Today’s note includes earnings updates on 12 companies, the podcast and the Catalyst Report. We publish the Catalyst Report on the Friday after each monthly issue of the Cabot Turnaround Letter. There were no changes to any of our ratings this week.
We encourage you to take a look at the Catalyst Report – it is popular among many of our subscribers and unique on Wall Street. This report lists all of the companies that had a major catalyst in the past month, including CEO changes, new activist involvement, emergence from bankruptcy, major acquisitions, and others. If for no other reason, it’s an interesting list of what is going on in the market from a company-level perspective, rather than a stock-price performance perspective like most of the media.
For stock picking, the names provide a shopping list, of sorts. For names that have out-of-favor stocks, they can point to interesting turnaround candidates, which we highlight with a * on the report. Often enough, some of these names become Buy recommendations for the Cabot Turnaround Letter.
Today’s note includes an update on 12 companies that reported earnings, including Albertsons (ACI), Altria (MO), Credit Suisse (CS), Dril-Quip (DRQ), General Electric (GE), Lamb Weston (LW), Mattel (MAT), Molson Coors (TAP), Newell Brands (NWL), Nokia (NOK), Royal Dutch Shell (RDS.B) and Xerox Holdings (XRX).
Next week, ten companies report earnings, including Berkshire Hathaway (BRK.B), Ironwood Pharmaceuticals (IRWD), General Motors (GM), Kraft Heinz (KHC), Vistra (VST), Adient (ADNT), Oaktree Specialty Lending (OCSL), Conduent (CNDT), Gannett (GCI) and GCP Applied Technologies (GCP).
Earnings updates:
Albertsons Companies (ACI) – After years of acquisitions, divestitures and other deals, this grocery company looked like a jumble of siloed and poorly managed entities with minimal integration. Following its recent IPO, Albertsons is boosting its margins, reducing its debt and clarifying its pension obligations. The new CEO looks capable, and the pandemic is providing a helpful tailwind.
Fiscal first-quarter results were encouraging. Identical store sales fell 10% but this was reasonable given the pandemic surge from a year ago. Identical store sales were 17% higher than the pre-pandemic period two years ago, which is clearly positive. The company has been able to capitalize on the pandemic as well as gain market share. Total sales were about 4% above the consensus estimate. The Delta variant will likely prolong the grocery store boomlet.
Adjusted earnings of $0.89/share fell 34% from a year ago, as lower sales fell to the bottom line due to Albertson’s high fixed-cost structure. Compared to $0.30 in earnings two years ago, Albertson’s is showing healthy improvements. Similarly, while Adjusted EBITDA of $1.3 billion fell 23% from a year ago, it was 49% above the two-year-ago result. The pandemic tailwind and various efficiency, merchandising and digital programs are all contributing to the improvements, which are driving profit margins higher.
Albertsons raised its full-year revenue guidance by about 1% and its adjusted EBITDA guidance by about 5%. The balance sheet is improving, as net debt fell by $410 million, or about 6%, in the quarter, as cash accumulated. Federal government programs to aid union pension plans is helping reduce the pension overhang risk for Albertsons and thus boosting the firm’s value to shareholders.
Altria Group (MO) – Altria is the domestic seller of Marlboro cigarettes which hold a 43% market share (non-U.S. operations were separated years ago into Philip Morris International). The company has struggled with declining cigarette volumes, slow development of non-combustible products and its disastrous $12.8 billion JUUL investment. Other issues: possible new regulations on menthol cigarettes and nicotine content, an IQUS patent lawsuit, and the market’s focus on ESG-favored companies. However, Altria’s resilience is underestimated by investors. Smokable volume declines have flattened while price increases buoy revenues. Led by a new CEO, the company is also developing promising new non-combustible products, and Altria generates and returns to shareholders considerable free cash flow, such that the high dividend yield appears secure.
Second-quarter results were mildly encouraging. Revenue net of excise taxes rose 11% from a year ago and was about 5% higher than the consensus estimate. With Altria, revenues are a proxy for relevance, as the company fights to produce value for shareholders while the cigarette industry is in a slow secular decline. Industry stick volumes fell 5% - faster than we would like to see but slower than investors expected. Altria’s stick volume fell by a slightly lower 4.5%. Marlboro continued its incremental market share gains, although we anticipate there will be some quarters where it loses share.
Adjusted earnings of $1.23/share rose 13% from a year ago and was about 5% higher than the consensus estimate. Altria raised the low end of its earnings guidance, a minor tailwind that nevertheless helps support our view on the company’s profit trajectory. The company’s cash flow and balance sheet remain sturdy.
