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Value Investor
Wealth Building Opportunites for the Active Value Investor

November 16, 2022

Following our demoralized and never-changing, four-word question of “are we there yet” came worthless responses like “soon enough,” or “sometime later,” “we’re getting closer.”

Are We There Yet?

“Are we there yet?”

This is perhaps the most common phrase ever uttered by kids to their parents during long-distance trips. I can remember the seemingly endless childhood hours spent in the back seat of our station wagon, waiting, waiting, waiting to arrive at Wall Drug, South Dakota or some fishing camp in deep northern Canada. I had only the vaguest notion of where we were, where we were headed, or what would happen when we got there. I remember the utter boredom, punctuated by the momentary excitement produced by some odd feature of the otherwise featureless interstate landscape, or a quirky billboard or perhaps a license plate from Hawaii which left us wondering just how, exactly, that car got to the mainland. There were no electronic devices – the closest thing we had to the glass iPhone screens of today was the glass of the car windows.

Following our demoralized and never-changing, four-word question of “are we there yet” came worthless responses like “soon enough,” or “sometime later,” “we’re getting closer.”

This is what the stock market feels like today. We may have a rough idea of where we are but have no idea where we are headed – with the economy, corporate earnings, interest rates, inflation, geopolitics, domestic politics, or much anything else – or when we will reach our destination.

It feels like we are getting closer, but we wonder if this is only yet one more momentary excitement like the other three this year (March, July/August, October/early November) that soon passed, followed by the stock market sliding to yet another low.

Just like the road trips of yore, we are not going back from whence we came. Hyper-growth tech stocks aren’t coming back. Their absurd valuations and robust fundamentals are visible only in the rear-view mirror. Oatly (OTLY), as one of perhaps hundreds of examples, had looked poised for sustained high-speed revenue growth and impressive profits. But, its pedal-to-the-metal trajectory took the exit ramp. Estimated 2023 revenues are now projected to be essentially flat compared to 2022, a sudden deceleration compared to earlier estimates for revenues to double. Rather than shifting into high gear, projected profits have dropped into reverse, with a large loss estimated for 2023. Like so many of its peers, Oatly, once a Ferrari, is now merely an Edsel, broken down by the side of the road and out of the race.

Will tech stocks in general return to their pole position in the stock market race? Yes, almost certainly. However, the starting grid will not be filled with the current contenders, but rather companies now on the drawing board, and in the garages, overseen by entrepreneurs who are tinkering with their business models, making adjustments, responding to customers and developing ideas in secret. In five or seven years, these new companies will emerge, probably side-by-side with the mainstreaming of 5G telecom service, sporting accelerating revenue growth as they capture market niches yet undiscovered.

So, no, we are not there yet. The ride will take longer, will seem interminable, occasionally exciting and certainly bumpy.

In the meantime, the road is filled with undervalued companies with solid earnings, strong balance sheets, products with enduring demand and managements with enough common sense and maturity to steer their companies through these complicated times. Almost sounds like we’re talking about our parents.

Note on the Valuation and Earnings table:

This week, we are rolling our valuation and earnings estimate table forward by a year, dropping the 2022 estimates and adding the 2024 estimates. By this time of the year, stocks are starting to trade on estimated 2023 earnings, so our table now reflects these numbers.

Share prices in the table reflect Tuesday (November 15) closing prices. Please note that prices in the discussion below are based on mid-day November 15 prices.

Note to new subscribers: You can find additional color on our thesis, recent earnings reports and other news on recommended companies in prior editions of the Cabot Undervalued Stocks Advisor, particularly the monthly edition, on the Cabot website.

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Today’s Portfolio Changes

Last Week’s Portfolio Changes

Upcoming Earnings Reports
Arcos Dorados (ARCO) – Wednesday, November 16
Cisco Systems (CSCO) – Wednesday, November 16
Big Lots (BIG) – Thursday, December 1

Growth/Income Portfolio
Cisco Systems (CSCO) is facing revenue pressure as customers migrate to the cloud and thus need less of Cisco’s equipment and one-stop-shop services. Cisco’s prospects are starting to improve under a relatively new CEO, who is shifting Cisco toward a software and subscription model and is rolling out new products, helped by its strong reputation and entrenched position within its customers’ infrastructure. The company is highly profitable, generates vast cash flow (which it returns to shareholders through dividends and buybacks) and has a very strong balance sheet.

