Equities put in a great performance -- and they did it in spite of some hefty challenges: ongoing inflation, record gas prices, cash-strapped consumers, continued supply-chain woes, and bloated retailer inventories.

By Friday's close, all four major market indexes added more than 5%, erasing their earlier May losses in the process, save for the Nasdaq Composite. That index is still down close to 2% for the month. The sober view is that even after the week's rally, which lifted a number of AAP portfolio holdings above the portfolio's benchmark -- including ChargePoint, Deere & Co., Costco Wholesale, Nvidia, Nucor, and United Rentals --  the market is still down for the year and faces a number of headwinds.

What lifted the market this week, and pushed the McClellan oscillator into overbought territory, was the shift in the prevailing narrative for the Fed and its fight on inflation. While the Fed's May meeting minutes practically confirmed the much telegraphed 50-basis point rate hikes exiting June and July, it was an updated inflation forecast by the nonpartisan Congressional Budget Office (CBO) that started to alter the narrative. Alongside it is a revised GDP forecast that now calls for 3.1% growth this year, driven by consumer spending and demand for services. The CBO shared its view that "roaring" inflation as measured by the consumer price index has topped and should cool each month coming in at 4.7% for 2022, 2.7% in 2023 and 2.3% in 2024. Baked into that forecast, CBO expects the Fed will hike its benchmark overnight interest rate to 1.9% by the end of 2022 vs. the prevailing market narrative of something more than 2.5%, before rising further in 2023 at 2.6%.

Friday's April personal consumption index index that moved lower month-over-month added some credibility to the CBO's inflation forecast. At its core, that CBO forecast suggests the U.S. economy can withstand the Fed's efforts to fight inflation without falling into a recession and that helped lift the market this week. However, with prospects for gas prices to move higher throughout the summer keeping inflationary pressures elevated and adding to consumer spending headwinds, we will continue to take a cautious stance with the portfolio. As always, we will let the data do the talking to us.

Adding to those gas and related consumer spending headwinds are increasing reports of higher slowdowns as well as Snap's guidance cut this week that suggests at the margin companies are tightening their belts. According to Challenger, Gray & Christmas, the company behind the monthly Job Cuts report, "Job cut plans appear to be on the rise, particularly as companies assess market conditions, inflationary risks, and capital spending." The company reported a 14% sequential increase (6% on a year-over-year basis) in job cuts in April for U.S. based employers. The next update on Job cuts should come late next week or early the following one, and what it says will factor into our thinking for both the economy and the portfolio.

And as we fade into the long weekend, modest progress has been made on Shanghai's reopening, but we will gauge progress in the coming days. In terms of the Russia-Ukraine war, Russian forces are advancing in Ukraine's east and report suggest U.S. President Joe Biden's administration is considering sending advanced, long-range weapons systems to Ukraine. When we return from the long weekend, we'll know if Russia made interest payments due Friday on its $40 billion of international bonds, but the country faces payments on two bonds on June 23 and 24. Hopefully we start to see some of the lockdown clouds in China begin to clear in the coming weeks even as the war and its implications look to continue.

We wish everyone a peaceful and enjoyable Memorial Day, and we'll see you back here on Tuesday.

The AAP Portfolio

We made a handful of moves with the portfolio this week, exiting the shares of Union Pacific and Marvell Technology, while adding to existing positions in McCormick & Co., the First Trust Nasdaq Cybersecurity ETF, and Nucor shares. We also shared with members an updated deep dive on Bullpen resident PepsiCo, which we see performing well in a slower economy. In terms of rating changes, we downgraded Walmart shares to a "Three," given concerns over the company's aggressive forecast and record inventory levels amid consumer spending concerns that could prompt some painful inventory discounting for the company. In keeping with the "Three" rating, we're eyeing pulling the plug on WMT shares near the $130-$135 range.

We recognize the portfolio's cash levels are running at high levels, but we also see that caution is warranted here, as the McClellan oscillator is extremely overbought, telling us the market is vulnerable to some downside activity. As we've shared with members before, the market can see some nice moves higher in the short-term even though we are still inside a bear market, but as we've seen in recent weeks, rallies have been sold vociferously and without any signal. We'll look to judiciously and prudently deploy the portfolio's cash, and odds are we'll see some of the more recent additions to the Bullpen graduate to the portfolio before too long. Heeding what the technicals have to say, and by that we mean the current overbought reading of the market, we will look to use pullbacks in the market to the portfolio's and members' advantage.

