Cabot Undervalued Stocks Advisor Weekly Update

INTEREST RATES CONTINUE TO DOMINATE HEADLINES

The news media continues to whip investors into a frenzy over the direction of interest rates. Depending on where you look, you can find knowledgeable financial pundits making the case for steady, unchanging interest rates or for the Fed to lower the fed funds rate in July. My opinion is therefore worth about $0.25, depending on whether the quarter comes up heads or tails. At this point, I do not expect a near-term drop in interest rates.

For as long as I can recall, I’ve been predicting stable, unchanging interest rates throughout 2019, as determined by the fed funds rate. My assessment is based most heavily on inflation (which remains low/stable), GDP growth (which remains strong) and employment (at historically high levels). Other economic statistics of note include business loan activity and trends in consumers paying their charge cards on time. For the most part, I pay no attention to “consumer confidence” reports. How can consumers be confident when media outlets are competing to scare viewers half to death? We occasionally witness a one-off economic statistic that indicates weakness, and it’s almost always followed by a subsequent report showing strength on par with a strong/stable economy.

Longer-term, I continue to believe that food price inflation will ultimately change the status quo. Rising prices on meats and grains are a natural result of the severe 2019 flooding in the U.S. Midwest that delayed/canceled planting cycles and killed livestock, and the devastation within China’s hog population due to African Swine Fever (ASF). ASF has spread to neighboring countries, it’s continuing to spread unchecked in China, and there is thus far no vaccine to help halt the disease. Poultry prices could also rise as China buys more poultry to offset the scarcity of pork.

We’ll see how interest rates play out in the coming year. Remember, the job of the Federal Reserve is to serve as an umpire on the economy, stepping in when something runs afoul of normalcy. They’re not supposed to worry that something negative might happen, but rather wait for something negative to actually happen, and then decide whether to adjust course via manipulation of interest rates or to remain on course while keeping a watchful eye on the pulse of the economy. The Fed is also supposed to ignore the partisan wishes of the various team coaches—investors, bond traders, the President, banks, etc.—who have self-interests in the outcome of the game.

As for me, I’m not concerned with occasional tweaks in the Fed funds rate, except for their effect on one industry: financial companies. When we enter a cycle of falling interest rates, I will be paring back investments in banks and lenders. In addition, I’ll pay close attention if businesses stop borrowing money, or if consumers stop paying their bills on time, each of which could signal an end to this current cycle of economic prosperity.

A MESSAGE FOR SHAREHOLDERS OF CORTEVA (CTVA) AND DUPONT DE NEMOURS (DD)

I acquired a Letter to Shareholders from Corteva, via email, that addresses its post-spinoff cost basis, with corresponding cost basis for DuPont de neMours (DD). I can forward that email to you upon your request. The letter will hopefully also be posted on Corteva’s website in the near future.

Send questions and comments to Crista@CabotWealth.com.

QUARTERLY EARNINGS RELEASE CALENDAR
July 11 am: Delta Air Lines (DAL) – 2Q
July 15 am: Citigroup (C) – 2Q
July 18 am: Blackstone Group (BX) – 2Q
July 19 am: Schlumberger (SLB) and Synchrony Financial (SYF) – 2Q
July 25 am: Dow Inc. (DOW), Southwest Airlines (LUV) and Total SA (TOT) – 2Q
July 30 pm: Apple (AAPL) – 3Q
July 31 am: Baker Hughes, a GE Company (BHGE) – 2Q
August 1 am: Corteva (CTVA) and Marathon Petroleum (MPC) – 2Q
August 5 pm: Mosaic (MOS) – 2Q

TODAY’S PORTFOLIO CHANGES
Axis Capital Holdings (AXS) moves from Strong Buy to Hold.

LAST WEEK’S PORTFOLIO CHANGES
Alexion Pharmaceuticals (ALXN) moved from Buy to Strong Buy.
Corteva (CTVA) moved from Hold to Buy.
Delta Air Lines (DAL) moved from Strong Buy to Buy.
Designer Brands (DBI) moved from Buy to Strong Buy.
DuPont de neMours (DD) moved from Hold to Sell.
Sanmina (SANM) moved from Hold to Buy.
Supernus Pharmaceuticals (SUPN) moved from Hold to Buy.

