September is seldom associated with stock market strength. The month is, in fact, often a weak one.

Usually, we can chalk that up to the end of summer that also brings a renewed focus economic data and company updates. That was true this year, but so were ongoing supply chain issues, renewed dollar strength, persistent inflation and the Fed confirming it will "go bigger, for longer" in its fight against rising prices. Then we have the upward move in Treasury yields, especially for the 2-year that has rescinded the "TINA" trade (as in there is no alternative). Valuation multiples also got a rethink.

We'd note the chart above doesn't include the negative guidance issued by Nike (NKE)  and Micron (MU)  late in the week. Micron issued downside guidance for its current quarter with EPS of $(0.06)-$0.14 vs. the $0.72 consensus and revenue of $4.0-$4.5 billion vs. the expected $5.68 billion. Micron shared its results were impacted by rapidly weakening consumer demand and significant customer inventory adjustments across all end markets. This led the company to announce it is "taking decisive steps to reduce our supply growth including a nearly 50% wafer fab equipment capex cut versus last year" which is likely to weigh on semiconductor capital equipment companies such as Lam Research and Applied Materials.

While Nike reported August-quarter results that topped expectations, the shares were under pressure last night as it also reported a 44% YoY increase in inventories after rising 23% the prior quarter and expects margins will be impacted by efforts to discount out-of-season product more aggressively in a largely promotional marketplace. And early Friday morning, Toyota Motor slashed its October production target by 6.3% to around 750,000 vehicles due to the ongoing semiconductor shortage. Last week, the company announced a production target of around 800,000 vehicles for the month.

Earlier in the week, several companies pulled their guidance for the balance of 2022, and survey findings published by Grant Thornton found 30% of surveyed CFOs are considering layoffs and 72% expect interest rate hikes to create a recession. Against that report, odds are we will continue to learn of cost reduction efforts as well as hiring freezes like the one reported at Meta Platforms this week. Our concern is the downward guidance issued by Nike and Micron are the tip of the iceberg, and that likelihood is keeping us in a defensive posture with our inverse ETFs and cash, while dollar headwinds keep us looking at companies that are U.S. heavy in their business mix.

While some may point to the rebuilding efforts that will follow in Hurricane Ian's wake, as we enter the quiet period ahead of the September quarter earnings season, we're not seeing many near-term positives that could lift the market on a sustained basis. Indeed, a new round of sanctions on Russia following its annexation of four Ukraine regions are likely to turn up geopolitical concerns depending on how Russian President Putin responds. We will be watching the weekend news for Putin's response and what it may mean for how we kick off October.

Next Wednesday, October 5, we have our September Members-Only and if you have a question for us, email it to and we'll do our best to answer it during the live call or in forthcoming AAP Podcast episode.

The AAP Portfolio

This week capped a painful month for stocks that pulled the market back to a negative position for the quarter, adding to stock market losses registered in the first half of 2022. That reverberated through the portfolio this week, especially for Apple, AMD and Ford Motor shares. Offsetting those moves lower were our inverse ETF positions, which outperformed significantly during September in full. Our cash position continued to blunt the downward pull of the market as well and our focus on domestic companies poised to benefit from stimulus spending out of Washington is paying off as evidenced by the outperformance in ChargePoint, United Rentals, and Vulcan Materials shares. The same was true with our position in domestic and healthcare facing companies that are AMN Healthcare and Elevance Health.

During the week, we exited the shares of Nucor and trimmed back our position in AMD using the proceeds to build our position in PepsiCo and began a new one in Lockheed Martin. In addition to those sales, across September, we exited the portfolio's positions in Nvidia, Morgan Stanley, and Applied Materials. Closing out the month, each of those three positions are currently trading at levels lower than the respective exit price. We will continue to focus on the fundamentals as well as the technical for the portfolio and its constituents.

We have ample cash on hand and the inverse ETF positions, and we will remain on the cautious path as we approach and move through the September quarter earnings season. Our suspicion is it will be another period of expectation re-setting, during which we will be fine-tuning our shopping list. Existing positions on that list include Vulcan Materials, American Water Works, Verizon, Elevance, Lockheed, and depending on what we hear during its earnings call next week, McCormick & Co. We will also continue to look for new positions, preferably with qualities like those found in the portfolio's newer positions. That said, we will be opportunistic should a compelling situation arise.

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)


We had several housing data points this week, which in total reaffirmed our view the housing market continues to slow, adding to the number of tailwinds for the economy. We continue to think home prices will continue to trend lower as mortgage rates move even higher in the balance of 2022 following additional rate hikes by the Fed. To help put this all-in perspective, Bloomberg published the following analysis, but we think it will help members crystalize what's ahead for the housing market -- With mortgage rates around 3% in early 2021, if you wanted to spend $2,500/month on a home you could buy a house that cost $758,572. Now, with mortgage rates more than double that, that same monthly payment would get you a house that costs $476,425.

And following the hotter than expected August core personal consumption expenditure (PCE) price index that hit 4.9%, up from 4.7% the prior month, there is little reason to speculate about the Fed potentially backing off on its quest to return inflation back to 2%. With the August core PCE print in hand, it makes the dip to 4.7% in July look more like an aberration given the 4.9%-5% readings for April, May, and June. Meanwhile, we've noticed that gas prices have started to creep higher with the national average gas price hitting $3.797 per gallon exiting this week vs. $3.689 this time last week.