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)


There were several key economic indicators released this past week, and the cut to the quick takeaway is they pointed to a slower rate of growth for the U.S. economy while inflationary pressures remained at elevated levels. The May Flash reading for S&P Global's Manufacturing index slipped to 57.5 from April's final reading of 59.2, hitting a three-month low, while the May Flash reading for U.S. Service Business Activity dropped to 53.5 from April's 55.6, marking a four-month low. As a reminder, a reading above 50 denotes expansionary activity, but it was the following on inflation that is likely to be the focal of the report:

"The surge in input prices was linked by companies to supplier-driven price hikes for a wide variety of goods and services as demand often continued to outstrip supply, as well as higher interest rates, wage bills, fuel costs and higher transportation fees. Average prices levied for goods and services also rose markedly, albeit with the rate of inflation easing from April's series-record high as some companies reported challenges passing further surges in costs on to customers. The pace of increase was the second-fastest on record, however."

Looking ahead, both new orders as well as new export orders both softened compared to prior months indicating the further slowing in the headline figures for June is highly probable. We see that adding to concerns the economy runs the risk of slowing with each passing Fed rate hike. We also see it leading, generally speaking, to revenue and earnings expectations once again being rethought to the downside, particularly for the S&P 500 group of companies.

Soon after that report was digested, we received the second estimate for first-quarter 2022 GDP, which was revised down to show real GDP decreasing at an annual rate of 1.5% from the advance estimate of -1.4%. The key takeaway from this report, though, was the upward revision to consumer spending to 3.1% from 2.7%. That exceeded consumer spending growth in 3Q and Q of last year, indicating U.S. consumer was still acting as a key growth engine in the first quarter despite rising interest rates and higher costs for most goods and services, and especially food and energy.

Recent Consumer Credit data points to consumer dipping further into revolving lines of debt to fund these purchases. But incrementally higher interest rates will mean a greater portion of consumer incomes will be used to service those higher levels of debt - a headwind to consumer spending. The final reading for May's U.S. consumer sentiment is another reason to be cautious when it comes to the outlook for consumer spending. The University of Michigan's final May sentiment index decreased to 58.4 from a preliminary reading of 59.1, data released Friday showed. In April, the gauge stood at 65.2. Households turned especially pessimistic in their short-and long-term outlooks for the economy. A gauge of current conditions fell to a 13-year low of 63.3, while a measure of future expectations dropped to 55.2. Consumers expect prices to rise 5.3% over the next year, holding close to a four-decade high. They expect prices will climb at an annual rate of 3% over the next five to 10 years. With the benefit of hindsight, we would not be surprised to learn the strong level of consumer spending noted in the revised 1Q 2022 GDP report was due in part to consumers pulling ahead purchases of durable goods and other items given concerns over escalating prices.

Those higher interest rates are continuing to weigh on the weekly MBA Mortgage Applications Index, with the latest data showing the unadjusted Purchase Index falling 16% year-over-year for the week ending May 20. With the 30-year fixed mortgage rate back near 5.5%, the report noted a 75% year-over-year drop in the Refinance Index, which means folks are no longer using their homes as ATMs. Following the continued weekly declines in the Purchase Index it wasn't much of a surprise at all that April New Home sales fell 26.9% following the sharp drop in March, and May's mortgage application activity likely points to another decline when we get that May data.

Late in the week, we received the April Personal Income & Spending report, which confirmed consumers are using their savings and taking on debt to fund their purchases. We say this real personal spending rose 2.8% year-over-year in April even though real disposable income fell for the fifth straight month in April. The report also brought with it the April Personal Consumption Expenditure Price Index, which was up 6.3% year-over-year, vs. 6.6% in March, and the core-PCE Price Index, the one the Fed watches most closely, was up 4.9% year-over-year, vs. 5.2% in March. That data supports the view that inflationary pressures have likely peaked, but those figures also suggest they remain at elevated levels.

Those core figures exclude food and energy, and what we saw this week for gas prices points to that particular form of inflationary pressure not abating any time soon. This week the average price for a gallon of regular unleaded gas in the U.S. reached $4.60 according to AAA. That's a 51% increase from a year ago and if you think that's bad, California residents are paying the most to fill up their tanks at an average of $6 per gallon. And it could get worse given falling gasoline stocks that are now below their 5-year range.

This drop in inventories is leading calls for gas prices to move even higher as we move through the summer months, with JPMorgan forecasting retail gas prices could jump to $6 a gallon or higher by August. As it is, data points to the typical consumer spending $4,800 on an annualized basis for gas, up 70% year-over-year and a big headwind to discretionary spending. This adds to our view that retailers are likely to have a challenging time working off excessive inventories in the coming months. It also means that we are likely to see continued inflationary comments in forthcoming PMI reports as companies contend with those gas prices and the decline in the PCE Price Index to the Fed's target level could take some time.