Cisco reports earnings on Wednesday, November 16, with a consensus earnings estimate of $0.84/share.

The shares were flat in the past week and have 47% upside to our 66 price target. The valuation is attractive at 8.9x EV/EBITDA and 12.7x earnings. The 3.4% dividend yield adds to the appeal of this stock. BUY

Comcast Corporation (CMCSA) With $120 billion in revenues, Comcast is one of the world’s largest media and entertainment companies. Its properties include Comcast cable television, NBCUniversal (movie studios, theme parks, NBC, Telemundo and Peacock), and Sky media. The Roberts family holds a near-controlling stake in Comcast. Comcast shares have tumbled due to worry about cyclical and secular declines in advertising revenues and a secular decline in cable subscriptions as consumers shift toward streaming services, as well as rising programming costs and incremental competitive pressure as phone companies upgrade their fiber networks.

However, Comcast is a well-run, solidly profitable and stable company that will likely continue to successfully fend off intense competition while increasing its revenues and profits, as it has for decades. The company generates immense free cash flow which is more than enough to support its reasonable debt level, pay a generous dividend (recently raised 8%) and sizeable share buybacks.

There was no significant company-specific news in the past week.

Comcast shares rose 9% for the past week and have about 21% upside to our $42 price target. The shares offer an attractive 3.1% dividend yield. BUY

Dow Inc. (DOW) merged with DuPont to create DowDuPont, then split into three companies in 2019 based on product type. The new Dow is the world’s largest producer of ethylene and polyethylene, the most widely used plastics. Investors undervalue Dow’s hefty cash flows and sturdy balance sheet largely due to its uninspiring secular growth traits, its cyclicality and concern that management will squander its resources. The shares are driven by: 1) commodity plastics prices, which are often correlated with oil prices and global growth, along with competitors’ production volumes; 2) volume sold, largely driven by global economic conditions, and 3) ongoing efficiency improvements (a never-ending quest of all commodity companies). Recent concerns about a recession have sent Dow shares to well below our estimate of their fair value, even as the company’s long-term prospects and ability to maintain its dividend are attractive. Dow shares are a recommended Buy in our sister publication The Cabot Turnaround Letter.

There was no significant company-specific news in the past week.

Dow shares rose 5% in the past week and have 15% upside to our 60 price target (same as in the Cabot Turnaround Letter). The quarterly dividend appears readily sustainable and provides an appealing 5.4% yield. The shares trade at a modest 6.7x EV/EBITDA multiple and 11.8x EPS on recession-minded 2023 estimates. BUY

State Street Corporation (STT) State Street is the world’s largest custodian bank, with $38 trillion in assets under custody/administration. About 56% of its revenues are produced from custody, client reporting, electronic trading and full enterprise solutions services for investment managers. The balance is produced from investment management fees on ETFs, foreign exchange fees, securities financing fees and net interest income. The industry has combined into four dominant firms due to economies of scale. State Street’s shares are out of favor and unchanged since 2007 due to concerns over its anemic growth and steady pricing pressure from competitors. However, we see State Street as a solid, well-capitalized franchise that provides critical services, with a slow-growth but steady revenue and earnings stream. Our interest in STT shares is that we can buy them at an attractive valuation. We also find the dividend yield appealing.

There was no significant company-specific news in the past week.

State Street shares rose 6% in the past week and have about 16% upside to our 94 price target. The company’s dividend (3.1% yield) is well-supported and backed by management’s strong commitment. BUY

Allison Transmission Holdings, Inc. (ALSN) Allison Transmission is a midcap manufacturer of vehicle transmissions. While many investors view this company as a low-margin producer of car and light truck transmissions that is destined for obscurity in an electric vehicle world, Allison actually produces no car or light truck transmissions. Rather, it focuses on the school bus and Class 6-8 heavy-duty truck categories, where it holds an 80% market share. Its EBITDA margin is sharply higher than its competitors and on par with many specialty manufacturers. And, it is a leading producer and innovator in electric axles which all electric trucks will require. The company generates considerable free cash flow and has a low-debt balance sheet. Its capable leadership team keeps its shareholders in mind, as the company has reduced its share count by 38% in the past five years.

