More on the View from London
This week’s note is being written in London once again as I continue the unexpected extension of my visit here. My Covid symptoms have long faded, but the Centers for Disease Control and Prevention remain undaunted in their fruitless efforts to prevent Covid from entering the United States, and thus I am prohibited from returning to my home country. Let’s just say that my opinions regarding the CDC’s policies are just a bit more energetic than I might convey here.
Thanks to the wonders of technology, armed solely with a borrowed laptop and a robust wi-fi connection, I can nearly fully operate in any part of the world. The only setback is that my spreadsheets, paper notes and other work remain either on my office laptop or on my desk back in the States. Timing is a modest challenge, as the U.S. markets open at 2:30 p.m. and close at 9:00 p.m. here in London, but in my experience the biggest company-specific news is reflected in the first hour or so of trading. After that, the stock prices are either follow-through or market driven.
Being a few thousand miles and an ocean away provides some useful distance from the nagging urgency of minute-to-minute market action. Successful investing is all about avoiding emotions while focusing on fundamentals, mathematics and opportunities. However, the amazing history, sights and energy of London create plenty of distractions – say, leisurely enjoying a coffee and croissant on the grounds of the wondrous Westminster Abbey or St. Paul’s Cathedral – which aren’t entirely compatible with productive investing. My eventual departure will be bittersweet.
Keeping the more harsh global realities front and center is news that a top Russian official said that the “threat of nuclear war is real.” As does seeing the S&P 500 slide another 2% today. We’re not entirely confident that the burn-down is finished. Inflation is too high, the Fed is too far behind in raising rates, and we’re not fully convinced that this bout of inflation can easily be cured with higher interest rates. And we wonder whether the Fed will have the fortitude to keep raising rates if the stock market slips another 15% or more, or if the economy slips into a recession. The outlook is about as clear as a foggy day in London.
Share prices in the table reflect Tuesday (April 26) closing prices. Please note that prices in the discussion below are based on mid-day April 26 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.
Send questions and comments to Bruce@CabotWealth.com.
Today’s Portfolio Changes
None
Last Week’s Portfolio Changes
None
Upcoming Earnings Reports
Wednesday, April 27: Allison Transmission Holdings (ALSN)
Thursday, April 28: Merck & Company (MRK)
Friday, April 29: Bristol-Myers Squibb (BMY)
Friday, April 29: Molson Coors Beverage Company (TAP)
Growth/Income Portfolio
Bristol-Myers Squibb Company (BMY) shares sell at a low valuation due to worries over patent expirations for Revlimid (starting in 2022) and Opdivo and Eliquis (starting in 2026). However, the company is working to replace the eventual revenue losses by developing its robust product pipeline while also acquiring new treatments (notably with its acquisitions of Celgene and MyoKardia), and by signing agreements with generics competitors to forestall their competitive entry. The likely worst-case scenario is flat revenues over the next 3-5 years. Bristol should continue to generate vast free cash flow, has a solid, investment-grade balance sheet, and trades at a sizeable discount to its peers.
Bristol-Myers is scheduled to report earnings this Friday, April 29, with the consensus earnings estimate at $1.89/share.
BMY shares slipped 1% in the past week and trade essentially at their all-time closing high, but just below our 78 price target. Valuation remains reasonable compared to its peers and the company seems to be executing on its strategy while also maintaining a solid financial posture, so we are inclined to let the stock at least reach 78 before deciding on what changes to make to the rating and/or price target. BUY
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.
There was no significant company-specific news in the past week.
CSCO shares were unchanged in the past week and have 28% upside to our 66 price target. The dividend yield is an attractive 3.0%. BUY
The Coca-Cola Company (KO) is best-known for its iconic soft drinks yet nearly 40% of its revenues come from non-soda beverages across the non-alcoholic spectrum. Its global distribution system reaches nearly every human on the planet. Coca-Cola’s longer-term picture looks bright but the shares remain undervalued due to concerns over the pandemic, the secular trend away from sugary sodas, and a tax dispute which could cost as much as $12 billion (likely worst-case scenario). The relatively new CEO James Quincey (2017) is reinvigorating the company by narrowing its over-sized brand portfolio, boosting its innovation and improving its efficiency, as well as improving its health and environmental image. Coca-Cola’s balance sheet is sturdy, and its growth investing, debt service and dividend are well-covered by free cash flow.