Chart of the Week: Biotech May Be Right Medicine

There are some budding charts out in the markets, not everything looks horrible any longer. Yet, we have to be on guard for any pullbacks, they could be opportunities or just plain misses. Looking at the IBB iShares biotech ETF (IBB) , the weekly chart shows these stocks are starting to recover. Notice the money flow and relative strength index bending upward -- that is encouraging. The shaded part of the chart shows a rangebound segment, which is strong resistance, that could be a point where price is turned away. The good news, that comes in around $144 or so, about 30% higher than current prices. Volume trends lately have been bullish, so a move above that downtrend line bodes well. That would be around $125 or so right now.

The Coming Week

When we return from the long weekend, we will welcome a number of key economic data points. Among them are the final April readings for the manufacturing & services economies from S&P Global as well as both the April ISM manufacturing and non-manufacturing indexes.

Inside both we'll be eyeing new orders as well as inflationary comments for both input and output costs as we further sharpen our view on the current speed of the economy and what's likely ahead in the next few months. With the inflation data, we'll be looking for comments pointing to what we're likely to see when we get the May data for both the CPI and PPI on June 10 and 14, respectively.

In terms of wage pressures, we'll be comparing the year-over-year average hourly wage gains reported in the May employment report with those from the prior month's data. Fed Chair Powell has shared the view that a key part of the inflationary pressures is related to the tight jobs market and that will have us picking carefully through the April JOLTS Job Openings data when it's reported next week. Given our position in AMN Healthcare, we'll be closely examining the delta between openings, hires and separations for the Health care and social assistance sectors.

The timing of that data will be rather important given the Fed will emerge from its next two-day monetary policy meeting on June 15. Currently the expectation is for a 50-basis point rate hike, but the data to be had as we get closer to that meeting will likely set the tone for both the Fed's formal policy statement as well as Powell's tone during the follow on press conference.

Also next week, we'll get the April Construction Spending report and, given the portfolio's holdings in Nucor as well as United Rentals, we'll be picking through that data, assessing the year-over-year pace of spending, with a particular focus on non-residential construction. As we do this, we'll be matching it up with recent AIA Architecture Billings Index data.

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


Tuesday, May 31

  • FHFA Home Price Index - March (9:00 AM ET)
  • Chicago PMI - May (9:45 AM ET)
  • Consumer Confidence - May (10:00 AM ET)

Wednesday, June 1

  • Weekly MBA Mortgage Applications (7:00 AM ET)
  • Markit Manufacturing PMI - May (9:45 AM ET)
  • ISM Manufacturing Index - May (10:00 AM ET)
  • Construction Spending - April (10:00 AM ET)
  • JOLTS Job Openings - April (10:00 AM ET)
  • Fed Beige Book (2 PM ET)

Thursday, June 2

  • ADP Employment Survey - May (8:15 AM ET)
  • Weekly Initial & Continuing Jobless Claims (8:30 AM ET)
  • Unit Labor Costs & Productivity - 1Q 2022 (8:30 AM ET)
  • Durable Orders - April (10:00 AM ET)
  • Factory Orders - April (10:00 AM ET)
  • Weekly EIA Natural Gas Inventories (10:30 AM ET)
  • Weekly EIA Crude Oil Inventories (11:00 AM ET)

Friday, June 3

  • Employment Report - May (8:30 AM ET)
  • Markit PMI Services - May (9:45 AM ET)
  • ISM Non-Manufacturing Index - May (10:00 AM ET)


Monday, May 30

  • Eurozone: Business Climate, Consumer Confidence, Economic Confidence - May
  • Germany: CPI - May

Tuesday, May 31

  • China: CFLP PMI Manufacturing & Non-Manufacturing - May
  • France: Consumer Spending - April
  • France: CPI - May
  • Eurozone: CPI - May.

Wednesday, June 1

  • Japan: Markit/JMMA PMI Manufacturing - May
  • China: Caixin PMI Manufacturing - May
  • Germany: Retail Sales - April
  • Eurozone: Markit PMI Manufacturing - May
  • UK: CIPS Manufacturing PMI - May

Thursday, June 2

  • Eurozone: PPI - April

Friday, June 3

  • Japan: Services PMI - May
  • Eurozone: Markit Services PMI - May
  • Eurozone: Retail Sales - April

On the earnings front, we have a rather thin calendar for portfolio constituents with ChargePoint issuing its latest quarterly results after the market close on Tuesday, May 31. We'll also be listening to hear what HP (HPQ) has to say about PC demand following the strong outlook issued by Dell (DELL), which boded rather well in our view for both Nvidia and AMD shares. Following recent chatter over iPhone production volumes, we'll look for some clarity when Broadcom (AVGO) reports its quarterly results late next week. Late next week also brings more quarterly earnings from a few constituents of the First Trust Nasdaq Cybersecurity ETF. Based on what we've heard in recent weeks, we expect further confirmation that cybersecurity remains a growth market.

