As Value Investors, We Like Our Chances
The U.S. stock market rebounded on Tuesday, following testimony from Chair Powell at his Senate confirmation hearing. Investors liked what he said, implying that the three anticipated quarter-point rate increases, which could start in March, would likely be enough to quell inflation (along with a hoped-for return to normal supply conditions). If this path is successful, the stock market would likely surge in the Goldilocks scenario: low-inflation, low-interest rates with a robust economy.
While a strong economy with few growth constraints would likely help hyper-growth tech stocks, it would also help others. Economic growth would support oil and plastics demand, lifting energy and other commodity companies like our recommended ConocoPhillips (COP) and Dow (DOW). Tech valuations would lift, as would demand for tech gear, helping Cisco Systems (CSCO) and Sensata Technologies (ST). Consumers flush with cash could emerge in a Covid-light summer to drink sodas from Coca-Cola (KO) and quaff beverages from MolsonCoors (TAP).
However, just in case things don’t quite play out this perfectly, and the Fed raises interest rates four or more times along with shrinking its balance sheet (by no longer buying bonds), investors might want to hold onto some value-oriented stocks. Not all of our recommended stocks will outperform hyper-growth stocks in a recovering bull market – even though they as a group already have over the past few months – but they would very likely retain and possibly gain value in a sloppy market, and almost certainly perform much better than trendier tech/IPO/SPAC stocks. Our recommended companies generate solid earnings, have healthy balance sheets and produce sturdy free cash flow. They sport an average price/earnings multiple of only 12.9x estimated 2022 earnings, barely half the S&P500’s multiple of 22x. Also, our stocks pay an average 2.7% dividend yield – more than twice the S&P500’s 1.3% yield.
The reprieve from the tumbling market feels like a huge relief. But, we are only seven or so trading days into the new year – there are 246 more to go. Between now and new year’s 2023, the stock market will likely be volatile. Given the market’s currently optimistic outlook, the risk that inflation stays elevated and the odds that some unexpected negative event happens, we like our chances as value-oriented investors.
Share prices in the table reflect Tuesday (January 11) closing prices. Please note that prices in the discussion below are based on mid-day January 11 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
ConocoPhillips (COP) – Raising our price target from 80 to 89.
Last Week’s Portfolio Changes
None.
Upcoming Earnings Reports
Friday, January 14: Citigroup (C)
Thursday, January 27: Dow (DOW)
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.
If Bristol can demonstrate at least the reasonable potential for merely stable revenues during its patent expiration period, which we believe will happen, the shares are remarkably undervalued. On a free cash flow yield basis, assuming an average of $15 billion/year, the shares trade at a 12% free cash flow yield.
Bristol provided an encouraging update at JPMorgan’s Annual Healthcare Conference on January 10. Most tangibly, the company announced that it will repurchase $5 billion of its shares in the first quarter – a solid idea in our view given the highly discounted share price.
The company guided for full-year sales of about $47 billion. This was in line with /fractionally lower than consensus estimates, but nevertheless was encouraging because they did not cut the estimate in the face of revenue losses due to patent expirations on treatments like Revlimid. Bristol guided for full-year earnings per share of $7.65 - $7.95 ($7.80 at mid-point), representing growth of about 4% compared to 2021 estimated earnings. Analysts slightly raised their consensus estimate for 2022 to $7.89, on the assumption that Bristol is under-promising. Similar to the revenue guidance, the company’s confidence in its 2022 earnings outlook, because it didn’t lower its 2022 guide, is encouraging.
Essentially, the company is saying that it has confidence that it can navigate the year’s patent expirations pressures. If this confidence is backed up with actual results during the year, it would clearly be supportive for the shares and provide at least some confidence that Bristol can reasonably navigate future patent losses. It also would buy the company more time to develop its internal pipeline and find worthwhile acquisition targets.
The company reiterated its long-term financial targets through 2025, including maintaining low-mid-40% operating margins. Bristol provided its target (not technically “guidance”) for $45 billion - $50 billion in cumulative free cash flow from 2022 to 2024, extending its same target for the 2021-2023 time period, and that it would use this financial firepower to make small and mid-sized bolt-on acquisitions (rather than a major transformative/risky acquisition), continue to cut its debt and return cash to shareholders.
BMY shares moved up another 6% in the past week, bringing the cumulative bounce from mid-December’s bottom to just over 21%. The shares are approaching their mid-2021 high and have about 19% upside to our 78 price target. Valuation remains low at 8.3x estimated 2022 earnings, compared to 11x or better for its major peer companies. The stock’s 7.7x EV/EBITDA multiple is similarly cheap, compared to 9-10x or better for peers.