With potential production cuts from OPEC+ on the table and before too long the White House no longer tapping the Strategic Petroleum Reserve, the outlook for more meaningful declines in gas prices absent a pronounced drop in the global economy is uncertain. A pronounced drop in the economy was depicted by the regional September Chicago PMI that fell to 45.7 from 52.2 in August and widely missing the market forecast of 51.8. And while it received far less media attention, the Dallas Fed Manufacturing Survey for September fell to -17.2 from -12.9 in August, with new orders for September falling to -6.4 vs. -4.4 the prior month. These and other regional Fed manufacturing surveys suggest we are likely to see a weaker than expected print in the September ISM Manufacturing Index next week vs. the consensus forecast of 52.0%. For context the August print was 51.8, and if we get a print below 50 for September, we are likely to see renewed worries the Fed will torpedo the economy in its inflation fight. But let's remember, the Fed has already shared there will be some pain for businesses and consumers as it looks to return inflation back to its target level.

In terms of key international data to be had this week, it reaffirmed the overall slowing nature of the global economy, and inflationary pressures that will sap consumer buying power, particularly in the Eurozone:

Amid lingering global economic uncertainty, Japan's consumer confidence index declined to 30.8 in September of 2022 from August's 3-month high of 32.5. However, Retail Sales in Japan increased by 4.1% YoY in August, exceeding the market consensus of 2.8% and following a 2.4% gain in July. The August print was the sixth straight month of increase in retail trade and the steepest pace since May 2021.

The Caixin China General Manufacturing PMI fell to 48.1 in September from 49.5 the previous month, hitting the lowest level since May. New orders shrank the most since April, and export sales declined at the steepest rate in four months.

The official NBS Manufacturing PMI for China increased to 50.1 in September from 49.4 the previous month, surpassing market forecasts of 49.6. This was the first expansion in factory activity in three months and follows a series of stimulus packages from the government and an easing of Covid-19 restrictions in some cities. The NBS Non-Manufacturing PMI for China declined to a four-month low of 50.6 in September from 52.6 the prior month with new orders (43.1 vs 49.8 in August) and foreign sales (46.0 vs 48.9) contracting for the third month in a row.

The preliminary annual inflation rate in the Euro Area jumped to 10% year-over-year in September of 2022 from 9.1% in August, reaching double-digits for the first time ever. The consensus forecast called for an increase of 9.7% and the preliminary figure for September marked the fifth consecutive month of rising inflation, with prices showing no signs of peaking.

Chart of the Week: The Dow Industrials Appear to Have Fallen into a Sink Hole

If you're the Dow Industrials, you're saying "good riddance" to the month of September. We can see from the chart the index moved sharply lower starting in mid-August and turned uber bearish toward the end of that month. With a series of lower highs, lower lows there is a clear trend in place, and it is down. Notice the recent break on this daily chart below the June lows, the most egregious of the indexes to break (the Russell 2000 did not do this yet).

Bollinger bandwidth has expanded sharply, and that simply means wide ranges each day, and getting wider (3rd pane). The TDI and relative volatility index have been pointing down since late August, in alignment with the index. For now, resistance just under 30,000 on the Dow industrials, which if broken to the upside has some much higher targets to achieve, around the 31500 first. But let's not get overly exuberant yet.

For a detailed look at the chart, click here.

The Coming Week

We're now expecting a llitany of economic data. Included among the reports for next week we will start to get the final pieces that will shape GDP expectations for 3Q 2022. As we and others digest this data and factor it into our thinking for what lies ahead, namely the September-quarter earnings season and guidance for the balance of 2022, the real question will be if the data points to the conclusion that GDP contracted for the third consecutive quarter?

Given Fed head comments in support of the Fed's "go bigger for longer" inflation fight, including comments from Federal Reserve Vice Chair Lael Brainard on Friday that stressed the importance of not shrinking from the task until it is finished, it has already shared there will be some pain to consumers and businesses ahead. Following the hotter than expected print in the August Core Personal Consumption Expenditure (PCE) Price Index, we do not expect to see the Fed back off from its task even if the data to be had in the coming weeks points to further slowing ahead. More than likely that is what the Fed wants to see given its monetary policy tools influence demand, not supply.

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


Monday, October 3

  • S&P Global US Manufacturing PMI - September (9:45 AM ET)
  • ISM Manufacturing Index - September (10:00 AM ET)
  • Construction Spending - August (10:00 AM ET)

Tuesday, October 4

  • Factory Orders - August (10:00 AM ET)
  • JOLTs Job Openings Report - August (10:00 AM ET)

Wednesday, October 4

  • Weekly MBA Mortgage Applications (7:00 AM ET)
  • ADP Employment Change Report - September (8:15 AM ET)
  • S&P Global US Services PMI - September (9:45 AM ET)
  • ISM Non-Manufacturing Index - September (10:00 AM ET)
  • Weekly EIA Crude Oil Inventories (10:30 AM ET)

Thursday, October 6

  • Challenger Job Cuts Report - September (7:30 AM ET)
  • Weekly Initial & Continuing Jobless Claims (8:30 AM ET)
  • Weekly EIA Natural Gas Inventories (10:30 AM ET)

