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FALL 2021

MESSAGE FROM EXECUTIVE BOARD Cornell Equity Research has had an incredible fall semester. With meetings back in person, the team’s engagement is stronger than ever. We recruited 12 new members, representative of six undergraduate colleges at Cornell. Members of the executive board spearheaded committees to keep current members engaged. We also added a new sector, meme stocks. Finally, we were able to provide a consistent theme to our report this semester by focusing on the investment themes on the next page. This report is inspired by the craziness of the ﬁnancial markets this past year. The world was introduced to new forms of investments, ranging from cryptocurrencies to NFTs. Government stimulus and accessible retail trading platforms are contributing to the volatility of the markets, generating record trading volumes and stock prices. And throughout the pandemic, sustainability became a focal point and priority amongst businesses and industries. Given all these factors, my team is so excited to present our hand-picked stocks for this semester. Thank you to the e-board, members new and current, alumni, and guest speakers, all of whom helped the club and its operations smoothly transition back to normalcy this semester.

INVESTMENT THEMES - FALL 2021 Climate Change/Net Zero Focus

Advanced Connectivity

Global Deposit Receipts

COVID-Resilient

Social Impact

Bounced-Back Stocks

EXECUTIVE BOARD

Jeﬀerson Yin President jy763@cornell.edu

Lexi Ding Co-Vice President of Education sd923@cornell.edu

Gracelyn Goodridge Executive Vice President gfg36@cornell.edu

Andy Tan Co-Vice President of Education axt6@cornell.edu

EXECUTIVE BOARD

Sarah Boyle Vice President of Membership sab463@cornell.edu

Grant Travis Vice President of Publishing gt325@cornell.edu

Keertana Talla Vice President of Professional Development kst67@cornell.edu

Radhe Melwani Vice President of Public Relations rm967@cornell.edu

EXECUTIVE BOARD

Ayesha Chowdhury Women’s Group Leader asc265@cornell.edu

Vikas Reddy Events Chair vkr8@cornell.edu

Lesly Gissell Zhicay Junior Member Liaison lgz5@cornell.edu

Ashley Zhang Treasurer abz6@cornell.edu

Declan Beran Executive Administrator djb384@cornell.edu

INDUSTRIALS

John Hanna | November 1, 2021

Rating: BUY Current Price: $35.68 Price Target: $40.56 Company Updates / News ● Recent Earnings beat, reporting top line Revenue growth (y/y) of 24% and 32% Earnings Growth ● Industry continues to experience mixed results due to rampant inflation and supply chain issues, providing decrease in shipping volume but increase in revenue per unit Competitor Statistics from Q3 2021

CSX Corporation (CSXT)

Transportation in the era of Technology

Investment Thesis: As the United States economy experiences the fastest rebound in growth in its history, consumer spending has surged and producers are struggling to keep up. The dynamics of this new economy will shape an interesting time for the transportation industry as it seeks to keep up with demand for both, while addressing increasing costs. My hold recommendation reflects a belief that CSX is a firm positioned in a market leadership capacity and will take advantage of increased domestic production, but will struggle to address rising cost and potentially decreasing volume as inflation continues and the economic rebound slows down.

Valuation: Based on conservative estimates valued through a DCF model and a comparable companies analysis, CSX has a fair value of roughly $40 per share.

Domestic Manufacturing Growth: Under the two most recent administrations in the US, the shifting of foreign imports to domestic production has been a priority. As the Biden administration preserves a variety of tariffs and implements subsidies for domestic manufacturing, CSX is poised to benefit, with their domestic railways becoming increasingly essential for consumers and producers. Two of the primary segments for CSX are Merchandise (produced and manufactured goods) as well as intermodal, which provides transportation along the manufacturing process such as chemicals and raw materials.

Revenue: $6.2 billion

Revenue: $10.4 billion

Revenue: $21.9 billion

Concentration Along East Coast: One of the most substantial factors differentiating CSX is their railways are concentrated along the East Coast, primarily along North-South routes. In this economy, there are a plethora of advantages to this. Firstly, as vaccinations revive the US economy, East coast economies have seen sustained low COVID cases, leading to their stable economic growth. As this powers trade forward, CSX can take advantage of that, driving revenue growth in their merchandise segment. Another advantage of being located primarily on the East Coast is as Southeastern “Sun-Belt” states capture a greater share of the US population, the demand for transportation of goods to that region is set to increase and shipping of manufactured goods, which are primarily produced in the “Rust Belt” region will lead to increased demand along the shipping routes dominated by CSX.

John Hanna | November 1, 2021

Graph Title: CSX

S&P 500

31.00% 26.00% 21.00% 16.00% 11.00% 6.00% 1.00% -4.00% -9.00% -14.00%

Source: CapitalIQ Risk Potential Coal Business: 11 percent of shipping volume along CSX routes has been due to coal transportation. As coal declines in market share due to natural gas, oil, and even renewable energy, there could continue to be a secular decline in this business segment.

M&A Activity: The recent merger of Kansas City Southern and Canadian National will lead to the first North American railway to pass through all of the US, Canada, and Mexico, promoting manufacturing and transportation from those countries, which is often more cost effective than CSX clients.

Inflation and Interest Rates: As questions over whether inflation is truly transitory continue to arise, the PMI has lagged behind expectations and manufacturers are losing confidence, leading to declines in their CapEx, production, and inventories. This leads to less volume for CSX, and it could get worse before it gets better as the Federal Reserve begins to taper its economic support.

Sources: Bloomberg | SEC.gov | Capital IQ | Financial Times | Wall Street Journal

John Hanna| November 3, 2021

Rating: Hold Current Price: $18.28 Price Target: $21.74

A leading global miner which will continue to thrive in an expansionary cycle

Company Updates / News

Investment Thesis:

Anglo American PLC (LSE: AAL)

Anglo American is the global leader in Diamond mining and has a leadership position in a plethora of other metals including Copper, Nickel, and Iron. ● Revenue has more than doubled Q3 Y/Y as global metals production and demand surge ● Global Shortages in resources and production have benefitted Anglo American Competitor Statistics 2021 YTD

My hold recommendation reflects a belief that precious metals demand shows no signs of slowing, and the unique global nature and size of Anglo American provides it with unique differentiators. Yet due to potential declines in CapEx among technology companies as well as supply chain spending reductions, Anglo American will likely maintain a similar rate of growth, valuation multiples, and in turn, share price over an 18 month horizon.

Valuation: Based on an analysis employing a discounted cash flow model as well as a comparable companies analysis under conservative assumption, Anglo American should be valued at a share price of roughly $22.

Technological Advancement: Revenue: $60.8 billion

In recent years, the industries which have experienced the most rapid growth have all involved technology. From electric vehicles to smartphones, these devices all possess an inherent demand for semiconductors and in turn, precious metals such as Copper. The global nature of Anglo American allows it to produce these goods at the lowest costs and insulates it from short-term fluctuations in productive capacity and demand in certain economies, allowing it to be the market leader in these raw materials.