Either we are completely wrong about the company’s fundamental strength, or the market must eventually recognize Bristol’s earnings stability and power. We believe the earning power, low valuation and 3.3% dividend yield that is well-covered by enormous free cash flow make a compelling story. 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 two weeks.
CSCO shares rose 1% in the past week and have 7% upside to our 66 price target. The stock trades at a post-dot-com peak, having surpassed its prior post-bubble high of about 58 set in mid-2019. The all-time high was set in March, 2000 at just over 80. The shares offer a 2.4% dividend yield. BUY
Coca-Cola (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 oversized 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.
The company will leverage its Fresca brand in a new agreement with Constellation Brands. Constellation will manufacture, market and distribute new Fresca mixed cocktails starting this year. This should add incremental momentum to Fresca, which is currently the fastest growing soft drink trademark in Coca-Cola’s U.S. portfolio. The soft drink is highly popular as a cocktail mixer, given its zero-calorie, zero-sugar sparkling soda water traits.
KO shares slipped 1% in the past week and are fractionally below the all-time high. The shares have about 7% upside to our 64 price target.
While the valuation is not statistically cheap, the shares remain undervalued given the company’s future earning power and valuable franchise. Also, the value of Coke’s partial ownership of a number of publicly traded companies (including Monster Beverage) is somewhat hidden on the balance sheet, yet is worth about $23 billion, or 9% of Coke’s market value. This $5/share value provides additional cushion supporting our 64 price target. KO shares offer an attractive 2.8% 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/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 newsflow related to economic growth, energy prices and any industry capacity changes. In the meantime, Dow shareholders can collect a highly sustainable 4.8% dividend yield while waiting for more share buybacks, more balance sheet improvement, more profits and a higher valuation.
There was no significant company-specific news in the past week.
Dow shares were flat in the past week and have 33% 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 in June and we think it will divest its animal health segment sometime in the next five years.
Merck’s presentation at JPMorgan’s Annual Healthcare conference on January 10 was largely uninformative. Merck said it sees a doubling of its Gardasil sales by 2030 (implying a 7.2% annual growth rate). It also reiterated that it sees acquisitions, co-investments and joint ventures as an important part of its strategy (not news). Merck also committed to lifting operating margins to greater than 43% by 2025. Separately, several new countries announced that they are adopting the use of the molnupiravir Covid treatment.
Merck shares gained 5% in the past week. Investor expectations are very low, yet the company won’t passively accept its presumed demise. The shares have about 22% upside to our 99 price target.
Merck produces generous free cash flow to fund its current dividend (now yielding 3.4%) as well as likely future dividend increases (the company recently raised its dividend by 6%), although its shift to a more acquisition-driven strategy will slow the pace of increases. BUY
Buy Low Opportunities Portfolio
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 including its economic conditions (in particular, inflation, running at a 10.7% rate), currency and the chances that a socialist might win next 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.
The company will hold its annual Investor Day on January 26, 2022, at 7:30am New York time, with a live webcast available through Arcos’ website.
ARCO shares fell 9% in the past two weeks, probably related to market volatility and perhaps some slippage after the strong surge late last year. ARCO shares have about 35% upside to our 7.50 price target.
We remain steady in our conviction in the company’s recovery. 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. We note that analysts have raised their 2022 earnings estimate by 4% this past week.
Aviva shares rose 2% in the past two weeks. Insurance company stocks are sensitive to financial market gyrations (in both directions) they have leveraged balance sheets with their principal tangible assets being investments and securities. Aviva shares have about 18% 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 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.
There was no significant company-specific news in the past week.
Over the past week, commodity gold was unchanged at $1,815/ounce, recovering from a dip below $1,790 since a week ago. The 10-year Treasury yield jumped to 1.76%, although it dipped from its new post-pandemic high of about 1.81% set on Monday. The U.S. Dollar Index, another driver of gold prices (the dollar and gold usually move in opposite directions), dipped to 95.67. The index remains about 3% below its pre-Covid late-2019 level of about 99. Per-ounce gold prices seem range-bound between $1,700 and $1,900.
Concerns over the Fed’s pace and magnitude of tightening, as well as geopolitical tensions in the Ukraine and Kazakhstan, along with a general increase in global tensions, have pushed around gold, interest rates and the dollar. We see the gaping spread between mid-1% Treasury yields and nearly 7% inflation rate being closed at least partly by rising interest rates. It would seem highly unlikely that the spread remains any wider than three or four percentage points.
Barrick shares were flat this past week and have about 44% 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.