Friday, October 7

  • Employment Report - September (8:30 AM ET)
  • Consumer Credit - August (3 PM ET)


Monday, October 3

  • Japan: au Jibun Bank Japan Manufacturing PMI - September
  • Eurozone: S&P Global Eurozone Manufacturing PMI - September
  • UK: S&P Global/CIPS UK Manufacturing PMI - September
  • JPMorgan Global Manufacturing PMI - September

Tuesday, October 4

  • Eurozone: Producer Price Index - August

Wednesday, October 5

  • Japan: au Jibun Bank Japan Services PMI - September
  • Eurozone: S&P Global Eurozone Composite PMI - September
  • UK: S&P Global/CIPS UK Services PMI - September
  • JPMorgan Global Composite PMI - September

Thursday, October 6

  • Eurozone: Retail Sales - August

Friday, October 7

  • Japan: Household Spending, Leading Index - August
  • Germany: Industrial Production - August

Quarterly reports from Nike and Micron pointed to excess inventories for chips as well as apparel while channel checks late in the week from Keybanc point to weak freight demands. Weekly rail traffic data published by the Association of American Railroads showed declines in September vs. year ago levels. And reports indicate that during a weekly Q&A session with employees, Meta Platforms Chief Executive Officer Mark Zuckerberg outlined sweeping plans to reorganize teams and reduce headcount for the first time ever. Per the report, Zuckerberg also shared Meta would reduce budgets across most teams, even those that are growing.

Those data points set the stage for the quarterly earnings reports on deck next week. While we have the latest from McCormick & Co. on deck, we will be reviewing results from ConAgra as a barometer of grocery demand, but we will also be listening for what it says about recent pricing initiatives and prospects for additional action. The same goes with Levi Strauss (LEVI) and we'll also be interested in how it sees the sell-in for the holiday shopping season.

As we enter the start of October and the final quarter of 2022, we will be on high alert for earnings pre-announcements and what they tell us ahead of the September quarter earnings season swinging into action on Oct. 13.

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

Monday, October 3

  • Open: Dentsply Sirona (XRAY)

Tuesday, October 4

  • Open: Acuity Brands (AYI)
  • Close: Smart Global (SGH)

Wednesday, October 5

  • Open: Helen of Troy (HELE), Lamb Weston (LW)
  • Close: Resources Connection (RGP)

Thursday, October 6

  • Open: ConAgra (CAG), Constellation Brands (STZ), McCormick & Co. (MKC)
  • Close: Levi Strauss (LEVI)

Friday, October 7

  • Open: Tilray (TLRY)


AMN Healthcare Services, Inc. (AMN) ; $105.96
; 1,135 shares; 3.7%; Sector: Health Care Services

WEEKLY UPDATE: While there was no company-specific news this week, we continue to see headlines confirming the ongoing nursing shortage. Findings from Jefferies point to demand remaining at elevated going forward, which bodes well for contract rates. Next week's JOLTS report should continue to be a positive for AMN shares, revealing the continued discrepancy between healthcare job openings and hires. In an uncertain market characterized by currency concerns, members that are underweight AMN shares should nibble at current levels.

1-Wk. Price Change: 1.9%; 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 $132; 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

Cboe Global Markets Inc. (CBOE) ; $117.7; 950 shares; 3.4%; Sector: Financials

WEEKLY UPDATE: While there was no new development this week, given our concerns over the upcoming September-quarter earnings season and continued market volatility, we continue to see a robust environment for Cboe's options business. Late in the week, CBOE shares were upgraded to Neutral from Sell at Goldman Sachs.

1-Wk. Price Change: 1.4% 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 $140; 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) ; $14.76; 8,040 shares; 3.6%; Sector: Electrical Components & Equipment

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

WEEKLY UPDATE: We upgraded CHPT shares to a "One" rating following the Department of Transportation approving EV infrastructure development plans for all 50 states. During the week we also saw new partnerships that should foster EV deployments in Europe. Despite these positive developments, our ChargePoint shares were dragged down by undercapitalized Volta pulling its guidance for 2022. That resulting pullback in CHPT gives members an opportunity to scoop them up as the catalysts we've been waiting for begin to spark.

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 U.S. Department of Energy, the U.S. 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 $22; 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.

Costco Wholesale (COST) ; $472.27; 245 shares; 3.5%; Sector: Consumer Staples

WEEKLY UPDATE: With personal spending rising less than the Core PCE Price Index in August, consumer buying power remains under pressure. We see that continuing to translate into consumers looking to stretch their spending and bodes wells for additional consumer wallet share gain by Costco as we approach the holiday shopping season. We would look to add to portfolio's position in the coming days even as we reassess our current $620 price target.

1-Wk. Price Change: 1.3% Yield: 0.7%

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. Earlier this year, Costco announced a 13.9% increase for its quarterly dividend to $0.90 per share.

Target Price: Reiterate $620. Rating: One

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) ; $333.89; 310 shares; 3.2%; Sector: Farm Machinery & Equipment

WEEKLY UPDATE: Morgan Stanley issued bullish comments on Deere shares given prospects for farm profitability over the next two years to be vibrant, demand for precision agriculture equipment, and the need to replace the aging fleet of existing ag equipment. We agree with each of those points, and we look forward to the next crop report for the USDA.