Emerging Markets: Revenue: $58.3 billion

Revenue: $55.8 billion

The greatest area of production for Anglo-American has been Africa. As developing economies invest in growth, technology and its components have been the priorities. As these economies grow, their demand for tech and the metals for it will advance. Anglo American has unique relationships in these markets that position them to be the market leader there. Shipping costs would decrease for Anglo American in this scenario as these regions are geographically proximate to the production of their goods. The diamond segment is also poised to win in this scenario. With this being the largest component of the business, the growth in luxury product demand in the US and China has facilitated rapid revenue growth for Anglo American. With pent-up demand and money flush throughout global systems, Anglo American can expect Diamond Demand to surge globally.

John Hanna| November 3, 2021

Historical Performance: AAL

S&P 500

61.00% 51.00% 41.00% 31.00% 21.00% 11.00% 1.00% -9.00%

Source: CapitalIQ Risk Potential Shipping Costs: With shipping costs rising as global producers seek to ramp up demand in order to meet record consumer spending, Anglo American will have to struggle to maintain margins. Although they are in a strong position to pass costs to consumers as a luxury good producer in some segments.

Geopolitical Conflict: Operating primarily in developing economies means there increased risk due to unstable governments acting as an obstacle. Additionally, being a British company has been an issue in recent year due to loss of some European trade at the hands of Brexit.

Decline in Tech CapEx: If interest rates begin to rise in the largest global consumer markets such as the US and China, companies in the technology space will be less likely to invest in production and therefore will reduce demand for metals and raw materials.

Sources:

Bloomberg | SEC.gov | Capital IQ | Financial Times | WSJ

JP Spak | November 14, 2021

Rating: Buy Current Price: 38.34 Price Target: 45.00 Company Updates / News ● Q3 2021 saw record Sales numbers for the company, building off a fantastic Q2 2021. ● As of 9/28/21, Corning will increase its collaboration with AT&T, working to increase investment in fiber infrastructure. ● On 7/26/21, Corning announced a new product category for its Automotive Glass Solutions to be utilized by Hyundai Mobis in their vehicles. Competitor Statistics from LTM

Revenue: $13.76B

Revenue: $16.37B

Corning

Old and Steady wins the race.

Investment Thesis: Corning has been doing business for the last 170 years and has continued to succeed despite various economic crises, changes in political leadership, and even two World Wars. They have braved the storm with their glass products and will continue to do so in the future. My buy recommendation reflects a belief that Corning will continue to perform well, given the honed focus of their target markets and ongoing recent success.

Valuation: As of November 6th, Corning (GLW) is trading at $38.34. I believe that this equity is undervalued, and I expect it to increase to $45.00 by the end of 2022. I arrived at this conclusion by conducting a Comparable analysis with a 1.68% growth rate and comparing the company against fellow competitors Thermo Fisher Scientific (TMO), Danaher Corporation (DHR), and PPG Industries (PPG). Despite slower comparative historical growth, Corning had the lowest P/E Ratio over the last twelve months of 19.58, with the next lowest being PPG at 27.17.

Wide Range of Target Markets: Corning has found and cultivated the perfect balance of spreading its resources across different markets while not spreading them too thinly. They work primarily in five main markets, namely, Optical Communications, Mobile Consumer Electronics, Display, Automotive, and Life Sciences. This wide range allows them flexibility should one market stagnate, as they are not overly reliant on one to support growth. In addition, Corning has long relied on research and development in order to stay ahead of the competition. In order to do so, the company has limited its expansion into smaller, less profitable fields. Its focus on only a small number of large markets will allow them to substantially grow without additional complications from further bureaucracy.

Rapidly Rising Sales: Revenue: $39.06B

One can speculate about the future success of newer business strategies, but in the case of Corning, their outlook and approach has already demonstrated success. Q2 2021 saw record sales numbers and further growth was predicted for Q3. Q3 then saw a new record for sales numbers. Their revenue continues to climb, with some analysts predicting a doubling in numbers by next year.

JP Spak | November 14, 2021

Comparable Percent Change in Stock Price (Last 5 Years)

Source: Yahoo Finance Risk Potential Return to Office Work: Corning has relied on glass used in IT products to spur growth in revenue. During the pandemic, work from home environments would have necessitated higher usage of such products, thereby increasing demand and possibly explaining the large increases in revenue the company saw. With an increasing number of companies returning to office work, materials utilized in work from home environments may start to decline, thereby eliminating this former advantage for the company.

Supply Chain Problems: The COVID-19 pandemic witnessed sharp halts on industrial production as a result of widespread lockdowns. As demand for products has now increased, these production outlets are struggling to catch up to former levels, causing bottlenecks in production for companies around the world. These issues are still ongoing and may continue to ail companies’ management into the foreseeable future.

Infrastructure Plan Concerns: With the Biden administration set on dealing out a massive infrastructure plan and the Democratic party controlling both houses of Congress, funding will need to be generated, usually in the form of taxes. An increase in a capital gains tax or the corporate tax would seriously impact the cost structure of the company, decreasing returns for investors. Sources: Corning Investor Relations | Yahoo Finance | Simply Wall Street | Thermo Fisher Scientific Investor Relations | Danaher Investor Relations | PPG Industries Investor Relations | Capital IQ | Forbes | CNBC

Nicholas Ono | November 2021

Rating: Buy Current Price: $67.44 Price Target:$83.57 Company Updates/Key Metrics • Net sales increased by 53% to $1.2 billion in Q3 2021 • Paid $399 million in Q3 2021 to repurchase 6.8 million shares of LP common stock • President Biden signed $1.2 trillion infrastructure bill • Market Capitalization: $5.7B • EPS (ttm): $13.99 • Dividend Yield: 1.07% • 52-week range: $28.78-76.35 Competitor Statistics from Q3 2021

Revenue: $2.8 B P/E ratio: 4.65

Revenue: $13.6 B P/E ratio: 40.72

Revenue: $2.6 B P/E ratio: 48.71

Louisiana-Pacific Corporation (NYSE: LPX) COVID-19 Drives Families to Suburbs and Single-Family Homes

Investment Thesis: Since 1973, Louisiana-Pacific Corporation has been a leader in highperformance building solutions. LPX manufactures engineered wood building products that meet the demands of builders, remodelers, and homeowners worldwide. The buy recommendation reflects LPX’s transition from a commodity forest products company to a leading building solutions company. LPX is positioned to benefit from a strong housing market and its vast portfolio of wood building products to meet customer and demand growth.

Valuation: LPX is currently trading at $67.44 per share I believe that this equity is undervalued and expected to increase to $83.57 within 10-12 months. I arrived at this conclusion by conducting a DCF analysis with a 6% growth, 26% operating margin, and a WACC of 3.6% across 5 years. I used these assumptions based off on historical data and an optimistic view of LPX’s SmartSide wood siding production.

SmartSide®: LPX is the largest producer of engineered wood siding. Since 2015, the Siding segment revenue has grown by a CAGR of 14%. To meet this increased demand for its siding products, LPX has converted some of its existing OSB plants to SmartSide manufacturing plants, in addition to building new plants. Since 2015, the Siding segment revenue has grown by a CAGR of 14%. To meet this increased demand for its siding products, LPX has converted some of its existing OSB plants to SmartSide manufacturing plants, in addition to building new plants.