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

Tuesday, May 31

  • Close: Ambarella (AMBA), ChargePoint (CHPT), Digital Turbine (APPS), HP (HPQ), Salesforce (CRM), Victoria's Secret (VSCO)

Wednesday, June 1

  • Open: Capri Holdings (CPRI)
  • Close: Chewy (CHWY), GameStop (GME), Netapp (NTAP), PVH (PVH), SentinelOne (S).

Thursday, June 2

  • Open: Ciena (CIEN), Designer Brands (DBI), Hormel Foods (HRL).
  • Close: Broadcom(AVGO), Calavo Growers (CVGW), CrowdStrike (CRWD), lululemon athletica (LULU), Okta (OKTA).


Airbnb, Inc. (ABNB) ; $120.50; 765 shares; 2.69%; Sector: Consumer Service

WEEKLY UPDATE: ABNB shares remained under pressure for mot the week United (UAL) recently boosting its revenue outlook and travel numbers that remain strong compared to 2021 levels. By our calculations, the Transportation Security Administration checkpoint travel numbers quarter-to-date are up almost 45% year-over-year. But we have to recognize that unlike several months ago or this time last year, we are now in a bear market and that means stocks of all types get "swiped at" no matter what the fundamentals may point to. As we said recently it means bad news is bad news, and good news isn't enough. As we look to limit further losses for the portfolio, we'll continue to chew on the above for Airbnb as we plot our next move with this holding.

1-Wk. Price Change: 7.1%; 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 $200; 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) ; $102.26; 1,160 shares; 3.46%; Sector: Info. Tech.

WEEKLY UPDATE: This week AMD completed its $1.9 billion acquisition of Pensando Systems, which will expand AMD's data center product portfolio with a high-performance data processing unit and software stack that are already deployed at scale across cloud and enterprise customers including Goldman Sachs, IBM (IBM) Cloud, Microsoft Azure, and Oracle (ORCL) Cloud. Also this week, Chair and CEO Lisa Su gave the keynote at the Computex 2022, unveiling the company's Ryzen 7000 Series desktop processors, which use the Zen 4 architecture and are capable of running at over 5GHz. The company shared it plans to launch the Ryzen 7000 desktop processors this fall and has a number of related product wins.

1-Wk. Price Change: 9.4% 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.

Target Price: Reiterate $160; 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) ; $95.63; 1,170 shares; 3.26%; Sector: Health Care Services

WEEKLY UPDATE: During the week Jefferies both issued positive comments on AMN and a boosted its price target to $175 from $170. While that price target is head-and-shoulders above our $125 target, we certainly agree with the firm's assessment the shares are oversold on excessive contract labor volume and rate concerns. We do expect labor contract rates will decline as we get further from the pandemic, but comments we collected during the March-quarter earnings season point out that that return will take far longer than previously thought. We continue to see the ongoing nursing shortage, along with the growing medical care needs of our aging population, driving favorable long-term demand for medical contract labor and AMN in particular.

1-Wk. Price Change: 8.1%; 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 $125; 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) ; $149.64; 1,080 shares; 4.71%; Sector: Technology

WEEKLY UPDATE: Once again, there were reports suggesting Apple's 2022 iPhone production could be trimmed back further amid ongoing supply-chain woes. Bloomberg reports Apple is planning to keep iPhone production flat in 2022, asking suppliers to assemble roughly 220 million iPhones vs. market forecasts that call for closer to 240 million units. Meanwhile, Nikkei Asia reports the development of the iPhone 14 model has been delayed but there are other reports that Apple is asking suppliers to ramp production for the new model given recent constraints. In our view, we are approaching the inflection point in Apple's annual production as it looks to bring its latest model to market in time for the holiday shopping season. While that means we could see softer-than-expected June-quarter iPhone volume, which tends to be a seasonally weak one, odds are it will be made up in the coming quarters as newer models ramp.

Late in the week, noted TF International Securities analyst Ming-Chi Kuo shared that his that his latest checks showed that while the iPhone 14 Max is "running behind," it is currently "under control" and Apple's suppliers can work overtime to catch up with its schedule. We would caution members not to read too much into Apple supply chain speculation. In the past that has proven to be a false indicator, especially given Apple's ability to shift product production to maximize revenue. We've seen that time and time again, including in the March quarter.

As we navigate the coming weeks, which will include several investor conferences, we'll look to fine tune the prospects. That includes any "crumbs" Apple may share about its second half of 2022 and beyond at its upcoming 2022 Worldwide Developer Conference that kicks off with CEO Tim Cook's keynote on June 6. Also late in the week, Apple started rolling out its new Tap to Pay on iPhone feature at some of its retail stores; the feature will allow small businesses to take credit card payments directly from their iPhone, without the need for additional hardware. This targets companies ranging from Square (SQ) to Toast (TOST) but the proof of success will hinge on its adoption.

