This was a week that closely resembled the month we're now saying goodbye, too -- down on all four major market indexes.

At the start of the week, we shared with members we would be taking a cautious stance, as earnings and several headwinds were blowing in. This led us to think the market would once again trade based on the latest headlines, likely keeping market volatility alive. That's pretty much what unfolded. During the days when we had favorable earnings reports and no concerning economic data, the market traded higher. Later in the week, the combination of a surprising gross domestic product print for the March quarter, reminders that inflation was still high, and quarterly earnings reports that reminded us China's lockdowns remain, led the market lower.

Stepping back, the drivers of the week have more or less been the same ones for the last few months, and as we exit the first third of 2022, the S&P 500 is down some 13% and the Nasdaq Composite Index is down more than 20%. With those same headwinds still blowing, odds are the start of May will continue to be volatile and once again trade based on the news of the day. This likely means another round of the market flipflopping based on the days' earnings and economic data at the start of the week. Midweek, however, the Fed's policy meeting could inject even greater volatility into the market, based on not only its monetary policy action move following that meeting, but what it signals as the likely outcome for its June and July meetings.

While the market's direction in the short-term will likely remain challenging near-term, until we see some of those headwinds begin to dissipate, we will look to words from Warren Buffett to ease our frustration. On the topic of market volatility, Buffet said "As an investor, you love volatility. You love the idea of wild swings, because it means more things are going to be mispriced."

While we may not be as long-term investors as Buffett has been, we are longer-term than many as we look ahead 12 to 18 months. With that in mind, we will continue to move cautiously, but also prudently, looking to capitalize on mispriced opportunities much the way we did this week and earlier this month.

The AAP Portfolio

We navigated a challenging week that capped a challenging month. During the week we added to several portfolio holdings, including Cboe Global Markets (CBOE) , McCormick & Co. (MKC) , Deere (DE) , ChargePoint Holdings (CHPT)  and United Rentals (URI) . Also, we downgraded the shares of Amazon (AMZN) to a "Two" rating and cut our long-term price target to $3,500 from $4,000. But we made no trimming or larger exits, and the combination of those portfolio moves left us with slightly less cash on hand compared to the prior week. The bite sizes of those additions should signal that we are being both prudent and opportunistic in deploying cash near-term, given the current mindset of the market as we navigate several headwinds and move not only through the March quarter earnings season but wait for the Fed's monetary policy meeting next week.

Looking at the portfolio in April, in addition to those trades mentioned above, we also added back the ProShares Short S&P 500 ETF (SH) , which continues to play out its role helping hedge the portfolio. We also swapped NortonLifeLock (NLOK)  shares for shares in the First Trust Nasdaq Cybersecurity ETF (CIBR) , given prospects for NLOK shares to rangebound in the coming months vs. adding more diversified exposure to cybersecurity to the portfolio. We also started an initial position in McCormick & Co. (MKC) , which as we mentioned above, we added to earlier this week. Other additions during the month included those to various other existing positions such as Applied Materials (AMAT) , Chipotle Mexican Grill (CMG) , Disney (DIS) , and Morgan Stanley (MS) , while we exited NortonLifeLock, Honeywell, Boeing, and AbbVie. We also booked timely gains in Nucor (NUE)  and Walmart (WMT) .

We will continue to identify prospects for the portfolio in the Bullpen and keep a close watch on position technicals, especially key support levels like we did recently with Boeing shares, which we exited at $186.15 vs. the current share price near $150.

Key Global Economic Readings


(Note: T is the most recent period, T-1 is the prior period's reading and T-2 is two periods back, the intent being to illustrate any trends)


While it was a busy week for corporate earnings, the same can be said for economic data that conflicted with initial GDP print for the March quarter. That report shocked many with its -1.4% print vs. the expected 1.1% and 6.9% figure for the December quarter. Meanwhile the initial reading for GDP in the Eurozone also slipped further to 0.2% for the March quarter. Alongside those reports, the March quarter Employment Cost Index that came in at +1.4%, above the expected +1.1% and April 1.0% reading; the March PCE Deflator as well as the PCE Core Price Deflator remaining at elevated levels; and inflation hitting a record year-over- year level in the eurozone during April of 7.5%. That combination led to renewed concerns about the economy being at risk of slipping into an eventual recession or entering a period of stagflation that would necessitate tight monetary policy to get inflation under control.

The initial GDP print for the March quarter was quite a shock especially when paired against a string of recent data such as the Flash April PMI data and comments this week from Visa (V) and Mastercard (MA) that show consumers were still spending in April and the rebound in core capital goods orders for March. The onslaught of the usual start of the month economic data includes the final PMI readings for April, but also ISM's take on manufacturing and services activity for the month. This consolidated picture along with the new order data contained in those reports should give us a better picture as to the economy's true speed.

Now a note of caution: What we found in the March Personal Income & Spending report, that personal spending continued to outpace income gains, could mean consumers were either spending out of savings and ringing up credit or paying down the sharp increase in credit taken out during February. The answer should become clear in next week's March consumer credit report.

With reports Germany is no longer opposed to an embargo on Russian oil, which could further tighten supplies, oil prices responded by moving higher week-over-week. During April oil prices swung back and forth, but ended higher compared to March, as those supply constraints trumped China lockdown demand questions -- even though China shows no signs of easing lockdown measures. While gas prices are still down slightly compared to a month ago, data from AAA shows they ticked modestly higher compared to a week ago and remain considerably higher compared to this time last year. For context, AAA's average gas price per gallon is $4.159 exiting the week vs. the highest recorded average price of $4.331 on March 11 of this year and well above the $2.889 per gallon price this time last year. In terms of diesel, the move higher this week has the current price at $5.18 per gallon a new record high. To us this means, we are likely to see businesses attempt to pass through price increases to offset that cost. Another reason to think inflation isn't ready to roll over any time soon.

Chart of the Week: S&P Bears Downward

There is little to like in this chart of the S&P 500, if you're bullish. Frankly, the downtrend channel is established and shows we are heading to the lower end of that range. A lower low on the chart would define the trend here as down, and odds seem to favor a much more dramatic move down to the 3800 level on the index.

For the month, we can see every week has been down for April. The Relative Strength Index is in a downtrend as is the Moving Average Convergence Divergence (MACD) oscillator, so momentum is pointing lower. Next week is the start of a new month, and often bullish money flows. But we also have a Fed meeting, where the markets may not like the tone or the course of action. Many will say the markets are moving downward in anticipation, a "sell the rumor, buy the news" setup. We disagree, until the price action improves and more stocks start trading upward, we should see this bear market continue on. Play this market cautiously and carefully.

The Coming Week

Following the eye-opening initial U.S. GDP print of -1.4% for the March quarter that was well below the expected 1.1% print and the further slowing evidenced in the Eurozone's GDP for the same period vs. the hotter-than-expected March quarter Employment Cost Index and still lofty PCE Price Index reading for March, we expect much attention will be paid to the outcome of the Fed's monetary policy meeting next Wednesday. While the expectation is the Fed will move ahead with a 50-basis point rate hike and bond purchases, it will be the signals it shares for its follow-on moves that many will be waiting for. The underlying question that hangs in the balance will be can the Fed get ahead of inflation with its policy moves without torpedoing a fragile global economy in the process?

Helping us get to the answer will be the usual start of the month economic data, including a rash of global manufacturing and service sector PMIs as well as data on domestic job creation. Inside the various manufacturing and services reports for April, we'll be focused not only the health of those sectors but signs of inflation and output price increases as well. With the April Employment Report, we'll also be watching data on wage inflation, looking for how hot it could run in the months ahead. Outside of those reports, we'll be examining the March JOLTS Job Openings reports for confirmation on our AMN Healthcare (AMN) investment thesis ahead of its quarterly results later in the week. And given the strong level of consumer spending reported in the March quarter, we'll be looking at the latest Consumer Credit report to see if the consumers have gotten out over their skies, another potential headwind for the economy.