There was no significant company-specific news in the past week.

The shares rose 2% in the past week and have 11% upside to our 48 price target. The stock pays a respectable and sustainable 1.9% dividend yield. BUY

Arcos Dorados (ARCO), which is Spanish for “golden arches,” is the world’s largest independent McDonald’s franchisee. Based in stable Uruguay and listed on the NYSE, the company produces about 72% of its revenues in Brazil, Mexico, Argentina and Chile. The shares are depressed as investors worry about the pandemic, political/social unrest, inflation and currency devaluations. However, the company has a solid brand, high recurring demand, impressive leadership (including founder/chairman who owns a 38% stake) and successful experience in navigating local conditions, along with a solid balance sheet and free cash flow.

Macro issues have a sizeable impact on the shares’ trading, including local inflation and the Brazilian currency. Since early 2020, the currency has generally stabilized in the 1.00 real = $0.20 range – a remarkably favorable trait given the sharp declines in other currencies around the world. As the company reports in U.S. dollars, any strength in the local currency would help ARCO shares.

Arcos reports earnings on Wednesday, November 16, with a consensus earnings estimate of $0.12/share.

ARCO shares slipped 1% this past week and have 16% upside to our 8.50 price target. BUY

Aviva, plc (AVVIY), based in London, is a major European company specializing in life insurance, savings and investment management products. Amanda Blanc, hired as CEO in July 2020, is revitalizing Aviva’s core U.K., Ireland and Canada operations following her divestiture of other global businesses. The company now has excess capital which it is returning to shareholders as likely hefty dividends following a sizeable share repurchase program. We expect that activist investor Cevian Capital, which holds a 5.2% stake, will keep pressuring the company to maintain shareholder-friendly actions.

Aviva provided its third-quarter trading update on November 9, which included revenues, capital and dividends but not earnings. Like many European companies, Aviva reports earnings every six months. Overall, the company remains solidly capitalized, is producing strong operating performance and reiterated its dividend and buyback plans.

Revenue growth was healthy, and the company said it is on track to deliver on its cost-cutting targets. Asset flows into its various products were generally positive, sufficient to support our thesis that requires only incremental growth and mostly just stability.

Aviva’s capital position remained solid through the market turbulence, although its cover ratio dipped due to the acquisition of the Succession Wealth company. Aviva does not offer any products in the now-plagued Liability-Driven Investment market, thus side-stepping a potential debacle.

The company reaffirmed its dividend outlook and its anticipated share buyback program which is likely to start in early 2023.

Based on management’s estimated dividend for 2023, the shares offer a generous 7.3% yield. This yield has been updated to reflect the depreciation of the British pound.

Aviva shares rose 4% in the past week. The shares have about 34% upside to our 14 price target. BUY

Barrick Gold (GOLD), based in Toronto, is one of the world’s largest and highest-quality gold mining companies. About 50% of its production comes from North America, with the balance from Africa/Middle East (32%) and Latin America/Asia Pacific (18%). Barrick will continue to improve its operating performance (led by its highly capable CEO), generate strong free cash flow at current gold prices, and return much of that free cash flow to investors while making minor but sensible acquisitions. Also, Barrick shares offer optionality – if the unusual economic and fiscal conditions drive up the price of gold, Barrick’s shares will rise with it. Given their attractive valuation, the shares don’t need this second (optionality) point to work – it offers extra upside. Barrick’s balance sheet has nearly zero debt net of cash. Major risks include the possibility of a decline in gold prices, production problems at its mines, a major acquisition and/or an expropriation of one or more of its mines.

On November 3, Barrick reported a reasonable quarter, but the company’s profits and cash flows are being incrementally squeezed by modestly lower gold prices, modestly weaker production volumes and higher costs. The company’s financial and operating condition remains strong but its underlying profitability is not as healthy as we had anticipated, even excluding the weaker gold price. We are staying with the Barrick position as it remains a well-managed company, is well-positioned to benefit from an eventual rebound in gold prices, has a solid balance sheet and pays a respectable base dividend that appears sustainable.