Single-Family Homes: Due to the COVID-driven shift from urban areas to suburban areas, the demand for Single-Family homes has grown. Between the undersupply of single-family homes and the growing US population, the deficit of available homes has worsened. This historic underbuilding has led to a rising median age of the U.S. housing stock, providing long-term support for R&R spending growth.

Nicholas Ono | November 2021

SmartSide Siding Revenue ($ in millions) $1,000 $915

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Source: 10-K Risk Potential Volatile Raw Materials Market: The most significant raw material used by LPX in its operations is wood fiber. Wood fiber is subject to commodity pricing and can fluctuate depending on market conditions. Wood fiber pricing can be affected by an increase in the use of biomass materials in the production of heat and natural events, such as forest fires. LPX also utilizes resin in its manufacturing process. The price of resin fluctuates based on the availability of the raw materials to produce resin like petroleum products. Overall, these fluctuations may impact operational costs and impact LPX’s bottom line.

Environmental Regulation Concerns: LPX’s operations are subject to many environmental regulations regarding the discharge of pollutants and the restoration of forests. Compliance with these regulations is a significant expense to their operations. A potential concern is the adverse effect of new environmental regulations proposed by the Biden administration.

Availability of Transportation: LPX utilizes third-party transportation providers to deliver both raw materials and finished products. If any of these third-party providers were to end their business relationship with LPX, then LPX may incur significant costs to replace the transportation.

Sources:

FINANCIALS

Visa Inc. Consumer Confidence on the Rise

Liam Ardrey | November 2021

Rating: Buy Current Price: $211.01 Price Target: $288.35 Company Updates / News -Market Cap: 451.08B -Dividend Yield: 0.71%

Competitor Statistics from Q3 2021

Revenue: $24,105 mm Net Income: $12,311 mm

Revenue: $17,788 mm Net Income: $8,093 mm

Revenue: $ 41,169 mm Net Income: 7,779 mm

Investment Thesis: Since Visa. Inc (NYSE: V) first listed on the New York Stock Exchange on March 18, 2008, the company has seen consistent growth as consumers transition away from cash payments. My hold recommendation is based on my belief that Visa will continue to expand, but as of right now it is valued reasonably. Much of the company’s growth has already been priced into its equity given its high multiples in comparison to its competitors

Valuation: As of November 11th, Visa Inc. is trading at $211.01. Based on my analysis I believe this stock is undervalued and will increase to $288.35. I came to this conclusion by conducting a DCF analysis, using a WACC of 4.45%, and an effective tax rate of 19.8%, based this projection on historical data and an optimistic view of the future with returns to normalcy after the COVID-19 pandemic.

Increase in Consumer Confidence: Visa’s revenues mainly come through the accumulation of transaction fees, which occur 150 million times per day, 40% of all purchase transactions globally. Additionally, Visa takes an additional fee when cross-border payments are involved. $2.783 trillion was spent using Visa’s networks last quarter. During to the COVID-19 pandemic, consumer expenditure decreased significantly as they have low confidence to spend. However, going into next year, consumer spending is increasing as people have the disposable income from savings, have a want to spend, and therefore are more confident to spend in the near future. Consumer spending is projected to increase in the fourth quarter, which in turn will increase Visa Inc. revenues. Additionally, with the return of international travel going into next year, cross-border expenditure will increase, resulting in a higher payment frequency, and higher revenues from cross-border transaction fees.

BNPL: Visa recently announced a new global Buy Now, Pay Later (BPNL) product, which allows consumers to purchase item and pay in smaller installments after a transaction. This platform will give Visa its own BNPL platform to rival other companies such as After pay and Klarna.

Visa Inc. (NYSE: V) Earnings throughout the pandemic

Visa Inc. (NYSE: V) Earnings throughout Pandemic 7,000

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Source: Yahoo Finance Risk Potential Covid-19: As Visa has consumer-based revenues, COVID-19 has a major impact on the company, and therefore the stock price. Visa’s cross-border volume plummeted 21% during the third and 4 th quarters of last year, with profit falling to $3.13 billion.

Cryptocurrency: The current boom of major cryptocurrencies brings a major threat to big banks, and in turn is a major threat to credit card companies like Visa. While the smaller Coins pose no real threat to larger companies because of the lack of financial backing, larger coins such as Bitcoin and Ethereum have demonstrated growth over the last year, reaching record values as of November 10th. Additionally, with an increasing number of companies like Venmo, and with the possibility of Tesla reintroducing crypto as a form of payment, the prices will be sure to keep growing for these large coins.

Sources:

Daniel Nieto| November 5, 2021

Rating: Hold Current Price: $950.04 Price Target: $950.04 Company Updates / News ● Market Cap: 145.165B ● PE Ratio: 25.40 ● EPS: 37.61 ● 52 Week High: 967.94 ● 52 Week Low: 645.12

Blackrock, Inc (BLK) Climate Change and COVID-Resilient Investment Thesis: Since Blackrock’s listing on the New York Stock Exchange on October 1, 1999 for $14 a share, the company has risen to become one of the top asset management firms in the world. My hold recommendation reflects a belief that Blackrock will continue its investing strategy that it has held throughout the pandemic along with a focus on combating climate change. However, there are some worrying signs in the housing market that could spell trouble for the economy and for Blackrock..

Valuation:

Competitor Statistics from Q3 2021

As of November 5th, Blackrock (BLK) is trading at $950.04. I believe that this equity is overvalued and expected to stay stable around $950.04 within this year. I arrived at this conclusion by conducting a DCF analysis with a 4% growth rate, 10% operating margin, and a WACC of 3.19% across 5 years. I used these assumptions based on historical data and an optimistic view given Blackrock’s recent performance history.

Investment Strategy:

Assets under Management: $9T Revenue: $18.7B

Throughout the pandemic, Blackrock has stayed committed to its investment strategy. Its stock price has risen from $454.95 to $950.04. Blackrock has diversified its portfolio, expanding into multi-family housing and international markets. It has invested a total of nearly $60 billion in real estate currently and has moved to invest heavily in emerging markets internationally. This strategy has paid off during the pandemic, and does not seem to be stopping soon. As the pandemic begins to end, Blackrock is in a strong position as the world’s largest asset management firm. Thanks to its commitment to its investment strategy, it looks to remain the industry leader.

Assets under Management: $6T Revenue: $69.9B

Climate Change Initiatives:

Assets under Management: $7T Revenue: $24.3B

Additionally, at the COP26 conference, the CEO Larry Fink spoke strongly about climate change and the importance of transparency and commitment from public companies. The CEO is committed to his vision of combating climate change as he sees a huge market for it.

In 2021, Blackrock announced it has raised $619 million for a climatefocused-infrastructure fund targeting emerging markets with backing from the French, German and Japanese governments. Renewable energy is a growing market and a necessary one that Blackrock is capitalizing on in emerging markets early on.