On its recurring $.09/quarter dividend, GOLD shares offer a reasonable 1.9% dividend yield. Barrick paid an additional $0.42/share in special distributions last year (no clarity on 2022 special dividends), lifting the effective dividend yield to 4.2%. 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.
Citigroup will report fourth-quarter earnings on Friday, with the consensus earnings estimate at $1.66/share.
Citi has adopted for its U.S. employees a strict mandate that requires a vaccine by January 14 or a specific exemption, or the employee will be placed on unpaid leave then fired at the end of the month. This “no jab, no job” rule is the first among major U.S. financial institutions. We anticipate minimal effect from this mandate on Citi’s shares or earnings, despite the sizeable degree of controversy.
Citi shares jumped another 5% over the past week and have about 27% upside to our 85 price target. After a noticeable dip following our new recommendation, the shares have nearly fully recovered. At 8.5x estimated 2022 earnings and 95% of tangible book value, Citi shares are among the cheapest in the banking sector – a major attraction as expectations are low. Critically, there is more to the story than just cheap valuation, as Citi is undergoing an aggressive retrench and rebuild turnaround under a highly capable new CEO. As the bank grinds along with its turnaround, the valuation should continue to lift.
The recent surge in the 10-year Treasury yield has helped boost the shares. The Treasury market has shown little concern about inflation. With inflation currently running at 6.8%, Treasuries would produce a negative post-inflation return of about 5% every year – this seems unsustainable. For perspective, a 6.8% inflation rate over ten years produces a near-doubling of the price level. Treasury investors would be left far behind in terms of spending power.
Given this, Treasury yields and inflation rates should eventually converge (perhaps not to the exact same rate but certainly a lot closer than the current 5-percentage point spread). The market still seems convinced that the inflation rate will tumble back to perhaps a 3% pace, such that more aggressive Fed action beyond their likely three rate hikes is not needed.
We see a greater likelihood that when the Fed stops its bond buying program, bond prices and yields will return to the market’s control, for the most part. This will probably result in higher interest rates across the board. This would be supportive of Citi’s earnings power.
Citigroup investors enjoy a 3.0% dividend yield and perhaps another 3% or more in annual accretion from the bank’s share repurchase program. BUY
ConocoPhillips (COP), based in Houston, Texas, is the world’s largest independent E&P company, with about two-thirds of its production in the United States. Conoco’s shares are depressed, as investors avoid climate-unfriendly companies, have low interest in exposure to volatile and unpredictable oil and gas prices, worry that company management will lose its new-found capital spending discipline, and are concerned that OPEC+ will re-open their spigots, sending oil prices tumbling.
We see resilient oil prices, as demand remains strong, alternatives aren’t yet plentiful enough, supply growth is restrained as shareholders prioritize cash flow rather than capital spending, and as majors seek to reduce their carbon footprint. We like Conoco’s low valuation, investment grade balance sheet, strong free cash flow, and public commitment to limiting its capital spending to 50% of its annual cash flow. The shares offer a respectable base-level dividend to shareholders that appears rock-solid.
Large shale oil producers in Texas may lose as much as half their water disposal capacity in some areas as state regulators work to reduce a spike in small earthquakes/tremors in oil-producing regions. The issue: drillers use vast quantities of saltwater in their shale drilling processes, and this water needs to be disposed of. Currently, producers drill deep injection wells, then dispose of the water down the hole. But the drilling can disrupt the underground geology enough to produce tremors that are felt on the surface. While no major damage occurs, it has regulators concerned enough to reduce the practice.
For Conoco and other majors, the overall effect is not likely to be large: it makes new drilling more expensive as waste water will need to be trucked, railed, or piped away to unaffected counties, but won’t affect the company’s overall profits significantly. However, the rules may reduce production by smaller producers who can’t afford the incremental costs, and any increase in costs will reduce overall production in Texas. This would incrementally support oil prices and thus Conoco.
West Texas Intermediate crude is currently trading at $81.30/barrel, up 5% from a week ago, while natural gas in the United States is priced at $3.89, up about 7% from a week ago. Cold weather is pressuring natural gas prices around the world, including in Europe which relies on gas from Russia via a pipeline that runs through Ukraine. A recent arrival of ships carrying natural gas from the U.S. has temporarily eased European prices but is lifting U.S. prices as export profits remain elevated.
OPEC’s production restraint continues to lift oil prices as global oil demand trends continue to look healthy, helped by the increase in global Covid vaccination rates and greater willingness by governments, consumers and businesses to keep economies open. We see little enduring impact from Omicron. A larger impact would be a major economic slowdown in the U.S. or elsewhere, which we believe is unlikely in the near term.
