November 5, 2025

A Rocky Start to November

After beautifully navigating the historically troubling months of September and October, stocks are off to a dicey start this month.

While the S&P managed to close slightly higher on Monday, most stocks had a rotten day. The index was propelled by technology while 400 of the 500 stocks moved lower on the day. On Tuesday, technology sold off and almost all sectors were lower. Is this a hiccup or a harbinger?

There seems to be increasing artificial intelligence bubble talk among Wall Street types. One prominent hedge fund manager is reportedly shorting AI darlings Nvidia (NVDA) and Palantir Technologies (PLTR). It’s a reversal as earnings had so far seemed to reaffirm strong AI demand. The report seems to have prompted more words of caution from the groupthink crowd.

The indexes are near the high after having trended higher for many months with little interruption. There is an overdue feeling out there, like playing musical chairs when the music has been playing too long. The Fed has also been wobbling, saying another rate cut this year is “not a foregone conclusion.” At the same time, earnings have been good. More than half of the S&P 500 companies have reported, with average growth of 10.7%. Solid earnings usually buoy the market.

Stocks may indeed overcome the recent negativity and continue trending higher, as they have so often done in the past six months. But this market is being tested. We’ll see if it passes or fails that test in the days and weeks ahead. Stay tuned.

Meanwhile, eight portfolio companies have reported earnings over the past week with mixed results.

Recent Activity

October 8
Purchased CareTrust REIT, Inc. (CTRE) - $33.99
AbbVie (ABBV) – Rating change – “HOLD” to “BUY”

October 15
SOLD Half of Constellation Energy (CEG) - $403.95

November 5
Cheniere Energy Partners, L.P. (CQP) – Rating change “BUY” to “HOLD”
Cheniere Energy, Inc. (LNG) – Rating change “BUY” to “HOLD”
Waste Management, Inc. (WM) – Rating change “BUY” to “HOLD”

High Yield Tier

AGNC Investment Corporation (AGNC – yield 14.3%) – The mortgage REIT reported solid third-quarter earnings last month. Book value per share increased 6% for the quarter, the best in two years. Spreads were still narrower than a year earlier, but the Fed rate cuts will likely help in future quarters. The REIT fell slightly after the report and is now below the 10 per share level. AGNC had a rough few years during inflation and rising rates. But this Fed rate-cutting cycle should get the price moving higher. Lower short-term rates will lower costs for AGNC and raise profit margins. Lower rates will also have a positive effect on net asset value (NAV), which tends to dictate the stock price. HOLD

Rating change – “BUY” to “HOLD”

Cheniere Energy Partners, L.P. (CQP – yield 6.3%) Earnings – The operator of the largest LNG export facility in the country reported earnings last week that beat expectations but managed to disappoint the market. The price has dropped 4.7% since the report by midday on Monday. The business has been slowing in terms of demand and pricing. After growing earnings by an average of 20% over the last five years, earnings are expected to be flat next year. The short-term struggles are despite a positive longer-term prognosis for the business, as global demand for American LNG is expected to grow sharply. But the time frame for that being realized is uncertain. CQP will be downgraded to a “HOLD” rating unless and until the price regains upside traction. (This security generates a K1 form at tax time.) HOLD

Enterprise Product Partners (EPD – yield 7.1%) Earnings – The midstream energy partnership reported earnings last week that were a little lighter than expected because of a series of temporary issues. EPD is down just a little bit since the report. Despite the lighter results, cash flow was still strong with 1.5 times distribution coverage, and the partnership raised the payout by 3.8%. Enterprise is about to turn the corner from a period of heavy spending to one of rising cash flow as $6 billion in new projects come online in the quarters ahead. In addition, the trade deal with Europe should ensure high NGL volumes for years to come. EPD is a great buy while it’s still sleeping (with a big fat yield) ahead of likely better days. (This security generates a K1 form at tax time.) BUY

Main Street Capital Corporation (MAIN – yield 7.4%) – This BDC had a big drop at the beginning of the month as investors soured on asset managers as the market became more volatile. But it has had a solid rebound since and has still delivered impressive returns over the past couple of years. The rebound began when Main announced preliminary estimates for third-quarter earnings that were very positive, the BDC reports officially early next month. MAIN can be bouncy by nature. The recent downturn ended a multi-month uptrend. I’ll be watching it closely in the weeks ahead, but it looks like it is getting back on track. HOLD

The Williams Companies, Inc. (WMB – yield 3.4%) Earnings – This rock-solid midstream energy company reported stellar earnings again on Monday. Adjusted earnings per share grew 14% from last year’s quarter, and cash flow grew 16% with an impressive 2.37 times dividend coverage. Williams also raised guidance for the full year. The business is steady with growing volumes, and new projects are coming online to ensure continued earnings growth. Yet, WMB is lagging the S&P with a 10% YTD return. It’s been that kind of year for midstream energy companies, but the future looks great, and the dividend is solid. BUY