Adjusted earnings of $0.13/share fell 46% from a year ago but were 18% above the consensus estimate. Revenues fell 11% from a year ago but were modestly higher than estimates. Adjusted EBITDA of $1.2 billion fell 31% from a year ago but was 4% above estimates.

Barrick felt the impact of lower gold prices, but most of the weaker profits were due to lower production and higher costs. Gold prices were only 3% lower than a year ago, but production was 7% lower and costs per ounce rose 21%. Production is lower due to various issues at its mines – nothing major but a lot of small issues that add up. Higher energy costs throughout their production chain, as well as higher labor and consumables costs, weighed on results. Also, the company is spending more to maintain its production, as seen in the 48% increase in “minesite sustaining capital expenditures.”

Third-quarter and year-to-date gold costs were above the range provided in the full-year guidance and the company acknowledged that its full-year costs will exceed this guidance.

The head of the giant Nevada Gold Mines operation is retiring. While difficult to discern whether this is a normal retirement or a performance-driven change, we see the change as a positive.

The balance sheet remains solid with $145 million of cash in excess of debt. Barrick will pay a regular $0.10 base dividend and a $0.05 performance dividend this quarter. The company is also repurchasing shares but at a slow pace, in our view.

There was no significant company-specific news in the past week.

Over the past week, commodity gold jumped 4% again to $1,775/ounce. The 10-year Treasury yield slid to 3.80% following the favorable CPI report last week. Investors are anticipating the “end-game” in which Treasuries peak at a roughly 5.0% yield to roughly match or slightly exceed the anticipated inflation rate in a year or so. If this scenario pans out, gold and equity prices in general should rise.

The U.S. Dollar Index, another driver of gold prices (the dollar and gold usually move in opposite directions), fell 3% to 106.18.

While the Fed hasn’t changed the pace of its strident rate hike campaign, the favorable inflation reports point to an eventual slowing and stopping of the rate increases. This is favorable for gold. Investing in gold-related equities is a long-term decision – investors shouldn’t allow near-term weakness to deter their resolve.

Barrick shares rose 2% in the past week and have about 69% upside to our 27 price target. Our resolve with Barrick shares remains undaunted through the recent sell-off. BUY

Big Lots (BIG) – Big Lots is a discount general merchandise retailer based in Columbus, Ohio, with 1,431 stores across 47 states. Its stores offer an assortment of furniture, hard and soft home goods, apparel, electronics, food and consumables as well as seasonal merchandise. Our initial case for Big Lots rested with its loyal and growing base of 22 million rewards members, its appeal to bargain-seeking customers, the relatively stable (albeit low) cash operating profit margin, its positive free cash flow, debt-free balance sheet and low share valuation.

Our thesis was deeply rattled by the company’s dismal first-quarter results although second-quarter results, while dismal, were better than the market’s dour consensus. The company needs to offload its still-bloated inventory at sharp discounts while also now loading the company with what is probably permanent debt.

We are retaining our HOLD rating for now: investor expectations are sufficiently depressed to provide some downside cushion, while management should be able to extract itself from the worst of the inventory problem over the next few quarters. Nevertheless, the Big Lots investment is now high-risk due to the new debt balance, the lost value from the inventory glut and the likelihood of a suspension of the dividend.

Favorable reports from retailers like Home Depot and Walmart are lifting Big Lots’ shares. We’re happy to see the increase but view it as mostly pure speculation. Big Lots’ fate will rest on its own ability to work down its excessive inventory at respectable prices and then return to reasonably healthy profits in 2023.

Big Lots shares jumped 14% this past week and have 72% upside to our $35 price target. The shares offer a 5.9% dividend yield, although, as noted, investors should not rely on this dividend being sustained.

We reiterate our view that Big Lots shareholders who are not willing or able to sustain further losses in the shares should sell now. There is no reasonably definable floor to a stock like Big Lots when fundamentals and valuation are ignored while investors reduce their risk exposure. HOLD

Citigroup (C) Citi is one of the world’s largest banks, with over $2.4 trillion in assets. The bank’s weak compliance and risk-management culture led to Citi’s disastrous and humiliating experience in the 2009 global financial crisis, which required an enormous government bailout. The successor CEO, Michael Corbat, navigated the bank through the post-crisis period to a position of reasonable stability. Unfinished, though, is the project to restore Citi to a highly profitable banking company, which is the task of new CEO Jane Fraser.