ConocoPhillips shares jumped 5% in the past week to above our 80 price target. Given the good likelihood of higher oil and natural gas prices, and Conoco’s spending restraint, both of which make COP shares cheaper, we are raising our price target to 89. 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 reinstated its dividend.
There was no significant company-specific news in the past week.
TAP shares slipped 1% in the past week and have about 42% 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 2022 results, still among the lowest valuations in the consumer staples group and below other brewing companies. 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.
Organon provided little incremental information at the JPMorgan Annual Healthcare conference on January 10. One useful nugget was that the company said its EBITDA margin would stay between 33% and 37% – a wide spread but it was encouraging that this range wasn’t lower despite higher investments in research and development. Organon is wrapping up its budgeting process and will likely provide more color when it reports earnings in mid-February.
OGN shares rose 2% in the past two weeks and have about 43% 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.
There was no significant company-specific news in the past week.
ST shares fell 2% in the past two weeks yet remain just below their all-time high as the market increasingly recognizes the value of the company’s steady earnings growth, healthy margins, solid business franchise and underleveraged balance sheet. The shares have about 18% 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 | 1/11/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Bristol-Myers Squibb (BMY) | 04-01-20 | 54.82 | 65.48 | 19.4% | 3.3% | 78.00 | Buy |
| Cisco Systems (CSCO) | 11-18-20 | 41.32 | 62.37 | 50.9% | 2.3% | 66.00 | Buy |
| Coca-Cola (KO) | 11-11-20 | 53.58 | 60.45 | 12.8% | 2.7% | 64.00 | Buy |
| Dow Inc (DOW) * | 04-01-19 | 53.50 | 59.18 | 10.6% | 4.7% | 78.00 | Buy |
| Merck (MRK) | 12-9-20 | 83.47 | 81.67 | -2.2% | 3.4% | 99.00 | Buy |
| Buy Low Opportunities Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 1/11/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Arcos Dorados (ARCO) | 04-28-21 | 5.41 | 5.56 | 2.8% | — | 7.50 | Buy |
| Aviva (AVVIY) | 03-03-21 | 10.75 | 11.92 | 10.9% | 5.1% | 14.00 | Buy |
| Barrick Gold (GOLD) | 03-17-21 | 21.13 | 18.86 | -10.7% | 1.9% | 27.00 | Buy |
| Citigroup (C) | 11-23-21 | 68.10 | 67.11 | -1.5% | 3.0% | 85.00 | Buy |
| ConocoPhillips (COP) | 9-24-21 | 65.02 | 83.59 | 28.6% | 2.2% | 89.00 | Buy |
| Molson Coors (TAP) | 08-05-20 | 36.53 | 49.25 | 34.8% | 2.8% | 69.00 | Buy |
| Organon (OGN) | 06-07-21 | 31.42 | 32.75 | 4.2% | 3.4% | 46.00 | Buy |
| Sensata Technologies (ST) | 02-17-21 | 58.57 | 64.09 | 9.4% | — | 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 | 65.59 | 7.89 | 8.19 | 0.8% | 0.6% | 8.3 | 8.0 |
| CSCO | 61.93 | 3.42 | 3.68 | 0.0% | 0.0% | 18.1 | 16.8 |
| KO | 59.84 | 2.43 | 2.60 | -0.4% | 0.0% | 24.6 | 23.0 |
| DOW | 58.54 | 6.26 | 6.34 | 0.2% | -0.3% | 9.4 | 9.2 |
| MRK | 80.82 | 7.24 | 7.23 | -0.1% | 0.0% | 11.2 | 11.2 |
| 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 | |
| ARCO | 5.54 | 0.30 | 0.37 | 0.0% | 0.0% | 18.5 | 15.0 |
| AVVIY | 11.83 | 1.27 | 1.35 | 4.4% | 0.0% | 9.3 | 8.8 |
| GOLD | 18.76 | 1.14 | 1.14 | -0.7% | -1.4% | 16.5 | 16.4 |
| C | 66.96 | 7.84 | 8.46 | -1.8% | -1.6% | 8.5 | 7.9 |
| COP | 81.13 | 8.09 | 7.09 | 1.4% | 5.2% | 10.0 | 11.4 |
| TAP | 48.61 | 4.08 | 4.35 | -0.5% | -0.2% | 11.9 | 11.2 |
| OGN | 32.25 | 5.93 | 6.02 | 0.0% | 0.0% | 5.4 | 5.4 |
| ST | 63.62 | 4.08 | 4.71 | 0.2% | 0.4% | 15.6 | 13.5 |
Current price is yesterday’s mid-day price.
CSCO: Estimates are for fiscal years ending in July. Current price is yesterday’s mid-day price.