Here's a closer look at the economic data coming at us next week:


Monday, May 2

  • S&P Global PMI Manufacturing (Final) - April (9:45 AM)
  • Construction Spending - March (10:00 AM)
  • ISM Manufacturing Index - April (10:00 AM)

Tuesday, May 3

  • Durable Factory Orders - March (10:00 AM)
  • Factory Orders - March (10:00 AM)
  • JOLTS Job Openings - March (10:00 AM)

Wednesday, May 4

  • Weekly MBA Mortgage Applications (7:00 AM)
  • ADP Employment Report - April (8:15 AM)
  • S&P Global Services PMI (Final) - April (9:45 AM)
  • ISM Non-Manufacturing Index - April (10:00 AM)
  • Weekly EIA Crude Oil Inventories (10:30 AM)
  • Federal Reserve FOMC Meeting Announcement (2 PM)

Thursday, May 5

  • Weekly Initial & Continuing Jobless Claims (8:30 AM)
  • Unit Labor Costs & Productivity - 1Q 2022 (8:30 AM)
  • Weekly EIA Natural Gas Inventories (10:30 AM)

Friday, May 6

  • Employment Report - April (8:30 AM)
  • Consumer Credit - March (3:00 PM)


Monday, May 2

  • Germany: Retail Sales - March
  • Eurozone: S&P Global PMI Manufacturing (Final) - April

Tuesday, May 3

  • UK: CIPS Manufacturing PMI (Final) - April
  • Eurozone: PPI - March
  • Eurozone: Unemployment Rate - March

Wednesday, May 4

  • Eurozone: S&P Global Service PMI (Final) - April
  • Eurozone: Retail Sales - March

Thursday, May 5

  • China: Markit/Caixin Services PMI - April
  • Germany: Manufacturing Orders & Turnover - March
  • UK: CIPS Services PMI (Final) - April
  • UK: Bank of England Interest Rate Announcement

Friday, May 6

  • Japan: CPI Tokyo - April

We have another busy week for the portfolio holdings on the earnings front, with Airbnb (ABNB), Skyworks (SWKS), and AMD (AMD) all set for May 3 with AMN Healthcare's results following soon thereafter. With regard to Deere & Co. (DE), next week brings back-to-back results from two of its key competitors - AGCO (AGCO) and CNH Industrial (CNHI). While we expect both to report favorable demand conditions, it will be what they say on the cost side that will be our point of focus. Quarterly results from Yum China (YUMC) will no doubt reflect the pain of China's lockdowns but what it says about potential opening prospects will be something we factor into our thinking. Comments from Synaptics (SYNA) should help us refine the near-term outlook for PC demand, while guidance from AMC Entertainment (AMC) and Cinemark (CNK) wills help set the tone for the summer box office and what they likely means for Disney (DIS).

Here's a closer look at the earnings reports coming at us next week:

Monday, May 2

  • Open: Global Payments (GPN)
  • Close: Avis Budget (CAR), Clorox (CLX), Expedia Group (EXPE), NXP Semiconductor (NXPI), Omega Health (OHI).

Tuesday, May 3

  • Open: AGCO Corp. (AGCO), Bausch Health (BHC), CNH Industrial (CNHI), Cummins (CMI), Eaton (ETN), Estee Lauder (EL), Hilton (HLT), Meritor (MTOR).
  • Close: Airbnb (ABNB), AMD (AMD), Caesars Entertainment (CZR), Herbalife Nutrition (HLF), Skyworks (SWKS), Starbucks (SBUX), Yum China (YUMC).

Wednesday, May 4

  • Open: Cedar Fair (FUN), CVS Health (CVS), Ferrari 9RACE), Marriott (MAR), Oatly Group AB (OTLY), Physicians Realty Trust (DOC), Vulcan Materials (VMC), Wingstop WING), Yum! Brands (YUM).
  • Close: Booking Holdings (BKNG), Cerner (CERN). CF Industries (CF), Fortinet (FTNT), Ingersoll-Rand (IR), Ortho Clinical Diagnostics (OCDX), Ping Identity (PING), Qorvo (QRVO), TripAdvisor (TRIP), Uber (UBER).

Thursday, May 5

  • Open: Anheuser-Busch InBev (BUD), Arrow Electronics (ARW), Dentsply Sirona (XRAY), Hanesbrands (HBI), II-VI (IIVI), Interdigital (IDCC), Kellogg (K), Shopify (SHOP),
  • Close: Allscripts Healthcare (MDRX), AMC Entertainment (AMC), AMN Healthcare (AMN), Axon (AXON), Beyond Meat (BYND), Block (SQ), DoorDash (DASH), Dropbox (DBX), Insulet (PODD), Post (POST), Synaptics (SYNA), Zillow (ZG).

Friday, May 6

  • Open: Cinemark (CNK), Under Armour (UAA)


Airbnb, Inc. (ABNB) ; $153.21; 765 shares; 3.16%; Sector: Consumer Service

WEEKLY UPDATE: Ahead of Airbnb reporting its March-quarter on May 3, both Visa (V) and Mastercard (MA) reported better-than-expected quarterly results with both citing the continued strength in travel and tourism. Mastercard also shared that strength continued during the first three weeks of April. Those comments echo similar ones by American Express (AXP) a growing list of airlines, and TSA passenger data. While the portfolio has a rather full position in ABNB shares at present, we suggest members, both new and old, that have sat on the sidelines with ABNB shares use the current share price to build out their position size.

1-Wk. Price Change: -1.8%; Yield: 0.00%

INVESTMENT THESIS: Airbnb is a global technology platform that matches travelers or "guests" with hosts that make their home or other dwelling available for use over a period of days. Airbnb makes its money is on services associated with usage of its platform, customer support and payment processing. That revenue stream, which is tied to facilitating a guest's stay, is recognized when the guest check-in occurs. Airbnb updated or introduced 50+ products for guests and hosts that are designed to increase host confidence to list properties with greater insurance coverage, making listings more informative with improved and automated translation in 62 languages, verified accessibility features and verified Wi-Fi speeds. For guests, there is improving discoverability, such as the "I'm Flexible" feature now extends for stays out to 12 months and can be filtered by property type. In our view the more comfortable Airbnb is able to make hosts, there more hosts the company can attract, and the more properties hosts are likely to list. Similarly, the more options and greater flexibility it can provide guests, the greater the likelihood of winning consumer wallet share. We would argue Airbnb has learned one of what we think is Amazon's (AMZN) great value propositions -- the ability to reduce transactional friction.

Target Price: Reiterate $220; Rating: One

RISKS: The COVID-19 pandemic and its impact on travel spend, economic challenges, geopolitical risks, host growth and retention.

ACTIONS, ANALYSIS & MORE: Investor Relations

Advanced Micro Devices (AMD) ; $85.52; 1,160 shares; 2.68%; Sector: Info. Tech.

WEEKLY UPDATE: AMD will publish its quarterly results next week on May 3 after the market close, which makes it the first quarterly report to include the Xilinx acquisition. This could make for a messy earnings report, but as we parse through any extraneous items we'll be focusing on not only the respective growth drivers of combined company, but also synergy and other cost savings opportunities. We'll look for management to spell out how Xilinx should not only diversify the overall revenue stream, but also insulate it from swings in the PC and other markets. What we heard from Intel this week lays favorable groundwork for AMD's report, but we will be mindful of its comment as well about supply chain issues and low-end PC demand.

1-Wk. Price Change: -3% Yield: 0.00%

INVESTMENT THESIS: AMD is a chip maker that specializes in the development of both CPUs (like Intel) and GPUs (like Nvidia). On the CPU side, the company continues to take share from Intel in the data center thanks to its 2nd generation EPYC processor line, which is seeing increased adoption in the super computing and high-performance computing space (especially following execution missteps from Intel that has resulted in delays for the companies 7nm chips), which you can read more about at the link here. On the GPU side, while Nvidia remains the unquestioned leader in terms of overall performance, AMD is the close on its tail and provides a strong balance between price and performance. AMD is also seeing strong momentum in the mobile space, recently announcing that its Ryzen platform has exceeded its moonshot 25x20 goal set in 2014 that aimed to improve the energy efficiency of its mobile processors 25 times by 2020. Simply put, we think AMD has more room to run as it gains market share, especially when you factor in the current strength of data center and the company's positioning as it relates to the next-gen video game console cycle given that both PlayStation and Xbox use AMD graphics cards. We'd also note our $175 price target equates to a PEG ratio of 1.3 -- not expensive at all given it's well below a PEG ratio of 2.0.

Target Price: Reiterate $175; Rating: One

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/27/21), CEO Interview (7/29/20), Readthroughs Are Still Positive for AMD (7/24/20), Initiation (7/7/20), Investor Relations

AMN Healthcare Services, Inc. (AMN) ; $97.75; 1,060 shares; 2.80%; Sector: Health Care Services

WEEKLY UPDATE: It was a quiet week for our shares of AMN, but in reviewing comments made during HCA Healthcare's (HCA) recent earnings report and conference call, the company shared it is seeing "high cost per hour for contract labor," which suggest to favorable contract rates for AMN's talent solutions. AMN will report its quarterly results on May 5.