1-Wk. Price Change: 8.8% Yield: 0.6%

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) ; $119.48; 1,160 shares; 4.04%; Sector: Industrial Machinery

WEEKLY UPDATE: While there was no specific company news, this week the Spanish government announced it would spend $13.2 billion to convert the country into a major producer of microchips. This builds on the European Union's announced $48 billion plan to become a major semiconductor producer and President Biden's $52 billion push to invest in a national chip producing sector. Also this week Samsung announced it will spend $356 billion through 2026 in its businesses including adding additional semiconductor capacity after warning twice in the past year of capacity shortages. We see all of those efforts fostering continued demand for semi-cap equipment even as year-over-year revenue gains at chip companies with prospects for further year-over-year gains to be had in the coming quarters suggests industry capacity will continue to remain tight. We see that as a positive for semiconductor capital equipment demand. The next known catalyst will be when Taiwan Semiconductor (TSM) reports its May 2022 revenue.

1-Wk. Price Change: 12.2% Yield: 0.8%

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 $165; 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.

Cboe Global Markets Inc. (CBOE) ; $111.84; 925 shares; 3.01%; Sector: Financials

WEEKLY UPDATE: With market volatility remaining at elevated levels and prospects for that continuing into June and July as we navigate the Fed's telegraphed interest rate hikes, we added to the portfolio's position in CBOE shares. This is because of the prospects for continued use by individual and professional investors to use options and related products to protect their portfolios. We see that setting up another banner month for options contract volume in May, much the way it did in March and April, and we expect to have confirmation when Cboe reports its May metrics.

1-Wk. Price Change: 4.6% 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.

Target Price: Reiterate $137; Rating: One.

RISKS: IT spending, competition, supply chain challenges

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

ChargePoint Holdings Inc. (CHPT) ; $13.45; 8,865 shares; 3.47%; Sector: Electrical Components & Equipment

1-Wk. Price Change: 22.1% Yield: 0.00%

WEEKLY UPDATE: None. ChargePoint will announce earnings on May 31.

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) ; $1,402.42; 70 shares; 2.86%; Sector: Restaurants

1-Wk. Price Change: 8.4% Yield: 0.00%

WEEKLY UPDATE: Board member Gregg Engels acquired $381,152 CMG shares on May 18, according to a filing with the Securities Exchange Commission. The filing revealed Engels expanded his CMG position by 54% to 571 shares. Meanwhile BMO Capital Markets ran recession scenario tests across the entire casual dining sector using 2008-2009 aggregate comp slowdowns and 2017-2018 valuation metrics (when interest rates were last near current levels) and determined CMG has less than 10% implied downside from current levels. We continue to see Chipotle benefitting from the consumer shift from casual dining to fast casual with its better for you menu appealing to shifting consumer preference. We also remain fans of management's use of limited time offering menu items that goose traffic and are additive to average ticket. We would remind members that Chipotle's recent price increases are likely to translate into margin improvement when food input costs normalize.

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) ; $109.32; 900 shares; 2.87%; Sector: Communication Services

WEEKLY UPDATE: A report out this week from The Information suggests advertising-supported streaming video could bring a 21% boost to U.S. revenue at Netflix (NFLX). We would argue something similar is likely to happen with Disney's Disney+ streaming service when it offers an ad-supported version of the service later this year. And speaking of Disney+, its international rollout continues as the service is headed to Israel courtesy of a deal with telecom company Bezeq. In terms of Disney's content line up, this weekend brings its latest Star Wars installment to Disney+ and it will be followed by "She-Hulk: Attorney at Law" on August 17. "Willow" will be released starting this November, actor Jude Law has signed on to lead a new Star War series dubbed "Skeleton Crew" and season 3 of "The Mandalorian" will debut in 2023. These and other projects including expected Marvel Cinematic films at the box office in the coming months confirms the House of Mouse is delivering on its content plans for the second half of 2022 and beyond. During the week Wells Fargo named DIS shares to its inaugural "Signature Picks" list that is culled from its highest conviction ideas.

1-Wk. Price Change: 6.7% 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 $150; 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) ; $2,246.33; 55 shares; 3.60%; Sector: Communication Services

WEEKLY UPDATE: Early in the week GOOGL shares along with others in the social media and digital advertising space were hit following Snap (SNAP) cuttings it revenue outlook roughly a month after sharing its revenue would be up 20%-25%. The company cited the worsening economic environment, but we also question how much of that pain is due to the continued adoption of privacy solutions in Apple's various operating systems as well as Alphabet's Android one. Later in the week, the UK's CMA announced it is investigating Google over its advertising practices and whether it has restricted competition. "Advertising technology intermediation, also known as the 'ad tech stack', is a complex set of services which facilitate the sale of online advertising space between sellers (publishers, like online newspapers and other content providers) and buyers (advertisers). In 2019, UK advertisers spent around £1.8 billion on this kind of online advertising. The market is important because millions of people across the UK use websites that rely on advertising revenue to offer high-quality, free content. The CMA is assessing whether Google's practices in these parts of the ad tech stack may distort competition." This follows a similar bill introduced in the U.S. Senate last week, however, the fate of that bill could hinge on the mid-term election outcome later this year. For now, we see Alphabet's core Search and Advertising business continuing to benefit from the ongoing shift toward digital advertising, with the same being said for its YouTube business as well.

