Woody Hayes and Warren Buffett
The awful financial market conditions continue to deteriorate. As everyone knows, the domestic stock market ticked below its midsummer low and is now down over 23% from its November 2021 peak. Stock prices in developed country markets have fallen in local terms just as much if not more that the major U.S. stock indices. Emerging market returns (in local terms) have slid 21% YTD. With the awe-inspiring gains in the U.S. dollar, up 19% YTD, global stock returns for American investors have been downright dismal.
Government bond prices have collapsed. This is the right word for the 15%+ drop in the prices of these otherwise stable-value, government-guaranteed securities. Prices of key commodities like oil (down 36% from the peak and now flat year to date) and gold (down 9% YTD) have also slid. For most conventional investors, there have been few if any safe havens. Major institutional investors have sought solace in supposedly resilient private equity holdings, but it is only a matter of time before these are marked down to reflect public equity market declines.
The financial market and economic outlooks are grim. Already-identified crises seem to get worse or some new crisis always seems to emerge. Most recently, the United Kingdom’s announcement of new economic policies (which we believe may be good long-term choices) spooked traders, sending the British pound down to near-parity with the dollar and British bond yields surging. By the end of the week, something else will likely turn for the worse.
It is easy to get pessimistic – very pessimistic. Emotions can be really useful tools in times like these. Use the fear that emotions inspire – not to panic, but to think ahead about the possibility of a complete meltdown of financial markets. As the saying goes, “Don’t be surprised – Be prepared.” Think now about how you are positioned for a market bust and how you would react if the financial market’s wheels fell completely off, say, if the S&P 500 tumbles to 3,400 (where it was just before the pandemic) or even to 2,500 (a round number that is about 10% above the pandemic low set in March 2020). This latter situation is highly unlikely, but not impossible.
A few thoughts: make sure your cash allocation is high enough to buffer the decline and also have cash available to buy in the depths of a burndown. Put your cash in short-term U.S. Treasuries that offer a 4% yield and a 100% government-guaranteed principal value. Sell stocks that still look overvalued or have worthless business models, not necessarily the ones that have fallen the most in price.
After preparing for the possibility of a market meltdown, start thinking about brighter scenarios. Inflation won’t likely accelerate from here, as input prices, housing prices and other prices are already starting to roll over. The pace of wage increases seems to have reached its maximum and is likely to flatten out (albeit at a permanently higher plateau). The next Consumer Price Index report will be released in two weeks, on October 13, and moderation in that index could ease the Fed’s exceptionally aggressive rate increase mentality. Any return to a somewhat steady state – say, 4-5% inflation and a 5% ten-year U.S. Treasury bond yield – would likely sharply lift the excessively depressed prices of many stocks.
As Woody Hayes, the legendary coach of Ohio State’s football team, once said, “nothing is ever as good as it seems, or as bad as it seems.”
Things seem to be getting pretty bad. To quote another legendary individual, Warren Buffett, “when it is raining gold, reach for a bucket, not a thimble.” So, we’re patiently waiting for more meltdown, when it will be raining gold. Stocks of many regional banks, for example, which trade at around 7x next year’s earnings and sport attractive dividend yields, are starting to look appetizing. The Buy list is getting longer.
Share prices in the table reflect Tuesday (September 27) closing prices. Please note that prices in the discussion below are based on mid-day September 27 prices.
Note to new subscribers: You can find additional color on our thesis, recent earnings reports and other news on recommended companies in prior editions of the Cabot Undervalued Stocks Advisor, particularly the monthly edition, on the Cabot website.
Send questions and comments to Bruce@CabotWealth.com.
Today’s Portfolio Changes
None
Last Week’s Portfolio Changes
None
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.
There was no significant company-specific news in the past week.
CSCO shares fell 4% in the past week and have 61% upside to our 66 price target. The valuation is attractive at 8.1x EV/EBITDA and 11.6x earnings, the shares pay a sustainable 3.7% 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. BUY
Dow Inc. (DOW) merged with DuPont to create DowDuPont, then split into three companies in 2019 based on product type. The new Dow is the world’s largest producer of ethylene and polyethylene, the most widely used plastics. Investors undervalue Dow’s hefty cash flows and sturdy balance sheet largely due to its uninspiring secular growth traits, its cyclicality and concern that management will squander its resources. The shares are driven by: 1) commodity plastics prices, which are often correlated with oil prices and global growth, along with competitors’ production volumes; 2) volume sold, largely driven by global economic conditions, and 3) ongoing efficiency improvements (a never-ending quest of all commodity companies). 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.