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

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.

Price Target: Reiterate $425; 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

SPDR Gold Shares ETF (GLD) ; $154.67; 312 shares; 1.5%; Sector: Commodities

WEEKLY UPDATE: Gold may have made an interim bottom this week, rising strong on Wednesday following the Bank of England's surprising news, buying Gilts. This short-term form of quantitative easing put in a nice bid under gold and other precious metals. We are yet to see a breakout though, and with the Federal Reserve headstrong into fighting inflation that should be a dollar positive vs other currencies (whose countries are slow to fighting higher prices). The strong dollar has been a headwind for gold, but we continue to like having a small piece as an inflation hedge just in case, they do not go large enough, in addition there is a strong argument for holding gold during times of war and uncertainty much like we have today.

1-Wk. Price Change: 1.1% Yield: 0%

INVESTMENT THESIS: The GLD ETF is a proxy for gold. This "trust" buys and sells gold futures each day in an attempt to mimic the daily moves in the underlying asset, in this case gold. We see gold as an ideal hedge against a weaker dollar, strong inflation (which tends to weaken the dollar) alternative and in uncertain times (worry over war and battles). For the past 15 years gold has been a strong asset class held by fund managers, countries, and banks. The metal is not correlated with markets and will move based on the demand/supply dynamic in the marketplace. Other precious metals such as silver and platinum are good proxies for the criteria stated earlier, however gold is far more liquid and offers better upside opportunities.

Target Price: Reiterate $200; Rating: One

RISKS: Weak inflation data, interest rate risk, dollar strength relative to other currencies, geographic risk.

United Rentals (URI) ; $270.12; 360 shares; 3.0%; Sector: Industrials

WEEKLY UPDATE: The late in the week 2022 Investor Day held by Vulcan Materials reaffirmed the forthcoming catalyst tied to the Biden Infrastructure Law that keeps up bullish on URI shares. Next week brings the latest domestic Construction Spending report, and we'll be focusing on the nonresidential and public construction data in contains.

1-Wk. Price Change: 2.6% 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 $380; 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.

Verizon Communications (VZ) ; $37.97; 2,335 shares; 2.7%; Sector: Communication Services

WEEKLY UPDATE: Verizon is partnering with Qualcomm and Razer to launch a new 5G gaming handheld called the Razer Edge 5G. The device will run Android and include support for Verizon's 5G Ultra-Wideband networks. More details on this new device will be revealed at Razer's RazerCon event on Oct. 15, but we see it as part of Verizon's effort to drive data usage and premium data plans. The company also announced it will bring NFL+ to its +play streaming service. Verizon also announced it will soon launch a pay-as-you-go home wireless internet service aimed at bargain hunters. During the week, Credit Suisse trimmed its price target on VZ shares to $47 from $50. With VZ shares continuing to move lower along with the market, the dividend yield becomes even more compelling, and we are looking to scoop up the shares in the coming days.

As a reminder, Verizon's recently increased dividend of $0.6525 per share will be paid on Nov. 1 to shareholders of record on Oct. 7.

1-Wk. Price Change: -3.9% Yield: 6.9%

INVESTMENT THESIS: Verizon Communications is one of the largest communication companies in the U.S. Its Consumer business, includes wireless equipment and services as well as residential fixed connectivity solutions, including internet, video, and voice services, is ~75% of Verizon's revenue stream but ~90% of its operating income. Exiting the March 2022 quarter, the company had 115.2 million wireless customers split between 91.4 million pre-paid and 23.8 million postpaid, and 7.1 million broadband consumers, the vast majority of which are Fios Internet customers. From a revenue and operating profit contribution perspective, the Business segment accounts for ~25% and 10%, respectively. Through this segment Verizon offers wireless and wireline communications services and products, including data, video and conferencing services, corporate networking solutions, security and managed network services, local and long-distance voice services, and network access to deliver various Internet of Things (IoT) services and products.

Target Price: Reiterate $55; Rating: One

RISKS: Industry and economic risk, competition and competitive pressures, acquisition risk, labor relations, and the regulatory environment.

ACTIONS, ANALYSIS & MORE: Here's Why We're Attracted to This Telecom, Exiting 2 Positions, Initiating 1, and Adding to 3, Investor Relations


Advanced Micro Devices (AMD) ; $67.96; 1,010 shares; 2%; Sector: Info. Tech.

WEEKLY UPDATE: We trimmed back out position in this chip maker given concerns over further PC weakness, industry inventory issues and downside demand risk with data centers in the near-term. Susquehanna trimmed its estimates for AMD this week citing weakening PC channel checks. Late in the week, Micron (MU) reaffirmed those concerns sharing it doesn't see demand rebounding for its memory products until at least early 2Q 2023. As we communicated with members, given strong technical resistance at $75 should the shares rebound to that level even though the fundamental outlook remains as is, we may trim the portfolio's position in AMD further.