There was no significant company-specific news in the past week.

This past week, the yield spread between the 90-day T-bill and the 10-year Treasury bond, which approximates the drivers behind Citi’s net interest margin, widened to a negative 39 basis points (100 basis points in one percentage point), steepening the inversion of the yield curve over this horizon.

Citi shares trade at 61% of tangible book value and 7.3x estimated 2023 earnings. The remarkably low valuations assume an unrealistically dim future for Citi.

Citi shares rose 7% in the past week and have about 72% upside to our 85 price target. Citigroup investors enjoy a 4.1% dividend yield. We anticipate that the bank is done with share buybacks until there is more clarity on the economic and capital market outlook, which could readily be a year or more away. BUY

Gates Industrial Corp, plc (GTES) – Gates is a specialized producer of industrial drive belts and tubing. While this niche might sound unimpressive, Gates has become a leading global manufacturer by producing premium and innovative products. Its customers depend on heavy-duty vehicles, robots, production and warehouse machines and other equipment to operate without fail, so the belts and hydraulic tubing that power these must be exceptionally reliable. Few buyers would balk at a reasonable price premium on a small-priced part from Gates if it means their million-dollar equipment keeps running. Even in automobiles, which comprise roughly 43% of its revenues, Gates’ belts are nearly industry-standard for their reliability and value. Helping provide revenue stability, over 60% of its sales are for replacements. Gates is well-positioned to prosper in an electric vehicle world, as its average content per EV, which require water pumps and other thermal management components for the battery and inverters, is likely to be considerably higher than its average content per gas-powered vehicle.

The company produces wide EBITDA margins, has a reasonable debt balance and generates considerable free cash flow. The management is high-quality. In 2014, private equity firm Blackstone acquired Gates and significantly improved its product line-up and quality, operating efficiency, culture and financial performance. Gates completed its IPO in 2018, with Blackstone retaining a 63% stake today.

On November 4, Gates reported a reasonable quarter but reduced its full-year guidance as currency and supply chain headwinds aren’t relenting as fast as the company had hoped. The company continues to improve its execution and its future looks bright once Gates passes through the currently choppy macro environment.

Full-year guidance was reduced due to ongoing currency headwinds as well as slower than anticipated easing of supply chain issues, inflation and costs associated with its production capacity increases. Sales were guided to increase by 5.5-8.0%. The midpoints of both the Adjusted EBITDA and adjusted EPS guidance fell by 7.5%.

In the quarter, revenues were essentially flat compared to a year ago but were about 4% below estimates. Adjusted income of $0.31/share was flat compared to a year ago and in line with the consensus estimate. Adjusted EBITDA of $178 million fell 3% from a year ago and was about 7% below estimates.

Excluding the drag from the strong dollar, sales were healthy. In local currencies, sales rose nearly 8% and this included the negative effect of suspending their operations in Russia. The EBITDA margin slipped from 21.3% to 20.6% due to the strong dollar, rising costs and production inefficiencies from supply chain disruptions that more heavily affected its Power Transmission segment. In the Fluid Management segment, revenues and profits were meaningfully better than a year ago.

The company reduced its overhead expenses by an impressive 8% and passed through to its customers much of its higher costs. These helped margins improve from the second quarter.

Debt remains modestly elevated, but this is not an issue given Gates’ management quality, business franchise and healthy-enough free cash flow. Third-quarter free cash flow was $73 million and is implied to be about $200 million in the fourth quarter. The share count fell 5% from a year ago as the company balanced the merits of an improved debt level vs lower share count. We would like to see lower debt but appreciate management’s recognition of the discounted share price.

There was no significant company-specific news in the past week.

At the current price and based on estimated 2022 results, the shares offer an 11% free cash flow yield (free cash flow divided by market cap). This is a sizeable discount to what the company is worth. GTES shares rose 6% in the past week and have about 17% upside to our 14 price target. BUY

Molson Coors Beverage Company (TAP) is one of the world’s largest beverage companies, producing the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft and specialty beers. About two-thirds of its revenues come from the United States, where it holds a 24% market share. Investors worry about Molson Coors’ lack of revenue growth due to its relatively limited offerings of fast-growing hard seltzers and other trendier beverages. Our thesis for this company is straightforward – a reasonably stable company whose shares sell at an overly discounted price. Its revenues are resilient, it produces generous cash flow and is reducing its debt. A new CEO is helping improve its operating efficiency and expand carefully into more growthier products. The company recently reinstated its dividend.

