than-expected earnings. We think that expectations seem realistic currently. Greater Synergy Capture. As integration work makes progress with recently completed acquisitions, any synergies beyond management's expectations could improve profitability. Alix Partners Study. Findings to improve operating efficiencies in the N.A. business could enhance profitability. This initiative is currently in a pilot stage, but initial findings have been encouraging. First Analyst Day. LKQ will host its first ever analyst day on March 15. We think this will provide management an opportunity to articulate the Company's strategy. Accretive acquisitions. LKQ has a history of being very acquisitive, with both bolt-on and transformative acquisitions. Given the fragmentation of the market and LKQ's ability to find accretive acquisitions like Rhiag, we think this could provide upside to earnings. RISKS: Integration Missteps. Given the complexity of expanding operations overseas, a lack of execution could lead to slower synergies capture. Intensified FX Pressure. Given LKQ's exposure to Europe and the UK, continued strength in the dollar could compress revenue and pressure expense leverage. Declining Scrap Prices. A continued decline in scrap steel prices would pressure revenue, gross margins and dampen the Company's ability to achieve expense leverage. Softening Macro Demand Fundamentals. If we see a meaningful economic downturn with an increase in unemployment rates and reduction in miles driven, organic growth would likely slow in North America.

1 Year Price History for LKQ

Q3

Q1

2015

Q2

33 30 27 24 21 18

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

9

COMPANY SUMMARY January 4, 2016 Rick Nelson, CFA, CPA, Analyst 312-292-5768, [email protected]

Penske Automotive Group

Nicholas Zangler, CFA, Associate Changes

Previous

Rating Target Price

Current

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Overweight $60.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$42.34 90.07 $54.39 $41.30 $3,813.6 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest: EPS

309,794 42.6 70.9 $0.40 $1.00/2.4% $19.72 2.8%

2014A $0.75A $0.81A $0.83A $0.89A $3.38A 12.5x

2015E $0.84A $1.04A $0.96A $0.87 $3.72 11.4x

2016E NE NE NE NE $4.02 10.5x

Mar Jun Sep Dec FY P/E

2014A $0.73A $0.89A $0.85A $0.79A $3.27A 12.9x

2015E $0.85A $1.05A $0.96A $0.87 $3.72 11.4x

2016E NE NE NE NE $4.02 10.5x

Rev.

$17.18B

$19.04B

$19.78B

Mar Jun Sep Dec FY P/E Oper. EPS

Penske Automotive Group, Inc ., headquartered in Bloomfield Hills, Michigan, is the second-largest public automotive retailer in the U.S. as measured by total revenue of $17.2 billion in 2014. It owns and operates 173 franchises in major metro areas in the continental U.S. and Puerto Rico, as well as 171 franchises internationally, primarily in the U.K.

PAG – NYSE

2016 Best Idea INVESTMENT CONCLUSION: Penske Automotive Group (PAG) is poised to outperform in 2016, benefiting from market share gains in the premium/luxury brands, tailwinds in the service/parts, and industry consolidation. New products and growing off-lease returns should feed new and used car sales. We note PAG is over-indexed to premium luxury brands where leasing is more prevalent. UK auto dealerships have grown from $900 mil. to $6.5 bil. since its initial acquisition 12 years ago, and we see a similar opportunity in heavy trucks. The Company is in the early stages of consolidating the commercial truck segment with a goal to double revenues from the current level of ~$900 mil. in the near term. Penske has partnered with Freightliner, which commands ~38% market share. PAG's strong relationship with Daimler, Freightliner's parent, should be an advantage as it looks to consolidate its dealer network. The commercial vehicle segment offers attractive acquisition multiples (25%-30% discount to auto retail), low capex requirements, a higher proportion of service/parts (~70% of gross profit vs. 40% in auto dealerships), and estimated operating margins at 4.0% to 4.5% vs. 2.5% to 3.0% in auto retail. Relative to other dealers, PAG has significant capacity to participate in M&A. TTM net debt/EBITDA currently sits at 1.9x; the Company has historically operated at 2.5x and we would not rule out 3.0x, which could bring up to $3.0 bil. of acquired revenues. Beginning in 4Q15, the Company will begin to anniversary underperformance seen in Australia, which has reduced EPS by ($0.14) over the past year. FX headwinds will anniversary in 1Q16 and have reduced EPS by ($0.14) over the past three quarters. The Company is in the early stages of rolling out a new digital site "Preferred Purchase" that enables customers to choose a vehicle, value trade-ins, and arrange financing from a desktop or mobile device. CATALYSTS: • Capacity for acquisitions in the auto retail/commercial vehicle segments. • Anniversary of headwinds from foreign exchange and Australia. • High number of off-lease returns in premium/luxury segment driving new/used vehicle sales. • Service/parts segment benefiting from growth in the pool of serviceable vehicles (0-5 year) and elevated recall activity. RISKS: • Acquisitions bring integration and operational risks. • The ability to source acquisitions at attractive prices. • Further deterioration in Australia and continued foreign exchange headwinds. • Significant reduction in annual new vehicle sales.