On April 25, Coca-Cola reported earnings of $0.64/share, up 16% from a year ago and about 10% above the consensus estimate. Despite suspending its Russia operations, the company reiterated its full-year volume, revenue, profit and free cash flow guidance. Overall, the outlook for Coke remains strong, with no changes to our price target or rating.
Revenues adjusted for acquisitions, divestitures and currency changes rose 18%. Revenues were 7% higher than the consensus estimate. Prices increased by 7%, surprisingly strong and reflective of the value of its brands. Volumes grew 11%, partly from an easy comparison to weaker business a year ago and partly from incremental demand growth as the company improves its marketing and distribution. Coke’s non-carbonated beverages sales growth was over 10%.
“Volumes sold” is formally called “concentrate sales” and primarily measures the company’s sales to its bottlers and distributors. “Unit case volume” is a measure of end-demand by people that consume the products, and this past quarter unit case volume rose by 8%. Often these two metrics don’t match in any given period due to differences in shipment timing.
Coke’s margins expanded modestly to 31.4% even as marketing spending increased and currencies moved unfavorably. The company’s incremental profit margin (what it makes from selling one more serving) is high, so it benefitted from sharply higher revenues. It is reinvesting some of this into better marketing – a practice that we believe is important to its future profits.
KO shares rose 1% in the past week and have 5% upside to our recently and tepidly raised 69 price target. Coca-Cola’s fundamentals remain sturdy with respectable revenue, profit and free cash flow growth. Management continues to focus on execution in its core business while generally avoiding any major non-core commitments.
We are tepid on the price target raise, as KO shares now trade noticeably above their record high and have healthy upward momentum even as valuation is no longer “cheap” – traits that are a tad unfamiliar and uncomfortable for a value/contrarian investor. However, we also rarely have the chance to own a high-quality and enduring franchise like Coca-Cola, so we will be a bit more patient with the shares. 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/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). We see Dow as having more years of strong profits before capacity increases signal a cyclical peak, and expect the company to continue its strong dividend, reduce its pension and debt obligations, repurchase shares slowly and restrain its capital spending.
Industry conditions will likely be strong for a while. Dow remains well-positioned to generate immense free cash flows over the next few years, even as the stock market cares little about cash but rather is focused on the incremental news flow related to economic growth, energy prices and any industry capacity changes. In the meantime, Dow shareholders can collect a highly-sustainable 4.1% dividend yield while waiting for more share buybacks, more balance sheet improvement, more profits and a higher valuation.
On April 21, Dow reported first-quarter adjusted operating earnings of $2.34/share, up 72% from a year ago and about 14% higher than the consensus estimate. Overall, the report indicates that fundamentals at Dow remain strong and that earnings estimates will likely continue to increase. Reflecting this, Dow shares jumped about 3% on the day. No change to our price target or rating.
Revenues rose 28% from a year ago (about 5% above the consensus estimate), with all operating segments and geographic regions showing good growth. Nearly all of the growth in revenues came from higher local prices (+28%) as tighter supplies of its array of petrochemical and other products provide Dow and other producers with strong pricing power. While volume growth of 3% may seem sluggish compared to more highly cyclical companies or high-growth tech companies, we would consider this pace to be healthy and slightly faster than the growth of the overall global economy. The strong dollar weighed modestly on revenues when local revenues were converted into U.S. dollars.
The strong pricing power more than offset higher input costs, driving the operating profit higher compared to a year ago. The operating profit margin of 15.9% rose from 13.1% a year ago. Earnings from Dow’s various joint ventures slipped $50 million, to $174 million, due to planned maintenance projects and higher input costs. Compared to years of losses as several of these projects ramped up, we are satisfied with the profit contribution this quarter.
