The Low Tide is Revealing Some Underclad Swimmers
Our weekly note usually follows the theme of “what’s on our minds.” The topics range from discussions about individual stocks to the overall market to inflation and other matters. We usually have a lot on our minds, so it’s mostly a matter of picking one.
This week, one topic on our mind is the merits of having others manage one’s investment portfolio. Professional investing requires some combination of talent, process, and marketing (a manager needs assets to manage). We’ve seen this from the inside during our 25-plus years of professionally managing investments. Done right, investment management is a service that benefits the customers over the long run – by providing competitive returns using reasonable risk at reasonable fees.
However, as the industry has grown, talent and process have been relegated to second-tier status while marketing has ascended to the top priority. The aggressive marketing of ESG strategies, active mutual funds, target-date funds and elite hedge funds, all of which carry high fees but lack the performance to support them, showcase this problem.
This supremacy of marketing is an immense disservice to the funds’ customers. Exhibit A is Tiger Global hedge fund. Year-to-date through May, its core hedge fund that held $23 billion in assets at year-end 2021 has lost 52% of its value. Another fund within Tiger Global, an $11 billion (year-end assets) strategy that doesn’t short-sell stocks, lost 62%. Its venture capital portfolio – which traditionally is an asset class well outside of the hedge fund skill set – will likely show similar losses on its $64 billion in year-end asset base.
A major culprit in the wipeout was Tiger’s aspirations not for superior returns, but for reaching its $100 billion in assets goal. In its quest for size at the expense of its clients’ performance, Tiger ignored clear signs of a popping bubble through its overzealous reliance on hyper-growth, negative-profit tech stocks. Yet this lost focus, not to mention the lack of hedges in its “hedge fund,” has erased nearly two-thirds of the accumulated gains since inception for the hedge fund and long-only fund – and for most clients that invested after its inception the strategies have likely produced losses. Given that the bulk of its immense venture capital assets were raised in the past few years, it’s fair to suggest that most investors in these funds now are nursing large losses.
Hedge funds like Tiger Global typically charge a 1.5% annual management fee based on assets under management and a 20% fee on any profits. For example, a $10 billion fund that produced a 15% return would collect $150 million in annual base fees plus an additional $300 million in performance fees ($10 billion x 15% return x 20% fee). So, for the privilege of producing what easily could be S&P 500-like returns, the hedge fund earns a $450 million fee, equal to 4.5% of its start-of-year assets. It’s no wonder why star hedge fund managers are billionaires.
Just as large of a disservice as the high fees is their one-way direction. Fees are earned annually, based on trailing performance. A hedge fund that collapses 50% by May of the following year doesn’t give back any of those fees. So, many Tiger Global investors have essentially paid high fees to lose more money than an index fund.
Our beef isn’t specific to Tiger Global, although they stand out as perhaps the most visible example. What is most upsetting is that too many investment managers focus on asset growth rather than investment performance. This draws in customers but in too many cases then does these customers a disastrous disservice – through high fees and subsequently lousy returns.
The market’s low tide is arriving. Warren Buffett, head of Berkshire Hathaway, an immensely successful investor and source of a vast library of poignant quotes about other investors, once said, “Only when the tide goes out do you discover who has been swimming naked.”
While you are waiting for the tide to turn, consider investing in some of our recommended undervalued stocks discussed below. And for dull-as-sand yet 100% U.S. government guaranteed securities that currently pay an annual 9.6% interest rate, consider investing in US Treasury Series I Savings Bonds. They are available through the US Treasury Direct service, which is a branch of the Treasury Department.
Share prices in the table reflect Tuesday (June 7) closing prices. Please note that prices in the discussion below are based on mid-day June 7 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
Bristol-Myers Squibb (BMY) – Moving from HOLD to SELL
Big Lots (BIG) – Moving from BUY to HOLD
Growth/Income Portfolio
Cisco Systems (CSCO) is facing revenue pressure as customers migrate to the cloud and thus need less of Cisco’s equipment and one-stop-shop services. Cisco’s prospects are starting to improve under a relatively new CEO, who is shifting Cisco toward a software and subscription model and is rolling out new products, helped by its strong reputation and entrenched position within its customers’ infrastructure. The company is highly profitable, generates vast cash flow (which it returns to shareholders through dividends and buybacks) and has a very strong balance sheet.