1-Wk. Price Change: -6.6%; Yield: 0.0

INVESTMENT THESIS: AMN Healthcare's business centers on talent solutions for the health care sector in the U.S. The company's revenue stream is tied to talents solutions, it reports in three business segments: Nurse and Allied Solutions, which generated 61% of revenue for the first nine months of 2021 and ~59% of its operating profit; Physician and Leadership Solutions - 24% and 13%, respectively; and Technology and Workforce Solutions - 15% and 28%, respectively. That business mix positions the company to be capitalize on the rising demand for healthcare professionals, particularly for nurses and doctors, which is expected to grow significantly as more of the U.S. population moves past the age of 65 in the coming years.

Target Price: Reiterate $140; Rating: One

RISKS: Economic downturns and the pace of economic recovery; the ability to win new contracts; the ability to recruit and retain quality healthcare professionals.

ACTIONS, ANALYSIS & MORE:, Initiation (1/27/22), Our Aging of the Population Investment Theme Explores Medical Staffing Issues, Investor Relations

Apple (AAPL) ; $157.65; 1,080 shares; 4.60%; Sector: Technology

WEEKLY UPDATE: Following Apple's better-than-expected March-quarter results, dividend increase and $90 billion addition to its share buyback program, we are keeping our $200 price target and "One" rating intact. Near-term Apple is contending with supply chain issues and China's eventual reopening that will crimp its ability to meet strong demand across its product line up by an estimated $4 billion to $8 billion in the current quarter vs. the pre-March quarter earnings report consensus revenue forecast of $86.2 billion and the $81.4 billion booked in the June 2021 quarter. As we move further through the current quarter, we'll have a better sense as to what the size of that revenue crimp is likely to be. Already we are hearing factories in China are reopening and that Apple partner Foxconn is ramping production both in China as well as India and other markets. The 5% boost to Apple's dividend along with the super-sized share buyback program add support to the shares. We also see any near-term revenue issues likely translating into even stronger demand as it releases its next round of product upgrades, especially for iPhone later this year. We will continue to monitor monthly revenue results at Apple partner Taiwan Semiconductor (TSM) as well as get ready for what lies ahead at WWDC 2022 that begins on June 6.

1-Wk. Price Change: -2.6% Yield: 0.5%

INVESTMENT THESIS: While we acknowledge that near- to- midterm performance remains heavily influenced by iPhone sales, the dynamic is shifting as investors finally being to place greater emphasis on Services growth. We are bullish on the 5G upgrade cycle and believe longer-term upside will continue to come as Services revenue grows its share of overall sales. Services provide for a recurring revenue stream at higher margins, a factor that serves to reduce earnings volatility while allowing for a higher percentage of sales to fall to the bottom line, as a result, we believe that Services growth and the installed base, are much more important than how many devices the company can sell in a given 90-day period. In addition to improved profitability, we also believe the transparent nature of this revenue stream will demand an expanded price-to-earnings multiple as segment sales grow. Furthermore, we believe that Apple's desire to push deeper into the healthcare arena will help make its devices invaluable as more life-changing features are added and the company works to democratize health records. Lastly, also see upside resulting from increased adoption of wearables (think the Apple Watch) and potential new product announcements such as an AR/VR headset or an update on project Titan, the company's secretive autonomous driving program.

Target Price: Reiterate $200; Rating: One

RISKS: Slowdown in consumer spending, competition, lack of new product innovation, elongated replacement cycles, failure to execute on Services growth initiative

ACTIONS, ANALYSIS & MORE: FY3Q21 Earnings Analysis (7/27/21), Apple Product Launch Event Takeaways (4/20/21), Takeaways from WWDC (6/22/20), Initiation (1/4/10), Investor Relations

Applied Materials (AMAT) ; $110.35; 1,160 shares; 3.46%; Sector: Industrial Machinery

WEEKLY UPDATE: During the week Bloomberg Intelligence shared a bullish call on chip equipment stocks, given the outlook for automotive and Internet-of-Things (IoT) semiconductors, as well as "re-shoring" efforts amid the push for technology and semiconductor self-sufficiency. Following medium to longer-term bullish comments from ASML (ASML), Lam Research (LRCX), and Taiwan Semiconductor (TSM), this week Intel (INTC) revealed a sizable capital spending ramp in the coming quarters as it reiterated its $27 billion forecast after spending just $4.6 billion in the March quarter. We will continue to monitor industry data ahead of the company's next quarterly earnings report that should be released near May 19. At current levels we see the risk-to-reward skewed strongly to the reward side.

1-Wk. Price Change: -2.2% Yield: 0.9%

INVESTMENT THESIS: SEMI, the semiconductor capital equipment trade association, now sees global sales of semiconductor manufacturing equipment by original equipment manufacturers passing the $100 billion mark in 2022, after jumping 34% to $95.3 billion in 2021 and registering $71.1 billion in 2020. Other forecasts point to continued growth in the semiconductor capital equipment market due to the maturing of the 5G and IoT markets as well as the maturation of the other drivers for chip demand. We also like the company's policy of returning capital to shareholders and would note its growing track record of annual dividend increases.

Target Price: Reiterate $180; Rating: One

RISKS: Semiconductor capital equipment spending. Geopolitical tensions and international trade disputes.

ACTIONS, ANALYSIS & MORE: Trimming 2 Names; Initiating a New Position, Investor Relations.

ChargePoint Holdings Inc. (CHPT) ; $12.94; 8,000 shares; 2.79%; Sector: Electrical Components & Equipment

1-Wk. Price Change: -10.3% Yield: 0.00%

WEEKLY UPDATE: We used the outsized pullback in ChargePoint shares to increase the portfolio's position. We'd note the move lower tracks closely to that of Tesla (TSLA) shares, the arguable barometer for the EV category, at least today. The move lower in Tesla's shares likely has more to do with headlines surrounding Elon Musk's purchase of Twitter (TWTR) than the fundamental outlook for the EV industry. Similar to the rising EV production capacity levels at Tesla that we discussed following its consensus beating March-quarter results, we see the EV roadmap outlined by Ford Motor (F) speaking to the long-term needs for EV charging stations, ChargePoint's business and our shares. Late this week Cantor Fitzgerald issued bullish comments on the EV charging sector, saying the space should benefit from "rapid EV adoption and supportive legislation." Even so, in our view the week's selloff is still extreme relative to the longer-term prospects, our $27 price target and technical support at $12.

INVESTMENT THESIS: ChargePoint Holdings designs, develops and markets networked electric vehicle (EV) charging system infrastructure and cloud-based services which enable consumers the ability to locate, reserve and authenticate Networked Charging Systems, and to transact EV charging sessions on those systems. As part of ChargePoint's Networked Charging Systems, subscriptions, and other offerings, it provides an open platform that integrates with system hardware from ChargePoint and other manufacturers. According to the US Department of Energy, the US reached a milestone this past year with its 100,000th EV charger installed in 2021. Industry analysts at Guidehouse Insights forecast that a total of 120 million chargers will be needed globally by 2030, providing a meaningful opportunity for ChargePoint to expand its charging footprint. To that end, the U.S. Departments of Transportation and Energy announced nearly $5 billion over the next five years that will be made available under the new National Electric Vehicle Infrastructure (NEVI) Formula Program established by President Biden's Bipartisan Infrastructure Law. The aim of NEVI is to build out a national electric vehicle charging network of high voltage chargers along designated Alternative Fuel Corridors, particularly along the Interstate Highway System.

Target Price: Reiterate $27; Rating: One

RISKS: EV adoption of passenger and fleet applications, changing technology, subscription renewals.

ACTIONS, ANALYSIS & MORE: We're Calling Up a Name From the Bullpen, The Needle Could Begin to Move on This Bullpen Name, Investor Relations.

Chipotle Mexican Grill (CMG) ; $1,455.61; 70 shares; 2.75%; Sector: Restaurants

1-Wk. Price Change: -1.7% Yield: 0.00%

WEEKLY UPDATE: Chipotle reported tasty March-quarter results with earnings per share of $5.70 that topped the $5.63 consensus as revenue rose 16% year-over-year to $2.02 billion vs. the $2.01 billion consensus. Restaurant comp sales for the quarter rose 9.0% YoY, which was impacted by restaurant level operating margin falling to 20.7% YoY from 22.3% in the year-ago quarter due to higher wages and food costs. Toward the end of the quarter, Chipotle raised its menu prices by 4% to further offset rising costs, particularly for dairy, avocados, and tortillas. We'd remind members the company did something similar toward the end of the December quarter on a limited basis. In terms of the current quarter, restaurant comp growth should continue throughout the quarter, in part due to recent pricing action, but also the continued rollout of new menu items. Chipotle targets 10%-12% comp growth for the quarter, and we'll be closely watching monthly metrics including the retail sales report, Mastercard's (MA) SpendingPulse survey and data from restaurant research firm Blackbox. During the quarter, Chipotle repurchased $260 million in stock at an average price of $1,490 and management shared it will continue to opportunistically repurchase CMG shares stock. Management also shared it targets opening 235-250 new locations in 2022 with a growing percentage having Chipotlanes.