Free cash flow of $1.3 billion, of which Dow used $600 million to repurchase shares as part of its new $3 billion share repurchase program. The balance sheet remains sturdy.
As previously announced, Dow is taking a minority stake in a joint venture that will build a massive liquified natural gas (LNG) import facility in Germany, which will meet as much as 15% of that country’s natural gas needs. Also, Dow continues to advance its decarbonization through high-return, low-risk initiatives – our favored approach. The company also released its annual benchmark update, showing that Dow (not surprisingly) compares favorably to its competitors. While the study’s results are highly polished for investor consumption, we believe that the company takes this study very seriously internally and could provide deeper color if requested. Also, the study provides incremental transparency and a degree of accountability that many other companies would be hard-pressed to match.
Overall, a good report for Dow that was encouraging regarding its near-term prospects. Dow has several headwinds, including potential pricing pressure from new supply in a year or so, rapidly-rising natural gas input prices, a complicated demand situation in China, and to some degree reliance on high oil prices for its pricing power. The shares have been strong this year, in a difficult market, and continue to have strong dividend support, but the upside from our perspective is probably capped around our price target.
Dow’s earnings estimates jumped sharply, reflecting the strong results and potential for an enduring upcycle. Dow shares rose 2% in the past week and have 15% upside to our 78 price target. BUY
Merck (MRK) shares are undervalued as investors worry about Keytruda, a blockbuster oncology treatment (about 30% of revenues) which faces generic competition in late 2028. Also, its Januvia diabetes treatment may see generic competition next year, and like all pharmaceuticals it is at-risk from possible government price controls. Yet, Keytruda is an impressive franchise that is growing at a 20% rate and will produce solid cash flow for nearly seven more years, providing the company with considerable time to replace the potential revenue loss. Merck’s new CEO, previously the CFO, is accelerating Merck’s acquisition program, which adds return potential and risks to the story. The company is highly profitable and has a solid balance sheet. It spun-off its Organon business last June and we think it will divest its animal health segment sometime in the next five years.
Merck reports earnings this Friday, April 29, with the consensus earnings estimate at $1.83/share.
Merck shares slipped 1% in the past week and have about 17% upside to our 99 price target. The company has a strong commitment to its dividend (3.3% yield) which it backs up with generous free cash flow, although its shift to a more acquisition-driven strategy will slow the pace of dividend increases. BUY
Buy Low Opportunities Portfolio
Allison Transmission Holdings, Inc. (ALSN) – Allison Transmission is a midcap ($6.4 billion market cap) manufacturer of vehicle transmissions. 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. However, Allison produces no car and light truck transmissions, instead it focuses on the school bus and Class 6-8 heavy-duty truck categories, where it holds an 80% market share. Its 35% 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. Another indicator of its advanced capabilities: Allison was selected to help design the U.S. Army’s next-generation electric-powered vehicle. 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.
Allison is scheduled to report earnings on Wednesday, April 27, with the consensus earnings estimate at $1.27/share.
Allison shares were flat in the past week and have 32% upside to our 48 price target. The market has been brutal to consumer cyclical shares, and while ALSN is more of an industrial cyclical it trades closely with automobile stocks. For risk-tolerant and patient investors, this might be a good time to incrementally add shares. The stock pays an attractive and sustainable 2.3% dividend yield to help compensate for the wait. 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, as well as political/social unrest, inflation and currency devaluations. However, the company has a solid brand and high recurring demand and is well-positioned to benefit as local economies re-open. The leadership looks highly capable, led by the founder/chairman who owns a 38% stake, and has the experience to successfully navigate the complex local conditions. Debt is reasonable relative to post-recovery earnings, and the company is currently producing positive free cash flow.
Macro issues, including issues in Brazil related to its economic conditions (in particular, inflation, running at a 10.5% rate), currency and the chances that a socialist might win this year’s Brazilian presidential elections, will continue to move ARCO shares. Brazil is one of the most Covid-vaccinated countries in the world, which reduces pandemic-related demand risks.
There was no significant company-specific news in the past week.