Dow guided its third-quarter EBITDA to ~$1.8 billion, about 25% below the $2.4 billion consensus estimate, as conditions in most of its product groups are weakening. However, the shares discount a dark future that is unlikely to occur.
This week, we added shares of Dow to the recommended list for the Cabot Turnaround Letter given the excessively weak share price performance, low valuation and our confidence in the company’s future. We set a conservative $60 price target, implying a 50% gain over the next two or three years when including the generous 6.3% dividend yield. We are adjusting our Cabot Undervalued Stocks Advisor target price to $60 as well. Please ask me for a copy of our Dow analysis if you are interested.
There was no significant company-specific news in the past week.
Dow shares fell 4% in the past week and have 36% upside to our newly adjusted 60 price target. The quarterly dividend appears readily sustainable and provides an appealing 6.3% yield. The shares trade at a low 4.2x EV/EBITDA multiple.
Investors are offloading Dow’s shares on the assumption that a deep-ish recession will force it to eventually cut its dividend, as a 6.3% yield is too high for a company without dividend concerns. However, we view the dividend as enduring and a deep-ish recession as unlikely. Barring a deep recession, a collapse in oil prices or a surge in supply, Dow’s fundamental earnings picture seems solid. 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 six 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 2021 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 rose 1% in the past week and have 14% upside to our 99 price target. In a market spooked by recession fears, companies like Merck are less vulnerable to earnings erosion as consumers don’t cut their medications.
The company has a strong commitment to its dividend (3.2% 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. While the shares have pulled back, we are retaining our Hold rating as rising interest rates reduce the upside potential value of its shares. HOLD
State Street Corporation (STT) – Based in Boston, State Street is the world’s largest custodian bank, with $38 trillion in assets under custody/administration. About 56% of its revenues are produced from back-, middle- and front-office services including custody, client reporting, electronic trading and full enterprise solutions for investment managers. The balance is produced from investment management fees on ETFs, foreign exchange fees, securities financing fees and net interest income. The industry has combined into four dominant firms due to economies of scale. State Street’s shares are out of favor and unchanged since 2007 due to concerns over its anemic growth and steady pricing pressure from competitors. However, we see State Street as a solid, well-capitalized franchise that provides critical services, with a slow-growth but steady revenue and earnings stream. Our interest in STT shares is that we can buy them at an attractive valuation. We also find the dividend yield appealing.
The company hired an impressive new head of State Street Global Advisors, the segment that houses the exchange traded funds (ETF) business. Yie-Hsin Hung was previously head of NY Life Investment Management where she oversaw considerable growth in its assets, and also previously worked at the Bridgewater hedge fund and Morgan Stanley.
State Street shares fell 10% in the past week and have about 51% upside to our 94 price target. The company’s dividend (4.1% yield) is well-supported and backed by management’s strong commitment. BUY
Buy Low Opportunities Portfolio
Allison Transmission Holdings, Inc. (ALSN) – Allison Transmission is a midcap manufacturer of vehicle transmissions. While many investors view this company as a low-margin producer of car and light truck transmissions that is destined for obscurity in an electric vehicle world, Allison actually produces no car or light truck transmissions. Rather, it focuses on the school bus and Class 6-8 heavy-duty truck categories, where it holds an 80% market share. Its 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 fell 6% in the past week and have 43% upside to our 48 price target. The stock pays an attractive and sustainable 2.5% dividend yield to help compensate investors while waiting for the recovery. BUY
Arcos Dorados (ARCO), which is Spanish for “golden arches,” is the world’s largest independent McDonald’s franchisee. Based in stable Uruguay and listed on the NYSE, the company produces about 72% of its revenues in Brazil, Mexico, Argentina and Chile. The shares are depressed as investors worry about the pandemic, political/social unrest, inflation and currency devaluations. However, the company has a solid brand, high recurring demand, impressive leadership (including founder/chairman who owns a 38% stake) and successful experience in navigating local conditions, along with a solid balance sheet and free cash flow.
Macro issues have a sizeable impact on the shares’ trading. The Brazilian inflation rate eased to 8.73% in August, providing a favorable turn. With the October presidential elections only weeks away, incumbent Jair Bolsonaro trailed challenger and former president, Luiz Inácio Lula de Silva, by as much as 10 points in recent polls. A win by Lula, who is usually described as a leftist, would likely bring more moderate policies to Brazil and appears to be favored by financial markets. Perhaps just as important, a clear Lula victory would reduce/eliminate the chances that Bolsonaro launches a “vote steal” campaign. Arcos shareholders can monitor the iShares MSCI Brazil ETF (EWZ) to assess the market’s sentiment toward the overall Brazilian stock market.