Daniel Nieto| November 5, 2021

Graph Title: Blackrock vs KKR Stock Price over the last 3 years 1000 900 800 700 600 500 400

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Source: Yahoo Finance Risk Potential International Real Estate Market: Over the past couple of months, the international real estate market has been put under stress due to the Communist Party of China cracking down on its real estate developers. The largest, Evergrande, has been in a tough financial situation for over a year now. This could lead to an international downturn in the real estate market at a time when the pandemic seems close to ending.

Inflation Concerns: As a result of the pandemic, there is a supply shock around the world that is driving prices up. This is coupled with the fact that US inflation has risen as the world has slowly recovered from the pandemic. This has raised concerns around the world for another possible case of ‘stagflation’. Blackrock recently put out a report saying that they do not believe ‘stagflation’ will happen again. Blackrock must be prepared for the worst case as the supply shock possibly continues into next year.

Public Backlash: Although Blackrock was building off its investment strategy, there was an increase in public backlash in the past year due to its buying of multi-family homes. The public feels it is being priced out of these homes during the pandemic and is blaming various financial institutions, such as Blackrock. The growing backlash at Blackrock, especially in the United States, is a cause for concern as the company may need to readjust its strategy towards the housing market. Sources:

Benjamin Nadon-Enriquez | 11/05/2021

Rating: Buy Current Price: $348.79 Price Target: $460 Company Updates / News ● One of Mastercard’s main goals for the future is to help one billion consumers connect to the digital economy by 2025. ● The financial services industry will continue to grow with new innovations in the financial technology sector. ● Mastercard’s earnings are projected to grow 16.8 percent annually. Competitor Statistics

Mastercard (MA)

Bounced-Back Stocks, Advanced Connectivity

Investment Thesis: Mastercard is listed on the New York Stock Exchange and has grown over 230 percent in five years. Since then, Mastercard has continued to grow as one of the largest financial services with a credit purchase volume of $837 billion as of December 2020. My buy recommendation reflects a belief that Mastercard will continue to perform well, given a solid domestic growth in spending and a continued growth across borders, as well as a rapid shift toward ecommerce.

Valuation: As of November 5th, Mastercard(MA) is trading at $348.79. I believe that this equity is undervalued and expected to increase to $460 within this year. I arrived at this conclusion through a comparable company analysis comparing Mastercard to Verizon and Capital One using revenue and EBITDA multiples.

Electronic Payments: Mastercard’s growth can be attributed to a massive shift toward electronic payments, thanks to an ongoing rise in innovation. Digital payments are at peak demand, which shows no signs of slowing down. More consumers are continuing to consider digital payments such as digital currencies, biometrics, QR codes, and other contactless forms of payment. According to Mastercard, 93 percent of consumers are considering these methods as new forms of payment. Nearly 90 percent of in-person transactions globally take place at a contactless-enabled merchant.

Revenue: $15.3 B Market Cap: $357.16B

Revenue: $21.85 B

Revenue: $26.03 B

Buy Now pay Later and Cross-Border Spending Mastercard recently announced a buy now pay later offering that will be launched in Australia, the UK, and in the US in early 2022. This will further increase Mastercard’s market share in the financial technology space as well as in the cryptocurrency space. Banks and merchants on Mastercard’s network will eventually integrate cryptocurrencies in their products. Additionally, spending has gone up since pre-pandemic levels. Mastercard’s gross dollar volume grew 20 percent year over year in Q3 of 2020, and volume for Mastercard’s US credit and charge programs increased 36.1 percent year over year in Q3 of 2021. As a result, spending proves to continue to rise past prepandemic levels.

MA Yearly Stock Value:

Source: Yahoo Finance Risk Potential Market Entry: Although cross-border spending is serving as an advantage for Mastercard, there are still concerns in certain markets overseas. For instance, India’s central bank barred Mastercard from bringing in any new domestic customers due to data storage rule violations. This is a relatively large blow for Mastercard since the company handles 33 percent of payments in India.

Lawsuit Concerns: Mastercard is facing a record class action lawsuit in the United Kingdom as the Competition Appeal Tribunal presented a case that alleges that Mastercard charged excessive interchange fees in the period between 1992 and 2008.

Competition: Regardless of its dominant position, Mastercard still faces competition from many fintech companies as it continues to enter this market. However, it is safe to say that Mastercard’s recent acquisitions in this sector such as its acquisition of Aiia will allow the company to have a competitive advantage.

Sources:

Ashley Zhang | November 4, 2021

Rating: Buy Current Price: $60.62 Price Target: $81.80 Company Updates / News • Current Market Cap: $96.57 B • Revenue: $69.95 B • EBITDA: $18.43 B • P/E: 34.49 • 52wk High: $61.97 • 52wk Low: $32.75

Brookfield Asset Management (BAM) Major Decisions Creating Major Payoffs Investment Thesis: Since Brookfield Asset Management’s listing on the New York Stock Exchange in December 2000, the stock has grown more than 1200%. Today, Brookfield Asset Management manages over $636 billion in assets, making it one of the world’s largest asset management companies. My buy recommendation reflects a belief that Brookfield Asset Management will continue to perform well given the rebound of the real estate industry, the launch of its fourth flagship fund, and strategic acquisition decisions.

Valuation: Competitor Statistics from Q3 2021

As of November 5th, Brookfield Asset Management Inc. (BAM) is trading at $60.62. I believe that this equity is undervalued and expected to increase to $81.80 within this year. I arrived at this conclusion by conducting a DCF analysis with a 4% growth, 10% operating margin, and a WACC of 3.19% across 5 years.

COVID-19 Rebound: AUM: $626 B Revenue: $69.9 B

AUM: $429 B Revenue: $26.7 B

The coronavirus pandemic ravaged the real estate industry for months, in particular Brookfield Property Partners, the real estate branch of Brookfield Asset Management, lost over $2 billion in 2021. In response, Brookfield Asset Management took Brookfield Property Partners, one of their investment companies, private by buying out all of the available public shares. In another strategic move on October 2021, Brookfield won a bid to takeover AusNet Services, an Australian natural gas and energy company. This win expands Brookfield Asset Management’s global assets and connections as AusNet’s largest shareholders are Singapore Power International and State Grid Corporation of China. The former being the Singapores’s sole electrical and gas provider, and the latter being the largest utility company in the world.

Flagship Fund: AUM: $650 B Revenue: $20.2 B

On April 29, 2021, Brookfield Asset Management launched its fourth flagship opportunistic fund, BSREP IV – Brookfield Strategic Real Estate Partners IV. This fund, along with the other flagship funds, focuses its assets on a wide range of property types and real estate. The company isn’t shy from entering global market opportunities with this fund as the fund will include assets from North America to Europe to South America. This fund is the first of its kind to not include public market capital which will prevent the parent company from collecting a fee. This fee will allow the fund to generate more capital, without taking away from the profits. The company hopes to raise $17 billion in capital which will make it the firm’s largest real estate fund to date.