A key part of our thesis is that pricing power will keep revenues at least steady. In the quarter, higher prices plus channel refill allowed cigarette segment revenues to grow at an 11% pace. Overall, the cigarette volume and pricing story is holding up. Oral tobacco product revenues grew 5.1% and profits grew 3.5%.
Altria has stopped the expansion of its IQOS and Marlboro HeatSticks products following a ruling in a patent case at the International Trade Commission. These promising products may have infringed upon a patent. If the order is not reversed by the U.S. Trade Representative, Altria would be unable to import the IQOS product or would have to pay a higher royalty rate.
Credit Suisse (CS) – This Swiss bank is shifting its strategy to more stable Switzerland banking and global investment management and away from weak/volatile trading and investment banking to help it recover from the decade-ago financial crisis. The bank is struggling with chronic bad decision-making and a loose risk-control culture that could threaten its existence if not aggressively addressed. We have high hopes for major changes under the new board chairman.
The bank reported a mixed quarter as its new chairman is starting to reign in the loose risk-taking culture while building the wealth management business. We remain on board with Credit Suisse shares, especially as they trade at a very low 0.60x tangible book value.
Total revenues fell 18% from a year ago, mostly because of a 44% decline in investment banking revenues. The more stable wealth management businesses had a 2% increase. These generate revenues largely based on assets prices and assets under management, which in most markets are fairly stable. They are “sticky” and recurring – only through client neglect will they depart. They don’t require constant activity to replenish, unlike investment banking and trading revenues which require daily efforts to generate. Wealth management is the future of Credit Suisse, which it appears that the bank is starting to realize. In the quarter, 71% of total revenues came from wealth management.
Income before taxes fell 48% but would have been CHF500 million higher without the Archegos and other losses in the quarter. Wealth management adjusted pre-tax income was CHF1.1 billion, up 6.5% from a year ago. These businesses generated about 65% of the bank’s total pre-tax income. Investment banking pre-tax income fell 39% from a year ago.
The return on tangible equity was 2.6%. This is perhaps a quarter to a sixth of what the bank should be earning.
Credit Suisse seems to be more aggressively addressing its problems and saying so more forthrightly in the release. Also, the bank is investing in basic tech infrastructure to bring its capabilities up to par with peers. The bank is shrinking its risk-bearing assets (down 5% already), tightening its risk approach and reducing leverage. All of these steps are necessary yet will crimp the investment banking profits. We’re fine with that, as CS has limited edge compared to sharper American and European rivals. Lower risk will boost its valuation multiple from the remarkably low .60x price/tangible book value per share.
The bank’s capital looks solid with a 13.7% CET1 ratio, providing shareholders with a buffer from other potential debacles.
Dril-Quip (DRQ) – A major supplier of subsea equipment, Dril-Quip is struggling with the downturn in offshore oil and natural gas drilling. It generates positive free cash flow and has a sizeable cash balance yet no debt, all of which should allow it to endure until industry conditions improve.
Dril-Quip’s report was a mild disappointment. Revenues fell 11% and were 8% below consensus estimates. Adjusted earnings of $(0.53)/share was weaker than the $(0.34) loss a year ago and compared unfavorably to the $(0.09) consensus estimate. Overall, it was a relatively quiet quarter. Dril-Quip said it was on track to meet its full-year financial and operational targets.
The recovery in offshore oil and natural gas drilling is not here yet. New orders of $50 million appears to be a floor level, and the company was optimistic about more orders later in the year and in the next 2-3 years. Dril-Quip continues to pursue a wide range of avenues for rebuilding its revenues, including collaborations, new products and other initiatives as it waits for an eventual recovery. The company generated $8 million in incremental cash to add to its debt-free balance sheet.
General Electric (GE) – Led by impressive new CEO Lawrence Culp, GE finally appears to be righting its otherwise severely damaged business. Key priorities include a primary focus on the Industrial businesses (and an exit from the financial businesses), much better execution and a strategic emphasis on cash flow and debt reduction. To help achieve its goals, GE is decentralizing its operations, pushing more responsibility and accountability down to each business line.
GE’s second-quarter results were encouraging, although the comparisons were against a very weak period a year ago and the company still has an enormous amount of work remaining with its turnaround. Industrial organic revenues grew 7%, with total organic orders increasing 30%. Total revenues were slightly higher than the consensus estimate. Adjusted earnings per share of $0.05 compared to a $(0.14) loss a year ago and were better than the $0.03 consensus estimate. The company raised its full-year Industrial free cash flow guidance by $500 million, to a range of $3.5-5.0 billion. Several major division heads retired and were replaced by capable new leaders.
