1

Chevron Corporation (Ticker: CVX)Analyst: Edward Weagel

2

Recommendation for Chevron (CVX)

Recommendation: HOLD Target Price (12/31/2015): $124

Closing Price (05/11/2014): $117.03

Reasoning Behind the Recommendation CVX outperforms the other supermajors in profit per barrel. The company is investing heavily in new US and International projects. Barrels of Oil Equivalent (BOE) per day in production is projected to

increase into 2017. The company reliably pays the shareholders.

Why not a BUY?Crude oil resources are depleting -- there is less “low hanging fruit”

The methods for exploration are becoming more technically challenging.

Exploration is becoming more expensive

3

Strengths

Upstream Strengths Greater than 90% of earnings come from 27% of revenue Production per day is projected to increase to 3.1 million bpd of BOE. New Projects

Angola LNG project started shipping its product. Australia – Wheatstone LNG project Delaware Basin Kurdistan Region – 80% stake in Qara Dagh Block Marcellus Shale

Downstream Strengths Demand is expected to rise for refined products in the next 15 years. US Gulf Coast Petrochemicals Project

4

Weaknesses

Risk-adjusted performance during the past 5 quarters The sector performed worse than the S&P. The company performed worse than the sector.

Upstream WeaknessesExploration expense is at a high for the past 5 years at $1.8 billionCapital and Exploratory expenditures are at a high for the past 5 years The increasing reliance on offshore drilling means more risks.

Downstream Weaknesses Historically, the segment is vulnerable to low margins. This segment contributes less than 10% to earnings For both US and International, sales decreased for refined products.

5

Questions?

7

Recommendation for Honeywell International (Ticker: HON)Analyst: Benjamin Yang

Recommendation: BUY Target price (12/2015): $103

Closing Price (4/14/2014): $90.92

2013 Sales: $39.1 B

2013 Net Income: $3.96 B

8

Strengths Ties to industries with positive outlook

High expected earnings growth through M&A-based competitive advantages

Transportation

Global Economy

Construction

Green Technology

Aerospace

ACS

PMT

2008 2010 2012 2014 2016 2018 2020$0.00

$5.00

$10.00 EPS

2X EPS

Year

EP

S (

$)

9

Weaknesses Defense and Space (Aero) faces headwinds

Net income margin improvement capacity uncertain beyond 2015

2012 2013 2014 2015 2016 2017 2018 2019 $-

$5,000

$10,000

$15,000 AeroDe-fense

Year

Aer

o R

even

ue

($M

)

2012 2013 2014 2015 2016 2017 2018 20190.0%

10.0%

Year

Net

In

com

e M

arg

in

10

Recommendation for Kinder Morgan Energy Partners LP (Ticker: KMP)Analyst: Robert Nagaki

Recommendation: BUY Target price (12/2015): $90

Closing Price (4/14/2014): $77.70

Industry Overview

- Energy Transportation and Storage

Business Segments

- Natural Gas Pipelines

- CO2 Pipelines

- Product Pipelines

- Terminals

- Kinder Morgan Canada *Source of basic data company 10-k

11

Positives

Tennessee Gas Pipeline El Paso Natural Gas Copano Pipeline Eagle Ford Gathering Cochin Pipeline Jones Act Tankers $14.8 billion in future growth projects

12

Negatives

Interest Rates

Alternative forms of Energy Transportation

Terrorist Attacks

13

Questions?

14

Recommendation for PepsiCo (PEP)Analyst: Chase Eggleston

Recommendation: BUY Target price (12/2015): $89

Closing Price (mm/dd/yyyy):

Segments• PepsiCo Americas Foods

• Frito-Lay North America (FLNA)• Quaker Food North America (QFNA)• Latin American food businesses (LAF)

• PepsiCo Americas Beverage (PAB)• Europe• Asia, Middle East and Africa (AMEA)

15

Reasons for RecommendationPositives:

Return to Shareholders Share repurchases Dividends

- $2.27 per share to $2.62 per share

Size Cash Flows Revenue Volatility Low Risk

Growth Potential Shanghai’s DisneyLand At home beverage production

16

Reasons for RecommendationThings to be aware of:

Consumer TrendsCommodity PricesCurrency ExchangeCompetitors

17

Sources

1. IBIS World

2. Mergent

3. PepsiCo 2013 10-k

4. PepsiCo 2012 10-k

5. http://seekingalpha.com/article/2059583-pepsi-tingyi-take-aim-at-coke-with-disney-win