ARCO shares fell 5% in the past week and have 16% upside to our recently-increased 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 was hired as the new CEO in July 2020 to revitalize Aviva’s laggard prospects. She divested operations around the world to re-focus the company on its core geographic markets (UK, Ireland, Canada), and is improving Aviva’s product competitiveness, rebuilding its financial strength and trimming its bloated costs. Aviva’s dividend has been reduced to a more predictable and sustainable level with a modest upward trajectory. Excess cash balances are being directed toward debt reduction and potentially sizeable special dividends and share repurchases.
Much of our interest in Aviva is based on its plans for returning its excess capital to shareholders, including share repurchases and dividends. These distributions could be substantial. We also look for incremental shareholder-friendly pressure from highly-regarded European activist investor Cevian Capital, which holds a 5.2% stake.
There was no significant company-specific news in the past week.
Aviva shares fell 4% in the past week and have about 29% upside to our 14 price target. The projected dividend, which would produce a generous 7.7% yield, looks fully sustainable. 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 new and 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.
Over the past week, commodity gold dipped 3% to $1,901/ounce. The 10-year Treasury yield fell to 2.76%. The spread between this yield and inflation of 8.5% remains exceptionally wide compared to a long-term average spread of perhaps one to two percentage points, strongly suggesting many more interest rate hikes ahead. Chatter about the “real” yield turning positive is based on other yields and inflation rates and we consider them to be less useful. The US Dollar Index, another driver of gold prices (the dollar and gold usually move in opposite directions), rose to 102.25, touching its five-year high. The prior peak was set in 2001 at 119.43.
There was no significant company-specific news in the past week. We note the increase in earnings estimates, likely reflecting the ongoing strength in gold prices.
Barrick shares slipped 10% in the past week and have about 21% upside to our 27 price target. The price target is based on 7.5x estimated steady-state EBITDA and a modest premium to our estimate of $25/share of net asset value. BUY
BigLots (BIG) – BigLots 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. The company has a large and loyal customer base of 22 million Rewards program members, which has growth steadily over the past decade. BigLots should benefit if consumers trade down due to a slowing and inflationary economy. While low, the 5.5% cash operating profit margin appears stable. Management guided for weak first quarter results and investor expect the full year guidance may be too high, as well.
We are intrigued enough by the shares’ remarkably low valuation to make this stock a Buy. On conservative fiscal 2022 (ending in January 2023) estimates, the shares currently trade at 3.1x EV/EBITDA and 7.3x per-share earnings. These multiples imply a dour recessionary future for the company. The EV/EBITDA multiple, in particular, is sharply below an average of perhaps 11x for its peers. Even adjusting for scale and quality, a 70% discount for BIG is unwarranted.
From a historical perspective, BigLots’ shares trade unchanged from their 2007 price level and are down 50% from their stimulus-boosted peak at over 70 last year.
BigLots’ balance sheet carries only $4 million of debt compared to $54 million in cash. While the balance sheet ebbs and flows with its inventory needs, the company is operated primarily as a debt-free business. This provides BigLots with considerable endurance and flexibility. We would rate the management and board quality as “good enough.” BigLots generates positive free cash flow that is strong enough to provide a reasonably sustainable $0.30/share quarterly dividend and repurchase its own shares.
The presence of investor Mill Road Capital (5.1% stake) is interesting. We doubt whether Mill Road has the financial firepower to execute a buyout on its own, and are also skeptical of its proposal for BigLots to lever up to do a share buyback. Nevertheless, Mill Road has publicly highlighted the company’s deeply discounted shares – a positive without a doubt.
All-in, while BIG shares carry higher risk, the risk/return trade-off appears compelling.
There was no significant company-specific news in the past week.
BigLots shares fell 11% in the past week and have 32% upside to our 45 price target. Investor fears of a recession drove the shares lower. The dividend produces an attractive 3.5% yield. BUY
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.
On Thursday, April 14, Citigroup reported earnings of $2.02/share that fell 44% from a year ago but were 45% above the consensus estimate. The report was positive in the sense that it largely contained no new negatives.