1 Year Price History for PAG

Q3

Q1

2015

Q2

56 52 48 44 40 36

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

10

COMPANY SUMMARY January 4, 2016 Rick Patel, CFA, Analyst 212-891-1715, [email protected]

G-III Apparel Group

Shreya Jawalkar, Associate Changes

Previous

Rating Target Price

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Current Overweight(Vol) $70.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$44.26 45.54 $73.93 $40.41 $2,015.6 Jan

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest:

524,098 39.7 0.0 $2.86 NA/NA $19.44 7.8%

Adj. EPS

2014A $0.03A $0.14A $1.39A $0.50A $2.12A 20.9x

2015E $0.15A $0.27A $1.85A $0.48 $2.75 16.1x

2016E NE NE NE NE $3.17 14.0x

Apr Jul Oct Jan FY P/E

2014A $0.03A $0.14A $1.61A $0.48A $2.33A 19.0x

2015E $0.15A $0.27A $1.87A $0.48 $2.77 16.0x

2016E NE NE NE NE $3.17 14.0x

Rev.

$2.12B

$2.39B

$2.56B

Apr Jul Oct Jan FY P/E EPS

G-III Apparel Group, headquartered in New York City, is a retailer and wholesaler of men's and women's outerwear, dresses, sportswear, swimwear, and accessories. Its largest business is licensed wholesale, in which Calvin Klein is its biggest brand with products across several categories. Its wholesale non-licensed segment includes multiple brands as well as Vilebrequin, GIII's newest acquisition.

GIII – NASDAQ

2016 Best Idea INVESTMENT CONCLUSION: With the stock down in 2015 due to unfavorable weather and concerns about its customers, we see GIII rebounding in 2016 as sales and sentiment improve. We believe GIII is a best in class retailer with a diverse business model, strong management team, and multiple pathways to continue driving double-digit EPS growth annually over the next few years. In wholesale, we see sales being driven organically and through expansion into new categories/licenses. At retail, we see margin expansion at G.H. Bass and Wilson's. We also see potential upside from future acquisitions, as GIII has historically been an attractive roll-up story. Overall, we believe GIII has EPS power of >$5 (vs. estimated $2.75 in ’15) excluding future acquisitions. We reiterate our Overweight (Vol) rating on GIII and $70 price target. CATALYSTS: • The wholesale channel should be driven by organic growth and expansion through new brands and categories. Organic growth will be driven by shelf space in existing categories like dresses, athleisure wear, handbags, etc. that have had strong momentum. New initiatives include Tommy Hilfiger dresses and Karl Lagerfeld products (both starting spring ’16), G.H. Bass women’s wear, and licensed opportunities (G.H. Bass footwear and menswear). • The retail channel should benefit from productivity and margin improvements at G.H. Bass and Wilson's, which are both turnaround stories. G.H. Bass in particular has shown significant signs of improvement over the last year. Bass has flattish margins versus GIII’s goal of ~10%. • A potential acquisition is also on the table, and GIII has been vocal about targeting a lifestyle brand with annual sales of $500 mil. - $1 bil. This could be yet another lever for future sales and EPS growth. Overall, we think GIII is on track to meet its long-term goals of HSD%-LDD% annual sales growth, DD% operating margins (vs. 7.8% in 2014) and DD% annual earnings growth. RISKS: • Macroeconomic headwinds (economic weakness could hurt sales) • Dependence on favorable weather (35%-40% of GIII's sales come from outerwear) • Concentrated customer base (~20% of sales from Macy's) • Inherent risk from acquisitions (acquisitions are a part of GIII's growth strategy)

1 Year Price History for GIII

Q3

Q1

2015

Q2

80 70 60 50 40 30

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

11

COMPANY SUMMARY January 4, 2016 Will Green, Analyst 817-900-5712, [email protected]

Pioneer Natural Resources

Ben Wyatt, Analyst

2016 Best Idea

Matt Beeby, Associate Josh Stevens, Associate John Durham, Associate Changes

Previous

Rating Target Price

Current

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Overweight $170.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$125.38 149.38 $181.97 $105.83 $18,729.3 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest: EPS