1-Wk. Price Change: -6.8% 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: Reduce to $75 from $140; Rating: Two

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

Amazon (AMZN) ; $113.78; 710 shares; 2.5%; Sector: Consumer Discretionary

WEEKLY UPDATE: With personal spending rising less than the Core PCE Price Index in August, consumer buying power remains under pressure. We see that alongside ongoing supply chains issues leading consumers to re-embrace digital shopping. With that said, Amazon announced it will hold a Prime Early Access on Oct. 11 and 12, a new event that will give Prime members exclusive early access to discounted holiday deals. We suspect Amazon will use the event to win new Prime members and the shares are on our own shopping list for the portfolio. At its annual product event, Amazon announced several new devices, including the new Kindle Scribe, the first of its kind that users can write and draw on. Other new devices included the high-end Echo Studio speaker comes with spatial audio technology and allows for better sound quality. We will continue to watch developments for Amazon's intended purchase of iRobot (IRBT) following a second request for additional materials and information from the Federal Trade Commission.

1-Wk. Price Change: -0.7%; 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 $175; 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

American Water Works (AWK) ; $130.16; 705 shares; 2.8%; Sector: Utilities

WEEKLY UPDATE: With AWK shares below the portfolio's cost basis and the company's inelastic business model, we are once again eyeing adding to this position given their oversold status.

1-Wk. Price Change: -7.6%; Yield: 1.9%

INVESTMENT THESIS: American Water is the largest and most geographically diverse, publicly traded water and wastewater utility company in the United States, as measured by both operating revenues and population served. The company's primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers. The company's utilities operate in approximately 1,700 communities in 14 states in the United States, with 3.4 million active customers in its water and wastewater networks. Services provided by the Company's utilities are subject to regulation by multiple state utility commissions or other entities engaged in utility regulation, collectively referred to as public utility commissions (PUCs). Residential customers make up a substantial portion of the Company's customer base in all of the states in which it operates. The Company also serves (i) commercial customers, such as food and beverage providers, commercial property developers and proprietors, and energy suppliers, (ii) fire service customers, where the Company supplies water through its distribution systems to public fire hydrants for firefighting purposes and to private fire customers for use in fire suppression systems in office buildings and other facilities, (iii) industrial customers, such as large-scale manufacturers, mining and production operations, (iv) public authorities, such as government buildings and other public sector facilities. Because there is usually only one water utility available, the business has a rather wide moat, and the company has used its scale and balance sheet to acquire smaller, regional water utilities thereby further expanding its scale. pending rate increases under pin the company's 7%-9% annual EPS growth targets between now and 2026 as well as its stated objective to increase its annual dividend by 7%-10% over the next several years. American Water declared its latest quarterly dividend of $0.655 per share will be paid on Sept. 1 to shareholders of record as of Aug. 9.

Target Price: Reiterate $165; Rating: Two

RISKS: Regulatory oversight risks, environmental safety laws and regulation, weather related service disruptions.

ACTIONS, ANALYSIS & MORE: We're Initiating 1 Name While Adding to Another Initiating a Position in This Public Water Utility Company, Investor Relations presentation.

Apple (AAPL) ; $138.2; 750 shares; 3.2%; Sector: Technology

WEEKLY UPDATE: It was a challenging week for Apple that started off with reports key supplier Taiwan Semiconductor is seeing "major" fabless customers start cutting back orders for 2023. Soon after, Bloomberg reported Apple was pulling back from plans to boost iPhone production by about 6 million units, instead focusing on flat production in the second half of 2022 around 90 million units. The same report, however, noted a shift in production toward higher-end, higher priced Pro models vs. the iPhone 14 model. Despite that positive, Bank of America downgraded AAPL shares to Neutral from Buy given concerns that iPhone 14 Pro model demand may not be enough to offset potential weaker consumer demand for other Apple products and services in the coming quarters. Given our Two rating and the uncertain near-term outlook, we're inclined to stay on the sidelines, but should we see further pronounced pressure in the shares we may be inclined to nibble further if the technicals support such a move.

1-Wk. Price Change: -8.1% 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 $175; Rating: Two

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

Chipotle Mexican Grill (CMG) ; $1502.76; 70 shares; 3.2%; Sector: Restaurants

1-Wk. Price Change: -3.5% Yield: 0.00%

WEEKLY UPDATE: Black Box Intelligence reported restaurant same-store sales growth rose 5.3% in August, the strongest since March and up significantly compared to July. Black Box Guest Intelligence data confirms that customers opt for off-premise options including take-out and delivery more now than they did prior to the pandemic. We see both data points playing to Chipotle's strengths as consumers increasingly shift to fast casual dining.

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 $1,850; Rating: Two

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

First Trust Nasdaq Cybersecurity ETF (CIBR) ; $38.51; 2,590 shares; 3%; Sector: Cybersecurity

WEEKLY UPDATE: CIBR shares traded off with the tech market despite headlines continuing to alert investors to the latest round of ransomware and other cyberattacks. We have ample room to build out the portfolio's position and CIBR shares are on our shopping list as companies look to protect fend off attacks on their crown jewels. Even if corporate spending slows, cybersecurity budgets are likely to remain relatively unchanged given the increasing propensity for cyberattacks and ransomware.

