Dynamic Growth Equity List Strategy

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1 Brian S. Postol, Equity Sector Analyst Dynamic Growth Equity List Strategy Holdings by Sector June 1, 2018 Strategy overview: The Dynamic Growth Equity List Strategy (Dynamic Growth) focuses on companies that we believe offer above average growth potential and may be on track to become leaders in the markets they serve. Our objective is to offer investors a list of stocks that they can use to help build a welldiversified portfolio or to fill holes in an existing portfolio. Market Cap (billion) NTM EPS L-T EPS Growth Please see pages 5-6 of this report for Important Disclosures, Disclaimers and Analyst Certification. Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value Date Added To List Company Symbol Price NTM PE Consumer Discretionary (average) $ x 17% Amazon.com AMZN $1, $790.4 $ x 36% 11/7/13 Burlington Stores, Inc. BURL $ $9.9 $ x 26% 11/8/13 CarMax, Inc. KMX $68.92 $12.4 $ x 13% 1/27/15 Cavana Co., Cl A CVNA $28.85 $0.5 -$ % 5/8/18 Nike, Inc. NKE $71.80 $116.2 $ x 10% 1/11/16 O'Reilly Automotive, Inc. ORLY $ $22.2 $ x 15% 3/16/15 Planet Fitness PLNT $39.63 $3.5 $ x 17% 2/15/17 Consumer Staples $ x 18% Estee Lauder Cos. Cl A EL $ $54.9 $ x 18% 7/2/12 Energy $ x 24% Concho Resources Inc. CXO $ $20.5 $ x 23% 7/2/12 Matador Resources MTDR $28.07 $3.1 $ x 25% 2/15/17 Financials $ x 13% Affiliated Managers Group Inc. AMG $ $8.6 $ x 13% 1/10/13 Charles Schwab SCHW $55.62 $75.0 $ x 24% 7/20/15 First Republic Bank FRC $99.60 $16.1 $ x 13% 1/11/16 IntercontinentalExchange Inc. ICE $70.89 $41.2 $ x 13% 7/2/12 SVB Financial Group SIVB $ $16.5 $ x 11% 12/13/17 Health Care $ x 18% ABIOMED, Inc. ABMD $ $16.9 $ x 49% 12/13/17 Celgene Corp. CELG $78.68 $57.6 $ x 18% 11/7/13 Danaher DHR $99.28 $69.3 $ x 9% 12/1/15 Industrials $ x 15% Dycom Industries DY $93.16 $2.9 $ x 15% 1/11/16 Schneider National, Inc. SNDR $29.48 $5.2 $ x 15% 1/16/18 WABCO Holdings WBC $ $6.5 $ x - 7/3/12 XPO Logistics XPO $ $12.7 $ x 31% 6/30/17 1 Simple average for market cap, date added. Harmonic average for PE. Median for EPS growth estimate. EPS = earnings per share, funds from operations used for real estate investment trusts PE = price to earnings ratio L-T = long-term Market Cap categories: large cap greater than $12.5 billion, mid cap between $12.5 billion and $3 billion, small cap less than $3 billion Page 1 of 6

2 Market Cap (billion) NTM EPS L-T EPS Growth Date Added To List Symbol Price NTM PE Information Technology $ x 19% Electronic Arts EA $ $40.1 $ x 10% 12/1/15 Facebook, Inc. FB $ $556.5 $ x 24% 3/2/16 NVIDIA Corp. NVDA $ $153.1 $ x 10% 10/5/17 Proofpoint, Inc. PFPT $ $5.9 $ x 24% 10/5/17 RedHat RHT $ $28.8 $ x 18% 1/27/15 salesforce.com CRM $ $94.4 $ x 23% 3/16/15 Square, Inc. Cl A SQ $58.25 $23.3 $ x 58% 5/8/18 Visa, Inc. V $ $293.3 $ x 19% 3/2/16 WEX Inc. WEX $ $7.6 $ x 15% 1/10/13 Materials $ x 13% Ecolab Inc. ECL $ $41.1 $ x 13% 7/2/12 Real Estate $ x 33% SBA Communications SBAC $ $18.4 $ x 33% 1/26/15 Telecommunications Services $ x 27% Zayo Group Holdings ZAYO $34.80 $8.7 $ x 27% 10/5/17 Dynamic Growth Equity List 1 $ x 18% S&P 500 SP50 $2,705 $45.7 $ x 12% 1 Simple average for market cap, date added. Harmonic average for PE. Median for EPS growth estimate. EPS = earnings per share, funds from operations used for real estate investment trusts PE = price to earnings ratio L-T = long-term Market Cap categories: large cap greater than $12.5 billion, mid cap between $12.5 billion and $3 billion, small cap less than $3 billion Page 2 of 6