The Brazilian currency also drives Arcos’ shares. Since early 2020, the currency has generally stabilized in the 1.00 real = $0.20 range. As the company reports in U.S. dollars, any strength in the local currency would help ARCO shares.
There was no significant company-specific news in the past week. ARCO shares fell 6% this past week and have 21% upside to our 8.50 price target. BUY
Aviva, plc (AVVIY), based in London, is a major European company specializing in life insurance, savings and investment management products. Amanda Blanc 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.
There was no significant company-specific news in the past week.
It’s been said that life insurance companies are just closed end bond funds in disguise, given that their assets are primarily bonds. As such, it isn’t a complete shock that Aviva’s shares have slid along with bond prices. For reference, yields on the two- and ten-year British gilts (government bonds) rose nearly a full percentage point in the past week. In terms of prices, the benchmark U.K. government bonds index is down 29% year to date in local currency. For government bonds, this is perhaps the worst bear market on record, certainly over the past 40 years. Bond price erosion is a direct hit to Aviva’s capital account and erodes its capacity to repurchase shares, although its asset base is partly hedged and includes many other assets, so we estimate that the capital erosion is no more than 5%. The generous dividend yield looks intact even under the current dour financial market conditions.
Partly offsetting the lower asset base is the lower present value of its future insurance liabilities, as higher interest rates weigh on the value of liabilities just as they do on the value of assets.
We look forward to an update from the company when it reports interim results, likely in early November. Given the market’s volatility, we would expect the company to include some updates on its quarter-end capital position even though its interim results typically only include revenues.
Based on management’s estimated dividend for 2023 (which we believe is highly credible), the shares offer a generous 9.5% yield. Based on this year’s actual dividend, the shares offer an attractive 6.4% dividend yield.
The plummeting value of the British pound, now trading around $1.08, down 13% from $1.22 only a few months ago, and down a monstrous 5% in the past week (a move of this size might be normal over an entire year rather than just a single week), is weighing on the shares, as is the 3% decline in the London FTSE index.
Given all of these headwinds, it isn’t entirely surprising that Aviva shares slipped 11% in the past week. The shares have about 59% 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 fell about 2% to $1,644/ounce. The 10-year Treasury yield continued its drive upward, reaching 3.95%. A year ago, we expected the yield to reach 5%, and we are getting closer. While many investors view a 5% yield on the 10-year Treasury as a rare and dangerous situation, we believe that it merely reflects the typical yield that has prevailed for decades – the aberration is the zero-yield environment over the past 10 years.
The U.S. Dollar Index, another driver of gold prices (the dollar and gold usually move in opposite directions), ticked upward to 113.75, about 3.3% since a week ago, and continues to reach heights not seen since the July 2001 peak at about 121. Given the underlying fundamentals of high U.S. interest rates relative to most of the rest of the developed world, the safe-haven traits of the U.S. dollar in a world of rising global geopolitical tensions, and the resilience of the U.S. energy supply and overall economic strength, it is readily possible that the dollar will eclipse its prior 2001 high. Gold will not do well in this environment. Investors are extrapolating this fear and thus steadily selling gold. Encouraging to us is that we are starting to see commentators out-bear each other with ever-more-dour gold price forecasts. Yesterday we heard a forecast for $600 on Bloomberg Radio by a commentator whose name we did not catch.
Any wavering by the Fed in its now-strident rate hike campaign would likely result in gold rebounding sharply. Until this happens, gold will probably remain out of favor. Investing in gold-related equities is a long-term decision – investors shouldn’t allow near-term weakness to deter their resolve.
Barrick shares fell 5% in the past week and have about 88% upside to our 27 price target. Our resolve with Barrick shares remains undaunted through the recent selloff. BUY
Big Lots (BIG) – Big Lots is a discount general merchandise retailer based in Columbus, Ohio, with 1,431 stores across 47 states. Its stores offer an assortment of furniture, hard and soft home goods, apparel, electronics, food and consumables as well as seasonal merchandise. Our initial case for Big Lots rested with its loyal and growing base of 22 million rewards members, its appeal to bargain-seeking customers, the relatively stable (albeit low) cash operating profit margin, its positive free cash flow, debt-free balance sheet and low share valuation.
Our thesis was deeply rattled by the company’s dismal first-quarter results although second-quarter results, while dismal, were better than the market’s dour consensus. The company needs to offload its still-bloated inventory at sharp discounts while also now loading the company with what is probably permanent debt.
We are retaining our HOLD rating for now: investor expectations are sufficiently depressed to provide some downside cushion, while management should be able to extract itself from the worst of the inventory problem over the next few quarters. Nevertheless, the Big Lots investment is now high-risk due to the new debt balance, the lost value from the inventory glut and the likelihood of a suspension of the dividend.