INVESTMENT THESIS: Our investment thesis on CMG shares centers on its offering consumers better-for-you fare while also expanding its geographic density, embracing digital ordering and bringing to market limited-time menu offerings that should spur traffic and boost average revenue per ticket. With upside to our price target shrinking, we are once again reviewing the incremental upside and revisiting protein input costs.

Target Price: Reiterate $2,000; Rating: One

RISKS: Input costs, particularly for the protein complex, labor costs, consumer spending, food safety, industry dynamics and competition.

ACTIONS, ANALYSIS & MORE: Initiating a New Position in Chipotle, We're Adding Chipotle to the (Bullpen) Menu

Disney (DIS) ; $111.63; 900 shares; 2.71%; Sector: Communication Services

WEEKLY UPDATE: We continue to closely watch the technical set up on DIS shares even though Visa (V) and Mastercard (MA) join the growing list of companies discussing how their businesses have benefitted from strong travel and tourism spending. Those comments as well as others about price increases and park attendance bode well for Disney's performance in the March quarter and point to a strong start to the current quarter given the timing of the Easter holiday. At Disney's Marvel and Star Wars related businesses, enthusiasm exiting CinemaCon for upcoming movie and streaming projects point to Disney delivering a stronger content slate in the second half of 2022. Near term, Dr. Strange in the Multiverse of Madness lands at theaters next week (May 6) with Thor: Love and Thunder following on July 8. Disney will report its quarterly results on May 11, two days after it holds its annual shareholder meeting.

1-Wk. Price Change: -5.6% Yield: 0.00%

INVESTMENT THESIS: We believe Disney is excelling in its pivot from pay-TV to direct-to-consumer. The launch of Disney+ has been met with incredible fanfare and has surpassed 100 million subscriptions globally. In total, Disney projects its family of offerings could reach 300 to 350 million global subscribers by fiscal 2024, and we believe there is upside to management's profitability projections. Disney is also a strong "re-opening" play through its theme park, cruise line, and theatrical entertainment businesses. We also see margin expansion opportunities at the parks through the implementation of new reservation systems, new technologies, new experiences, and new membership programs.

Target Price: Reiterate $215; Rating: One

RISKS: Covid-19 related closures and movie production delays, macroeconomic slowdown impacting the consumer, churn on subscription products.

ACTIONS, ANALYSIS & MORE: The Selloff in Disney Makes the Stock Look Attractive (5/14/21) FY2Q21 Earnings Analysis (5/13/21), Disney Tells a Great Story at Its Investor Day (12/11/2020), CEO Bob Chapek Discuss Disney's Media & Entertainment Restructuring (10/12/20), Initiation (9/21/21), Investor Relations

Alphabet (GOOGL) ; $2,282.19; 55 shares; 3.39%; Sector: Communication Services

WEEKLY UPDATE: For its March quarter results, EPS of $24.62 at Alphabet came up short vs. the $25.54 consensus while revenue for the quarter rose 23% year-over-year to $68.0 billion, modestly ahead of expected $67.9 billion. By segment, Google advertising revenue for the quarter rose 22% year-over-year to $54.66 billion as YouTube Ads climbed 15% year-over-year to $6.9 billion Google Cloud revenue jumped 45% year-over-year to $5.8 billion. When reviewing the above, the clear cut stand out was the slower growth at YouTube, but with the company testing advertising on its Shorts platform that competes with TikTok, we expect to see that growth rate rebound as that strategy is formally rolled out. We see that as a nice compliment to the 2 billion monthly signed-in YouTube users that on average are consuming over 700 million hours of YouTube content on TVs every day. In our view, that places Alphabet in a very strong position to capture the ongoing shift to advertising dollars to digital from traditional media and should lead to a resumption of more aggressive growth at YouTube Advertising. Even as Alphabet warned it will face tough comparisons in the current quarter, it unveiled its Board has authorized the repurchase up to an additional $70.0 billion of its Class A and Class C shares. Given the current share price, we see the company leaning into that buyback program, bringing some support to the shares as we march toward the upcoming stock split.

1-Wk. Price Change: -4.6%; Yield: 0.00%

INVESTMENT THESIS: We believe that while search and digital ad dominance are what will carry shares in the near- to- midterm, longer-term it is the company's artificial intelligence (AI) "moat" that will provide for new avenues of growth. AI is what has made the company's Search, Video (YouTube) and targeted ad capabilities best-in-class and is the driving force behind the company's success in voice (Google Home) and autonomous driving (Waymo). Furthermore, we believe it is this AI expertise that will also make the company more prevalent in other industries, including healthcare via subsidiary Verily, as AI and machine learning continue to disrupt operations across industries. We believe Alphabet's willingness to invest in new areas, knowing most will fail, is a recipe for long-term success as while most "X Moonshot Factory" projects may fail, every once in a while, you end up with a Waymo, perhaps the division's, most successful graduate to date. Lastly, compounding out positive view of the company's future opportunities, we believe that Alphabet's free cash flow generation and solid balance sheet set it apart and are what will allow the company to continue taking chances on far-out ground-breaking and potentially world changing projects. Following the company's announced 20-for-one stock split, a move that could very well help the shares land in the Dow Jones Industrial Average, we will adjust our new price target on July 1.

Target Price: Reiterate $3,500; Rating: One

RISKS: Regulatory risk (data privacy), competition, macroeconomic slowdown impacting consumers and therefore ad buyer activity

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/27/21), Why GOOGL Has Shrugged Off Antitrust Headlines in Early Trading Tuesday (10/20/20), Initiation (11/27/13), Investor Relations

Marvell Technology (MRVL) ; $58.08; 1,750 shares; 2.74%; Sector: Info. Tech.

WEEKLY UPDATE: Marvell will report its quarterly results on May 26, and what we heard this week, including comments from Intel (INTC), Nokia (NOK), Alphabet (GOOGL), Qualcomm (QCOM), Microsoft and others paint a net favorable picture for the company's end markets that span data center, carrier infrastructure, enterprise networking, automotive/industrial and consumer. Intel's comments pointed to continued strength in a number of the company's end markets, while Nokia reported brisk 5G business that was hindered by supply chain constraints. Meanwhile, Alphabet and Microsoft both shared plans to increase cloud spending, with Alphabet specifically calling our incremental spending on servers. Meta Platforms (FB) also shared it spent $5.5 billion during the March quarter on data center, services, networking and other items, and reiterated its plan to spend $29-$34 billion this year. In terms of Marvell's auto business, Qualcomm's robust year over year growth and increasing backlog confirm the ongoing digitization for autos in the coming years. With AMD reporting its quarterly results next week and Nvidia doing the same on May 25, one day before Marvell reports, members know we'll be digging into those reports and updating our investment tapestry.

1-Wk. Price Change: -0.6% Yield: 0.4%

INVESTMENT THESIS: Marvell Technologies is a semiconductor company that specializes in 5G infrastructure and data center chips. Our bullish centers on our view that the 5G upgrade cycle is still in its early earnings and will provide a multiyear tailwind to earnings. But the data center represents Marvell's largest end market, and it is also one of its fastest growing thanks to strength in the cloud. Meanwhile, Automotive represents the single biggest incremental opportunity for Marvell over the next five to 10 years. Management also has a terrific track record when it comes to M&A. This strategy has diversified Marvell's business away from volatile end markets with short product cycles like Consumer and pushed the company deeper into secular growth markets like Data Center and data infrastructure. Some notable completed deals are the acquisition of Cavium, Aquantia, Avera Semiconductor, and most recently, Inphi. Marvell's $1.1 billion acquisition of Innovium, a leader in networking solutions for cloud and edge data centers, is currently expected to be completed by the end of calendar 2021.

Target Price: Reiterate $105; Rating: One

RISKS: Further intensification on the US/China trade front, a delayed ramp in 5G infrastructure buildouts.