Dividend Growth Tier

AbbVie (ABBV – yield 3.3%) Earnings – The pharma giant reported earnings that slightly disappointed the market, and the price fell over 4% on Friday. ABBV is now down nearly 12% from the high made at the beginning of last month. But earnings beat expectations, and the main growth engines, Skyrizi and Rinvoq, delivered stellar results. Skyrizi increased revenue 49% and Rinvoq grew 35% from last year’s quarter, with revenue of $4.7 billion and $2.2 billion, respectively. Those two drugs best peak Humira revenue of around $5 billion a quarter. The problem was that other areas of the company, namely Humira revenues and aesthetics division revenues, were less than expected. Earnings were still a net positive, but the market demands perfection from a stock priced near the high. BUY

Ally Financial Inc. (ALLY – yield 3.1%) – The online banker reported strong earnings last month that soundly beat expectations, and the stock has rallied, although it has given some back over the past week. There had been concern about rising credit delinquencies generally and in the auto loan market specifically. Delinquencies are near a historic high in the auto market. But none of that applies to Ally. In fact, loan delinquencies at the company have declined since last year’s quarter. Business is solid, and Ally is navigating the market very well. It should be in good shape unless the economy has trouble. HOLD

Broadcom Inc. (AVGO – yield 0.7%) – The AI superstar stock pulled back a little from the high over the past week. But it still looks great. It’s still close to the high and has returned 57% YTD and 789% since being added to the portfolio in January of 2021. The stock doesn’t seem to want to give up the recent gains because they are solidly based on soaring revenue projections. This earnings season should have a big impact on the near-term direction of the price, and so far, AI demand looks strong. Broadcom reports earnings in about a month and could get a further boost from another stellar report. HOLD

Rating change – “BUY” to “HOLD”

Cheniere Energy, Inc. (LNG – yield 0.9%) Earnings – The country’s largest exporter of natural gas reported earnings last week that failed to impress. Cheniere reported earnings growth of 9.7% above last year’s quarter. But that is significantly below the average earnings growth of over 38% for the past five years. Margins also declined from 23.4% to 21.1% over the past year. Forecasts also call for continuing earnings pressure. But there are issues with that negative prognosis.

First, LNG is cheap. It sells at an 11.6 price/earnings ratio compared to 17 for the industry. The price also has a discounted cash flow (DCF) fair value of 465.14 per share versus a current price of 208 and a consensus analyst price target of 271.55. The price of natural gas is also a wild card that is hard to predict. And the rapid increase in demand for natural gas exports doesn’t seem to be factored in. However, LNG will be downgraded to a “HOLD” rating until the downtrend reverses and the stock demonstrates some upside traction. HOLD

Constellation Energy Corporation (CEG – yield 0.4%) – Half of the position in this red-hot and stylish nuclear energy provider was sold last month based on price alone. CEG had soared over 80% YTD, and the price probably got ahead of itself in the near term. The price is down 9% since the shares were sold. CEG typically pulls back after a big surge, but AI and the huge increase in demand for electricity are not going away, and Constellation is in one of the very best positions to benefit. The company announced huge deals with Microsoft (MSFT) and Meta (META), and management indicated that more deals were likely on the way. It’s well worth holding the other half of the position and perhaps buying half back on a conspicuous dip. HOLD

CareTrust REIT, Inc. (CTRE – yield 3.8%) – This latest portfolio addition health care REIT recovered from a swoon earlier this month and hit a 52-week high on Monday. Health care looks good after the tariff and pricing issues seem to be getting resolved in a positive manner. REITs should benefit because interest rates are more likely to trend lower over the rest of the year. I’m hoping this will be a solid holding with good relative performance in just about any kind of market. CTRE had a good week last week, and the REIT reports third-quarter earnings later this week. BUY

Eli Lilly and Company (LLY – yield 0.7%) Earnings – The pharma juggernaut reported another blow-out earnings quarter last week. The report crushed expectations with 54% revenue growth and 120% earnings growth over last year’s quarter. The main driver was weight-loss drug Tirzepatide (which includes the two drugs known as Zepbound and Mounjaro). Zepbound sales grew 185% from last year to $3.6 billion, and Mounjaro grew sales 109% to $6.5 billion. Together, the drugs did over $10 billion in one quarter. The world’s best-selling drug used to do $20 billion in a year. And there is still a runway for growth, especially considering Lilly has an oral weight-loss drug up for approval. LLY sells at a high valuation of 42 times earnings, but the growth is justifying the valuation. The price is up over 9% since the report and could be on its way to a new high, over 935. BUY

Fidelity National Financial, Inc. (FNF – yield 3.6%) – The title insurance company stock has pulled back this month amid housing market concerns. The housing world took another hit after a research firm had negative things to say about the state of the current market. The negative perception has become the accepted norm, and only earnings reports can turn things around. We’ll see the real state of things when homebuilders start reporting.