There was no significant company-specific news in the past week.
Big Lots shares rose 2% this past week. Shareholders not willing or able to sustain further losses in the shares should sell now. The market continues to punish the shares as rising interest rates are seen as producing a weaker economy, thus weakening Big Lots’ profit outlook. There is no reasonably definable floor to a stock like Big Lots when fundamentals and valuation are ignored while investors reduce their risk exposure.
The stock has 83% upside to our $35 price target. The shares offer a 6.3% dividend yield, although, as noted, investors should not rely on this dividend being sustained. 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.
The London Financial Times newspaper said that Citigroup is preparing to trim the size of its buyout subscription lines book to $20 billion from $65 billion. We see this as a sensible risk control step by the bank, as deals being completed today are likely to have poor economics – this step reduces the risk of adverse selection in which Citi is the only funding source around and thus gets stuck with weak deals.
This past week, the yield spread between the 90-day T-bill and the 10-year Treasury note, which approximates the drivers behind Citi’s net interest margin, jumped to 0.63% from 0.29% a week ago. The current spread is still near the low end of its range over the past 40 years, with a 2.00 percentage point spread being a rough average. If spreads were to return to a 2-point spread, bank profits would likely surge, assuming that other sources of profits, including credit quality, remained unchanged.
Citi shares trade at 54% of tangible book value and 6.0x estimated 2023 earnings. The remarkably low valuations assume an unrealistically dim future for Citi.
Citi shares fell 9% in the past week and have about 97% upside to our 85 price target. Citigroup investors enjoy a 4.7% dividend yield and perhaps another 3% or more in annual accretion from the bank’s share repurchase program once it reaches its new target capital ratio and if a slowing/stalling economy doesn’t meaningfully increase its credit costs. BUY
Gates Industrial Corp, plc (GTES) – Gates is a specialized producer of industrial drive belts and tubing. While this niche might sound unimpressive, Gates has become a leading global manufacturer by producing premium and innovative products. Its customers depend on heavy-duty vehicles, robots, production and warehouse machines and other equipment to operate without fail, so the belts and hydraulic tubing that power these must be exceptionally reliable. Few buyers would balk at a reasonable price premium on a small-priced part from Gates if it means their million-dollar equipment keeps running. Even in automobiles, which comprise roughly 43% of its revenues, Gates’ belts are nearly industry-standard for their reliability and value. Helping provide revenue stability, over 60% of its sales are for replacements. Gates is well-positioned to prosper in an electric vehicle world, as its average content per EV, which require water pumps and other thermal management components for the battery and inverters, is likely to be considerably higher than its average content per gas-powered vehicle.
The company produces wide EBITDA margins, has a reasonable debt balance and generates considerable free cash flow. The management is high-quality. In 2014, private equity firm Blackstone acquired Gates and significantly improved its product line-up and quality, operating efficiency, culture and financial performance. Gates completed its IPO in 2018, with Blackstone retaining a 63% stake today.
There was no significant company-specific news in the past week.
GTES shares fell 8% in the past week and have about 41% upside to our 14 price target. BUY
Molson Coors Beverage Company (TAP) is one of the world’s largest beverage companies, producing the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft and specialty beers. About two-thirds of its revenues come from the United States, where it holds a 24% market share. Investors worry about Molson Coors’ lack of revenue growth due to its relatively limited offerings of fast-growing hard seltzers and other trendier beverages. Our thesis for this company is straightforward – a reasonably stable company whose shares sell at an overly discounted price. Its revenues are resilient, it produces generous cash flow and is reducing its debt. A new CEO is helping improve its operating efficiency and expand carefully into more growthier products. The company recently reinstated its dividend.
There was no significant company-specific news in the past week.
TAP shares fell 4% in the past week and have about 44% 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 8.2x estimated 2022 results, still among the lowest valuations in the consumer staples group and below other brewing companies. The 3.2% dividend yield 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 fell 4% in the past week and have about 83% 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 4.4% dividend yield. BUY
Sensata Technologies (ST) is a $3.8 billion (revenues) producer of nearly 47,000 highly engineered sensors used by automotive (60% of revenues), heavy vehicle, industrial and aerospace customers. About two-thirds of its revenues are generated outside of the United States, with China producing about 21%. Investors undervalue Sensata’s durable franchise. Its sensors are typically critical components that generally produce high profit margins. As the sensors’ reliability is vital to safety and performance, customers are reluctant to switch to another supplier that may have lower prices but also lower or unproven quality. Sensata has an arguably under-leveraged balance sheet and generates healthy free cash flow. The relatively new CEO will likely continue to expand the company’s growth potential through acquisitions. Electric vehicles are an opportunity as they expand Sensata’s reachable market.