1-Wk. Price Change: 3.1%; 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

Microsoft Corp (MSFT) ; $273.24; 425 shares; 3.38%; Sector: Technology

WEEKLY UPDATE: Microsoft held its annual Build developer conference on Tuesday at which it several new features and services for its software, including new features for Teams. This included the new Live Sharing feature for Teams, which allows users in the meeting to co-edit or co-create documents, aiding with the company's further push into the metaverse. The new feature will offer a more interactive meeting and is available via apps that are already integrated into Teams, which competes with Zoom (ZM) and Salesforce's (CRM) Slack. Microsoft also unveiled a new cloud service, known as Dev Box, that lets developers work on projects across workstations. Also this week, Microsoft signed a deal with Meta Platforms (FB) for its Azure unit to be a strategic cloud provider for Meta as it accelerates its AI research. We'd also remind members that Microsoft will pay its next $0.62 per share quarterly dividend on June 9.

1-Wk. Price Change: 8.2% Yield: 0.9%

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) ; $86.45; 1,385 shares; 3.49%; Sector: Financials

WEEKLY UPDATE: None although the recent pick up in in M&A transactions bodes well for a better investment banking comparisons compared to earlier in the year. Turning to Morgan's asset management business, data from Refinitiv Lipper showed investors bought a net $6.16 billion worth of global equity funds, marking their first weekly net buying since April 6.

1-Wk. Price Change: 8.9%; Yield: 2.8%

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

United Rentals (URI) ; $297.46; 255 shares; 2.21%; Sector: Industrials

WEEKLY UPDATE: Several months after the signing of President Joe Biden's $1 trillion infrastructure package, the government shared there are 4,300 projects underway with more than $110 billion in funding announced. Of the $110 billion announced so far, $52.5 billion is for federal highway funding this fiscal year and $20.5 billion for public transit. There is another $27 billion over five years for bridges, as well as money for safety, rural highways, airports, ports, drought resilience and other programs. We see that setting up a stronger second half of the year for 2022 with even more in 2023 and beyond as the full impact of infrastructure spending is had.

1-Wk. Price Change: 10.2% 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) ; $2,302.93; 30 shares; 2.01%; Sector: Consumer Discretionary

WEEKLY UPDATE: Alongside our shares of Disney, Amazon shares were also named to the inaugural Wells Fargo "Signature Picks" list that is culled from its highest conviction ideas. Soon thereafter Cowen reiterated its Outperform rating on AMZN shares, sharing the drop looks over done and based on its calculations, investors are getting the e-commerce, subscription and advertising businesses for free. We would agree the drop in Amazon is overdone, however, the company will continue to face challenging comparisons for the current quarter given the timing for its 2022 Prime Day. We will continue to monitor a variety of retail sales data for the coming months, and if all signs point to a stronger than expected rebound in digital shopping, we're inclined to slowly build back our position size in Amazon.

1-Wk. Price Change: 7%; 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: Reiterate $3,500; 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

Costco Wholesale (COST) ; $470.76; 245 shares; 3.36%; Sector: Consumer Staples

WEEKLY UPDATE: Thursday night Costco Wholesale reported fiscal third-quarter results that were simply terrific with clear signs it continues to win consumer wallet share, membership renewals continuing to improve, and more plans to expand its warehouse footprint. All in all it was a solid quarter, however, the shares are trading off Friday morning more than likely because the company has opted to put an expected membership price increase on hold for now. We'll get more into the rationale for that below but given the expectations as we hit the five-year anniversary of the last membership price increase, some are not pleased and we suspect others will have to adjust their models to account for what will likely be a later-than-expected membership fee hike. We recently added to the portfolio's COST position, and if the current position size weren't as large as it is we would be using today's pullback to add even more following the quarterly results. With COST shares still well off their recent highs, and the business firing on all cylinders, we would suggest members that are underweight the shares use Friday's pullback to square up their position sizes relative to the portfolio's. We continue to rate COST shares a One and our long-term price target remains $620. Costco also said it will announce its May sales results on Sunday, May 29, which means we'll have some thoughts on those figures when we return from the Memorial Day weekend.