1-Wk. Price Change: -.2% 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

Elevance Health Inc. (ELV) ; $454.24; 90 shares; 1.3%; Sector: Health care


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

INVESTMENT THESIS: Elevance, formerly Anthem/Blue Cross Health is a premiere health care brand that appears to be in the sweet spot for HMO companies. Mostly domestic, this company has wide reach and coverage across the US, serving more than 118 million people via medical, pharmacy, clinical and care solutions. Founded in 1944, Elevance offers a terrific business model that works in boom or bust economic times. The opportunity to find a company with reliable and dependable revenue and cash flows is right here with Elevance. Revenue growth for this company has surged in recent years, better than double digit growth since 2018 as the company thrived during the pandemic. Earnings grew more than 30% in 2021.

Target Price: Initiation at $550; Rating: Two

RISKS: With any insurance business the risk is high for changes in regulation and government programs. Since the onset of Obamacare more than 10 years ago, companies like Elevance have changed their model to be more in line with a better cost/benefit analysis, reducing waste and squeezing out excesses (as was outlined and suggested in Obamacare). Separately, as the population increases and ages there is more opportunity for Elevance to grow, but if those changes there is risk. Lastly, competition is brisk with some very strong opponents who keep their costs low (Humana, Cigna, UNH, CVS/Healthnet).

ACTIONS, ANALYSIS & MORE: 2021 Annual Report, 2Q 2022 Earnings Report, Investor Relations.

Ford Motor (F) ; $11.20; 7,850 shares; 2.7%; Sector: Industrials

WEEKLY UPDATE: According to TrueCar total new vehicle industry sales are expected to reach 1.14 million units in September, up 13% year-over-year and 3% vs. August. The same report notes that incentive spending is down 55% year over year for the September quarter, a tailwind for profitability. We'll revisit that forecast next week when we receive the formal September figures as well as Ford's September sales data on Oct. 4. During the week, it was reported Ford would ask for a new trial following last month's $1.7 billion jury verdict against the company in a lawsuit involving a truck rollover accident that killed two people. With F shares down roughly 25% in September we are interested in adding to the portfolio's position given the aged vehicle fleet in the U.S. and expected demand for EVs. Recently, the IEA said it sees "another all-time high for electric vehicle sales [in 2022], lifting them to 13% of total light duty vehicle sales globally" vs. almost 9% of the car market in 2021. By 2030, IEA sees EVs accounting for 60% of new car sales. Ford will report its quarterly results on Oct. 26

1-Wk. Price Change: -9.1% Yield: 2.7%

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.

Target Price: Reiterate $17; 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

Alphabet (GOOGL) ; $95.65; 1,000 shares; 2.9%; Sector: Communication Services

WEEKLY UPDATE: We continue to like the company's positions in Search and YouTube, and see it as a beneficiary of political ad spend leading up to the mid-term elections in the U.S. This week the company announced it will shut its Stadia cloud gaming service, a move we attribute to Alphabet's growing focus on costs as well as areas with greater growth and profit prospects. On Oct. 6, Google will hold an event that is expected to showcase its new Pixel 7 smartphone as well as a new version of its Pixel Watch.

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 "moat" that will provide for new avenues of growth. AI is what has made the company's search, video 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.

Target Price: Reiterate $155; 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)

Lockheed Martin Corp. (LMT) ; 386.29; 85 shares; 1%; Sector: Aerospace & Defense

WEEKLY UPDATE: We started a position in Lockheed Martin with a "Two" rating this week, with a $450 price target. Given the greater stability associated with defense and military spending in challenging times, Lockheed's position in that industry, and prospects for another dividend increase, we're starting with a small position in LMT shares. As members know, in our view, the September quarter earnings season is likely to be a challenging one for the market, we'll look to use pullbacks in LMT shares to add to the portfolio's position size, especially if it retraces to the $375 level. With that in mind, after actively using its current buyback authorization, Lockheed had $1.6 billion remaining under that current program exiting June. Alongside its annual dividend increase, the company has typically re-loaded its buyback program as well. Given the current landscape and the predictable nature of its business, as we see it, the odds of that happening again are pretty good.

1-Wk. Price Change: -1.8% Yield: 2.8%

INVESTMENT THESIS: Lockheed Martin is the largest defense contractor globally and has dominated the Western market for high-end fighter aircraft since the F-35 program was awarded in 2001. Lockheed's largest segment is aeronautics, which is dominated by the massive F-35 program. Lockheed's remaining segments are rotary and mission systems, which is mainly the Sikorsky helicopter business; missiles and fire control, which creates missiles and missile defense systems; and space systems, which produces satellites and receives equity income from the United Launch Alliance joint venture. Historically, the stability of defense spending has been a safe haven during periods of economic uncertainty, and we see that repeating once again even as geopolitical conflicts are likely to lead to incremental demand for Lockheed's products. The company has increased its dividend consistently over the last 19 year and is widely expected to boost it again in the coming days.

Target Price: Reiterate $450, Rating: Two

RISKS: Contracts and budget risk with the U.S. government and the Department of Defense, F-35 program funding and renewal, competition, subcontractor issues.

Mastercard (MA) ; $284.34; 275 shares; 2.4%; Sector: Info. Tech

WEEKLY UPDATE: W continue to see Mastercard benefitting from both the ongoing shift to card and contactless payments vs. cash and checks as well as the continued uptake of digital shopping. Given the sharp drop in MA shares during September, we will be digging into its September SpendingPulse report once it is published as well as August Retail Sales data for the Eurozone. Based on what we learn, we may be inclined to add to the portfolio's position in MA shares.