Cisco will update investors several times in June, including at Bank of America’s 2022 Global Technology Conference (June 8 at 5:20 p.m. ET) and the Nasdaq Investor Conference (June 14 at 4 a.m. ET, yes, in the morning). These are minor, technology-oriented conferences primarily presented by heads of tech businesses rather than strategic-level updates.
With Cisco, we are stuck with a stock that has fully round-tripped from our initial recommendation at 41.32 to 64 and back to 45 or so. While frustrating, this is not the time to sell the stock. The fundamentals remain reasonably stable and likely to tick back upward, and profits seem likely to improve, as well. If we have a recession in global tech spending, Cisco would likely to feel the downturn but not as severely as other technology companies due to the mission-critical nature of its products and services.
The valuation is attractive at 9.2x EV/EBITDA and 13.4x earnings, the shares pay a sustainable 3.4% dividend yield, the balance sheet is very strong and Cisco holds a key role in the basic plumbing of technology systems even if its growth rate is only modest. We are keeping our Buy rating.
CSCO shares were flat in the past week and have 46% upside to our 66 price target. 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.
There was no significant company-specific news in the past week.
KO shares dipped 2% in the past week and have 11% upside to our recently and tepidly raised 69 price target. We recently moved the shares to a HOLD as rising interest rates and the market’s weakness put a lid on the target valuation multiple.
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. HOLD
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 4.2% dividend yield while waiting for more share buybacks, more balance sheet improvement, more profits and a higher valuation.
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. No change to our price target or rating.
In perhaps a record for brevity, Dow’s presentation by its CEO at the highly-regarded Bernstein Strategic Decisions Conference last week was a single slide, although it was accompanied by four slides for title pages and boilerplate compliance disclosures. The primary message was that Dow remains optimistic on their near-term and long-term prospects, and reiterated their second-quarter guidance. Also, they spoke about their advantageous cost position relative to European chemicals plants, as Dow’s U.S. plants have a cheaper source of natural gas and natural gas liquids relative to the European producers. Russia is a major global producer of chemicals, so export restrictions from that country will tighten the market and help Dow. As China emerges from Covid lockdowns, their demand for plastics should ramp up, helping to reverse negative profit margins in some Asian markets. From a dividend perspective, the CEO spoke of the importance of being able to maintain the dividend and capital spending even at the bottom of the cycle.
Dow shares slipped 2% in the past week and have 17% 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.
There was no significant company-specific news in the past week.
Merck shares fell 2% in the past week and have about 10% upside to our 99 price target. The company has a strong commitment to its dividend (3.1% 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. With limited upside, and our reluctance to raise our price target, we recently moved the shares to HOLD. HOLD
Buy Low Opportunities Portfolio
Allison Transmission Holdings, Inc. (ALSN) – Allison Transmission is a mid-cap ($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.
There was no significant company-specific news in the past week.
Allison shares lifted 3% in the past week and have 17% upside to our 48 price target. The stock pays an attractive and sustainable 2.0% 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 an 11.3% rate), currency and the chances that a socialist might win this year’s Brazilian presidential elections, will continue to move ARCO shares.
The company will present to investors at the Bradesco BBI Conference in London (June 8 and 9, no times specified).
ARCO shares dipped 2% in the past week and have 11% upside to our 8.50 price target. BUY
Aviva, plc (AVVID), 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 (U.K., 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.
Aviva completed a complicated capital return program, which is called a “B Share Scheme” on June 6. The program features a payout to shareholders of about £3.75 billion (about $4.7 billion) and a reduction in the share count.
Our initial review of this transaction is this: A typical buyback program involves a company repurchasing shares in the open market with no direct impact on shareholders. Aviva’s repurchase appears to be a pro-rata repurchase from each shareholder, such that each shareholder gets cash for some percentage of their shares.
We will dig further into the mechanics of this complicated transaction.
The net effect is that the ADS shares now trade under the ticker AVVID rather than AVVIY, and holders get approximately $2.5315/ADS in cash which is treated as a return of capital for tax purposes. Investors may want to check with their tax advisor on the treatment of this cash payout, as it might not be a taxable event but may reduce their tax cost basis.