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (8/26/21), FY1Q21 Earnings Analysis (6/7/21), Marvell Technology Gets Approval From China Regulators for Inphi Deal (3/24/21), Marvell Announces Acquisition of Inphi (10/29/20), Initiation (7/3/19), Investor Relations

Microsoft Corp (MSFT) ; $ 277.52; 425 shares; 3.18%; Sector: Technology

WEEKLY UPDATE: The company reported March-quarter revenue and EPS that topped consensus forecasts hitting $2.22 and $49.36 billion, respectively, led by commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% year-over-year. Not to be outdone, Microsoft also issued guidance that pointed to sequential improvement at its three core businesses, which in aggregate topped consensus expectations. For the current quarter, the company targets revenue of $52.4-$53.2 billion. Our more detailed comments on the quarter can be found here. While we maintained our $360 price target, a number of Wall Street firms trimmed their price target from loftier levels to more closely match ours. Later in the week, at a special meeting, more than 98% of Activision Blizzard (ATVI) shares voted in favor of the proposed transaction with Microsoft.

1-Wk. Price Change: 1.3% Yield: 0.8%

INVESTMENT THESIS: We believe the cloud to be a secular growth trend and that upside to shares will result from Microsoft's hybrid cloud leadership as the company grab's market in this expanding industry. While companies may look to build out multi-cloud environments, Microsoft's Azure offering will be a prime choice thanks to the company's decision to provide the same "stack" used in the public cloud, to companies for their on-premise data centers. Additionally, we would note that hybrid environments are currently the preference for most companies because it allows them to maintain critical data in house while taking advantage of the agility and scalability provided by public clouds. Outside of the cloud opportunity, we maintain a positive view on the company's growing gaming business, which we believe is becoming an increasingly prominent factor in the Microsoft growth story as gaming becomes more mainstream, management works to convert its gaming revenue from one-time license purchase to a recurring subscription model and as technologies like augmented/virtual reality evolve. Finally, as it relates to LinkedIn and other subscription-based services such as O365 and various Dynamics products, we continue to value them highly for their recurring revenue streams, which we remind members, provides for greater transparency of future earnings.

Target Price: Reiterate $360; Rating: One.

RISKS: Slowdown in IT spending, competition, cannibalization of on premises business by the cloud

ACTIONS, ANALYSIS & MORE: FY4Q21 Earnings Analysis (7/27/21), Ignite 2021, Microsoft Acquires ZeniMax (9/22/20), CEO Satya Nadella on CNBC (3/25/20), CEO Satya Nadella speaks at the World Economic Forum (1/23/20)

Morgan Stanley (MS) ; $80.59; 1,385 shares; 3.01%; Sector: Financials

WEEKLY UPDATE: The company's investment banking business is starting the quarter off on a stronger foot as Morgan Stanley was the lead financial advisor to Elon Musk in his buyout of Twitter (TWTR). According to reports, Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing approximately $21.0 billion equity commitment. It will be interesting to see if the typical game of "musical chairs" that arises whenever we see a mega deal like this occur. If that proves out, we could see other potential pairings be announced before too long, which would also spur M&A and advisory fees for investment banks.

1-Wk. Price Change: -4.9%; Yield: 3%

INVESTMENT THESIS: The company's mission is to create three world-class businesses of scale: Institutional Securities, Wealth Management, and Investment Management. The bank has supercharged Morgan Stanley's push into the latter two businesses was recently enhanced by the acquisitions of E-Trade (for Wealth Management) and Eaton Vance (Investment Management). Both deals have increased the bank's exposure to fee-based and recurring revenue streams, making Morgan Stanley less dependent on volatile business lines and interest rates. Estimates suggest Wealth Management and Investment Management fees as a percentage of Morgan Stanley's overall revenues should increase to around 60% in the fourth quarter of 2022, up from about 46% in the first quarter of 2021. We see this transition as a multiple enhancing event. We also appreciate the bank's ability to return excess capital to shareholders. Following 2021's CCAR, the bank doubled its quarterly dividend payment to $0.70 per share and announced a share repurchase program worth up to $12 billion.

Target Price: Reiterate $120; Rating: One

RISKS: Capital Markets activity, Integration risk on recent acquisitions, increased regulation of banking industry, low interest rates

ACTIONS, ANALYSIS & MORE: 2Q21 Earnings Report (7/15/21), Initiation (7/12/21), Investor Relations

Nvidia (NVDA) ; $185.47; 610 shares; 3.05%; Sector: Info. Tech.

WEEKLY UPDATE: Quarterly results this week from Intel pointed to limitations for low-end consumer PCs but also shared demand continues to be robust in enterprise, cloud, AI, graphics, and networking. As we noted above with our Marvell comments, that strength in data center, server and networking demand was confirmed by comments from Alphabet, Meta Platforms and Microsoft this week. We'll be looking for confirmation when AMD reports its quarterly results on May 3 and Global Foundries (GFS) does the same on May 10, with the combination setting the tone for what we'll hear when Nvidia reports on May 25. When chip foundry company Taiwan Semiconductor (TSM) releases its monthly revenue for April we'll be eyeing what it tells us about data center chip demand.

1-Wk. Price Change: -5% Yield: 0.2%

INVESTMENT THESIS: We believe upside will result from Nvidia's GPU dominance, the moat created by its CUDA, the company's parallel computing platform, and significant growth in all of the company's end markets including, the cloud (think datacenter), gaming, autonomous vehicles and pro visualization. Furthermore, we believe the cloud (i.e. data center) growth will be even more of a factor in upside following the acquisition of Mellanox, which thanks to its low latency "InfiniBand" technology, provides Nvidia the ability be a more integral player in the buildout of data centers by working to both accelerate server subsystems via GPU-acceleration and accelerate the data center overall by "tying together" the multiple subsystems and allowing them to operate as a single cohesive unit.

Target Price: Reiterate $360; Rating: One

RISKS: Slow uptake of raytracing chips which will depend on gaming publishers' implementation of the new technology in software releases, a slowdown in the IT/data center spending, competition, slower than expected inventory channel normalization.

ACTIONS, ANALYSIS & MORE: FY2Q22 Earnings Analysis (8/18/21), Highlights From the Nvidia Investor Day (4/12/21), Jim Discusses Arm Holdings Acquisition on Mad Money (9/24/20), Initiation (3/18/19), Investor Relations

Skyworks Solutions (SWKS) ; $113.30; 850 shares; 2.60%; Sector: Semiconductors

WEEKLY UPDATE: March quarter results at Qualcomm were a positive affirmation for our Skyworks investment strategy as its handset revenue soared year-over-year as did its automotive and IoT businesses. In particular, Qualcomm called out non-Apple smartphone companies including Samsung but also Xiaomi, Oppo, Vivo and Honor, which are Skyworks customers. Also this week, Apple reported record March quarter iPhone revenue and shared demand for that device family remains strong. While Apple flagged near-term constraints in meeting demand, we have to remember that even with flat device shipments year over year, the greater chip content per 5G device should allow quarterly revenue at Skyworks to grow faster than industry smartphone shipments. Skyworks will report its quarterly results on May 3, and we expect it will signal a much stronger second half of 2022 vs. the first half.

1-Wk. Price Change: -1.6% Yield: 1.9%

INVESTMENT THESIS: Our thesis on the shares of this RF semiconductor company is multifold. We see the company's business benefiting from the 5G smartphone upgrade cycle, particularly given its higher dollar content per 5G device than 4G and 3G ones. As that multi-year opportunity matures, 5G will enable the IoT and connected car markets as well as other opportunities for the company's RF semiconductors. We also appreciate the company's growing track record for growing its dividends.

Target Price: $210; Rating: One

RISKS: International and geopolitical business risks, product development and design risks, limited number of customers.

ACTIONS, ANALYSIS & MORE: Initiating Coverage of Two Stocks and Trimming One, Investor Relations.

United Rentals (URI) ; $316.52; 255 shares; 2.18%; Sector: Industrials

WEEKLY UPDATE: The company crushed March-quarter expectations delivering EPS of $5.73 per share on revenue of $2.52 billion, up 22.7% year-over-year. The rental equipment company shared the momentum it entered 2022 has continued with a tailwind for rental demand being driven by construction and industrial markets. United Rentals boosted its 2022 revenue outlook to $11.1 billion-$11.5 billion from $10.65 billion-$11.05 billion vs. the $10.96 billion consensus. On the earnings conference call the management team shared it is starting to have conversations about federal projects spinning out of the Biden Infrastructure legislation, which should translate into an ample pick-up in demand beginning later this year and even more so in 2023. We see upward revenue and EPS revisions coming for both this year and next and that should translate into price target increases as well. We are likely to see the Wall Street consensus price target of $405 move closer to our $420 one. Adding to our confidence in this, heavy equipment company Caterpillar (CAT) shared it sees non-residential construction continuing to improve, matching recent comments by Steel Dynamics (STLD) and our own Nucor (NUE). Caterpillar went on to say that despite rising interest rates, infrastructure investment is expected to improve in late 2022 and beyond supported by the U.S. Infrastructure Investment and Jobs Act."