UPDATES ON GROWTH PORTFOLIO STOCKS

Adobe Systems (ADBE) is a software company that’s changing the world through digital experiences. Adobe is reimagining Customer Experience Management (CXM) with Adobe Experience Cloud, the industry’s only end-to-end solution for experience creation, marketing, advertising, analytics and commerce. Full year consensus estimates point toward EPS increasing aggressively by 42.0% in 2019 and 24.8% in 2020. The high P/E of 39 is the only reason that I am not giving ADBE a Strong Buy recommendation.

ADBE is a large-cap growth stock; a great stock for risk-tolerant growth investors and buy-and-hold equity portfolios. ADBE surpassed all-time highs on strong volume in mid-June, and the price chart remains bullish. I expect an extended run-up, occasionally interrupted by pullbacks in the broader market. Buy ADBE now. Buy.

CF Industries Holdings (CF – yield 2.6%) is one of the world’s largest producers of nitrogen products, serving customers on six continents. The company operates nine nitrogen production facilities in Canada, the U.K. and the U.S. CF Industries expects strong nitrogen demand through the current quarter, and to continue benefiting from low natural gas prices throughout 2019. The Henry Hub price of natural gas closed at $2.40 MMbtu last week.

The company is expected to grow full-year EPS by 62% and 33% in 2019 and 2020, with corresponding P/Es of 23.0 and 17.3. CF is a cyclical mid-cap aggressive growth stock. The stock launched above previous price resistance in mid-June. CF could trade anywhere between 44.5-50 in the coming weeks. Strong Buy.

CIT Group (CIT – yield 2.7%) operates both a bank holding company with $30 billion in consumer deposits and a financial holding company. CIT Group provides financing, leasing and advisory services to small and middle market businesses, consumer markets, and the real estate and railroad industries. CIT is an undervalued growth stock with an attractive dividend yield. Wall Street expects EPS to increase 19.3% and 13.7% in 2019 and 2020. The P/E is 10.8. The stock appears capable of surpassing 54-55, where it traded repeatedly in 2018. Buy CIT now. Strong Buy.

Marathon Petroleum (MPC – yield 3.8%) is a leading integrated downstream energy company and the nation’s largest energy refiner, with 16 refineries, majority interests in two midstream companies that will soon merge, 10,000 miles of oil pipelines and product sales in 11,700 retail stores. Consensus earnings estimates project 2019 EPS falling 25%, followed by a 73% jump in 2020 EPS, while the 2020 P/E is incredibly low at 6.9.

MPC rose rapidly on heavy volume in recent weeks, rebounding from the May declines in both crude oil prices and the broader stock market. Be aware that any hurricanes that make landfall through the U.S. Gulf Coast will likely (temporarily) increase both profit margins and share prices for oil refining companies. If you bought MPC for a short-term trade when I moved the stock from Hold to Buy on June 18, be prepared for MPC to hit price resistance at 58 quite soon. There’s additional resistance at 65. Buy.

Sanmina Corp. (SANM) designs and manufactures optical, electronic and mechanical products for original equipment manufacturers (OEMs) primarily in the communications networks, cloud solutions, industrial, defense, medical and automotive industries.

Analysts expect EPS to grow 49.3% and 8.2% in 2019 and 2020 (September year end), and the current P/E is 9.2. Once the June quarter results are reported, and the 2020 earnings estimates are thereafter adjusted, I’ll decide whether to keep SANM in the Growth Portfolio.

SANM is a small-cap growth stock. The stock continues to recover from the May pullback in the broader market. There’s short-term price resistance at 34. Expect volatility. Buy.

Southwest Airlines (LUV – yield 1.4%) is the largest U.S. domestic air carrier, transporting over 120 million customers annually to over 100 locations in the U.S., Central America and the Caribbean. Delta Air Lines’ report of strong June passenger traffic gave a boost to airline stocks last week. Southwest has been forced to cancel approximately 115 daily flights due to the Boeing Max 737 jet problem. CEO Gary Kelly now expects the affected planes to remain out of service beyond their previous target date of October 1. Boeing is working on a software upgrade and test flights in order to win FAA approval on the planes.

Southwest is expected to report second quarter EPS of $1.34 on the morning of July 25, within a range $1.27-$1.40. LUV is an undervalued large-cap stock. Wall Street expects full-year EPS to grow 7.1% and 15.9% in 2019 and 2020. At a share price of 51.79, there’s 12% upside to short-term resistance at 58, making LUV suitable for both growth investors and traders. Buy.