1-Wk. Price Change: -3.1% Yield: 0.8%

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. Mastercard's next quarterly dividend of $0.49 per share will be paid on Nov. 9 to shareholders of record on Oct. 7.

Target Price: Reiterate $425 Rating: Two

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

Microsoft Corp (MSFT) ; $232.90; 420 shares; 3.0%; Sector: Technology

WEEKLY UPDATE: Raymond James resumed coverage of MSFT shares with an "Outperform" rating and a $300 target, citing particular strength in public cloud and gaming. Sticking with gaming, Microsoft is seeking a formal EU approval for its targeted acquisition of Activision. When Micron reported its quarterly results, it shared expectations for the PC market to fall by a mid-teens percentage this year and flat to down in 2023. On a positive note, Micron also shared cloud remains healthy and this plays into our view that overtime investors will re-think Microsoft's business mix leading them to revisit how they value MSFT shares.

1-Wk. Price Change: -2.1% Yield: 1.2%

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. Microsoft recently declared a 10% increase with its next quarterly dividend of $0.68 per share. This new dividend will be paid on December 8 to shareholders of record on Nov. 17.

Target Price: Reiterate $310; Rating: Two.

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)

McCormick & Co. Inc. (MKC) ; $71.27; 1,415 shares; 3.1%; Sector: Food; Consumer Non-Durables

WEEKLY UPDATE: The company declared its latest $0.37 per share quarterly dividend that will be paid on Oct. 25 to shareholders of record on October 11. This is the fourth dividend payment at that level, setting the stage for the company's next dividend increase toward the end of 2022. When McCormick reports its quarterly results on Oct. 6, we'll have a clearer picture as to how much of the August shortfall was due to the divestiture and how much to the other factors. We'll also be quite interested in the progress on the company's previously announced pricing initiatives that were instilled during August. As we've said previously, parsing the revised guidance, it implies second half revenue will still rise 6%-10% with the bulk of that coming in the company's November quarter. Historically, that has been the company's strongest quarter given sell-in for holiday related demand and this year it should see benefits from those August price increases. Should the company's guidance confirm that, we'd look to round out our position size heading into the time of year we refer to as "season's eatings."

1-Wk. Price Change: -6.3% Yield: 1.8%

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.

PepsiCo Inc. (PEP) ; $163.26; 745 shares; 3.7%; Sector: Consumer Defensive

WEEKLY UPDATE: Deutsche Bank upped it price target on PEP shares to $181 from $179. PepsiCo shared it will invest $100 million in its Romanian snack facility as it looks to double production capacity for the Central and Easter European markets. Reports suggests Kraft Heinz (KHC) is initiating another round of price increases beginning in late October, and we'll look to see if PepsiCo plans to follow when it reports its September quarter earnings on Oct. 12. Late in the week, there was speculation PepsiCo may be considering cost cutting measures, including buyouts to employees over 55 years old. We'll look for confirmation in the lead up to PepsiCo next quarterly earnings report.

1-Wk. Price Change: -3.1%; Yield: 2.7%

INVESTMENT THESIS: PepsiCo is one of the largest food and beverage companies globally. It makes, markets, and sells a slew of brands across the beverage and snack categories, including Pepsi, Mountain Dew, Gatorade, Doritos, Lays, and Ruffles. The firm uses a largely integrated go-to-market model, though it does leverage third-party bottlers, contract manufacturers, and distributors in certain markets. In addition to company-owned trademarks, Pepsi manufactures and distributes other brands through partnerships and joint ventures with companies such as Starbucks. The combination of the consumable nature of those products along with PepsiCo's ability to realize price increases has led to consistent revenue, EPS, and dividend growth during both the Great Recession and the Covid pandemic. This company's most recent dividend increase marks its 50th consecutive one and that 7% bump moves the annualized dividend to $4.60 per share up from the prior $4.30.

Target Price: Reiterate $190; Rating: Two

RISKS: Economic conditions, supply chain constraints, raw material costs.

ACTIONS, ANALYSIS & MORE: Adding to 2 Positions on Market Weakness, We're Initiating 1 Name While Adding to Another, This Stock Should Have 'Pep,' Even in a Recession, Investor Relations

United Parcel Service (UPS) ; $161.54; 565 shares; 2.8%; Sector: Industrials

WEEKLY UPDATE: With Personal Spending rising less than the Core PCE Price Index in August, consumer buying power remains under pressure. We see that alongside ongoing supply chains issues leading consumers to re-embrace digital shopping. However, during the week BMO Capital Markets held investor meetings with UPS during which it acknowledged that even though it's not seeing the same deterioration reported recently by FedEx (FDX), macro headwinds are building. In response the company is focusing on cost efficiencies. UPS recently announced a pricing program that offers shippers one all-in rate while waiving almost all delivery surcharge, but we expect there to be some lift in its overall shipping rates. That should help combat margin pressure and we expect to learn more on that pricing move when the company reports its quarterly results on Oct. 25. At that time, we'll look to revisit our current price target, likely with a downside bias.