1-Wk. Price Change: 13% Yield: 0.8%

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) ; $360.73; 310 shares; 3.26%; Sector: Farm Machinery & Equipment

WEEKLY UPDATE: Deere boosted its dividend by 7.6% this week to $1.13 per share per quarter. This new dividend will be paid on August 8 to shareholders of record on June 30. This week the company shared that it will continue to build out productivity solutions in its equipment but its inclined to keep its "point of sale" model for equipment but integrate its productivity and autonomous solutions into a software as a service model. We like the concept of this subscription services approach given prospects for higher margins and recurring revenue, however, we expect it will take a few years for this to become a meaningful part of Deere's revenue stream. Also this week, key ag and construction wheel and tire company Titan International (TWI) shared that its order books are full through 2022 and 2023 looks even better given that "The price of corn, soybeans, wheat and cotton are all near historic highs, and there is no surplus out there, which should lead to farmers spending on equipment for quite a while." We see that bullish stance echoing that from Deere when it recently reported its quarterly results.

1-Wk. Price Change: 15.1% Yield: 1.1%

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: Two

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) ; $43.59; 1,535 shares; 1.95%; Sector: Cybersecurity

WEEKLY UPDATE: Two of CIBR's constituents, Splunk (SPLK) and Zscaler (ZS), reported better than expected quarterly results and lifted their respective guidance. Splunk (SPLK) reported better than expected April quarter results for both its top and bottom lines, and guided revenue for the current quarter and its fiscal year ahead of consensus expectations. For the full-year, Splunk now sees $3.30-3.35 billion in revenue vs. the $3.28 billion consensus. Zscaler (ZS) reported stronger than expected top and bottom line results for its April quarter as its calculated billings grew 54% YoY to $345.6 million and its deferred revenue jumped 65% YoY $818.7 million. For the current quarter, the company sees EPS of $0.20-0.21 vs. the $0.17 consensus with revenue in the range of $304-306 million vs. the $291.3 million consensus. Combined with other recently reported, better than expected CIBR constituent quarterly results we continue to see cybersecurity spending improving in the coming quarters.

1-Wk. Price Change: 7.7% 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)  ; $13.63; 8,670 shares; 3.44%; Sector: Industrials

WEEKLY UPDATE: Following the 24.9% decline in March new commercial vehicle registrations in the European Union, those registrations fell 27.1% to 125,034 units in April. All vehicle segments saw declines due to supply chain and Russia-Ukraine war issues. Soon after the Memorial Day holiday, we expect Ford to report its May sales data, which combined with that for April will lead us and others to determine how probable current consensus revenue expectations are for the June quarter. Exiting the week, Ford made the first delivery of F-150 Lightning to a retail customer in Standish, Michigan and it plans to make about 40,000 F-150 Lightning trucks this year. Despite the hiccups with auto chip supplies, we see that delivery confirming the company's transition continues to play out. Ford's next $0.10 quarterly dividend will be paid on June 1 to shareholders of record on April 26.

1-Wk. Price Change: 9% Yield: 1.6%

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.

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) ; $357.78; 275 shares; 2.87%; Sector: Info. Tech

WEEKLY UPDATE: During the week Mastercard made a $40 million strategic investment in Saudi Arabian FinTech company HyperPay, a company looks to help accelerate the adoption of digital payments. We see this as part of the companies larger push into other markets including those in Southeast Asia and Latin America. Earlier this month, Mastercard debuted a financial inclusion program in Guatemala, El Salvador and Honduras that will "accelerate the company's objective of including five million unbanked individuals and digitize and provide credit access to one million micro and small businesses (MSMBs)" in the next five years. Bank of America reaffirmed its positive stance on MA shares this week reminding investors the shares "handily outperformed" the S&P 500 during the Great Recession of 2008-2009. Mastercard will be presenting at the William Blair Growth Stock Conference on June 8 and then at the RBC Capital Markets Financial Technology Investor Day on June 14. Before both of those events, Mastercard should issue its SpendingPulse Report for May, and it will be one we review with a fine tooth comb.

1-Wk. Price Change: 6.4% 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.

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) ; $92.94; 1,090 shares; 2.95%; Sector: Food; Consumer Non-Durables


1-Wk. Price Change: 2.9% Yield: 1.5%

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) ; $137.74; 325 shares; 1.30%; Sector: Materials

WEEKLY UPDATE: We used the sharp pullback in the NUE shares over the last several weeks and the positive update on President Biden's infrastructure spending plan to add to our holdings. The addition also increases the portfolio's dividend exposure given Nucor's current quarterly dividend of $0.50 per share. Typically, the company has announced its next quarterly dividend in early June, which suggests as soon as next week, and has typically paid it in early August.