Brookfield Asset Management vs KKR & Co. Stock Price since 2013

Source: Yahoo Finance Risk Potential Life-Insurance Business: Brookfield Asset Management recently hired Michael McRaith as vice chairman of Brookfield Asset Management Reinsurance Partners, the company’s life-insurance arm. Brookfield seeks to expand its investments in U.S life and annuity insurance companies due to extremely low interest rates. This new endeavor will test Brookfield Asset Management’s ability to withstand the state insurance departments, who impose extra protections on these transactions with newcomers. Additionally, this move will determine Brookfield’s strength against the influx of other investment firms into this market.

Work From Home: True to its nature, Brookfield Asset Management regularly invests in brick-and-mortar buildings and office spaces. As the world eases out of the COVID-19 pandemic, many companies, such as Amazon, Capital One, and Facebook, are giving employees the option to work from home for the indefinite future. This decision poses a threat to some of Brookfield’s assets as their tenants may not renew leases, thus impacting the company’s ability to service debt and continue its acquisition activities.

Renewable Energy Movement: At the most recent COP26 summit, country leaders pleaded with each other to begin the phase-out of coal power plants in efforts to reduce carbon emissions and further prevent climate change. Over 20 countries agreed to prioritize low-carbon energy developments and stop financing international fossil fuel initiatives. This event poses an impact to Brookfield as Brookfield Infrastructure Corp., one of Brookfield Asset Management’s subsidiaries, is well invested in pipelines and other oil companies. The realistic future shift from oil to more sustainable energy sources pose a threat to the viability of this particular Brookfield subsidiary.

Sources:

CONSUMER DISCRETIONARY

Zoë Robbins Rutkovsky | November 14th, 2021

Hasbro (HAS) Success through play

Rating: Buy Current Price: 98.20 Price Target: 114.48 Company Updates / News ● Acquisition of eOne ● Company leadership ● Supply chain issues ● Covid 19 restructuring ● Revenue: $ 6129.9 B ● EBITDA: $1209.4 B ● 52 Week High: $104.89 ● 52 Week Low: $86.05 Competitor Statistics from Q3 2021

Share price: $98.2 Revenue: $17.7B

Investment Thesis: Hasbro is the second largest toy company in the world. The 2019 merger with eOne facilitated company growth and expansion into television and media sectors. My buy recommendation reflects the belief that Hasbro will perform well in the long term. A dip in the price may occur depending on whether supply chain issues are resolved for the upcoming holiday season. Despite this short term dip, the company will continue to perform well into the new fiscal year. Hasbro is set to perform well in the upcoming year despite leadership losses and supply chain issues, given the annual and daily need for toys and other entertainment products.

Valuation: As of November 12th, Hasbro was trading at $98.20. I believe that their equity is undervalued and expected to increase to $114.48 this year. I arrived at the conclusion by conducting a COMPS analysis with a 1.8% projected revenue growth. The equity value fell at $12,900.5, whereas the implied equity value is $17,787.3, 1.37x higher. This higher value implies that the stock is undervalued. I used these quantitative data points to make the decision to buy at the current price.

Toys/Media:

Share price: $22.73 M Revenue: $4.58B

Share price: $13.75 Revenue: $236.96M

Hasbro is the second largest toy maker in the world. The company includes brands like My Little Pony, Play-Doh, Nerf, Transformers and well as hit movies and television shows (such as the movie 1917). Their company model creates content in an ethical manner with efficiency and an expansionist mind. In 2014, Hasbro entered into a relationship with Disney, allowing the company to make products for the Disney Princesses and Frozen franchises.

Merger/Acquisition: In 2019, Hasbro finalized an agreement to acquire eOne, a Canadian multinational entertainment company. eOne is the owner of “Peppa Pig” and “PJ Masks” franchises. The acquisition cost $3.8 billion and resulted in a net revenue increase of $4.72 billion (3%). Operating profit increased to $652.1 million or 13.8% as a result of the acquisition.

Hasbro vs. Mattel vs. Jakks Pacific Cash:

Source: S&P Capital IQ Supply Chain: In the 3rd quarter, Hasbro experienced delays for 100 million dollars of merchandise. Supply Chain issues have emerged as the demand for products has gone up during the pandemic without an increase in production and workforce. These issues will not deter the company, as their expansion into entertainment has boosted the company’s revenue up to 76% in the third quarter. Hasbro’s CFO Deborah Thomas released a statement regarding handling supply chain issues: “ We have delivered much of what was delayed in the third quarter despite continued supply chain challenges.” This statement is well supported by financials, as the sales or revenue growth is +10.97% for September 2021.

Covid-19: As a result of the pandemic, Hasbro released a statement on business leadership during COVID 19. This plan laid out company support (“Support Our People”), adaptations (“Adapting our Business & Supply Chain”) and community interactions (“Engaging our community”). Despite the initial setback during the onset of the pandemic, there has still been a 4% increase in net revenue. This increase is larger than that of competitors.

Media Volatility: Although Hasbro has increased revenue since the expansion into entertainment and the merger with eOne, the entertainment industry has many competitors and Hasbro is entering an already exhausted market. Hasbro has had great success with the “Peppa Pig” franchise. Productions released during the pandemic, like “My Little Pony” (on Netflix) and “Come From Away” (on Apple TV +) helped to increase the 3rd quarter revenue by 76% from last year. This success will either hold or falter depending on these, and other streaming services' ability to produce original content. Sources:

Steven Dong | 11/8/21

Rating: Buy Current Price: $68.43 Price Target: $78.20 Q3 Updates ● Revenues: $1.9B or $0.78 EPS ● Operating Margin: 40% ● MAU: +7% to 119M YoY ● New Q4 Outlook: $2.78B in Revenue or EPS of $1.29 ● Development pipeline of Overwatch 2 and Diablo IV delayed and expected in 2024 Competitor Statistics from Q3 2021

Activision Blizzard (ATVI) Investment Thesis: Activision Blizzard offers a portfolio of leading video game franchises, including Call of Duty, Diablo, Overwatch, etc. The stock was up 65% from pre-pandemic levels to its peak of $105 in February 2021 but has since fallen by 33% as restrictions subside and challenges arise from internal management and workplace culture issues. My buy recommendation reflects a belief that the company has strong growth potential with benefits from secular tailwinds and continued investments into its products. There are also new growth opportunities in the mobile gaming and advertising segment that ATVI has yet to fully captalize on.

Valuation: As of November 8rd, ATVI is trading at $68.43. I believe that this equity is undervalued and expected to increase to $78.20 within the next year. I arrived at this conclusion by conducting a DCF analysis with drivers of a 3.5% growth, 40% operating margin, and a WACC of 11% across a 6-year projection period. These assumptions are based on historical data and an optimistic view given Activision’s performance history.

Pandemic Tailwinds: Revenue: $1.92B ROE: 15.8% LTM EV/EBITDA: 13x

Despite delays in key pipeline developments of Overwatch 2 and Diablo IV, the recent release of Call of Duty Vanguard and Warzone is expected to maintain user engagement and drive in-game monetization. These franchise titles will address feedback from the user base and could drive additional growth from lingering pandemic tailwinds. In particular, video game console installation and total monthly active users continue to remain steady even after peaking at the height of the pandemic.