Adjusted Industrial segment profits were $934 million, which compared to a large loss a year ago – this is GE’s core business, and it is encouraging to see a return to profitability. YTD, the profits were $1.8 billion.
Revenues and orders were much improved across all of GE’s Industrial segments, including the Aviation segment which is participating in the airliner travel recovery.
Industrial free cash flow, a critical measure of GE’s progress, was an outflow of $2 billion. However, the company had previously sold many of its receivables (a bad practice that now has been discontinued) which siphoned away cash that otherwise would now be inflowing. Adjusted for this, Industrial free cash flow would have been about $388 million.
The Industrial balance sheet is solid, with $15.6 billion in cash mostly offsetting $18.8 billion in debt. GE Capital has about $45 billion in debt and the company continues to whittle away at obligations. The sale of GE’s aircraft leasing operations to AerCap has received needed approvals and should close in the fourth quarter, further shrinking GE Capital.
As a reminder, GE’s 1:8 reverse stock split will be effective on August 2.
Lamb Weston Holdings (LW) – As the largest producer of frozen potato products (mainly French fries) in North America, Lamb-Weston’s revenues fell sharply when restaurants closed during the pandemic. We believe “Lamb” is a sturdy company, conservatively financed, with a strong market position among fast food restaurants (McDonald’s is a 10% customer, for example) and other food service venues. LW shares remain undervalued. Once the sales-reducing effects of the pandemic are in the past, we believe the market will more fully recognize the company’s value.
Fourth-quarter results were strong, but the company gave a disappointing near-term outlook so the shares fell 14% on the news. We remain firm in our conviction of Lamb’s value, but we will unfortunately have to wait to fully realize it. For investors that don’t hold LW shares, this is a good chance to buy.
Revenues of $1.0 billion rose 19% from a year ago and were slightly higher than the consensus estimate. Earnings per share of $0.47 compared to a $(0.01) loss a year ago and were a cent above the consensus estimate. Adjusted EBITDA of $166 rose 112% from a year ago but fell slightly shy of the consensus estimate.
Volumes rose 13% and price/mix improved by 6%, producing the 19% sales growth. This year, the fourth quarter had one fewer week than a year ago, so on a comparable-week basis sales grew 28%.
Remarkably, full-year revenues for the just-completed fiscal year were only 3% lower than the prior year, while Adjusted EBITDA fell only 6%. Lamb’s business is clearly resilient, as one would expect from a company that sells French fries.
The company expects that demand (thus, revenues) will fully recover by the end of the calendar year, such that it guided FY2022 revenues to be up by perhaps 5-7%. Favorable pricing and volumes will likely contribute.
However, rising input, transportation and labor costs, along with a shortage of labor and costs related to investing in its operations, will weigh on first-half FY2022 earnings. Lamb said it would be able to eventually offset these issues with price increases and operating changes.
Free cash flow was healthy but will be strained over the next two years from construction of a $250 million facility in China and a $415 million facility in Idaho. Total capital spending in FY2022 will be about $675 million, compared to a $170 million normal spending rate. Lamb’s balance sheet remains sturdy, with $784 million in cash partly offsetting $2.7 billion in debt.
Mattel (MAT) – At our initial recommendation in 2015, Mattel was struggling with its failure to adjust to the realities of how young children spent their playtime. This failure had produced years of revenue decay. In addition, its cost structure became bloated, and its debt levels increased. However, led by its new CEO, Mattel now appears to be finding its way.
Mattel’s quarter was impressively strong, continuing its turnaround. Revenues grew 40% (against a pandemic-weakened period a year ago) and were about 17% higher than the consensus estimate. Adjusted earnings per share of $0.03 compared to a $(0.26) loss a year ago and was much better than expectations for a $(0.09) loss.
Management raised its full-year revenue and EBITDA guidance and guided for more strength over the next two years.
Demand was strong in all of Mattel’s segments and geographies. In perhaps an encouraging note for society, the company said that the Child Tax Credit may be contributing to the strength (we can’t think of a better way for parents to spend this money than on their children). The gross margin and operating margin improved. EBITDA and cash flow were strong. Net debt is declining slowly.