There was no significant company-specific news in the past week.

TAP shares rose 2% in the past week and have about 32% upside to our 69 price target. The stock remains cheap, particularly on an EV/EBITDA basis, or enterprise value/cash operating profits, where it trades at 8.3x estimated 2023 results, still among the lowest valuations in the consumer staples group and below other brewing companies. The 2.9% dividend yield only adds to the appeal. BUY

Organon & Company (OGN), a spin-off from Merck, specializes in patented women’s healthcare products and biosimilars, and also has a portfolio of mostly off-patent treatments. It may eventually divest its Established Brands segment. The management and board appear capable as they work to boost internal growth augmented by modest-sized acquisitions. The company produces robust free cash flow, has modestly elevated debt and pays a reasonable dividend.

On November 3, the company reported a weak third quarter with flattish revenues but a narrower profit margin. While the results were ahead of estimates, this essentially reflects a company that is seeing a slower erosion relative to expectations, but a company that is eroding nonetheless. Organon raised its EBITDA margin guidance for the full year, but its other guidance remained largely unchanged.

Revenues fell 4% (+3% ex-currency changes) and were about 1% above estimates. Adjusted earnings of $1.32/share fell 16% from a year ago but was about 20% above estimates. Adjusted EBITDA of $546 million fell 11% from a year ago and was about 17% above estimates. The company excludes stock-based compensation from its adjusted earnings numbers. We frown upon this, especially in an era when options are likely to be underwater and may need to be reissued at lower strike prices.

Volumes rose nearly 5% but local pricing eroded 2%, producing the +3% revenue growth ex-currency. Gross profit margins are improving to a respectable 64.2% (not adjusted) but the EBITDA margin continues to slide as Organon is spending more on selling and product promotions while also investing more heavily in research and development. Another disappointment not reflected in adjusted EBITDA is the $70 million of costs associated with the spin-off. The spin-off occurred over a year ago and Organon should be completely finished with this transition.

Organon’s balance sheet currently carries $600 million less debt than on its spin-off date but also less cash, such that net debt is essentially unchanged from the spin-off date. Working capital has absorbed close to $600 million of cash year to date, nearly all of which is spin-off related. Another $263 million in cash has been lost to one-time spin-off payments. Again, the spin-off was over a year ago and these flows and costs should have been sorted out by the last year’s end. We are wondering what is going on with Organon’s financial function that they can’t manage to convert more profits into cash.

There was no significant company-specific news in the past week.

OGN shares rebounded 7% in the past week and have about 82% upside to our 46 price target (using the same target as the Cabot Turnaround Letter). The shares offer an attractive 4.4% dividend yield. BUY

Sensata Technologies (ST) is a $3.8 billion (revenues) producer of nearly 47,000 highly engineered sensors used by automotive (60% of revenues), heavy vehicle, industrial and aerospace customers. About two-thirds of its revenues are generated outside of the United States, with China producing about 21%. Investors undervalue Sensata’s durable franchise. Its sensors are typically critical components that generally produce high profit margins. As the sensors’ reliability is vital to safety and performance, customers are reluctant to switch to another supplier that may have lower prices but also lower or unproven quality. Sensata has an arguably under-leveraged balance sheet and generates healthy free cash flow. The relatively new CEO will likely continue to expand the company’s growth potential through acquisitions. Electric vehicles are an opportunity as they expand Sensata’s reachable market.

There was no significant company-specific news in the past week.

ST shares rose 9% in the past week and have about 66% upside to our 75 price target. Our price target looks optimistic in light of the broad market sell-off, but we will keep it for now, even as it may take longer for the shares to reach it. BUY.