1-Wk. Price Change: -1.7% Yield: 3.1%

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), Investor Relations

Vulcan Materials Company (VMC) ; $157.71; 305 shares; 1.5%; Sector: Building Materials

WEEKLY UPDATE: Late in the week, Vulcan held its 2022 Investor Day during which it shared that, as expected, its end markets are in growth mode, underpinned by the $853 billion in new federal fund, 41% of which is in aggregate intensive highways and bridges. Management commented that over the last six months, its highway projects have increased sharply, leading it to raise its EBITDA guidance for 2022 to $2.7-$3.0 billion when it reaches 260-270 million tons of product vs. the $1.6-$1.7 billion it sees for 2022. Vulcan also shared that it continues to eye expanding its footprint on a strategic basis, which in our view likely translates into some nip and tuck acquisitions. When we first added VMC shares to the portfolio, we indicated potential downside to the $150 level. With VMC shares modestly above that level, we are revisiting our Two rating on VMC shares.

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

INVESTMENT THESIS: Vulcan Materials Company operates primarily in the U.S. and is the nation's largest supplier of construction aggregates (primarily crushed stone, sand, and gravel), a major producer of asphalt mix and ready-mixed concrete, and a supplier of construction paving services. Its products are the indispensable materials building homes, offices, places of worship, schools, hospitals, and factories, as well as vital infrastructure including highways, bridges, roads, ports and harbors, water systems, campuses, dams, airports, and rail networks. Ramping spending associated with the Biden Infrastructure Law should drive demand for Vulcan's products over the coming years. Vulcan has historically complimented its organic growth prospects by acquiring business to expand its geographic reach and product scope. Since 2014, the company has acquired more than two-dozen companies, including the 2021 acquisition of U.S. Concrete. That combination has allowed the company to deliver steady top and bottom-line growth over the last decade, with only a modest decline when the pandemic hit in 2020.

Target Price: Reiterate $222; Rating: Two

RISKS: General economic and business conditions; dependence on the construction industry; timing of federal, state, and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction.

ACTIONS, ANALYSIS & MORE: Initiation Post, Investor Relations

Energy Select Sector SPDR Fund (XLE) ; $72.02; 735 shares; 1.6%; Sector: Energy

WEEKLY UPDATE: The possibility that OPEC+ will agree to a cut in crude output lifted oil prices this week, its first gain in five weeks. Also supporting the outlook for oil prices are another round of sanctions against Russia following its move to annex four Ukrainian regions. While the U.S. announced a fresh round of sanctions, Eurozone countries were inching towards agreeing what would be the bloc's eighth round of sanctions, that would include more trade curbs and a price cap for Russian sea-borne oil deliveries to third countries, mostly insured by European companies. This would be in addition to European Union sanctions that ban seaborne imports of Russian crude beginning on Dec. 5. As a reminder, the U.S.'s Strategic Petroleum Reserve is 30% lower levels it was at some two years ago, putting it at the lowest level since 1984, which means at some point the White House will need to re-stock that reserve. Meanwhile, with no gas flowing through Nord Stream for the foreseeable future, European countries are racing to secure more energy supplies as the winter months approach, which is driving export demand for U.S. gas production.

1-Wk. Price Change: 2.2; Yield: 3.9%

INVESTMENT THESIS: Energy Select Sector SPDR Fund is an exchange-traded fund (ETF) that tracks the performance of the Energy Select Sector Index. The ETF holds large-cap U.S. energy stocks. It invests in companies that develop & produce crude oil & natural gas, provide drilling and other energy related services. The holdings are weighted by market capitalization.

Target Price: Reiterate $98; Rating: Two

RISKS: interest rates, weakness in the broad economy, energy prices. seek

ACTIONS, ANALYSIS & MORE: Adding to 2 Positions on Market Weakness, We're Initiating a Position in the Energy Sector, State Street Global Advisors SPDR Fact Sheet for XLE.

Market-Hedging Positions

ProShares Short QQQ ETF (PSQ) ; $14.92; 4,070 shares; 1.9%

WEEKLY UPDATE: With the Fed on path to tame inflation, a move that will see further interest rate hikes in the coming months, we remain concerned over the potential for the Fed to overreach and scuttle the domestic economy. We continue to see signs of slowing enterprise spending, dollar headwinds and continued supply chain issues that are likely to lead to further downward revisions to GDP and earnings expectations. Our suspicion is we will continue to see companies trimming back expectations, offer conservative guidance or both. That concern keeps PSQ shares in play as we now navigate the path to the September quarter earnings season and the Fed's next monetary policy to be held in November.

1-Wk. Price Change: 3.1%; 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: N/A

RISKS: Because QQQ shares track the inverse of the Nasdaq 100 Index, 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) ; $17.28; 3,310 shares; 1.7%

WEEKLY UPDATE: With the Fed on path to tame inflation, a move that will see further interest rate hikes in the coming months, we remain concerned over the potential for the Fed to overreach and scuttle the domestic economy. We continue to see signs of slowing enterprise spending, dollar headwinds, continued supply chain issues, and persistent inflation that are likely to lead to further downward revisions to GDP and earnings expectations. Our suspicion is we will continue to see companies trimming back expectations, offer conservative guidance or both. That concern keeps SH shares in play as we now navigate the path to the September quarter earnings season and the Fed's next monetary policy to be held in November.

1-Wk. Price Change: 2.9%; 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