1-Wk. Price Change: .6% Yield: 0.0%

INVESTMENT THESIS: United Rentals is the largest equipment rental company in the world, operates throughout the United States and Canada, and has a limited presence in Europe, Australia and New Zealand. It serves the industrial and other non-construction; commercial (or private non-residential) construction; and residential construction. Industrial and other non-construction rentals represented approximately 50% of rental revenue, primarily reflecting rentals to manufacturers, energy companies, chemical companies, paper mills, railroads, shipbuilders, utilities, retailers and infrastructure entities; Commercial construction rentals represented approximately 46% of rental revenue, primarily reflecting rentals related to the construction and remodeling of facilities for office space, lodging, healthcare, entertainment and other commercial purposes; and residential rentals ~4% of revenue. We see the company benefitting on three fronts - the seasonal uptick in construction spending; the release of funds and projects associated with the five-year Biden Infrastructure Bill; and the company's nip and tuck acquisition strategy that should further enhance its geographic footprint. In January, the company announced a fresh $1 billion buyback authorization following the completion of $4 billion in share repurchases over the 2012-2021 period.

Target Price: Reiterate $420; Rating: One

RISKS: Industry and economic risk, competition and competitive pressures, acquisition risk.

ACTIONS, ANALYSIS & MORE: Initiating a Position in This Equipment Rental Company, We're Adding This Equipment Rental Company to the Bullpen, Investor Relations.


Amazon (AMZN) ; $2,485.63; 47 shares; 3.15%; Sector: Consumer Discretionary

WEEKLY UPDATE: Following Amazon's head-scratching March-quarter results that served up more questions than answers, we downgraded the shares to a "Two" rating and cut our long-term price target to $3,500 from $4,000. As we explained in our more comprehensive note to members, while there is ample upside given our priced target the March-quarter performance has, in our view, put AMZN shares in the "show me" camp, especially with no identifiable catalyst until Prime Day 2022 that lands in July vs. June last year. That's contributing to the weaker-than-expected guidance for the current quarter, but to us the larger issues include the lack of growth at Amazon's product revenue during the quarter and slower growth at Amazon Web Services when Alphabet and Microsoft are ramping capacity. While some of the digital retail facing performance could be due to the global re-opening, we'll want to see confirmation shoppers are returning to digital shopping. Clearly CEO Andy Jassy has his work cut out for him, but perhaps this could lead him to share more about the company's health care strategy as part of an effort to reassure investors Amazon's best growth days aren't behind it.

1-Wk. Price Change: -13.9%; Yield: 0.00%

INVESTMENT THESIS: We believe upside will result from Amazon's continued Commerce dominance, AWS' continued leadership in the public cloud space, and ongoing growth of the company's advertising revenue stream, which feeds off Amazon's eCommerce business. Additionally, we believe profitability will continue to improve as AWS and advertising account for a larger portion of total sales as both these segments sport higher margins than the eCommerce operation. And while we believe the increasing share of revenue from these higher margin businesses will be key to driving profitability longer-term, we believe margins on ecommerce stand to improve as the company's infrastructure is further built out and economies of scale further kick in. The embedded call option is that management is always looking to enter a new space and generate new revenue streams. We continue to see the company's Prime, logistics service and learnings from its Chime video conferencing platform as a game changer for the healthcare industry.

Target Price: Reduced to $3,500 from $4,000; Rating: Two

RISKS: High valuation exposes the stock to volatile swings, eCommerce has exposure to slower consumer spending, competition, management is not afraid to invest heavily, potential headwinds resulting from new eCommerce regulation in India, management is not scared to invest aggressively for growth, which can at times cause volatile reactions as near-term concerns arise relating to the impact on margins.

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/29/21), 2020 Letter to Shareholders (4/15/21), Initiation (2/2/18), Investor Relations

Cboe Global Markets Inc. (CBOE) ; $112.98; 685 shares; 2.13%; Sector: Financials

WEEKLY UPDATE: Not only did Cboe top consensus expectations for its March quarter led by the 21% year over year jump in Options segment revenue, tight cost control versus the 14% year over year increase in quarterly revenue resulted in nice operating margin expansion. We continue to see the volatile market spurring options trading volume ahead, which sets the state for further favorable year over year comparisons for Cboe. Another positive is the upward forecast revision for Cboe's Data and Access Solutions business, which it now sees growing 8%-11% this year vs. its prior forecast of $7%-10%. On the cost side, Cboe targets 2022 operating expenses at $617-$625 million compared to the $712 million if we annualized the March quarter's operating expense level. The combination of rising revenue and tight expense control in the coming quarters sets the stage for further bottom line beats relative to current expectations.

1-Wk. Price Change: -1% Yield: 1.6%

INVESTMENT THESIS: Cboe's business, which centers on market infrastructure, data solutions, and tradable products for equities, derivatives, and foreign exchange across North America, Asia Pacific, and Europe. Those operations include the largest options exchange and the third largest stock exchange operator in the U.S., one of the largest stock exchanges by value traded in Europe, and EuroCCP, a leading pan-European equities and derivatives clearinghouse among others. The two primary drivers of the company's earnings are its options and North American equities business, which combined drive around 75% of its revenue but more importantly roughly 85% of its operating income. Viewed from a different perspective, 28%-30% of Cboe's revenue stream is from recurring non-transaction revenue that includes proprietary market data as well as access and capacity fees. We like the sticky nature and predictability of that business. The core driver of the company's business hinges on continued growth in options trading volume and the company expanding its recurring non-transaction revenue. If options trading volume continues to surge, or the shares retreat under market pressure to below the $110 level, we would look to revisit our "Two" rating.

Target Price: Reiterate $137; Rating: Two

RISKS: IT spending, competition, supply chain challenges

ACTIONS, ANALYSIS & MORE: Addition to AAP Portfolio; Initial Technical Review, Addition to Bullpen, Investor Overview.

Cisco Systems (CSCO) ; $48.98; 2,440 shares; 3.23%; Sector: Info. Tech.

WEEKLY UPDATE: As we wait for the company to report its latest quarterly results, we will be listening to comments from mobile carriers, telcos, cable companies, and data center ones about their March quarter, expectations for the current one and any supply chain disruptions they experienced. During the week both Alphabet (GOOGL) and Microsoft (MSFT) shared increasing plans to build out their cloud infrastructure given demand prospects, while later in the week Nokia (NOK) commented it continues to see strong demand for 5G equipment and reported a strong order backlog that would have grown faster without supply chain constraints. That comments paint a favorable picture for Cisco, however, those same supply chain issues could lead the company to report quarterly results or guidance that underwhelms expectations. For now we will sit on the sidelines with CSCO shares.

1-Wk. Price Change: -4.6% Yield: 3.9%

INVESTMENT THESIS: We have a favorable outlook on Cisco and its positioning to the recovery in Enterprise IT spending after the company reported 10% YoY order growth in its fiscal third quarter. This result represented the strong demand the company has seen in nearly a decade, and it is being driven by substantial growth opportunities in hybrid work, digital transformation, and the cloud. In addition to positive industry trends, the company's ongoing transition from hardware to more software/subscription sales is a price-to-earnings multiple expanding opportunity. Not only does this transition expand margins, but the recurring nature of the sales also reduces the volatility of earnings. Lastly, we like how management consistently returns a ton of cash to shareholders. Share repurchases are typical quarter after quarter, and the current stock price offers investors an attractive dividend yield. Management has increased its dividend payout for seven consecutive years.

Target Price: Reiterate $68; Rating: Two

RISKS: IT spending, competition, supply chain challenges

ACTIONS, ANALYSIS & MORE: FY4Q21 Earnings Analysis (8/18/2021), Initiation (6/2/21), Investor Relations

Costco Wholesale (COST) ; $531.72; 210 shares; 3.01%; Sector: Consumer Staples


1-Wk. Price Change: -7% Yield: 0.6%

INVESTMENT THESIS: We like Costco's long-term prospects, driven by a club-based operating model that focuses on volumes, not margins, and therefore offers its customers a value proposition of everyday low prices. The strength of this model has created an incredible loyal customer base with low churn and continued share gains in both brick and mortar and e-commerce. And this is a global concept, evidenced by the strength of sales both in the U.S. and abroad, which includes an emerging China opportunity. We see the company's membership model as a key differentiator vs. other retailers and its plans to open additional warehouse locations in the coming quarters should drive retail volumes and the higher margin membership fee income as well. We also appreciate management's approach to capital returns and their willingness to return cash when it is in excess on the balance sheet. Costco announced a 13.9% increase for its quarterly dividend to $0.90 per share. The dividend is payable May 13, 2022, to shareholders of record at the close of business on April 29, 2022.