Fidelity should benefit from Fed rate cuts and, hopefully, a reduction in mortgage rates. Business is affected by the housing market as more home purchases result in more business. And the biggest impediment right now is high mortgage rates and housing affordability. It will likely be range-bound until there is some significant improvement in the mortgage rate/housing market situation. Perhaps the situation will improve because it can’t get much worse. BUY

McKesson Corporation (MCK – yield 0.4%) – The supply chain pharmaceutical powerhouse is really coming as advertised. It is an oligopoly in a business that grows all by itself because of the aging population. MCK has returned 47% YTD and 81% in the two years since being added to the portfolio while being only half as volatile as the overall market. It has been trending higher since management raised profit guidance and long-term growth targets on Investor Day last month. The forecasts provided more clarity and raised targets beyond what had been expected. McKesson reports on actual earnings this week. HOLD

Oracle Corporation (ORCL – yield 0.7%) – This newfound AI powerhouse has pulled back from the September high. It is likely consolidating after the remarkable one-day 36% surge after the earnings report. ORCL is down a whopping 27% from the high. But future revenue projections have exploded. Revenue for its AI-infused Cloud infrastructure service grew 77% over last year’s quarter to $18 billion. But the company said it anticipated that revenue to grow to $144 billion by 2030. The 700% revenue growth by the end of the decade is explosive. Soaring revenue is a very good reason for the price to soar, and I expect ORCL to regain upside traction before too long. HOLD

Toll Brothers, Inc. (TOL – yield 0.8%) – The homebuilder company stock isn’t out of the woods yet. TOL had mustered a sustained upside move from April until pulling back in early September. It had a big down move last month, and it wasn’t only because of the market. Research firm Evercore ISI downgraded the stock last week on concerns that weak homebuying demand continues, despite lower mortgage rates and a housing shortage. It was the first negative news for the housing market in a while, and the market took notice. But earnings reports from homebuilders will be more important. HOLD

Rating change – “BUY” to “HOLD”

Waste Management, Inc. (WM – yield 1.5%) – WM had been floundering all fall before reporting earnings last week that missed estimates, by a lot. Waste Management also lowered full-year guidance to the lower end of the range. The price fell 4% by midday on Tuesday. The selloff wasn’t bad considering the magnitude of the earnings miss, $1.49 versus an expected $2.08. The bright spot is that the core collections and disposal business is still killing it with record margins and 13.5% free cash flow growth. The problem was in the recycling business, as recycled commodity prices declined more sharply than expected. The rating will be reduced to “HOLD” until the downside trend reverses. HOLD

Safe Income Tier

American Electric Power Company, Inc. (AEP – yield 3.2%) Earnings – The newly added utility stock got a nice 4.6% one-day bump after reporting earnings last week. The earnings themselves were solid and workmanlike, with 9% YTD earnings growth and 9% revenue growth over the same period last year. What jazzed the market was the growth projections. The company announced a $72 billion capital investment plan over the next five years, which is a 33% increase over the last five-year plan. American projects growing peak loads to 65 GW from the current 37 GW. The growth from soaring electricity demand is coming to fruition, and this utility is benefiting. AEP should have strong growth in the years ahead to add to its already solid defensive qualities. BUY

NextEra Energy (NEE – yield 2.8%) Earnings – NextEra delivered solid earnings results last week with 7.4% revenue growth and 9.7% earnings growth over last year’s quarter. That’s solid and way above average for a utility. But the main event should be future growth as electricity demand continues to increase. NEE pulled back after the report but has still broken out to a new level above 75 per share, and I expect it to resume moving higher in the weeks ahead. Electricity demand is booming. NEE is undervalued. The nation’s largest electric utility has a lot going for it right now. And the future should be bright, as falling rates and opportunities for higher growth for the alternative energy segment should provide a great tailwind. BUY

USB Depository Shares (USB-PS – yield 5.9%) – Interest rates have remained peskily high this year. But fixed income got a boost as the Fed has started cutting the fed funds rate again. The trend for longer-term interest rates is more likely to be lower than higher in the months ahead. The high yield is safe, and the price could rally over the rest of the year, even though it has been bouncy of late. BUY

Vanguard Long-Term Corp. Bd. Index Fund (VCLT – yield 5.4%) – Ditto for VCLT. The long-term corporate bond ETF loves falling interest rates and hates rising ones. There will be more price pressure if rates continue to rise and vice versa. But the situation over the course of the year should be more positive than it has been. VCLT has already been moving higher in anticipation. BUY

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