6. http://www.fool.com/investing/general/2014/03/17/pepsico-enters-at-home-carbonation-market-before-c.aspx

7. http://seekingalpha.com/article/2018301-pepsico-ceo-discusses-q4-2013-results-earnings-call-transcript?part=single

8.  http://advisor.marketscope.com/SP/msa/reports.pdf?reportURL=/indsurv/fnb/fnb.pdf

18

Recommendation for PPG Industries (Ticker: PPG)Analyst: Marin Decaudaveine

Recommendation: SELL

Target price (6/30/2015): $181

Closing Price (4/10/2014): $189.96

19

2013 PPG Overview

20

• Very high return last year: 63.80% (S&P 500 return last year: 34.93%). Sell PPG to secure these gains

• Transitions optical business separation, which was very profitable, and had excellent margins (29.2% versus 9.4% for the whole company)

• Exposure to the risk of raw materials inflation. Titanium dioxide purchases are 70% to 80% of the cost of goods sold of the coatings business (84% of the total revenues of PPG in 2013).

• Architectural coatings segment is weaker than other coatings segment, despite the construction market recovery. Due to fewer competitive advantages.

• PPG’s performances are tightly linked to global economy.

Why selling PPG?

21

However, PPG has some strengths

• Current PPG’s portfolio shift. Focus on coating activity (2004: 56%, 2014: 90%). Strong acquiring activity, and a lot of divestitures. Coatings manufacturing industry benefits from many positive points. Low capital intensive industry, stable earnings/cash, consolidating industry. High growth potential. Results improved in the long run.

• 25% of the firm's sales are from emerging regions. It will drive growth, because the western regions expand at a slower rate.

• High return of cash to shareholders ($1.35 billion in 2013), through buy-back and dividends.

22

Questions?

23

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

Recommendation: “Sell”

Target Price: $60

Today’s Price: $56.77

24

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

47%

22%

11%

10%

8% 3%

Segment Revenues

Iron Ore

Aluminium

Copper

Energy

Diamonds & Minerals

Other Operations

Segments:

Iron OreAluminiumCopperEnergyDiamonds & Minerals

25

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Price of Aluminium

26

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

May-13 Nov-13 Jun-14 Dec-14 Jul-15 Jan-16 Aug-16 Mar-17$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Price of Iron Ore

27

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

China’s Influence

28

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

29

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

30

Rio Tinto (Ticker: Rio)Analyst: Garett Mahoney

31

Recommendation China’s economic and political changes will negatively

impact multiple segment revenues. Significant impact on iron ore prices.

Development of GHOST Cities cannot be sustained. China’s consumption will be cut.

Aluminium demand and price increase will be overshadowed by Chinese policy changes.

Poor HPR and Risk-Adjusted Returns shows investment would be more beneficial in Sector ETF.

Target Price: $60

32

Recommendation for Schlumberger Ltd (Ticker: SLB)Analyst: Jordan Fuentes

Recommendation: HOLD Target price (12/2015): $114.00

Closing Price (4/14/2014): $98.46

% of Revenues

Reservoir Characterization DrillingProduction Eliminations & Other

27.05%

38.26%

35.19%

-0.49% % of Revenues

North America Latin AmericaEU/CIS/Africa MidEast/AsiaElimination & Other

17.12%27.32%

23.88%

0.98%

30.70%

Segments: Regions:

33

Recommendation for Schlumberger Ltd (Ticker: SLB)Analyst: Jordan Fuentes

Recommendation: HOLD Target price (12/2015): $114.00

Closing Price (5/07/2014): $97.34

Positives:• Technological Innovation and Efficiency• Financial Performance against competition• Industry outlook quite positive

Negatives:• Highly Dependable on expenditures from Oil and Gas industry related to the

Exploration and Production of hydro-carbons. • Subject to risk related to foreign exchange and geo-political events• Alternative Energy production

Competitors:

Halliburton Company (HAL) Baker Hughes Incorporated (BHI)

Weatherford International (WFT)

34

Technological Innovation: SLB• 1.4 billion invested into

R&E • Over 125 R&E facilities

worldwide• Involved in optimization of

hydro-carbon rigs.• Improved efficiency for

customers• Shale, Fracking, Deep-

water E&P

• New drill bit can penetrate 92% further than traditional drills bits.

• World Record for shortest time between Exploration and Production: 14 Months

• Improved efficiency seen in production and financials.