Underpenetrated Mobile Market: Revenue: $984.9M ROE: 20.1% LTM EV/EBITDA: 20.4x

Revenue: $1.85B ROE:10.9% LTM EV/EBITDA: 25.6x

ATVI is starting to expand upon its mobile market operations by leveraging successful franchises into new mobile titles, such as the upcoming release of Diablo Immortal. In addition, the recent acquisition of Digital Legends studios should result in revenue synergies by establishing more CoD titles on a mobile platform following the successful precedent of CoD: Mobile. The high margins (46%) and continued growth in revenue (+22% YoY) of the King segment (Candy Crush) also provides an opportunity to further scale its digital advertising operations. Additional acquisition opportunities similar to that of King Digital could serve as a supplement to its long-term growth strategy along with consistent innovation of new game titles.

Graph Title: Comp Set EV/EBITDA (Trailing Two Years)

Source: Capital IQ

Risk Potential Legal Risk & Turnover: Activision Blizzard has a precedent of lawsuits citing its workplace culture as hostile and discriminatory.. These cultural concerns were reflected by the departure of Jen Oneal, a co-leader of Blizzard, just after 3 months of joining the firm. The internal management issues and turnover was a key driver in the delay of key pipeline developments, which led to decline in share price. Continued legal challenges and workplace culture issues could pose a lasting threat on ATVI’s ability to continuously develop its game titles by failing to acquire and retain talent amidst a labor shortage.

Obsolesce: Consumer preferences in the video game industry are usually cyclical and hard to predict as even the most popular games begin to lose popularity over time. As a result, ATVI needs to continuously develop new titles while refreshing and enhancing existing titles to maintain user engagement and in-game monetization. Additionally, the time to market of new products is an important consideration with more challenges of increasing lead time and cost involved with developing high-quality products.

Lack of Integration: Given that M&A activity has been a main driver in Activision Blizzard’s growth and longterm strategy, the ability to successfully integrate other business models into its operations of wide scope and complexity is essential in realizing the revenue and cost synergies of these transactions. Notably, operational challenges could arise from cultural and organizational misalignment – especially considering the current organizational cultural challenges that ATVI is experiencing.

Sources:

ATVI Investor Relations | Bloomberg | Thomson Reuters | Capital IQ | Financial Times

Quinn Montgomery| November 6th 2021

Rating: Buy Current Price: $65.31 Price Target: $78.76 Company Updates / News • 52 Week Price Change Relative to S&P 500: 127.95% • Operating Margin: 16.21% for Capri versus 8.90% for the industry on average • Adjusted EPS outlook for the year upward to $5.30/share after 17% increase in revenue after Q2 • Better than anticipated revenues across all 3 luxury houses in Q2 Competitor Statistics from Q3 2021

Capri Holdings (CPRI) Bounced-Back Stocks Investment Thesis: Capri Holdings is one of the most dominant luxury goods companies in the world. With several successful luxury names such as Michael Kors, Jimmy Choo, and Versace, Capri has built a name for itself as one of the largest players in the consumer discretionary sector. My buy recommendation reflects a belief that Capri Holdings will maintain its leadership in the luxury goods market with its reputable brands, savvy marketing tactics, and pandemic-era catalysts that will propel this company to success in the coming years.

Valuation:

As of November 6th 2021, Capri Holdings is trading at $65.31, but based on both qualitative catalysts and a comparable company analysis, I believe that Capri Holdings should be trading at a price of $78.76. With Capri’s impressive performance in the last year, the firm’s stock increased 127.95% relative to the S&P 500, which indicates significant upward momentum for the stock in the short-term. This momentum is further insulated and propelled by the investment catalysts discussed below.

Consumer Savings: P/E Ratio: 29.22 Revenue: $4.86 B

P/E Ratio: 36.49 Revenue: $65.54 B

In the last 12 months, $3.7 trillion in excess savings have been generated by the pandemic among United States consumers alone. This is due to several factors such as stimulus checks, stock market growth, and lower consumer spending because of economic uncertainty. Since luxury spending is highly correlated with disposable income levels, as the world economy recovers from the COVID-19 pandemic, consumers across the world will be able to purchase more luxury goods. This phenomenon is especially true because the top 10% of households in the US are responsible for most luxury goods purchases, and these consumers accounted for 70% of all pandemic savings in the US. As the holiday season approaches and further advancements are made to combat the pandemic, this will only serve to benefit Capri Holdings further.

International Growth and Diversification:

P/E Ratio: 21.77 Revenue: $3.09 B

Capri Holdings operates in over 100 countries around the world with a number of different product lines and supply chains that serve to diversify both its sales and sourcing. This diversification limits Capri’s reliance on any one marketplace, allowing the company to succeed even in the face of volatile consumer sentiments and supply chain issues. Each of Capri’s three luxury houses—Versace, Jimmy Choo, and Michael Kors—have thrived in the last 12 months, setting Capri up for success for the end of 2021 and into 2022.

CPRI TTM Performance Versus Competitors and S&P 500: 160.00% 140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% -20.00%

Source: Capital IQ Risk Potential ESG Concerns: In recent years, consumers and governments alike have applied significant pressure on large corporations to better integrate ESG values into their daily operations. Luxury goods companies have faced particularly extreme scrutiny due to the sourcing of their high-end raw materials such as leather, which frequently relies on cheap labor or unsustainable processes. Consider Canada Goose for example, which faced such severe criticism for its use of coyote fur in its coat’s that it has pledged to begin using synthetic furs as a substitute in the near future. However, Capri is well-positioned to address these threats with recent changes to its supply chain management that have significantly reduced the company’s environmental footprint.

Fluctuating Consumer Preferences: As a luxury goods company, Capri Holdings constantly needs to stay up to date on trends in international fashion markets to make sure that it can succeed in this competitive market. This can prove especially challenging due to varying consumer tastes throughout the number of countries and regions that Capri operates in. Capri mitigates this risk with advanced marketing analytics and management teams on local levels that effectively guide production to meet the consumer preferences that drive demand in real time, allowing Capri to maintain its leadership in the space.

Exchange Rate Fluctuations: Like most other companies that operate on a significant global scale, Capri Holdings is exposed to significant exchange rate risk due to the variety of regions that the company operates in. Fortunately, Capri’s diversified operations mitigate this risk because it is not overly reliant on any single market, so exchange rate fluctuations driven by economic uncertainties tend to be transitory and relatively insignificant for the company’s long-term success.