Analysts began to factor this transaction and its effect on the share count and thus per-share earnings into their estimates a few weeks ago, which accounts for the sharp jump in estimates that we noted.
Aviva shares slipped about 1% in the past week and have about 33% upside to our 14 price target. Based on management’s estimated dividend for 2023 (which we believe is highly credible), the shares produce a generous 7.8% yield. Based on this year’s actual dividend, the shares offer an attractive 5.3% dividend yield. 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.
Barrick said it completed its divestiture of its 8.5% stake in Perpetua Resources for about $17 million. While tiny, the sale helps Barrick clean up its holdings in non-core assets.
Over the past week, commodity gold ticked up fractionally to $1,854/ounce. The 10-year Treasury yield lifted to 2.99% after reaching 3.04% earlier in the week. 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 next CPI release, for May 2022, will be on Friday, June 10. The US Dollar Index, another driver of gold prices (the dollar and gold usually move in opposite directions), ticked up to 102.56.
Barrick shares rose 1% in the past week and have about 31% 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
Big Lots (BIG) – Big Lots is a discount general merchandise retailer based in Columbus, Ohio, with 1,431 stores across 47 states. Its stores offer an assortment of furniture, hard and soft home goods, apparel, electronics, food and consumables as well as seasonal merchandise. Our bullish case for Big Lots rests with its loyal and growing base of 22 million rewards members, its appeal to bargain-seeking customers, the relatively stable (albeit low) 5.5% cash operating profit margin, its positive free cash flow, debt-free balance sheet and low share valuation at 3.1x EV/EBITDA and 7.3x per-share earnings based on conservative January 2023 estimates.
Our thesis was deeply rattled when the company reported dismal first-quarter results on May 27. The loss of $(0.39)/share was shockingly weak, particularly when compared to the $2.62/share profit a year ago, the company’s guidance of $1.10-$1.20 given on March 3, and the $0.94 consensus estimate. Weak sales and profit margins will continue to crimp its results as it needs to down-price its now-bloated inventory, which will weigh on profits for most of the rest of the year. Also, the company borrowed $271 million to finance its inventory, and with the profit outlook now hobbled Big Lots has a potential liquidity risk if it is unable to offload its inventory soon enough or at high-enough prices.
After looking deeper into the situation, we are retaining our HOLD rating for now. Investor expectations are sufficiently depressed to provide some downside cushion. Management should be able to extract itself from the worst of the inventory problem over the next few quarters, and its efforts to cut costs and capital spending will help preserve cash. We are incrementally encouraged that the company is replacing its chief merchandising officer, as at least some of the blame rests at his feet, while the new co-chiefs will no doubt aggressively work to fix the issues.
Nevertheless, the Big Lots investment is now high-risk. If the company can’t convert enough of its inventory into cash, or if it has a dismal holiday season later this year, it could run into liquidity problems. This would be disastrous for its shares. Further, we see the dividend as no longer safe – the $34 million a year in payouts may be needed to buttress its liquidity. If the company cut or eliminated its dividend, investors would be sufficiently alarmed to perhaps push the shares down sharply.
Big Lots shares fell 3% in the past week. We are reducing our price target to 35, offering a potential 43% upside. HOLD.
Citigroup (C) – Citi is one of the world’s largest banks, with over $2.4 trillion in assets. The bank’s weak compliance and risk-management culture led to Citi’s disastrous and humiliating experience in the 2009 global financial crisis, which required an enormous government bailout. The successor CEO, Michael Corbat, navigated the bank through the post-crisis period to a position of reasonable stability. Unfinished, though, is the project to restore Citi to a highly-profitable banking company, which is the task of new CEO Jane Fraser.
Citi said that a London-based “fat finger” trader cost it about $50 million in losses. While small, the trade triggered sharp volatility in several European stocks and is yet another embarrassing episode in a long series that highlights Citi’s incomplete internal controls and compliance. We see the fallout as minor but not zero.
We note that the spread between the 90-day T-bill and the 10-year Treasury note, which approximates the drivers behind Citi’s net interest margin, is 1.78%. This spread narrowed by about 3 basis points this past week (there are 100 basis points in one percent).