Overall, the Sensata investment remains sharply underwater as its revenue growth is challenged by new economic cycle pressures on top of the post-pandemic supply chain issues. The company is well-positioned for the post-recession, electric vehicle environment, but investors will have to wait for perhaps a year for that to arrive. The shares are still worth holding onto given their now-low valuation and ability to financially endure the downturn.
There was no significant company-specific news in the past week.
ST shares fell 6% in the past week and have about 97% 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 | 9/27/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Cisco Systems (CSCO) | 11-18-20 | 41.32 | 40.52 | -1.9% | 3.8% | 66.00 | Buy |
| Dow Inc (DOW) * | 04-01-19 | 53.50 | 43.79 | -18.1% | 6.4% | 60.00 | Buy |
| Merck (MRK) | 12-9-20 | 83.47 | 85.84 | 2.8% | 3.2% | 99.00 | Hold |
| State Street Corp (STT) | 8-17-22 | 73.96 | 61.28 | -17.1% | 4.1% | 94.00 | Buy |
| Buy Low Opportunities Portfolio | |||||||
| Stock (Symbol) | Date Added | Price Added | 9/27/22 | Capital Gain/Loss | Current Dividend Yield | Price Target | Rating |
| Allison Transmission Hldgs (ALSN) | 02-22-22 | 39.99 | 33.61 | -16.0% | 2.5% | 48.00 | Buy |
| Arcos Dorados (ARCO) | 04-28-21 | 5.41 | 6.92 | 27.9% | 2.3% | 8.50 | Buy |
| Aviva (AVVIY) | 03-03-21 | 10.75 | 8.70 | -19.1% | 6.4% | 14.00 | Buy |
| Barrick Gold (GOLD) | 03-17-21 | 21.13 | 14.10 | -33.3% | 2.8% | 27.00 | Buy |
| Gates Industrial Corp (GTES) | 08-31-22 | 10.71 | 9.84 | -8.1% | 0.0% | 14.00 | Buy |
| BigLots (BIG) | 04-12-22 | 35.24 | 18.18 | -48.4% | 6.6% | 35.00 | Hold |
| Citigroup (C) | 11-23-21 | 68.10 | 42.59 | -37.5% | 4.8% | 85.00 | Buy |
| Molson Coors (TAP) | 08-05-20 | 36.53 | 47.59 | 30.3% | 3.2% | 69.00 | Buy |
| Organon (OGN) | 06-07-21 | 31.42 | 24.26 | -22.8% | 4.6% | 46.00 | Buy |
| Sensata Technologies (ST) | 02-17-21 | 58.57 | 37.52 | -35.9% | 1.2% | 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 | 41.07 | 3.53 | 3.81 | 0.0% | 0.0% | 11.6 | 10.8 |
| DOW | 44.13 | 7.39 | 5.93 | -6.7% | -9.0% | 6.0 | 7.4 |
| MRK | 87.00 | 7.39 | 7.47 | 0.0% | 0.0% | 11.8 | 11.6 |
| STT | 62.18 | 7.12 | 8.52 | 0.0% | -0.4% | 8.7 | 7.3 |
| 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 | 33.48 | 5.75 | 6.68 | 0.0% | 0.0% | 5.8 | 5.0 |
| ARCO | 7.04 | 0.45 | 0.53 | -2.2% | -3.6% | 15.6 | 13.3 |
| AVVIY | 8.78 | 0.99 | 1.21 | -7.7% | -7.7% | 8.8 | 7.3 |
| GOLD | 14.34 | 1.01 | 1.01 | -0.1% | -2.4% | 14.2 | 14.1 |
| BIG | 19.13 | (4.55) | 0.72 | 0.0% | 2.9% | (4.2) | 26.6 |
| C | 43.10 | 7.30 | 7.23 | 0.0% | 0.0% | 5.9 | 6.0 |
| GTES | 9.91 | 1.22 | 1.32 | 0.0% | 0.0% | 8.1 | 7.5 |
| TAP | 48.04 | 3.95 | 4.21 | 0.0% | 0.0% | 12.2 | 11.4 |
| OGN | 25.17 | 5.00 | 5.44 | 0.0% | 0.0% | 5.0 | 4.6 |
| ST | 38.05 | 3.35 | 3.92 | 0.0% | 0.0% | 11.4 | 9.7 |
Current price is yesterday’s mid-day price.
CSCO: Estimates are for fiscal years ending in July of 2023 and 2024