Sources:

Alexa Cooper| November 9, 2021

Rating: Buy Current Price: $395.11 Price Target: $415.13 Company Updates / News ● Market Cap: $21.48 B ● Revenue: $7,656.6 B ● EBITDA: $1,396.8 B ● P/E Ratio: 30.4 ● 52 Week High: $414.98 ● 52 Week Low: $245.62 Competitor Statistics from Q3 2021

Investment Thesis:

Ulta Beauty, Inc. (ULTA) COVID-Resilient

Ulta Beauty is an industry leader in the beauty retail space, offering a wide range of cosmetic, hair, and fragrance products. I recommend Ulta Beauty as a buy due to its strong omnichannel strategy, recent partnerships, and prominent virtual presence. Additionally, Ulta is leading diversity and sustainability initiatives that make the brand a standout beauty retailer. Ulta reacted quickly to the challenges of the pandemic and was able to meet the increased demand for self-care beauty products. The company also has a strong customer base with 34.6 million members subscribed to the “Ultamate Rewards'' program. I believe Ulta is currently undervalued as the company will continue to increase their market share, maintain and expand their customer base, open new stores, and introduce new streams of revenue in the upcoming quarters.

Valuation: As of November 9th, 2021, Ulta (ULTA) is trading at $395.11. I believe that this equity is undervalued and will increase to $415.13 within the current year. I conducted a comparable company analysis and used the 25th percentile of the EV/Revenue multiple to arrive at my buy recommendation.

Partnerships: Revenue: $17,045 B EBITDA: $3,955 B

Revenue: $12,290.1 B EBITDA: 1,612.6 B

Ulta launched “Ulta Beauty at Target” which introduced mini Ulta shops inside over 100 Target retailers across the U.S. The expansion will grow to reach over 800 locations in the upcoming years. By introducing Target shoppers to Ulta Beauty products, Ulta will be able to reach a larger customer base and generate greater revenue. Ulta offers both low and high-end cosmetic products which both differentiates their business from its competitors and makes products accessible for a wide range of Target’s customers. Ulta has also partnered with DoorDash to introduce same-day delivery services for a faster and more convenient shopping experience. This partnership will create a new touchpoint for customers and will help Ulta meet consumer demand. The rollout will continue to expand into 2022 to include more locations.

Virtual Presence:

Revenue: $3,875 B EBITDA: $527.2 M

Ulta has a strong eCommerce presence and is continuing to utilize digital platforms to reach consumers in innovative ways. The retailer differentiates itself by offering online booking for in-store services, a guest services chatbox, a GLAMlab virtual try-on, and in-store QR codes for product discovery. Additionally, their large social media presence and mobile app allows shoppers to easily find products and partake in the loyalty rewards program. Ulta is introducing the “Digital Innovation Fund” in 2022 and partnering with agents of change to transform the beauty industry.

Ulta Beauty vs. The Estée Lauder Companies Share Pricing

Source: S&P Capital IQ Risk Potential Change in Leadership: In March, Ulta announced a transition in leadership as CEO Mary Dilon was replaced by Dave Kimbell. During Dilon’s time as CEO, Ulta’s market capitalization tripled. She introduced salon services, opened new stores, brought in new cosmetic brands, and enhanced the loyalty program to turn Ulta into one of the largest beauty retailers in the country. Kimbell may lead the company in a new direction which could worry shareholders.

Supply Chain Issues: The pandemic resulted in many supply chain disruptions, including shipping delays and higher freight costs for retailers. It is essential that Ulta prioritizes stocking inventory for its 1,300 retail stores, especially during the upcoming holiday season, to keep up with consumer demand. Ulta is also introducing a new network plan which will utilize four types of facilities, a Regional Distribution Center, a “Fast a Fulfillment Center”, a “Ship-from- Store” option, and a “Market Fulfillment Center”, to help alleviate supply-side challenges.

Shifting Industry Trends: There is a shift in consumer preferences for makeup towards product personalization. Ulta’s largest revenue driver is makeup which accounts for 44% of their net sales, but the company does not offer custom makeup products due to its long-term partnerships with well-established makeup brands. Ulta does offer personalization across channels through their Skin Analysis Service and livestream beauty consultations. The industry is also seeing an emphasis on gender neutral, multi-generational, and multicultural beauty products. However, Ulta’s strategy focuses on meeting the needs of their key target market which includes female, Gen-Z, Black, and Hispanic customers. Ulta should incorporate these industry trends into their core business strategy to ensure they can continue reporting sustainable profit and growth into the next fiscal year.

Sources:

ENERGY

Lavanya Pinnepalli | 11/4/21

Rating: Buy Current Price: $26.53 Price Target: $45.87 Company Updates / News ● Suncor completed the largest annual maintenance program in the company’s history, allowing it to return to normal production rates across their asset base in the fourth quarter ● Suncor has a current market capitalization of $37.59 and a P/E ratio of 32.44 ● Capital spending for 2022 is $4.7 billion, $300 million under the annual cap outlined by management Competitor Statistics from Q3 2021

Suncor Energy (SU) Although slower than its competitors, SU has recently been out-performing the market. Investment Thesis: Suncor Energy Inc (SU) is a Canada-based integrated energy company that operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing. My buy recommendation reflects a belief that although Suncor has been growth at a slower pace than its competitors, the recent outperformance of the market and doubling of dividends is an indication that the stock may rise gradually in the upcoming months.

Valuation:

As of November , 5th Mobile Suncor Energy Inc(SU) is trading at $26.53. According to a Comps Analysis I conducted against Enbridge Inc, Imperial Oil Ltd, BP plc, and Valero Energy Corporation, the implied share price of SU is $39.92. The one-year price target was $45.87, with a potential two-year target of $66.40. Further, the company announced plans to increase its current buyback program to retire an addition 2% of shares. Returning capital to shareholders and reducing the number of shares on the market is often an indication that management believes the company is undervalued.

Integrated Model: Stock Price: $26.53 Revenue: $27.35B

Suncor’s integrated model is focused on growing its oil sands business with upstream and downstream operations. Some of the strategic decisions made to work towards this integrated model include investments in network pipelines, marine terminals, rail unloading facilities, and additional storage capacity on the U.S. Gulf Coast. The integrated model helps Suncor swiftly adjust to the mercurial conditions of the oil market, and ensure they has as much control over the product and supply chain process as possible.

Rigorous Capital Discipline: Stock Price: $43.30 Revenue: $40.02 B

Stock Price: $77.92 Revenue: $27.91B

When it comes to the handling to capital, Suncor has three fundamental principles: fund the base businesses, invest in profitable growth, and return of cash to shareholders. When crude prices fall and the Canadian dollar strengthens, Suncor focuses on concentrating on what they can control. The company believes in managing costs according to strict budgets and planning our capital allocation for every possible scenario. So, when unforeseen markets events occur, which is often in this sector, Suncor has the capital backing, budget, and plan to handle any situation that may arise.

Production volume of Suncor Energy from 2011 to 2020, by segment 900

Production in Million Barrels of oil per day

800 700 600

500 400 300 200 100 0 2011

2012

Exploration and production

2013

2014

Divested production

2015

2016

Oil sands (total)

2017 Oil sands (bitumen)

2018

2019

2020

Oil sands (synthetic crude)

Source: Statista Risk Potential Greenhouse Gas Emissions and Targets: Suncor has committed to reducing Greenhouse gas emissions which relies on improving energy efficiency at facilities, developing and deploying new technologies, and investing in low-carbon power fuels. This requires significant capital expenditures with the potential that the costs required to achieve target goals differ from the original estimates. The shift in allocating resources towards emissions reduction could have a negative impact on operating results.