3 Dynamic Growth Statistics Symbol Sub-Industry Price Low High Per Share Yield End / Sales Sales EBITDA EBITDA Capital Consumer Discretionary (average) 0.2% 1.8x 1.5x 15.0x 14.6x 12% AMZN Internet & Direct Marketing Retail $1, $ $1, $ % DEC 3.2x 2.3x 23.0x 20.8x 7% AA- BURL Apparel Retail $ $79.07 $ $ % FEB 1.5x 0.9x 13.1x 10.5x 35% BB KMX Automotive Retail $68.92 $57.05 $77.64 $ % FEB 0.7x 0.7x 10.2x - 4% - CVNA Automotive Retail $28.85 $8.85 $31.35 $ % DEC 1.9x 1.6x % - NKE Footwear $71.80 $50.35 $73.49 $ % MAY 3.1x 2.7x 19.8x 16.5x 12% AA- ORLY Automotive Retail $ $ $ $ % DEC 2.3x 2.6x 12.1x 12.7x 33% BBB+ PLNT Leisure Facilities $39.63 $21.03 $41.67 $ % DEC 7.3x 4.4x 20.5x 16.5x 8% - Consumer Staples 1.0% 3.7x 2.9x 18.3x 15.1x 15% EL Personal Products $ $92.85 $ $ % JUN 3.7x 2.9x 18.3x 15.1x 15% A+ Energy 0.0% 4.1x 5.7x 6.9x 10.5x - CXO Oil & Gas Exploration & Production $ $ $ $ % DEC 4.4x 6.3x 6.6x 10.6x - BB+ MTDR Oil & Gas Exploration & Production $28.07 $20.13 $35.22 $ % DEC 3.9x 5.2x 7.3x 10.5x - B Financials 0.7% 5.7x 5.0x 11.3x 13.4x 11% AMG Asset Management & Custody Banks $ $ $ $ % DEC 3.5x 3.8x 8.2x - 13% BBB+ SCHW Investment Banking & Brokerage $55.62 $37.63 $60.22 $ % DEC 7.3x 6.0x 13.3x - 12% A FRC Regional Banks $99.60 $84.56 $ $ % DEC 5.3x 4.5x - - 5% A- ICE Financial Exchanges & Data $70.89 $59.91 $76.30 $ % DEC 8.4x 7.6x 14.6x 13.4x 12% A SIVB Regional Banks $ $ $ $ % DEC 6.5x 4.6x % BBB Health Care 0.2% 5.0x 5.4x 14.8x 14.5x 13% ABMD Health Care Equipment $ $ $ $ % MAR 23.0x 10.5x 65.2x - 19% - CELG Biotechnology $78.68 $74.13 $ $ % DEC 3.8x 7.7x 8.2x - 12% BBB+ DHR Health Care Equipment $99.28 $78.97 $ $ % DEC 3.5x 3.0x 15.4x 14.5x 7% A Industrials 0.2% 1.0x 0.8x 8.5x 8.1x 11% DY Construction & Engineering $93.16 $73.95 $ $ % JAN 0.8x 0.8x 7.9x 6.7x 8% BB SNDR Trucking $29.48 $19.32 $30.35 $ % DEC 1.1x 0.9x 7.3x 6.3x - - WBC Construction Machinery & Heavy Trucks $ $ $ $ % DEC 1.6x 2.1x 9.6x 12.1x 20% - XPO Air Freight & Logistics $ $51.86 $ $ % DEC 0.7x 0.5x 9.6x 9.5x 5% B+ 1 Simple average for dividend yield, return on invested capital, credit rating. Harmonic average for price/sales, EV/EBITDA. EV = enterprise value EBITDA = earnings before interest, taxes, depreciation and amortization TTM = trailing twelve months Fiscal Year NTM Price NTM Price / TTM Return on Invested S&P Credit Rating Page 3 of 6

4 Dynamic Growth Statistics Symbol Sub-Industry Price Low High Per Share Yield End / Sales Sales EBITDA EBITDA Capital Information Technology 0.1% 8.6x 6.6x 22.3x 19.5x 14% EA Home Entertainment Software $ $99.63 $ $ % MAR 7.3x 4.9x 16.6x 12.6x 20% BBB FB Internet Software & Services $ $ $ $ % DEC 9.3x 11.9x 13.0x 17.9x - - NVDA Semiconductors $ $ $ $ % JAN 11.8x 5.9x 25.7x 17.0x 42% BBB- PFPT Systems Software $ $82.60 $ $ % DEC 8.0x 7.5x 51.0x 352.8x - - RHT Systems Software $ $86.26 $ $ % FEB 8.6x 6.2x 27.2x 20.4x 12% BBB CRM Application Software $ $83.55 $ $ % JAN 7.0x 6.2x 28.5x 29.2x 4% NR SQ Data Processing & Outsourced Services $58.25 $22.22 $58.90 $ % DEC 15.5x 8.0x 69.7x 66.1x -7% - V Data Processing & Outsourced Services $ $92.80 $ $ % SEP 13.7x 11.4x 18.8x 16.2x 19% A+ WEX Data Processing & Outsourced Services $ $ $ $ % DEC 5.1x 4.2x 14.7x 9.6x 5% BB- Materials 1.1% 2.8x 2.5x 14.6x 14.3x 11% ECL Specialty Chemicals $ $ $ $ % DEC 2.8x 2.5x 14.6x 14.3x 11% A- Real Estate 0.0% 9.7x 8.9x 21.0x 20.1x 1% SBAC Specialized REITs $ $ $ $ % DEC 9.7x 8.9x 21.0x 20.1x 1% BB- Telecommunications 0.0% 3.2x 3.7x 10.3x 11.0x 1% ZAYO Alternative Carriers $34.80 $29.73 $37.95 $ % JUN 3.2x 3.7x 10.3x 11.0x 1% - Dynamic Growth List 1 0.3% 2.8x 2.5x 13.5x 13.6x 12% BBB+ S&P 500 $2,705 $2,404 $2,873 $ % 2.0x 1.8x 11.1x 10.3x 8% 1 Simple average for dividend yield, return on invested capital, credit rating. Harmonic average for price/sales, EV/EBITDA. EV = enterprise value EBITDA = earnings before interest, taxes, depreciation and amortization TTM = trailing twelve months Fiscal Year NTM Price NTM Price / TTM Return on Invested S&P Credit Rating Page 4 of 6