Mar Jun Sep Dec FY P/E Oper. CFPS

Mar Jun Sep Dec FY P/CFPS EBITDAX

FY EV/EBITDAX

PXD – NYSE

2,397,751 147.9 23.7 $6.88 $0.08/0.1% $60.08 6.1%

2014A $0.86A $0.01A $2.59A $2.90A $6.39A 19.6x

2015E ($0.52)A ($1.46)A $4.31A ($0.10) $2.20 57.0x

2016E NE NE NE NE $0.00 NM

2014A $3.91A $4.37A $4.65A $3.59A $16.44A 7.6x

2015E $2.42A $2.62A $2.44 $2.68 $10.12 12.4x

2016E NE NE NE NE $12.31 10.2x

2014A $2.59BA 7.9x

2015E $1.92B 10.6x

2016E $2.03B 10.0x

INVESTMENT CONCLUSION: PXD maintains a multi-decade inventory of low-cost oil assets in the Permian Basin. While economics will certainly be more challenged in a low price oil environment in 2016, boasting one of the best balance sheets in our coverage (YE16 net debt/EBITDA of ~1.1x) coupled with a solid hedge position (85% of oil and 70% of natural gas in 2016, 20% of oil in 2017) should allow PXD to withstand a low oil price environment in the intermediate term. The Company’s recent drilling results in the Wolfcamp and Spraberry zones have also steadily improved in recent months and are now consistently producing wells tracking above 1 million Boe, allowing the Company to target 15%-20% multi-year production growth on much less capital needs than before. The Company adopted an early focus on infrastructure build-out and recently netted ~$1 bil. from the sale of Eagle Ford midstream assets, which also should provide capital/cost tailwinds going forward. The combination of multiple decades of drilling inventory, low cost assets, ample liquidity, a solid balance sheet and a strong hedge position provide PXD a unique and distinct advantage over much of the E&P industry entering 2016. CATALYSTS: • Continuation of "headline" well results with strong IP rates suggesting EURs tracking above the 1 million Boe type curve. • Continued gains in efficiencies given the scale of drilling and completion activity in the Company's Permian acreage. • Investment in vertical integration of services with tank batteries, SWD facilities, sand/logistics, water access and gas processing providing further improvement in well economics. RISKS: • Permian/West Texas Weather Risk. • Execution Risk. • Excessive Rig Capacity. • NGL Markets.

1 Year Price History for PXD

Pioneer Natural Resources is a Texas-based E&P.

Q3

Q1

2015

Q2

200 175 150 125 100 75

Q3

2016

Created by BlueMatrix

Source: Bloomberg

Stephens Inc.

12

COMPANY SUMMARY January 4, 2016 Ben Wyatt, Analyst 817-900-5714, [email protected]

Rice Energy Inc.

Will Green, Analyst

2016 Best Idea

Matt Beeby, Associate Josh Stevens, Associate John Durham, Associate Changes

Previous

Rating Target Price

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Current Overweight(Vol) $20.00

Price: Fully Diluted Shares Out (mil.): 52-Week High: 52-Week Low: Market Cap (mil.): Fiscal Year End:

$10.90 136.38 $25.33 $8.01 $1,486.5 Dec

Average Daily Volume: Float (mil.): Debt/Cap: Cash/Shr: Dividend/Yield: Book Value/Shr: Short Interest: EPS

2,525,073 79.9 31.4 $1.88 NA/NA $11.49 13.3%

2014A $1.03A ($0.06)A ($0.05)A $0.76A $1.70A 6.4x

2015E $0.00A ($0.51)A $0.43A $0.02 ($0.05) NM

2016E NE NE NE NE ($0.27) NM

2014A $0.47A $0.18A $0.26A $0.53A $1.44A 7.6x

2015E $0.52A $0.57A $0.70A $0.64 $2.43 4.5x

2016E NE NE NE NE $2.70 4.0x

2014A FY $257.6MA EV/EBITDAX 7.7x

2015E $431.9M 4.6x

2016E $503.6M 3.9x

Mar Jun Sep Dec FY P/E Oper. CFPS

Mar Jun Sep Dec FY P/CFPS EBITDAX

RICE – NYSE

INVESTMENT CONCLUSION: With assets primarily in Belmont, Greene and Washington counties, RICE continues to benefit from drilling efficiencies and completion optimization. Its wells have produced some of the highest IP rates in the industry, while use of a managed choke program implies EUR improvement with just modest pressure declines. RICE remains well positioned for growth given its high-quality asset base, right sized firm transport and strong hedge portfolio (~70% hedged in 2016). Recent midstream transactions have provided a boost to an already robust liquidity position, while debt levels should remain manageable through 2016 (net debt/EBITDA of