Target Price: Reiterate $620. Rating: Two

RISKS: Inability to pass through higher costs, fuel prices, weaker consumer, membership churn.

ACTIONS, ANALYSIS & MORE: FY4Q21 Earnings Analysis (9/23/21), FY2Q21 Earnings Analysis (3/4/21), Upgrading Costco to a One (2/25/21), $10 Per Share Special Dividend (11/16/20), Recent Buy Alert (2/28/20), Initiation (1/27/20), Investor Relations

Deere & Co. (DE) ; $377.55; 310 shares; 3.16; Sector: Farm Machinery & Equipment

WEEKLY UPDATE: Antonio Carrere, who heads Deere & Co. operations in Latin America, shared that demand for food has outstripped supplies amid shrinking global stockpiles, adverse weather for crops and shipping turmoil caused by the pandemic and the Ukraine war. Per Carrere, "The world is demanding more food and fiber, and the only place where it's possible to increase production is Brazil and Latin America," and that is helping farmers' profits and supporting demand for agricultural machinery. We'll get confirmation on that next week when Deere competitors AGCO (AGCO) and CNH Industrial (CNHI) both report their latest quarter results. We'll also be looking for confirmation on the upgrade cycle for precision ag equipment. With DE shares below the $390 level, we are reconsidering our current Two rating.

.1-Wk. Price Change: -6.4% Yield: 1%

INVESTMENT THESIS: The global agriculture equipment market size is expected to reach $166.5 billion in 2027, growing at 6% CAGR over the 2020-2027 period. The favorable outlook for equipment purchases in the coming quarters reflects rising farmer income that historically drives new equipment purchases. At the same time, Deere continues to lean into the sustainability movement with its precision ag offering. That technology is helping farmers drive crop yields higher while also realizing cost savings, which makes the new technology a productivity upgrade compared to older equipment.

Target Price: Reiterate $450; Rating: One

RISKS: Geopolitical uncertainty, economic conditions, raw material and other input prices, prices for key agricultural commodities.

ACTIONS, ANALYSIS & MORE: Initiation (10/25/21), Investor Relations

First Trust Nasdaq Cybersecurity ETF (CIBR) ; $46.95; 1,200 shares; 1.52%; Sector: Cybersecurity

WEEKLY UPDATE: In the coming weeks we will see several constituents for this ETF report their quarterly results, and we expect favorable results and comments given the expanding reach and complexity of cyberattacks. CIBR shares have strong support at $44 and we would look to build out this position on pullbacks.

1-Wk. Price Change: -4.1% Yield: 0%

INVESTMENT THESIS: The First Trust Nasdaq Cybersecurity ETF is an exchange-traded fund. The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Nasdaq CTA Cybersecurity Index. The Nasdaq CTA Cybersecurity Index is designed to track the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. It includes companies primarily involved in the building, implementation, and management of security protocols applied to private and public networks, computers, and mobile devices in order to provide protection of the integrity of data and network operations. To be included in the index, a security must be listed on an index-eligible global stock exchange and classified as a cybersecurity company as determined by the Consumer Technology Association (CTA). Each security must have a worldwide market capitalization of $250 million, have a minimum three-month average daily dollar trading volume of $1 million, and have a minimum free float of 20%.

Target Price: Reiterate $62; Rating: Two

RISKS: Cybersecurity spending, technology and product development, timing of product sales cycle, new products, and services in response to rapid technological changes and market developments as well as evolving security threats.

ACTIONS, ANALYSIS & MORE: We're Swapping One Cybersecurity Stock for Another, ETF Product Summary

Ford Motor (F) ; $14.16; 8,670 shares; 3.31%; Sector: Industrials

WEEKLY UPDATE: During the week, Ford reported better-than-expected March-quarter results, which confirmed its transformation efforts are on track, even as it contends with the ongoing chip shortage. As we discussed, prospects for multi-year demand side keeps us long-term bullish and the continued progress on Ford's transformation keeps us long-term bullish on F shares, especially given the sharp retracement over the last three and a half months. Ford shared it is scaling EV capacity to meet demand for 600,000 units by late 2023, including that for its E-Transit vans in the U.S. and Europe, as well as the F-150 Lightning pickup in U.S. By the end of 2026, Ford targets producing more than 2 million EVs with EVs accounting for 50% of its global sales by 2030. While those may be viewed as lofty targets, they certainly track with any number of EV forecasts that we've seen. We would love to be buying the shares here, especially given the strong technical support near $13.50, but the existing position size prevents us from doing so. As such, we will have to remain patient with the position and let the transformation continue to play out. During our last Members Only call, we commented that exiting F shares here would mean leaving all of the transformation benefits on the table. We continue to have that view. We would encourage members, new and old, to use the current share price to average down their cost basis if they bought F shares at higher levels. If you have a position size that is less than that of the portfolio, this is a great spot to true up.

1-Wk. Price Change: -6.4% Yield: 0.7%

INVESTMENT THESIS: Our bullish thesis on Ford is mainly predicated on the turnaround led by CEO Jim Farley and his new leadership team. Whether it be through restructuring underperforming parts of the business and getting out of low profitable vehicles or addressing a roughly $2 billion headwind related to warranty costs, we believe Farley and his management are executing in building a new Ford that grows profitably and generates sustainable free cash flow. We also think Ford's electric vehicle business is underappreciated. Not only do they have the Mustang Mach-E, but Ford is also developing all-new electric versions of the popular F-150 and the E-Transit cargo van. Plus, Ford has a strategic partnership and minority investment with Rivian who is best known for its customer delivery vehicles for Amazon. Ford's next $0.10 quarterly dividend will be paid on June 1 to shareholders of record on April 26. Ford's 2022 virtual shareholder meeting will be held on May 12.

Target Price: Reiterate $25; Rating: Two

RISKS: Turnaround execution, the transition from ICE (internal combustion engines) to EV vehicles, competition, economic cycle,

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/28/21), Ford Continues to Shine After Capital Markets Day (5/27/21), Our Take on Ford as It Continues Its Climb Higher (1/21/21), Looking for Opportunities After a Ford Downgrade (11/25/20), Initiation (11/24/2020), Investor Relations

Mastercard (MA) ; $363.38; 275 shares; 2.70%; Sector: Info. Tech

WEEKLY UPDATE: The payment processor joined a growing number of companies that topped March-quarter consensus expectations for both the top- and bottom-lines and pointed to further growth ahead. By the numbers, revenue for the March quarter rose 24.4% year-over-year to $5.17 billion, handily beating the $4.9 billion consensus. As the company discussed on its earnings call, that strength continued in the first three weeks of April with switch volumes up 23% year-over-year and 27% excluding any impact from exiting Russia. Some of that may be tied to the late Easter holiday this year, but even after adjusting for that, it still shows overall spending was robust. Cross border volumes ballooned year-over-year during the first three months of April, up 60% and up 65% ex-Russia. This led Mastercard to share that as yet it has seen no noticeable headwind emerge in consumer spending. With Mastercard's exit of Russia, the company lowered its operating expense forecast for the year, leading it to see op-ex spending in the high-single digit teens this year vs. high teens revenue expectations for the year. As we examine upcoming Mastercard SpendingPulse surveys, monthly retail sales reports and ones for consumer credit we'll look to revisit our price target, but for now we are keeping our $425 price target intact. In the near-term if MA shares pierced the $490 level, we'd be inclined to revisit our current One rating on the shares.

1-Wk. Price Change: 3.5% Yield: 0.6%

INVESTMENT THESIS: Mastercard is a card network company that benefits from the secular shift away from cash transactions and towards card based and electronic payments. On COVID-19 dynamics, we view MA as a "reopening" play and an economic recovery play within technology because its cross-border volumes fell sharply during the pandemic but will rebound as mobility increases and travel restrictions ease. Mastercard has more international exposure relative to Visa, making its growth outlook more susceptible to new travel restrictions. However, we view MA as the better long-term play as we are betting on that inevitable recovery. The company's next $0.49 per share quarterly dividend will be paid on May 9 to shareholders of record on April 8.