Net interest income rose 3% from a year ago but the bank hasn’t benefitted much from rising interest rates. Fee income fell 9%. Expenses rose 15% as Citi is finding that business transformation is expensive. Credit costs remained low but the bank added reserves to help cover losses in Russia and other possible effects of the war in Ukraine. At 2.35% of loans, Citi has plenty of loan loss reserves. Citi’s capital ratio slipped to 11.4% but remains more than adequate. Share buybacks reduced Citi’s share count by 6% over the past year. Citi said it would work to return capital to a 12% ratio by year-end.
The bank trades at only 64% of its tangible book value of $79.03/share. Citi’s peers trade at between 130% and 200% of tangible book value. As the bank makes more progress with its strategic overhaul – a grinding process for sure – the share valuation should converge with its peers, providing exceptional upside with what appears to be limited downside.
Citi shares slipped 4% over the past week and have about 68% upside to our 85 price target. The sharp increase in earnings estimates for 2022 appears to reflect a database error from last week.
As long as the bank can execute its turnaround, the shares remain highly discounted. Investors have largely lost patience with Citibank. We are holding tight to the shares as our confidence remains sturdy and the shares remain overly discounted on a price/book basis as well as on an earnings basis.
Citigroup investors enjoy a 4.0% dividend yield and perhaps another 3% or more in annual accretion from the bank’s share repurchase program. 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 straight-forward – 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 re-instated its dividend.
There was no significant company-specific news in the past week.
TAP shares fell 3% in the past week and have about 27% 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 8.7x estimated 2022 results, still among the lowest valuations in the consumer staples group and below other brewing companies. The 2.5% dividend only adds to the appeal. BUY
Organon & Company (OGN) was recently spun off from Merck. It specializes in patented women’s healthcare products and biosimilars, and also has a portfolio of mostly off-patent treatments. Organon will produce better internal growth with some boost through smart yet modest-sized acquisitions. It may eventually divest its Established Brands segment. The management and board appear capable, the company produces robust free cash flow, has modestly elevated debt and will pay a reasonable dividend. Investors have ignored the company, but we believe that Organon will produce at least stable and large free cash flows with a reasonable potential for growth. At our initial recommendation, the stock traded at a highly attractive 4x earnings.
There was no significant company-specific news in the past week.
OGN shares slipped 6% in the past week and have about 44% upside to our 46 price target (using the same target as the Cabot Turnaround Letter). The shares continue to trade at a remarkably low valuation while offering an attractive 3.5% 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 safely 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.
Sensata reported adjusted earnings of $0.78/share, down 9% from a year ago but about 3% above the consensus estimate. Revenues were flat but a tad above estimates. The company initiated a dividend, at $0.11/share per quarter, which produces an attractive 3.8% yield. Despite the respectable results and new dividend, the shares fell through mid-day trading due mostly to the weak stock market.
Revenues rose 4% from a year ago and was about 2% above the consensus estimate. On an organic basis (adjusted for acquisitions, divestitures and currency changes) was unchanged, perhaps a bit disappointing as Sensata should be producing at least some growth, even though the results were above the company’s previous guidance. Sensata’s organic revenues grew noticeably faster than its end markets, which fell more than 6%, but this is a bit uninspiring as a target. Pricing strength helped boost revenues.
Margins slipped due to lower volumes, higher input costs and higher research spending. The company continues to invest in new products, which is helping its market share but weighing on earnings. Similarly, the company announced a $580 million acquisition, similarly helping its strategic positioning but is a drain on free cash flow.
Sensata’s heavy investments are starting to weigh on our view of its shares, but we will remain patient as the valuation remains attractive and the company is making both strategic and earnings progress. The new dividend provides an attractive yield while we wait.