Disclosure:The chief analyst of the Cabot Undervalued Stocks Advisor personally holds shares of every recommended security, except for “New Buy” recommendations. The chief analyst may purchase or sell recommended securities but not before the fourth day after any changes in recommendation ratings has been emailed to subscribers. “New Buy” recommendations will be purchased by the chief analyst as soon as practical following the fourth day after the newsletter issue has been emailed to subscribe

Growth/Income Portfolio
Stock (Symbol)Date AddedPrice Added11/15/22Capital Gain/LossCurrent Dividend YieldPrice TargetRating
Cisco Systems (CSCO)11/18/2041.3244.98.70%6.20%66Buy
Comcast Corp (CMCSA)10/26/2231.534.288.80%3.40%42Buy
Dow Inc (DOW) *4/1/1953.551.6-3.60%5.40%60Buy
State Street Corp (STT)8/17/2273.9679.467.40%3.20%94Buy
Buy Low Opportunities Portfolio
Stock (Symbol)Date AddedPrice Added11/15/22Capital Gain/LossCurrent Dividend YieldPrice TargetRating
Allison Transmission Hldgs (ALSN)2/22/2239.9942.97.30%2.00%48Buy
Arcos Dorados (ARCO)4/28/215.417.334.90%2.20%8.5Buy
Aviva (AVVIY)3/3/2110.7510.27-4.50%5.50%14Buy
Barrick Gold (GOLD)3/17/2121.1316-24.30%2.50%27Buy
BigLots (BIG)4/12/2235.2420.18-42.70%5.90%35Hold
Citigroup (C)11/23/2168.149.03-28.00%4.20%85Buy
Gates Industrial Corp (GTES)8/31/2210.7111.9311.40%0.00%14Buy
Molson Coors (TAP)8/5/2036.5352.0842.60%2.90%69Buy
Organon (OGN)6/7/2131.4224.88-20.80%4.50%46Buy
Sensata Technologies (ST)2/17/2158.5745.08-23.00%1.00%75Buy

*Note: DOW price is based on April 1, 2019 closing price following spin-off from DWDP.

Buy – This stock is worth buying.
Strong Buy – This stock offers an unusually favorable risk/reward trade-off, often one that has been rated as a Buy yet the market has sold aggressively for temporary reasons. We recommend adding to existing positions.
Hold – The shares are worth keeping but the risk/return trade-off is not favorable enough for more buying nor unfavorable enough to warrant selling.
Sell – This stock is approaching or has reached our price target, its value has become permanently impaired or changes in its risk or other traits warrant a sale.

Note for stock table: For stocks rated Sell, the current price is the sell date price.

CUSA Valuation and Earnings
Growth/Income Portfolio



2023 EPS


2024 EPS


Change in

2023 Estimate

Change in

2024 Estimate

P/E 2023P/E 2024
CSCO 44.83 3.53 3.810.0%0.0% 12.7 11.8
CMCSA 34.73 3.78 4.260.0%0.0% 9.2 8.2
DOW 51.98 4.39 5.410.0%0.0% 11.8 9.6
STT 81.00 8.29 9.250.0%0.0% 9.8 8.8
Buy Low Opportunities Portfolio



2023 EPS


2024 EPS


Change in

2023 Estimate

Change in

2024 Estimate

P/E 2023P/E 2024
ALSN 43.36 5.85 6.560.0%0.0% 7.4 6.6
ARCO 7.32 0.54 0.700.0%0.0% 13.6 10.5
AVVIY 10.42 0.55 0.630.0%0.0% 18.9 16.7
GOLD 15.95 0.77 1.020.0%0.0% 20.8 15.6
BIG 20.37 0.70 4.040.0%0.0% 29.1 5.0
C 49.45 6.82 7.720.0%0.0% 7.3 6.4
GTES 11.92 1.17 1.310.0%0.0% 10.2 9.1
TAP 52.28 4.12 4.360.0%0.0% 12.7 12.0
OGN 25.29 4.85 5.230.0%0.0% 5.2 4.8
ST 45.22 3.69 4.340.0%0.0% 12.3 10.4

Current price is yesterday’s mid-day price.
CSCO: Estimates are for fiscal years ending in July of 2023 and 2024

Bruce Kaser has more than 25 years of value investing experience in managing institutional portfolios, mutual funds and private client accounts. He has led two successful investment platform turnarounds, co-founded an investment management firm, and was principal of a $3 billion (AUM) employee-owned investment management company.