Supernus Pharmaceuticals (SUPN) focuses on the development and commercialization of products for the treatment of central nervous system diseases and psychiatric disorders, including epilepsy and migraine. Supernus has five pipeline products, in various phases of clinical trials, which aim to treat ADHD, impulsive aggression, bipolar disorder, depression and severe epilepsy. Three of those pipeline drugs are expected to launch in 2020, 2021 and 2023.

SUPN is an undervalued small-cap growth stock. Analysts are expecting EPS to grow 10.2% and 16.4% in 2019 and 2020. Political proposals regarding pharmaceutical pricing prompted news stories late last week. If you’re worried, use stop-loss orders. At a share price of 31.9, there’s 31% upside to short-term resistance at 42, making SUPN suitable for both growth investors and traders. Buy.

Voya Financial (VOYA – yield 0.1%) is a retirement, investment and insurance company serving millions of individuals and 49,000 institutional customers in the United States. Voya has $547 billion in total assets under management and administration. Voya was featured in the July issue of Cabot Undervalued Stocks Advisor.

CEO Rodney O. Martin, Jr. recently stated, “We intend to increase our common stock dividend to a yield of at least 1% and we expect to do so beginning in the third quarter of 2019.” Investors should expect that announcement during the last week of July, at which time the share price could easily jump as institutional investors who focus on dividend stocks will have yet another good reason to buy VOYA.

VOYA is an undervalued growth stock. Analysts expect full-year EPS to grow 35.9% and 14.8% in 2019 and 2020, and the current P/E is 10.4. VOYA just began reaching new all-time highs after running up against price resistance at 55 repeatedly for 18 months. Buy VOYA now. Strong Buy.

UPDATES ON GROWTH & INCOME PORTFOLIO STOCKS

Blackstone Group Inc. (BX – yield 4.7%*) is the world’s largest and most diversified alternative asset manager with $512 billion in client assets. The company deploys capital into private equity, lower-rated credit instruments, public debt and equity, real assets, secondary funds and real estate, all on a global basis. On July 1, Blackstone officially changed its business structure. The company’s name changed from Blackstone Group LP to Blackstone Group Inc. Blackstone will deliver second quarter results on the morning of July 18.

BX is a growth & income stock that’s reaching new all-time highs. The corporate conversion should trigger an extended period of institutional buying and also inclusion in the S&P 500 index, each invariably bullish for share price appreciation. Buy BX now. Strong Buy.
*The payout varies each quarter with the total of the last four announced payouts equaling $2.17 and yielding 4.7%.

Citigroup (C – yield 2.5%) is a global financial company that serves consumers, businesses, governments and institutions in 98 countries. Citigroup is expected to report second quarter EPS of $1.84 on the morning of July 15, within a range $1.70-$1.92. Citigroup plans to increase the third quarter dividend payout from $0.45 to $0.51—not yet officially announced—pushing the current yield up to 2.8%.

Citigroup is an undervalued, large-cap growth & income stock. Analysts expect Citigroup to grow EPS by 13.4% and 13.4% in 2019 and 2020. The corresponding price/earnings ratios (P/Es) are 9.5 and 8.4. Bank stocks responded well to the very strong June employment report on July 5. That’s because the now-diminished prospects for interest rate reductions by the Federal Reserve bode well for most banks, which make more profit when interest rates are higher.

On July 3, Jacob Mintz, Chief Analyst of Cabot Options Trader, noted a bullish purchase of January 2020 call options on Citigroup valued at $270,000. The stock is actively rising toward 77, where it last traded in January 2018. Strong Buy.

Commercial Metals Company (CMC – yield 2.7%) – Hold.*** (last review July 2)

Corteva Inc. (CTVA – yield 1.9%) spun off from DowDuPont (DWDP) on June 3. (Pronounced kor-TEH-vuh.) Corteva is an agricultural sciences company, providing farmers with seeds and crop protection products, enabling them to maximize yield and profitability. I am in possession of a Letter to Shareholders from Corteva that addresses its post-spinoff cost basis, with corresponding cost basis for DuPont de neMours (DD). I received the letter from Corteva Investor Relations, via email, and I can forward that email to you upon your request. The letter will hopefully also be posted on Corteva’s website in the near future. Corteva was featured in the July issue of Cabot Undervalued Stocks Advisor.