1-Wk. Price Change: 14.8% Yield: 1.3%

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

Nvidia (NVDA) ; $188.11; 610 shares; 3.34%; Sector: Info. Tech.

WEEKLY UPDATE: Nvidia reported April quarter results on Wednesday evening: Revenue soared 46.4% year-over-year to $8.29 billion, besting the $8.09 billion consensus, while EPS for the quarter clocked in at $1.36, $0.07 per share ahead of the consensus forecast. Data Center revenue climbed 83% YoY to $3.75 billion while Gaming revenue rose 31% YoY to $3.62 billion. Professional Visualization revenue grew 67% YoY to $622 million while the company's Automotive and Robotics revenues fell 10% YoY to $138 million.

Those positives were overshadowed by the company's soft guidance, which it chalked up to the lack of Russia data center related revenue, roughly $100 million, and expected declines in its Gaming business and China lockdown supply issues to account for $400 million. In total, Nvidia sees those factors hitting its revenue by $500 million in the current quarter, leading it to guide July quarter revenue to $7.94 billion-$8.26 billion vs. the $8.44 billion consensus.

Here's the thing, though: That revised guidance still points to 22%-27% top-line growth year-over-year as Nvidia continues to benefit from strong demand across its end markets, especially data center, a market we know is seeing incremental capital spending. We recognize the near-term headwinds are likely to restrain Nvidia's business and the shares, and as a result, we dropped our rating to Two from One. We also cut our price target on NVDA to $225 from $300 and saw a number of other higher price targets cut back as well late in the week. . We'll look to revisit our rating as we get clear signs China's lockdowns are easing and production is ramping back toward normalized levels. Alongside its April-quarter results, Nvidia announced it has upsized that program to a total of $15 billion through December 2023. Given where the stock currently trades this is a program that is likely to be widely used and provide some support.

1-Wk. Price Change: 12.7% Yield: 0.1%

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: Reduce to $225 from $300; Rating: Two

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

United Parcel Service (UPS) ; $182.53; 520 shares; 2.77%; Sector: Industrials

WEEKLY UPDATE: It was a relatively quiet week for UPS as it announced a new logistics brand, Movin, for the Indian market. The service, which is expected to focus on business-to-business domestic logistics, will debut in July in Delhi, Mumbai, and Bangalore. We'd remind members UPS will pay its next quarterly dividend of $1.52 per share on June 2.

1-Wk. Price Change: 6.7% Yield: 2.6%

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: Reiterate $230; 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) ; $128.48; 860 shares; 3.22%; Sector: Consumer Staples

Weekly Update: Given our concerns over Walmart's rather aggressive outlook for the second half of 2022 combined with it and a growing list of other retailers reporting record or near record levels of inventories exiting the April quarter, we downgraded WMT shares to a Three rating. Our concern is potential margin pressure that will weigh on retailer earnings in the coming quarters as they contend with challenged consumer spending and utilize discounting to clear through excess inventory levels.

1-Wk. Price Change: -7.8%; Yield: 1.7%

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 $130; Rating: Three

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

Market-Hedging Positions

ProShares Short QQQ ETF (PSQ) ; $13.23; 2,940 shares; 1.13%

WEEKLY UPDATE: Similar to the position in SH shares, we view the use of PSQ shares as tactical in nature, which likely means we expect to use the shares for a shorter duration than we would most other positions in the portfolio.

1-Wk. Price Change: -6.9%; Yield: 0.00%

INVESTMENT THESIS: ProShares Short QQQ seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Nasdaq-100 Index®. The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization.

Target Price: NA

RISKS: Because QQQ shares track the inverse of the Nasdaq 100 Index (NDX), QQQ shares will move lower when the Nasdaq 100 Index moves higher.

ACTIONS, ANALYSIS & MORE: Selling Shares in 1 Position, Closing Another, Adding to 1 and Initiating 1

ProShares Short S&P 500 ETF (SH) ; $15.13; 3,310 shares; 1.46%

WEEKLY UPDATE: We are using SH shares to both tamp down market volatility as well as provide the portfolio a hedge relative to its benchmark, the S&P 500.

1-Wk. Price Change: -6.3%; Yield: 0.00%

INVESTMENT THESIS: The ProShares Short S&P 500 ETF seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P 500®. We are using SH shares to blunt market volatility and hedge the portfolio's performance against its benchmark, the S&P 500. Given the tactical nature of this position, we do not expect to hold SH shares for the same length of time as we do the portfolio's long positions.

Target Price: NA

RISKS: Because SH shares track the inverse of the S&P 500, SH share will move lower when the S&P 500 moves higher.

ACTIONS, ANALYSIS & MORE: Selling Shares in 1 Position, Closing Another, Adding to 1 and Initiating 1, Trimming 2 Names While Initiating Coverage of a Third