5 IMPORTANT DISCLOSURES Disclosure information... For important disclosure information, please contact: Wells Fargo Advisors Attn: Advisory Services (Disclosure Information) One North Jefferson, St. Louis, MO Or call phone (888) Please remember to specify the issuer(s) with respect to which you would like to receive disclosure information. ANALYST CERTIFICATION: The Analyst who prepared this report hereby certifies that the views expressed in this report accurately reflect his/her personal views about the subject companies and their securities. The Analyst also certifies that he/she has not been, is not, and will not be receiving direct or indirect compensation for expressing the specific recommendation(s) or view(s) in this report. Disclaimers Prices and estimates are as of May 31, 2018 unless indicated otherwise. You should be aware that investments can fluctuate in price, value and/or income, and you may get back less than you invested. We recommend that existing shareholders consider their objectives, their risk tolerance, and the size of their positions relative to their portfolios when evaluating their holdings. Equity investments are subject to market risk which means their value may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Investments in equity securities are generally more volatile than other types of securities. Growth stocks tend to fluctuate more than the overall market and growth may not be realized. The growth style of investing tends to shift in and out of favor. The prices of small and mid-cap company stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions. Investments in the energy sector are subject to the adverse economic events within that industry. A downturn in the energy sector of the economy, adverse political, legislative or regulatory developments or other events could have a large impact on a portfolio s investments in this sector. There are special risks associated with an investment in real estate, including the possible illiquidity of the underlying properties, credit risk, interest rate fluctuations and the impact of varied economic conditions. Technology and Internet-related stocks, especially of smaller, less-seasoned companies, tend to be more volatile than the overall market. s can be increased, decreased or totally eliminated at any point without notice. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group, among other factors. It is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the largecap universe. An index is not managed and is unavailable for direct investment. Ratings of Baa3/BBB- (S&P & Fitch/Moody s), or higher are considered investment grade. Ratings of Ba1/BB+ (S&P & Fitch/Moody s), or lower are considered high yield (also known as junk bonds). EV/EBITDA is Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization. Page 5 of 6

6 Earnings per share (EPS) is the portion of a company s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company s profitability. Price to earnings ratio (PE ratio) is a valuation ratio of company s current share price compared to its per-share earnings. PE = market value per share/eps. Wells Fargo Advisors publishes several theme-based lists of recommended equity securities. Each list is based on a specific investment objective and time horizon which may be different from the other lists. This may cause Wells Fargo Advisors to recommend an equity security to be added to one list and removed from another list. Thus, one list may contain different recommendations or conclusions that could result in short-term price movements contrary to the recommendations in another list. Wells Fargo Advisors research analysts receive no compensation in connection with the firm s investment banking, sales and trading, or principal trading revenues. Analysts may be eligible for annual bonus compensation based on the overall profitability of the firm, which takes into account revenues derived from all the firm s business activities, including its investment banking business, sales and trading, and principal trading. The Advisory Services Group (ASG) of Wells Fargo Advisors works with information received from various resources including, but not limited to, research from affiliated and unaffiliated research correspondents as well as other sources. ASG does not assign ratings to or project target prices for any of the securities mentioned in this report. ASG receives research from affiliated and unaffiliated correspondent research providers with which Wells Fargo Advisors has an agreement to obtain research reports. Each correspondent research report reflects the different assumptions, opinions, and the methods of the analysts who prepare them. Any opinions, prices or estimates contained in this report is as of the date of this publication and is subject to change without notice. Additional information available upon request. Past performance is not a guide to future performance. The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or investment product. Opinions and estimates are as of a certain date and subject to change without notice. Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company Wells Fargo Clearing Services, LLC. All rights reserved. Page 6 of 6