Analysts** currently expect Corteva to report EPS of $1.14 and $1.45 in 2019 and 2020, reflecting aggressive 27% earnings growth next year. The 2020 price/earnings ratio is 20; not low, but certainly lower than the EPS growth rate. The first quarterly dividend will be paid on September 13.

CTVA is a mid-cap growth & income stock, appropriate for risk-tolerant investors. Buy.

Delta Air Lines (DAL – yield 2.3%) is a U.S. and international passenger and cargo airline that serves nearly 200 million people every year, flying to more than 300 destinations in over 50 countries. In June, Delta served 18.9 million passengers, an all-time monthly record.

Second quarter results will be delivered on the morning of July 11. Last week, Delta announced higher-than-expected June traffic numbers, and also told investors to expect second quarter EPS within a range of $2.25-$2.35, higher than the recent consensus estimate of $2.24. In addition, the company guided both second quarter revenue and pre-tax margin toward the high end of the company’s most recent guidance in April.

Delta announces their annual dividend increase at some point between mid-July and mid-August. Last year’s announcement of a 15% increase took place during the release of second quarter results.

Full year earnings estimates have been climbing since early March, rising again last week. Delta is now expected to achieve 21.4% and 6.0% EPS growth in 2019 and 2020, and the P/E is 8.6. If the projected 2020 EPS growth rate doesn’t improve, subsequent to the second quarter earnings release, I will likely retire DAL from the Growth & Income Portfolio. In the meantime, the price chart is bullish, second quarter results are expected to be quite bullish, and we’re about to hear of a dividend increase. I expect additional near-term capital gains. Buy.

Dow Inc. (DOW – yield 5.7%) is the materials science division of the former DowDuPont (DWDP) that began trading as a separate company on April 2, 2019. Dow is expected to report second quarter EPS of $0.85 on the morning of July 25, within a range $0.75-$1.05, and $11.3 billion revenue, within a range of $11.0-$11.4 billion. Note the wide range of earnings estimates.

When a company is newly introduced to the stock market in a spinoff or in an initial public offering (IPO), it takes several quarters for analysts to get a good grasp of the company’s business performance, and to make relatively accurate projections for future quarters. It doesn’t matter whether the company is large and famous or tiny. It’s like going on a date with a new person: you know what they look like and you’ve got their cell phone number. You think (and hope!) they will behave well – not revealing themselves to be angry, drunk, broke, criminal, psycho or damsel-in-distress. But you won’t start to see their true colors until you’ve gone out with them several times. Therefore, investors should expect the first few quarters of Dow’s business performance to be met with share price volatility as investors decide, “Yes, I love what I’m seeing” or “This is NOT what I signed up for!”

Analysts** currently expect Dow to report EPS of $4.39 and $5.25 in 2019 and 2020. I’m very pleased with the profit projections, the dividend yield and the P/E (11.2). The share price seems stable. Dividend investors should buy now, while growth investors should wait for the price chart to turn bullish. Strong Buy.

Guess?, Inc. (GES – yield 2.7%) – Hold.*** (last review July 2)

Royal Caribbean Cruises (RCL – yield 2.5%) – Hold.*** (last review July 2)

Schlumberger NV (SLB – yield 5.0%) is the world’s largest oilfield service company. Analysts expect Schlumberger to report second quarter EPS of $0.35, within a range of $0.336-$0.36, on the morning of July 19. Full-year earnings are expected to fall 5% in 2019 and to rise 37% in 2020. The 2020 P/E is 18.8. The stock is rising, with price resistance at 41-42 and again at 45-47. Buy.

Total S.A. (TOT – yield 5.4%) is a French multinational integrated energy company operating in over 130 countries. Total’s strengths are in the Middle East, Africa, North Sea and Deep Water. Total is expected to report second quarter results on the morning of July 25. TOT is an undervalued, large-cap growth & income stock with a large dividend yield. Total is expected to see full-year EPS grow 6.3% and 19.2% in 2019 and 2020, and the 2019 P/E is 10.3. The stock rose in June, and will soon meet some short-term price resistance at 57-58. Buy.