Mattel’s media and intellectual property development are making progress. The Barbie movie is on track for a 2023 release, with an animated special starting on Netflix in September, a Poly-Pocket movie through MGM under development, and new action figure-related movies (that should pull through sales of Mattel’s action figures) starting in the fall.
The turnaround clearly is making progress, and Mattel is arguably better-positioned strategically, operationally and financially than at any time in the past decade, or longer. Mattel generates all of its free cash flow in the third and fourth quarters, so their positive outlook for the rest of the year (and beyond) is encouraging. Strategically, the next step is for Mattel to pay down more of its debt, return to investment grade status, and begin repurchasing shares and/or paying a dividend.
Mattel’s shares have a long way to go to reach our 38 target price (our recommendation was too early) but we remain confident in its ability to earn its way there.
Molson Coors Beverage Company (TAP) – Molson Coors is struggling with weak growth yet is working under a new CEO to more aggressively develop specialty/higher-end beverages and reduce its reliance on mainstream and value offerings. Also, the company is increasingly focusing on its cost structure. Molson Coors continues to trade at a discount to its peers and its fundamental prospects.
The company’s second quarter was encouraging. Revenues rose 17%, or +14% excluding currency tailwinds. Sales in Europe in local currencies surged 52% compared to the dry year-ago period, as the economies there reopened, with volumes, pricing and mix all contributing to the increase. Sales in the North America segment, in local currencies, rose 8%, helped by a recovery in Latin America. Revenues were about 4% ahead of the consensus estimate.
Adjusted net income of $1.58/share rose 2% from a year ago and was 18% above the consensus estimate. Adjusted EBITDA fell 1.3% ex-currency effects. Profit growth lagged revenue growth as Molson spent much more on marketing this year compared to the belt tightening a year ago during the pandemic, and as inflation rose in its transportation, brewery and packaging materials costs. Also, a year ago, the company won a tax dispute, distorting the comparison with this year.
Beating the revenue and earnings estimates is important as it supports our view that investors don’t fully appreciate the resiliency in Molson’s business. The company reaffirmed its 2021 full-year guidance.
The adjusted earnings exclude a huge $102 million gain from hedges that the company has on various input costs. These hedges remain in place, and as they are closed out Molson will include those gains in their core profit numbers. This complicated the accounting, but the economic effect is clear – Molson’s actual all-in costs aren’t quite as high as they appear thanks to the hedges.
Molson’s debt balance is unchanged from year end, but cash is starting to accumulate. After quarter end, the company repaid $1 billion in debt upon its maturity. The company continues to generate good free cash flow and will restart its quarterly dividend at $0.34/share as disclosed a few weeks ago.
The company is paring as many as 100 smaller and/or low-potential products, many of which are in the economy segment, from its roster. This should boost profits. Also, its Topo Chico Hard Seltzer, Vizzy Hard Lemonade and ZOA products, which are new, are selling exceptionally well.
Newell Brands (NWL) – The company has struggled, literally for decades, with weak strategic direction and expense control, epitomized by its over-reaching $16 billion acquisition of Jarden in 2016. Pressured by activist investors last year, and now led by a capable new CEO, Newell appears to be finally fixing its problems, yet the shares remain significantly undervalued relative to their post-turnaround potential.
Newell reported a strong second quarter. Third-quarter earnings guidance was 12% below the consensus estimate, so investors will pressure the shares today.
Revenues grew 28% from a year ago and were about 6% above the consensus estimate. Sales were strong across all five segments, particularly in Learning & Development (writing and baby products) which is the largest and most profitable segment.
Normalized earnings of $0.56/share rose 87% from a year ago and were 24% above the consensus estimate. Newell’s EBITDA margin of 15.6% was encouraging.
The company raised its full-year revenue guidance by 2-3 percentage points but kept its earnings guidance unchanged. Rising raw materials and transportation costs will continue to weigh on profits. Newell is a huge consumer of plastics and metals, which have risen sharply in costs.
We’d like to see more cash production, as there was essentially none produced year to date, and free cash flow after dividends is negative. This is somewhat understandable given the company’s seasonal business (back to school and holidays), and Newell reiterated its full-year guidance for $1 billion in operating cash flow, but even at this rate the company’s surplus free cash flow (which we define as FCF less dividends) would be only about $100 million. Newell needs to convert more of its profits into cash at the end of the day. Still, we like the progress on revenues and margins.
The balance sheet is improved from a year ago, with 13% less net debt. Newell’s leverage is still a bit too high, at 3.1x trailing EBITDA. As profits rise, the leverage multiple will continue to come down, ideally to somewhere around 2.5x in our view.