Citi shares fell 4% over the past week and have about 66% upside to our 85 price target. 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 4% in the past week and have about 28% 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 9.1x estimated 2022 results, still among the lowest valuations in the consumer staples group and below other brewing companies. The 2.8% 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 2% in the past week and have about 23% 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 3.0% 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 rose 1% in the past week and have about 54% upside to our 75 price target. Our price target looks optimistic in light of the broad market sell-off, but we will keep it for now, even as it may take longer for the shares to reach it. BUY
Disclosure:The chief analyst of the Cabot Undervalued Stocks Advisor personally holds shares of every recommended security, except for “New Buy” recommendations. The chief analyst may purchase or sell recommended securities but not before the fourth day after any changes in recommendation ratings has been emailed to subscribers. “New Buy” recommendations will be purchased by the chief analyst as soon as practical following the fourth day after the newsletter issue has been emailed to subscribers.
| Growth/Income Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 6/7/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Cisco Systems (CSCO) | 11-18-20 | 41.32 | 45.57 | 10.3% | 3.3% | 66.00 | Buy |
| Coca-Cola (KO) | 11-11-20 | 53.58 | 63.25 | 18.0% | 2.7% | 69.00 | Hold |
| Dow Inc (DOW) * | 04-01-19 | 53.50 | 67.37 | 25.9% | 4.2% | 78.00 | Buy |
| Merck (MRK) | 12-9-20 | 83.47 | 90.48 | 8.4% | 3.1% | 99.00 | Hold |
| Buy Low Opportunities Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 6/7/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Allison Transmission Hldgs (ALSN) | 02-22-22 | 39.99 | 41.37 | 3.5% | 2.0% | 48.00 | Buy |
| Arcos Dorados (ARCO) | 04-28-21 | 5.41 | 7.67 | 41.8% | 2.0% | 8.50 | Buy |
| Aviva (AVVID) | 03-03-21 | 10.75 | 10.87 | 1.1% | 7.6% | 14.00 | Buy |
| Barrick Gold (GOLD) | 03-17-21 | 21.13 | 20.74 | -1.8% | 1.9% | 27.00 | Buy |
| BigLots (BIG) | 04-12-22 | 35.24 | 24.20 | -31.3% | 5.0% | 35.00 | Hold |
| Citigroup (C) | 11-23-21 | 68.10 | 52.10 | -23.5% | 3.9% | 85.00 | Buy |
| Molson Coors (TAP) | 08-05-20 | 36.53 | 54.65 | 49.6% | 2.5% | 69.00 | Buy |
| Organon (OGN) | 06-07-21 | 31.42 | 37.81 | 20.3% | 3.0% | 46.00 | Buy |
| Sensata Technologies (ST) | 02-17-21 | 58.57 | 49.15 | -16.1% | 0.9% | 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 | |
| CSCO | 45.07 | 3.36 | 3.56 | 0.0% | 0.0% | 13.4 | 12.7 |
| KO | 62.33 | 2.47 | 2.65 | 0.0% | 0.0% | 25.2 | 23.5 |
| DOW | 66.94 | 8.12 | 7.33 | 0.0% | 0.0% | 8.2 | 9.1 |
| MRK | 89.81 | 7.39 | 7.41 | 0.1% | 0.0% | 12.2 | 12.1 |
| 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 | 41.17 | 6.24 | 7.21 | 0.0% | 0.0% | 6.6 | 5.7 |
| ARCO | 7.68 | 0.39 | 0.46 | 0.0% | 0.0% | 19.7 | 16.7 |
| AVVID | 10.56 | 1.20 | 1.49 | -0.8% | -1.7% | 8.8 | 7.1 |
| BIG | 23.75 | (2.36) | 2.73 | 4.0% | -6.2% | (10.1) | 8.7 |
| GOLD | 20.65 | 1.17 | 1.22 | 0.5% | 1.2% | 17.7 | 17.0 |
| C | 51.19 | 6.85 | 7.39 | 0.3% | 0.3% | 7.5 | 6.9 |
| TAP | 53.85 | 3.93 | 4.28 | 0.0% | 0.0% | 13.7 | 12.6 |
| OGN | 37.35 | 5.33 | 5.74 | 0.0% | 0.0% | 7.0 | 6.5 |
| ST | 48.63 | 3.87 | 4.53 | -0.3% | -0.2% | 12.6 | 10.7 |
Current price is yesterday’s mid-day price.
CSCO: Estimates are for fiscal years ending in July.