UPDATES ON BUY LOW OPPORTUNITIES PORTFOLIO STOCKS

Abercrombie & Fitch (ANF – yield 4.6%) is a specialty retailer of Abercrombie & Fitch, abercrombie kids and Hollister brand apparel and accessories for men, women and kids. The company operates 857 stores globally. The company remains on track toward its multi-year goals of improving revenue, profits, expense-control, data analytics and global store expansion. Analysts expect EPS to fall 15.7% in 2019, then to rise 49.5% in 2020. The 2019 P/E is 17.7. (Earnings estimates do not yet reflect a lower share count stemming from the new 5 million share repurchase authorization.) ANF is a small/micro-cap stock. The stock is rebounding from a rapid drop in May, and could easily reach 20 before pausing again. Buy ANF now, and expect volatility. Buy.

Alexion Pharmaceuticals (ALXN) is a biopharmaceutical company that researches and manufactures treatments of severe and rare health disorders. On July 3, Alexion announced that the European Commission gave marketing authorization to ULTOMIRIS® for the treatment of adult patients with paroxysmal nocturnal hemoglobinuria (PNH).

ALXN is an undervalued large-cap growth stock. Analysts expect EPS to grow 19.1% and 14.2% in 2019 and 2020, and the P/E is 13.8 – rather low for a profitable biopharmaceutical company. Political proposals regarding pharmaceutical pricing triggered news stories late last week. If you’re worried, use stop-loss orders. The stock price is ratcheting toward 140, where it traded in early April. Strong Buy.

Apple Inc. (AAPL – yield 1.5%) is a manufacturer and provider of many popular technology devices and services, including the iPhone, iPad, Mac, App Store, Apple Care, iCloud and more. Five new services will roll out in the coming months: Apple News+, Apple TV+, Apple TV Channels, Apple Arcade and Apple Card. There are over 1.4 billion active Apple devices globally. Apple will report third quarter results on the afternoon of July 30 (September year end).

AAPL is a great stock for a high quality, buy-and-hold equity portfolio. The company has $38 billion in cash, raises the dividend annually, and repurchases tens of billions of dollars of its stock each year. Wall Street expects EPS to fall 4.0% in fiscal 2019, then to rise 10.3% in 2020. AAPL is rising toward price resistance at 210. Strong Buy.

Axis Capital Holdings Ltd. (AXS – yield 2.6%) is an A+-rated global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity of $5.3 billion and locations in Bermuda, the United States, Europe, Singapore, Middle East, Canada and Latin America. AXS is a small-cap stock. Axis reported full-year 2018 EPS of $1.92 in 2018, and is expected to report $4.99 and $5.50 in 2019 and 2020.

AXS broke past price resistance at 60 last week, now rising toward its March 2017 all-time high of 66. I’m moving AXS from Strong Buy to Hold, and will very likely sell the stock near 66 due to fair valuation and price resistance. Hold.

Baker Hughes, a GE Co. (BHGE – yield 2.9%) offers products, services and digital solutions to the international oil and gas community. The number of U.S. rigs drilling for crude oil and natural gas fell by four last week to a total of 963, down 89 vs. a year ago. The Canadian rig count fell by 4 last week to 120, while the international rig count grew by 12 in May to 1,138.

Last week, Reuters reported that Bahrain’s National Oil and Gas Holding Company signed a memorandum of understanding with Baker Hughes that allows the company to explore opportunities, raise efficiency levels, and contribute positive and constructive support for the process of economic growth in the Kingdom of Bahrain. In addition, Baker Hughes was awarded contracts worth $3.76 million from i3 Energy for two upcoming North Sea prospects.

BHGE is an undervalued, mid-cap aggressive growth stock. Wall Street expects EPS to increase 48% and 60% in 2019 and 2020. The P/E remains low in comparison to earnings growth at 25.6. The stock is resting after its June upswing, and could soon rise to short-term price resistance at 28.5. Strong Buy.

Designer Brands Inc. (DBI – yield 5.2%) operates DSW Warehouse and The Shoe Company stores with over 1,000 locations in 44 U.S. states and Canada, and Camuto Group. DSW was the #1 omnichannel retailer in the U.S. in 2017 and 2018, and has delivered 27 consecutive years of sales growth. Designer Brands was featured in the July issue of Cabot Undervalued Stocks Advisor.

DBI is an undervalued growth stock with a hefty dividend yield. Expected EPS growth rates are 15.1% and 13.6% in 2019 and 2020. The P/E is moderate at 10.1. In late June, DBI broke free from its trading range, and could travel as far as 23 before resting again, giving new investors a potential 19% short-term gain. Buy DBI now. Expect volatility. Strong Buy.

