For our recommended stocks, earnings season starts next week, led off by Walgreens Boots Alliance (WBA) on Thursday, October 13 and Wells Fargo (WFC) on Friday, October 14. The following week Mattel (MAT) and Nokia (NOK) report earnings. The earnings deluge for our companies starts the following week on October 24.
Earnings season, of course, includes thousands of companies and we will be watching their reports and commentaries for updates on revenue and profit conditions across the economy. As we mentioned last week, there appears to be a massive inventory cycle underway across many industries, so we want to look through dire comments about demand, especially those in the semiconductor industry, to evaluate how much is truly a recession-like decline and how much is simply customers working down bloated inventories.
Ratings Change
Macy’s (M) – raising our rating from Hold to Buy, with a 20 price target. Investor worries about rising interest rates and a slowing economy are pushing the price of Macy’s shares down past what we would see as reasonable adjustments to the new reality. Macy’s is arguably a better company today than it was a year ago when we downgraded it.
Friday, October 7, 2022 Subscribers-Only Podcast:
Covering recent news and analysis for our portfolio companies and other topics relevant to value/contrarian investors.
Today’s podcast is about 7 minutes and covers:
- Comments on other recommended companies:
- Kaman (KAMN) – Still struggling with delays at Boeing.
- Shell plc (SHEL) – Third-quarter earnings will be hurt by narrowing refining margins and other disruptions from volatile energy prices.
- Macy’s (M) – Inventory is in good shape, especially compared to competitors.
- Elsewhere in the markets:
- Time for investors sitting on excess cash to nibble on overly discounted shares.
- Final Note
- Annual trip to shopping mall finds immense discounts but also a lot of unmerchantable goods.
Please know that I personally own shares of all Cabot Turnaround Letter recommended stocks, including the stocks mentioned in this note.
| Market Cap | Recommendation | Symbol | Rec. Issue | Price at Rec. | 10/6/22 | Current Yield | Rating and Price Target |
| Small cap | Gannett Company | GCI | Aug 2017 | 9.22 | 1.52 | - | Buy (9) |
| Small cap | Duluth Holdings | DLTH | Feb 2020 | 8.68 | 7.39 | - | Buy (20) |
| Small cap | Dril-Quip | DRQ | May 2021 | 28.28 | 22.00 | - | Buy (44) |
| Small cap | ZimVie | ZIMV | Apr 2022 | 23.00 | 10.41 | - | Buy (32) |
| Mid cap | Mattel | MAT | May 2015 | 28.43 | 19.48 | - | Buy (38) |
| Mid cap | Conduent | CNDT | Feb 2017 | 14.96 | 3.47 | - | Buy (9) |
| Mid cap | Adient plc | ADNT | Oct 2018 | 39.77 | 31.10 | - | Buy (55) |
| Mid cap | Xerox Holdings | XRX | Dec 2020 | 21.91 | 14.70 | 6.8% | Buy (33) |
| Mid cap | Ironwood Pharmaceuticals | IRWD | Jan 2021 | 12.02 | 10.15 | - | Buy (19) |
| Mid cap | Viatris | VTRS | Feb 2021 | 17.43 | 8.94 | 5.4% | Buy (26) |
| Mid cap | Organon & Co. | OGN | Jul 2021 | 30.19 | 24.76 | 4.5% | Buy (46) |
| Mid cap | TreeHouse Foods | THS | Oct 2021 | 39.43 | 45.62 | - | Buy (60) |
| Mid cap | Kaman Corporation | KAMN | Nov 2021 | 37.41 | 29.31 | 2.7% | Buy (57) |
| Mid cap | The Western Union Co. | WU | Dec 2021 | 16.40 | 13.84 | 6.8% | Buy (25) |
| Mid cap | Brookfield Re | BAMR | Jan 2022 | 61.32 | 42.01 | 1.3% | Buy (93) |
| Mid cap | Polaris | PII | Feb 2022 | 105.78 | 99.19 | - | Buy (160) |
| Mid cap | Goodyear Tire & Rubber | GT | Mar 2022 | 16.01 | 11.22 | - | Buy (24.50) |
| Mid cap | M/I Homes | MHO | May 2022 | 44.28 | 41.27 | - | Buy (67) |
| Mid cap | Janus Henderson Group | JHG | Jun 2022 | 27.17 | 20.97 | 7.4% | Buy (67) |
| Mid cap | ESAB Corp | ESAB | Jul 2022 | 45.64 | 35.20 | - | Buy (68) |
| Large cap | General Electric | GE | Jul 2007 | 304.96 | 66.22 | 0.5% | Buy (160) |
| Large cap | Shell plc | SHEL | Jan 2015 | 69.95 | 51.67 | 3.9% | Buy (60) |
| Large cap | Nokia Corporation | NOK | Mar 2015 | 8.02 | 4.51 | 2.0% | Buy (12) |
| Large cap | Macy’s | M | Jul 2016 | 33.61 | 17.53 | 3.6% | Buy (20) |
| Large cap | Toshiba Corporation | TOSYY | Nov 2017 | 14.49 | 17.38 | 3.7% | Buy (28) |
| Large cap | Holcim Ltd. | HCMLY | Apr 2018 | 10.92 | 8.37 | 5.3% | Buy (16) |
| Large cap | Newell Brands | NWL | Jun 2018 | 24.78 | 14.38 | 6.4% | Buy (39) |
| Large cap | Vodafone Group plc | VOD | Dec 2018 | 21.24 | 11.40 | 8.9% | Buy (32) |
| Large cap | Kraft Heinz | KHC | Jun 2019 | 28.68 | 33.42 | 4.8% | Buy (45) |
| Large cap | Molson Coors | TAP | Jul 2019 | 54.96 | 47.73 | 3.2% | Buy (69) |
| Large cap | Berkshire Hathaway | BRK.B | Apr 2020 | 183.18 | 276.31 | - | HOLD |
| Large cap | Wells Fargo & Company | WFC | Jun 2020 | 27.22 | 42.24 | 2.8% | Buy (64) |
| Large cap | Western Digital Corporation | WDC | Oct 2020 | 38.47 | 37.06 | - | Buy (78) |
| Large cap | Elanco Animal Health | ELAN | Apr 2021 | 27.85 | 12.65 | - | Buy (44) |
| Large cap | Walgreens Boots Alliance | WBA | Aug 2021 | 46.53 | 32.25 | 5.9% | Buy (70) |
| Large cap | Volkswagen AG | VWAGY | Aug 2022 | 19.76 | 17.10 | 4.4% | Buy (70) |
| Large cap | Warner Bros Discovery | WBD | Sep 2022 | 13.13 | 12.49 | - | Buy (20) |
| Large cap | Dow | DOW | Oct 2022 | 43.90 | 45.52 | 6.2% | Buy (60) |
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.Please feel free to share your ideas and suggestions for the podcast and the letter 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 and space limits we may not be able to cover every topic, but we will work to cover as much as possible or respond by email.