Target Price: Reiterate $425 Rating: Two

RISKS: The recovery in cross-border transactions, regulation in payments market, competition from other fintechs, pricing pressures.

McCormick & Co. Inc. (MKC) ; $100.57; 760 shares; 2.06%; Sector: Food; Consumer Non-Durables

WEEKLY UPDATE: We took advantage of some softness in the share price of this spice, marinade, and extract company to nibble further on our position size. Later in the week, McCormick announced it will expand its French mustard brand to include a new line of creamy mustard spreads with initial flavors of yellow, sweet applewood and honey chipotle. This one example of the company's strengths - expanding the profile of its portfolio to meet evolving consumer taste preferences, particularly when dining at home. Candidly, we aim to try them and report back to members.

1-Wk. Price Change: -1.7% Yield: 1.4%

INVESTMENT THESIS: McCormick is a global leader in flavor that manufacture spices, seasoning mixes, condiments, and other flavorful products to the entire food industry-retailers, food manufacturers and foodservice businesses. Roughly 65% and 75% of the company's sales and operating income are derived from its Consumer business with the balance from its Flavor Solutions one. With consumers feeling the pinch of higher food prices, they are likely to repeat the historical pattern of shifting toward increasing food consumption at home, a driver of demand for McCormick's products. We are also entering the seasonally strong time of year for this dividend payer, which has increased its dividend each year over the past 37 years.

Target Price: Reiterate $110 Rating: Two

RISKS: Local economic and market conditions, input cost inflation, exchange rate fluctuations, and restrictions on investments, royalties and dividends.

Nucor (NUE) ; $154.78; 215 shares; 0.90%; Sector: Materials

WEEKLY UPDATE: Following our post-March quarter earnings price target boost to $175, as we expected others followed this week, including Citigroup that upped its target to $180 from $100. Even though we used recent strength to trim back the position near $174, given the underlying strength in steel prices and upcoming infrastructure bill we would look to add back to the position near $155.

1-Wk. Price Change: -3.9% Yield: 1.1%

INVESTMENT THESIS: Nucor is the largest steel producer in the United States, primarily serving commercial, municipal construction, and industrial markets. The company operates in three major segments: steel mills, steel products, and raw materials. Nucor is also the largest metals recycler in North America. We believe the steel industry is going through a multi-year cycle of higher prices, leading to higher margins and bigger profits for Nucor. The sharp, V-shaped recovery in industry activity has been one driver of profit growth for Nucor, as the surge in demand for steel coming out of the pandemic was met with tight capacity. We also believe Nucor will be a major beneficiary of a comprehensive infrastructure package. Lastly, Nucor has a history of rewarding its shareholders with robust capital returns during its upcycles. The company recently announced a 23% increase in its quarterly dividend to $0.50 per share, up from the prior $0.405, and the approval of a $4 billion share repurchase program, which replaces Nucor's prior $3 billion program under which the company bought back $2.33 billion between May-December of this year.

Target Price: Reiterate $175 Rating: Two

RISKS: Steel prices, decline in industrial activity, no comprehensive infrastructure package.

ACTIONS, ANALYSIS & MORE: Nucor Preannounces Stronger-Than-Expected Third-Quarter Earnings

(9/16/21), FY2Q21 Earnings Analysis (7/22/21), Initiation (6/7/21), Investor Relations

Union Pacific Corp (UNP) ; $234.29; 370 shares; 2.34%; Sector: Industrials


1-Wk. Price Change: 0%; Yield: 1.8%

INVESTMENT THESIS: We believe Union Pacific to be an ideal investment to both gain exposure to the economic reopening underway and to hedge against potential inflation. The supply crunch we are seeing across many industries (due to a surge in demand coupled with companies that have focused on running lean inventories throughout 2020) means a need to transport goods to rebuild supplies. This dynamic speaks to management's guidance for mid-single digit volume growth in 2021 versus the prior year. As for inflation, because of its importance in the global supply chain, Union Pacific has significant pricing power, which is the key to any inflationary hedge as it means the company can pass costs through to customers. Because of this pricing power, management also expects "continued margin improvement driven by pricing opportunities in excess of inflation and ongoing productivity initiatives." The company recently announced a new share repurchase authorization effective April 1 allowing it to buy up to 100 million shares by March 31, 2025.

Target Price: Reiterate $265 Rating: Two

RISKS: Service interruptions due to weather, West Coast port congestion, or other external factors, competition, a failure to innovate and increase efficiencies.

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/22/21), Accelerated Share Repurchase (5/26/21), Initiation (3/9/21), Investor Relations

United Parcel Service (UPS) ; $179.98; 520 shares; 2.53%; Sector: Industrials

WEEKLY UPDATE: UPS reported better-than-expected March-quarter results, guided its 2022 revenue modestly above expectations and announced it would double the amount of share repurchases for 2022, taking the target to $2 billion for the year. That last part should offer ample support to UPS shares given the expectation for strong second half of 2022 that should offset some domestic weakness in the first half of 2022. Earnings comments emanating from both Visa (V) and Mastercard (MA) this week point to continued strength in consumer and related spending during the first three weeks of April. We will continue to monitor spending metrics for both the consumer and corporations as well as fuel and other cost drivers. Given the softer near-term environment we are trimming our UPS price target to $230 from $255, and would look to revisit our Two rating closer to $180.

1-Wk. Price Change: -3.8% Yield: 2.3%

INVESTMENT THESIS: We are fans of CEO Carol Tomé. Throughout her time at Home Depot, Tomé built an impressive reputation as a turnaround artist, and we think her fresh perspective and intense focus on efficiencies will create a better UPS. However, near-term global supply chain issues paired with rising transportation costs could be a thorn in the company's side. We appreciate UPS's nearly 50 years of stability and growth in dividends, which management calls the "hallmark" of the company's financial strength. In February 2022, the company announced a 49% hike to its quarterly dividend putting it at $1.52 per share.

Target Price: Trim to $230 from $255; Rating: Two

RISKS: Weakness in the broader economy, rising fuel prices, execution, cost management, pricing power.

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (7/27/21), Investor/Analyst Day Analysis (6/9/21), Initiation Post (9/25/20), Investor Relations

Walmart (WMT) ; $156.86; 860 shares; 3.55%; Sector: Consumer Staples

Weekly Update: The company announced larger gas discounts at an expanded lineup of fuel stations for its Walmart+ members, a move to help spur adoption. The shares ended the week lower despite inflation data that will likely lead consumers to take advantage of Walmart's everyday low pricing strategy. We chalk the end of the week weakness more to market pressure but also some to Amazon's quarterly results, which showed its Product revenue little changed for the quarter. To us that likely means shoppers voted with their wallets either at other digital shopping locations or at brick & mortar stores. Paired with the inflationary pressures that have unfolded over the last few months, we see that benefitting Walmart's omnichannel strategy. If WMT shares retreated below the $150 level, we'd be inclined to reconsider the current Two rating.

1-Wk. Price Change: -2.5%; Yield: 1.4%

INVESTMENT THESIS: We believe Walmart to be a defensive name that can withstand the pressures of the coronavirus pandemic that is at the same time transforming itself for the digital, post-pandemic world. While its scale is well understood and to a large part what allows the name to be so resilient despite a difficult macroeconomic environment, we believe investments into ecommerce are what will provide longer-term upside. On this offensive front, we believe multi-year investments in eCommerce (previously rolling into the core online operation) and initiatives such as Walmart+ stand to increase engagement and customer loyalty. We also believe the recent partnership with Shopify will help expand the online marketplace and view a potential deal with TikTok Global as an "embedded call option" that can greatly aid the online segment's growth as it provides the company an Instagram like play with the ability to leverage online influencers. Moreover, we believe Walmart to have a strong foothold in the rapidly growing emerging Indian market via its majority ownership of Flipkart. Finally, we believe there to be a budding advertisement business that can leverage the company's omni-channel investments (and resulting data) that has yet to be appreciated by the market.

Target Price: Reiterate $175; Rating: Two.

RISKS: Consumer spending levels, FX, Competition, Margin headwinds related to e-commerce,

ACTIONS, ANALYSIS & MORE: FY2Q21 Earnings Analysis (8/17/21), Why We Are Upgrading Walmart to a One (6/24/21), Walmart Moves Higher After Bloomberg Reports 7Flipkart Could IPO in Q4 (4/6/21), Adding to Walmart (2/19/21). Initiation (11/6/20), Investor Relations