The Mosaic Company (MOS – yield 0.8%) is the world’s largest producer of finished phosphate and potash, supplying crop nutrients and animal feed ingredients via production facilities in the U.S., Canada, South America and the Asia-Pacific region. Their mission is to help the world grow the food it needs.

Costs associated with complying with new Brazilian mining regulations contributed to analysts adjusting 2019 EPS expectations downward in mid-June, reflecting a profit drop of 19% in 2019 and an increase of 38% in 2020. The Brazil situation is expected to be fully resolved by the end of September.

MOS is an undervalued mid-cap growth stock. The stock has been rising on strong volume. Upside price resistance is a bit nebulous. MOS could reach anywhere between 26-29 before resting again. Buy.

Synchrony Financial (SYF – yield 2.4%) is a consumer finance company with 80.3 million active customer accounts. Synchrony partners with retailers to offer private label credit cards, and also offers consumer banking services and loans. Synchrony is expected to report second quarter EPS of $0.95, within a range of $0.87-$1.05, on the morning of July 19. SYF is an undervalued, mid-cap growth & income stock. Wall Street expects full-year 2019 EPS growth of 13.9%, and the P/E is low at 8.4. In late July, Synchrony intends to announce an increase in the quarterly dividend from $0.21 to $0.22 per share, bringing the current yield up to 2.5%.

SYF responded well to the very strong June employment report on July 5. That’s because the now-diminished prospects for interest rate reductions by the Federal Reserve bode well for banks and finance companies, which make more profit when interest rates are higher. In addition, strong employment numbers imply that consumers are more likely to repay debt on time. The stock broke past resistance at 35, and could now travel to 38-39, where it peaked in January 2018. Buy SYF now. Strong Buy.

TiVo Corp. (TIVO – yield 4.4%) – Hold.*** (last review July 2)

Universal Electronics (UEIC) is a manufacturer and world leader of wireless and voice remote control products, software and audio-video accessories for the smart home; with over 400 patents and a strong pipeline of new products in the areas of safety and security, climate control and lighting. The full-year 2019 analysts’ earnings estimate projects 31.0% growth, and the P/E is low in comparison at 13.1.

UEIC is an undervalued micro-cap growth stock with very little analyst coverage, appropriate for risk-tolerant investors and traders. The price chart is relatively bullish. A breakout past 45, where UEIC traded in August 2018 and May 2019, could carry the stock to price resistance at 55, a potential 37% gain from the recent 40 share price. Buy UEIC now. Expect volatility. Strong Buy.

UPDATES ON SPECIAL SITUATION STOCKS

Carlyle Group LP (CG – yield 5.4%) manages $221 billion, divided among real assets, corporate private equity, investment solutions and global credit. The company is planning to make a near-term decision regarding whether they will convert from a limited partnership to a corporation, as four of their industry peers have announced since early 2018. A conversion to a corporation would allow a large number of new institutional investors to consider buying CG shares, thus potentially boosting the share price both immediately and over a multi-year period.

On July 3, Jacob Mintz, Chief Analyst of Cabot Options Trader, noted a bullish purchase of August call options on CG valued at $315,000. The stock just retraced 23-24, where it traded several times in 2018. A positive corporate conversion announcement will likely add about 10% to the share price. Buy CG now. Strong Buy.
*The payout varies each quarter with the total of the last four announced payouts equaling $1.26 and yielding 5.4%.

**Earnings projections for companies that have recently undergone major M&A activity (including post-merger companies, post-spinoff companies and IPOs) are relatively tentative until the companies have reported several quarters of earnings results. At that time, analysts can develop projections based on actual corporate results. They can also get a better feel for the reliability of corporate statements regarding the business outlook. (Some CEOs would naturally be conservative when estimating business trends to analysts, while others would be overly optimistic, and yet others perhaps devious or oblivious!)

*** In order to focus attention on newsworthy changes in our portfolio stocks, I’m eliminating descriptions of Hold-rated stocks during weeks when there are no significant news announcements or changes in consensus earnings estimates. As a reminder, Hold does not mean Sell. Hold means that I am not recommending additional purchases of the stock today, either due to price chart action, earnings outlook, or stock valuation. I expect Hold-rated stocks to perform well in the coming months.