• Wearable Intelligence:Google Glass

35

Financials Advantage• Expanding Margins• Double Digit EPS growth• FCF Growth unmatched by

competition• Improved 2013: Asset

Utilization, Inventory Management

SLB

HAL

BHI

WFT

0% 5% 10% 15% 20% 25%

Operating Margins: Annual

2012 2013

36

Recommendation Stryker Corporation (Ticker: SYK)Analyst: Bryan Deshayes

Recommendation: BUY Target price (12/2015): 93

Closing Price (5/07/2014): 82.14

Company Overview 2013 Revenue : $9.02 Billion

- 4.2% Increase from 2012

Segments- Reconstructive (4.8% increase)- MedSurg (2.9% increase)- Neurotechnology and Spine (5.6% increase)

44%

37%

19%

Sales

Reconstructive

MedSurg

Neurotechnology and Spine

37

Stryker Corporation Strengths

- Recent Acquisitions : MAKO, Trauson, Pivot, Patient Safety Technologies

- Fastest Long-Term Growing Dividend- Research and Development

Future Outlook- Reduced Cost Trend for Healthcare Providers- Lower Expenses (Reduced Non-Recurring Costs)

38

Stryker CorporationOpportunities

- International Expansion : Emerging Markets- Aging Population (Over 65 to double by 2030)- Increased Obesity

Threats- New Entrants in the Market/Competition- Regulation- Litigation/Lawsuits

39

Stryker Corporation

Questions?

Recommendation for Union Pacific Corporation (Ticker: UNP)Analyst: Kathy Hollingsworth

Recommendation: BUY Target price (12/2015): $206

Closing Price (5/0/2014): $184.84

2013 Performance Revenues

$21,963 (+5.%) Net Income

$4,388 (+11.3%)

20% Net income Margin (+1.2%) Earnings per Share Diluted

$9.42 (+13.92) Dividends

$2.96 (+18.88%)

Payout ratio 30%

Feb qtr $.91 (+15%)

41

Strengths/Opportunities

• Current leader in the industry• Strong Brand Recognition• Operations are tied to the economy• Diversified commodity mix• Only railroad to have all six ports to Mexico• Dividends increase, 1-3x p/ year PO ratio low 30s• $60 million buybacks until 2017• Outperformed rail industry and S&P 500• Balance sheet healthy-Lowest debt-to-equity ratio .5• Investing capital into networks and infrastructure to grow• More manufacturing in Mexico (especially cars)• Investing in technology for locomotives

42

Weaknesses/Threats

• Legacy contracts• Railroad Unions • Revenues tied to industry

commodity performance• Volatile fuel costs• Burlington North Pacific has

parallel lines• Enforcement of fuel

surcharges• Pending law suits regarding

price fixing• Coal Industry/Natural Gas

Competition• Pipelines

43

Conclusion

Union Pacific Corporation Leading the Rail Industry Maintains strong financials Best choice among industry competitors as fuel costs rise Prepares itself to grow with the forecasted economic rise Taking care of their investors

It’s a buy.

44

Walgreens Company (WAG)

45

Walgreens Company (WAG)Analyst: Thai Yaparwong

Recommendation: BUY Target price (12/2015): $76.00

Closing Price (5/07/2014): $65.43

Company OverviewOver 8,600 Locations

- 408 Healthcare ClinicsRevenue: $72.2 B (+0.8%)Net Income: $2.3 B (+10.6%)

Prescription DrugsFront End Products

63%

27%

10%

2013 Revenue Breakdown

Prescription Drug Sales

General Merchandise

Non-prescriptions Drug Sales

46

Walgreens Company (WAG)Analyst: Thai Yaparwong

Recommendation: BUY Target price (12/2015): $76.00

Closing Price (5/07/2014): $65.43

Reasons for RecommendationsStrategic Partnerships

Alliance BootsEurope, Asia & Africa

AmerisourceBergen10yr. Distribution Agreement

Global Platform Synergies2014 Projected: $425M2016 Goal: $1B

47

Walgreens Company (WAG)Analyst: Thai Yaparwong

Recommendation: BUY Target price (12/2015): $76.00

Closing Price (5/07/2014): $65.43

Market Presence & ReputationBalance Rewards ProgramHousehold Name

Key DriversCreating a Well ExperienceAdvancing Community PharmacyEstablishing an Efficient Global Platform

Risks Uncertainty of Government RegulationUncertainty of International Economies