Nokia (NOK) – Initially recommended in 2015, Nokia has struggled for years to regain its competitiveness. It appears that the new CEO, Peter Lundmark (March 2020), is capable of finally getting the company back into the game, particularly with the critical change-over to 5G over the next few years.
Even though it pre-announced results a few weeks ago, Nokia’s report was encouraging. Revenues of €5.3 billion rose 9% from a year ago (ex-currency) and was about 2% higher than the recently raised consensus estimate. Earnings of €0.09/share rose 50% from a year ago and were more than double the consensus estimate. The company raised its full-year revenue guidance to over €22 billion and raised its operating margin guidance by 2-3 percentage points. Its general guidance for 2023 (two years out) was also encouraging.
All four segments showed good revenue and profit improvements. Nokia’s turnaround is moving in the right direction. The underlying 5G technology is winning back customers and the network equipment and cloud segments are improving their relevancy and profits. Interestingly, Nokia is making inroads into the automotive segment with its two new licensing agreements.
Nokia generated positive free cash flow (€77 million) for the fifth straight quarter – an important accomplishment given its cash drains in prior years. The cash balance net of debt remained at a healthy €3.7 billion.
Royal Dutch Shell (RDS/B) – Shell has been on the recommended list for a long time (January 2015), so we are circumspect about its continued presence there. The company is well-managed and has navigated the weak oil/natural gas environment better than its peers, but its upside (and downside) is tied to unpredictable energy prices. The recently raised dividend now appears secure, to the extent that commodity prices remain stable, under its new policy.
Shell’s second-quarter results were mildly encouraging. As a reminder, earnings were reported on a constant cost basis, which removes inventory gains and losses from changes in commodity prices during any given period.
Shell’s profits are recovering as oil and natural gas prices rebound. Adjusted net income of $0.71/share was sharply higher than the $0.08 in earnings a year ago in the depths of the energy price downturn. Earnings were about 11% above the consensus estimate. Most of the jump in profits came from the Upstream segment, where this quarter’s $2.5 billion in earnings were a complete reversal from the $(1.5) billion loss a year ago.
Similarly, adjusted EBITDA of $13.5 billion rose 59% from a year ago. Prior-quarter comparisons are helpful as the energy business tends to have low seasonality, so Shell’s 18% increase in adjusted EBITDA from the first quarter was encouraging. Free cash flow of $9.7 billion was well-above $243 million a year ago and helped convince us that Shell can recover and continue to return cash to investors. We hope they will continue to remain restrained in their capital spending, as we are not convinced that its aggressive move toward alternative energy will be shareholder-friendly even if it may be environmentally friendly.
Overall energy production fell about 4% from a year ago, mostly due to lower natural gas production. Oil refining profits slid sharply but were partly offset by higher profits in its downstream marketing operations. Chemicals profits doubled from weak results a year ago.
As the company has reached its debt reduction target, it raised its quarterly dividend by 38%, to $0.48/ADR, such that the shares now yield about 4.8%. Also, Shell will repurchase $2 billion in shares by year end. Management is targeting a 4% annual increase in its dividend – a noble goal but one that will be dictated by commodity prices. We like the step-up in dividends and share buybacks, partly because it puts more cash in our pockets and partly because it keeps management from wasting it on ill-conceived projects.
Xerox Holdings (XRX) – While the near-term outlook remains clouded, as office workers remain in partial work-from-home mode, we believe the company’s revenue and cash flow will recover. Investors underestimate Xerox’s value due to its zero-growth prospects, but the company’s hefty free cash flow has considerable value. The balance sheet is strong, new and capable leadership is working to drive shareholder value higher, and its generous dividend looks reliable.
Second-quarter results were encouraging. Sales rose 18% from a year ago (adjusted for the strong dollar), suggesting that demand is recovering from the pandemic lows, particularly for desktop and office machines. Some of the incremental demand is by retailers restocking in advance of the back-to-school season, a source of confidence in printing’s future. Adjusted earnings of $0.47/share was sharply higher than the $0.18 a year ago and was about 25% higher than the consensus estimate. Xerox maintained its revenue (at least $7.2 billion) and free cash flow (at least $500 million) guidance for the full year.
Strategically, Xerox continues to emphasize generating free cash flow and returning at least half to shareholders. Based on a steady-state $700 million/year FCF and $200 million/year in dividends (reachable in 2023), the company could repurchase $150 million in shares each year. This 3% share count reduction plus the 4% dividend yield produces an annual 7% return to shareholders even if the stock price stays unchanged. Combined with the undervalued shares and the new management’s efforts to build the value of the company, the stock remains highly attractive.
