Acuity Brands

Acuity Brands (NYSE: AYI) missed first-quarter (ending November) estimates by 8% on Jan. 9. The stock dropped 15% before rebounding on the buy recommendations of brokerage firms. Management noted a marked drop in orders from small customers in November, primarily from those skittish about the election. Labor shortages for some customers also hurt growth. CEO Vernon Nagle commented, “Demand softened in the back half of the quarter, particularly for smaller projects, apparently due to what many of our customers are telling us is election jitters and, to a much lesser degree, delays in certain larger projects.” Those delays, Nagle went on to say, were because of pronounced labor shortages that some contractors faced. Both of these issues should be transitory. I am giving the company a grace period for one quarter to resume its high double-digit growth. Newly lowered estimates for 11% earnings growth in 2017 and 20% in 2018 look conservative.

Air Transport Services Group

Air Transport Services Group (NSDQ: ATSG) acquired PEMCO World Air Services, Inc. (PEMCO), a privately held provider of heavy maintenance and repair for airplanes as well as passenger-to-freighter aircraft conversions. Air Transport’s strategy of converting old passenger planes to freight aircraft feeds the demand from companies like Amazon, which have been bombarded with higher volumes of packages for delivery. Although PEMCO does not convert the popular Boeing 767s to cargo planes, it does work with the 737 model. Air Transport and competitor Atlas Air have been scooping up as many old 767s as possible to convert to cargo planes for customers like Amazon. The ability to convert 737s opens up a new supply source for Air Transport. Management noted the deal will add to 2017 earnings. Without offering specific numbers, management said the amount was in line with the $16 to $17 million spent on joint ventures in China and Sweden.

Ambarella

Ambarella (NSDQ: AMBA) continues to trade lower thanks to its relationship with GoPro. First, Amabarella shares weakened after rumors circulated that sales of GoPro wearable cameras were disappointing this holiday season. Then, on Jan. 11, the stock fell on another rumor that GoPro was considering adding Qualcomm as a second supplier for its lower-end chips. My buy rating on Ambarella is based on the company diversifying its customer base away from GoPro, so I am not overly concerned about the rumors. Although GoPro accounted for 30% of revenue in the third quarter, that number will be lower for the entire year. Demand from GoPro is greatest in the third quarter, as the wearable device maker ramps up its holiday production. Nevertheless, I am keeping Ambarella on a tight leash to ensure I am not too early with my buy rating.

Charles River Labs

Charles River Labs (NYSE: CRL) has been strong ever since the rising demand for the company’s safety and assessment data services was confirmed. That demand has increased since the third quarter. While presenting at the J.P. Morgan healthcare conference last week, management noted the demand for this service, which represents almost half of revenue, had strengthened since the previous quarter. Based on its expectation that demand would increase further, brokerage firm Evercore ISI upgraded the stock to a buy. It is always a good sign when a stock pops while management is out on the road speaking with investors. Charles River should report earnings in the first week of February.

Criteo

Criteo (NSDQ: CRTO) has been creeping up lately as enthusiasm builds for the shift to digital ads delivered on mobile phones. An analyst at brokerage firm Cowen noted his proprietary Ad Survey shows the shift to digital ads, primarily video ads, is accelerating. Criteo’s price target was raised to $55 and is a primary beneficiary of the growing demand to deliver digital ads across laptops, PCs and mobile phones. Criteo will report its fourth-quarter earnings in early February.

PayPal

PayPal (NSDQ: PYPL), a stock for which we hold the Feb. 20 call with a strike of $41, has seen a flurry of positive news. It signed an agreement with Discover Financial Services that provides PayPal with access to Discover’s tokenization services, expanding PayPal’s reach at the point of sale. That will enable U.S. PayPal customers to pay with their Discover cards at all merchants that accept contactless Discover payments (users wave their card over a terminal to transmit payment data). PayPal also took a minority stake in Indian digital-payment company Freecharge, which operates similarly to PayPal’s person-to-person Venmo service in the U.S. but also allows consumers to pay for utility bills. The stock has enjoyed two new buy ratings from brokerage firms that share my enthusiasm for PayPal’s ability to capitalize on digital payments.