ST shares fell 3% in the past week and have about 61% upside to our 75 price target. 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 subscribers.
| Growth/Income Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 4/26/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Bristol-Myers Squibb (BMY) | 04-01-20 | 54.82 | 75.59 | 37.9% | 2.9% | 78.00 | Buy |
| Cisco Systems (CSCO) | 11-18-20 | 41.32 | 50.90 | 23.2% | 3.0% | 66.00 | Buy |
| Coca-Cola (KO) | 11-11-20 | 53.58 | 65.05 | 21.4% | 2.6% | 69.00 | Buy |
| Dow Inc (DOW) * | 04-01-19 | 53.50 | 67.37 | 25.9% | 4.2% | 78.00 | Buy |
| Merck (MRK) | 12-9-20 | 83.47 | 84.48 | 1.2% | 3.3% | 99.00 | Buy |
| Buy Low Opportunities Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 4/26/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Allison Transmission Hldgs (ALSN) | 02-22-22 | 39.99 | 36.42 | -8.9% | 2.3% | 48.00 | Buy |
| Arcos Dorados (ARCO) | 04-28-21 | 5.41 | 7.39 | 36.6% | 2.0% | 8.50 | Buy |
| Aviva (AVVIY) | 03-03-21 | 10.75 | 10.75 | 0.0% | 7.7% | 14.00 | Buy |
| Barrick Gold (GOLD) | 03-17-21 | 21.13 | 22.37 | 5.9% | 1.8% | 27.00 | Buy |
| BigLots (BIG) | 04-12-22 | 35.24 | 33.32 | -5.4% | 3.6% | 45.00 | Buy |
| Citigroup (C) | 11-23-21 | 68.10 | 50.23 | -26.2% | 4.1% | 85.00 | Buy |
| Molson Coors (TAP) | 08-05-20 | 36.53 | 54.17 | 48.3% | 2.5% | 69.00 | Buy |
| Organon (OGN) | 06-07-21 | 31.42 | 31.66 | 0.8% | 3.5% | 46.00 | Buy |
| Sensata Technologies (ST) | 02-17-21 | 58.57 | 45.49 | -22.3% | 1.0% | 75.00 | Buy |
*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 | |||||||
| Current price | Current 2022 EPS Estimate | Current 2023 EPS Estimate | Change in 2022 Estimate | Change in 2023 Estimate | P/E 2022 | P/E 2023 | |
| BMY | 75.96 | 7.74 | 8.23 | -0.6% | -0.8% | 9.8 | 9.2 |
| CSCO | 51.43 | 3.44 | 3.73 | 0.0% | 0.0% | 15.0 | 13.8 |
| KO | 65.44 | 2.47 | 2.65 | 0.4% | 0.8% | 26.5 | 24.7 |
| DOW | 67.87 | 8.28 | 7.24 | 16.3% | 4.8% | 8.2 | 9.4 |
| MRK | 84.75 | 7.28 | 7.24 | 0.1% | 0.1% | 11.6 | 11.7 |
| Buy Low Opportunities Portfolio | |||||||
| Current price | Current 2022 EPS Estimate | Current 2023 EPS Estimate | Change in 2022 Estimate | Change in 2023 Estimate | P/E 2022 | P/E 2023 | |
| ALSN | 36.39 | 5.88 | 7.02 | 0.0% | 0.0% | 6.2 | 5.2 |
| ARCO | 7.35 | 0.39 | 0.45 | 2.6% | 0.0% | 18.8 | 16.3 |
| AVVIY | 10.82 | 1.15 | 1.39 | 0.0% | 0.0% | 9.4 | 7.8 |
| BIG | 34.10 | 4.85 | 5.60 | 0.0% | 0.0% | 7.0 | 6.1 |
| GOLD | 22.39 | 1.18 | 1.26 | 5.8% | 6.1% | 19.0 | 17.8 |
| C | 50.50 | 6.78 | 7.45 | 25.6% | -0.4% | 7.4 | 6.8 |
| TAP | 54.43 | 3.95 | 4.29 | 0.0% | 0.2% | 13.8 | 12.7 |
| OGN | 31.96 | 5.46 | 5.81 | -0.7% | 1.4% | 5.9 | 5.5 |
| ST | 46.62 | 3.94 | 4.57 | 0.0% | 0.4% | 11.8 | 10.2 |
CSCO: Estimates are for fiscal years ending in July.
Current price is yesterday’s mid-day price.