As workers gradually return to offices, Xerox is selling more machines and supplies. Pages printed, an important metric for machine utilization (and therefore relevance), increased slightly from the first quarter, and should continue to recover. Gross margins fell due to higher freight and delivery costs, and some components had limited availability which disrupted production – Xerox is working to mitigate these short-term problems. We will be watching the scale of a permanent hybrid-work world as this could trim demand for in-office equipment but possibly boost demand for at-home equipment.
Operating margins increased as much of Xerox’s cost base is fixed, combined with benefits from efficiency programs, helping bring more of the revenue increase to the bottom line.
Xerox is expanding its financial services business (XFS) to non-Xerox customers. This has some interesting growth potential, but ultimately, we would like to see this business sold in its entirety to a third party – greatly reducing the credit risk to Xerox shareholders yet also uncovering hidden value as the business is worth a lot more to a specialized finance firm than it is to Xerox. Our model has a book value for XFS of about $500 million, but it could be worth $800 million to an outside buyer, as-is. The $300 million incremental value over book value is about $2 per Xerox share, or 8% of the current share price. The company is also expanding its venture-capital-like investing which may or may not have meaningful profit potential.
The company’s balance sheet remains sturdy, with cash exceeding corporate debt by $1 billion.
Ratings changes:
None.
Friday, July 30, 2021 Subscribers-Only Podcast
Covering recent news and analysis for our portfolio companies and other topics relevant to value investors.
Today’s podcast is about 16 minutes and covers:
- Brief updates on:
- Earnings reports
- Final note:
- This past week we published the August edition of the Cabot Turnaround Letter, where we looked at five interesting post-SPAC companies, seven potential turnarounds at companies whose shares have been about flat or down over the past five years, and discuss our feature recommendation, Walgreens Boots Alliance.
Please join us for the 9th Annual Smarter Investing, Greater Profits Conference, held online again this year, on August 17-19, that’s Tuesday – Thursday. You can see presentations by all of our analysts, which will include updates on their areas of expertise and discussions of their best picks.
Please feel free to share your ideas and suggestions for the podcast with an email to either me at bruce@cabotwealth.com or to our friendly customer support team at support@cabotwealth.com. Due to the time limit we may not be able to cover every topic each week, but we will work to cover as much as possible or respond by email.
Catalyst Report
With 13 catalysts, July had fewer catalysts than any month in recent memory. In a typical month, we would see perhaps 50-60 catalyst events. Perhaps it was the macro headwinds, or higher regulatory scrutiny, or perhaps valuations are too high across the board. We expect to see a rebound in the next few months.
The Catalyst Report is a proprietary monthly report that is unique on Wall Street. It is an extensive listing of companies that have experienced a recent strategic event, such as new leadership, a spin-off transaction, interest from an activist investor, emergence from bankruptcy, and others. An effective catalyst can jump-start a struggling company toward a more prosperous future.
This list is intended to be comprehensive. While not all catalysts are meaningful, some can bring much-needed positive changes to out-of-favor companies.
One highly effective way to use this tool is to pair the names with weak stocks. Combining these two traits can generate a short list of high-potential turnaround investment candidates. The spreadsheet indicates these companies with an asterisk (*), some of which are highlighted below. Market caps reflect current market prices.
You can access our Catalyst Report here.
The following catalyst-driven stocks look interesting:
Scholastic Corporation (SCHL) $1.2 billion market cap– This 100-year-old company will have only its third CEO starting on August 1st. The former CEO, who passed away in June, was the son of the founder. Incoming chief Peter Warwick, 69, previously was an independent director. Warwick brings considerable media and publishing experience. The stock is out of favor, but will change come quickly, or will it be more of the same?
Codorus Valley Bancorp (CVLY) $212 million market cap – This small banking company in York, Pennsylvania, is being pushed to sell by Driver Management. Driver is an activist investor that focuses on small banks. As the bank currently sells at 1.1x tangible book value per share, Driver could be successful once again.
Disclosure: The chief analyst of the Cabot Turnaround Letter personally holds shares of every Rated recommendation. The chief analyst may purchase securities discussed in the “Purchase Recommendation” section or sell securities discussed in the “Sell Recommendation” section but not before the fourth day after the recommendation has been emailed to subscribers. However, the chief analyst may purchase or sell securities mentioned in other parts of the Cabot Turnaround Letter at any time.