Government/Regulatory Policy: Suncor is often subject to regulation and intervention is oil. For example, the company has to abide by restrictions on production like the mandatory production curtailments imposed by the Government of Alberta in 2019 and 2020. The process of regulatory compliance is costly, as the company has to maintain regulatory permits, licenses, and approvals.

Digital and Cybersecurity: The operations of Suncor’s business sector is dependent on computer hardware and cloud providers. The company stores large amount of sensitive data which is constantly subject to security breaches. Any attack could result in legal claims or proceedings and liability under laws that protect the privacy of personal information, holistically affecting the financial condition and results of operation.

Sources:

Kaitlyn Lau | 11/18/2021

Rating: Buy Current Price: $35.29 Price Target: $43.95 Company Updates / News • • •

•

Market Cap: 4.34B P/E Ratio: 122.11 Recently announced its plans to sell its thermal business to KKR for a total of $1.9 billion. Its thermal business, known as Clearway Community Energy, consists of thermal infrastructure assets. Clearway has not seen any significant impact to its financial condition from the pandemic. It did, however, see some degradation in volumetric sales on a weather normalized basis at certain thermal locations.

Clearway Energy (CWEN.A)

Clearway Energy has been outperforming the renewable energy sector with its diverse energy portfolio and exclusive PPAs.

Investment Thesis: Clearway Energy was publicly listed on the New York Stock Exchange on July 19, 2013. I will be focusing on the company’s Class A stock. Since its listing, the stock has grown more than 150%. Clearway is one of the largest developers of clean energy in the United States with over 5 gigawatts of wind, solar, and energy storage in operation. My buy recommendation reflects my belief that Clearway Energy will continue to grow, given the rising interest in renewable energy and the company’s strong asset portfolio.

Valuation: As of November 18th, Clearway Energy (CWEN.A) is trading at $35.29. I believe that this equity is undervalued and expected to increase to $43.95 within this year. I arrived at this conclusion by conducting a DCF analysis with a 16% growth rate and a WACC of 3.68% across 5 years. I used these assumptions based off historical data and an optimistic view given Clearway’ growth potential.

Competitor Statistics

Diverse and High-Quality Assets:

Stock Price: $34.89 Revenue: $1.23B

Furthermore, Clearway has been able to invest in leading technologies of the renewable energy sector through its portfolio of relatively younger assets. These assets tend to provide the company with greater high fleet availability while maintaining lower capital expenditures.

from Q3 2021

Clearway’s asset portfolio consists of 4,208 net MW of renewable generation capacity that are non-emitting sources of power generation. This focus on clean energy benefits the company as more federal legislation is focusing on environmental policies.

Acquisitions and PPAs: Stock Price: $85.53 Revenue: $0.96B

Stock Price: $39.81 Revenue: $1.20B

Clearway acquired many projects in response to the increased interest in renewable energy. For instance, the company recently announced its plans to acquire the remaining 50% equity interest in the Utah Solar Portfolio for $355 million. The portfolio has seven utility-scale solar farms, which will improve Clearway’s cash flows from its solar projects. The company also maintains a steady cash flow from its exclusive power purchase agreements (PPA). Recently, the company signed a virtual PPA with Toyota Motor North America to support Clearway’s 100 MW Wildflower Solar Project. These agreements not only benefit Clearway financially, but also boost the company’s brand image as it is helping companies access clean energy.

Kaitlyn Lau | 11/18/2021

CWEN.A Stock Price Over the Last Six Months (May 17- November 15) 38 36

35.59

34 32 30 28 26 24

22 20

Source: Yahoo Finance Risk Potential Weather Concerns: One of the most prominent side effects of climate change is the shift in weather patterns and the increase in natural disasters. These unpredictable weather conditions can have a negative impact on Clearway Energy’s project sites. Clearway’s portfolio mainly focuses on wind and solar energy. Wind patterns are known to be very volatile, while solar farms can be affected by air pollutants such as the smoke from wildfires.

Lack of Advancement in Renewable Energy Legislation: Joe Biden’s administration has been campaigning heavily for massive investments into the renewable energy sector. The President’s $1.75 trillion framework includes $555 billion for clean energy. Though having this funding would be greatly beneficial for renewable energy companies such as Clearway, there has not been much tangible legislation towards enacting on these frameworks. Therefore, there are concerns that this greater interest in renewable energy is all just buzz.

Reliance on Asset Development: Although Clearway Energy has many sources of revenue, it mainly works on developing energy-generation projects. Asset development carries more risk than investing in an already cashflowing project since the development process is both costly and time-consuming. However, Clearway’s assets are known for being both high-quality and long-lived as they carry low operating and maintenance costs once they are developed. Therefore, investors can be reassured that these projects provide steady and lucrative returns when they are fully established.

Sources:

Ioana Nechiti | 11/18/21

Rating: Hold Current Price: $44.5 Price Target: $40 Company Updates / News ● Market Cap: 25.037B ● Why Plug Power Stock Jumped 5% and Then Dropped Today ● Plug Power Opens First Green Hydrogen Gigafactory in NY ● Renault, Plug Power joint venture unveils two new hydrogen vehicles ● Citi analyst initiated pair trade on two fuel cell stocks, going long Plug Power and short Ballard Power ● Plug Power stocks falls 3% initially after wider Q3 loss, lower sales Competitor Statistics from Q3 2021

Revenue: $143.9 M Core Product Offering: Hydrogen Fuel Cells & Green Hydrogen

Revenue: $207.2 M Core Product Offering: Solid Oxide Fuel Cells

Revenue: $25.2 M Core Product Offering: Hydrogen Fuel Cells

Investment Thesis:

Plug Power Inc. (PLUG) Has PLUG’s stock run out of fuel?

Plug Power is a leading provider of hydrogen fuel cell solutions with over 20 years of experience in fuel cell design and integration. The company is a pureplay hydrogen fuel cell provider with high projected future growth that is factored into the current valuation. Investors are trading off bullish sentiment instead of fundamental valuation, which makes the future movement of the stock unpredictable. As of November 12th, PLUG is trading at $44.5. Based on research and careful consideration, Plug Power seems to be overvalued. Most growth drivers for PLUG, such as company partnerships and favorable alternative energy headlines, are already priced in. PLUG also saw a miss in both EPS and revenue expectations in Q3 2021, a result that does not bode well for a company trying to surmount negative EBITDA and operating profit. As such, we recommend holding PLUG shares until new catalysts arise that indicate the company will be able to meet promised growth expectations.

Valuation: The price target after comparable analysis with companies such as Bloom Energy Corporation and Ballard Power Systems using a median multiple was selected given the volatility of the markets of the past year was $10.11, a ~ 78% downside from the current stock price. Valuing PLUG with comparable companies is misleading, however, since most comparable companies anticipate less drastic future growth (due to more exposure in legacy energy industries) and most aren’t EBITDA negative. While the valuation based on a comparable analysis unfairly penalizes PLUG, the analysis also reflects the disconnect between investor sentiment and company financials. A more realistic valuation can be interpreted from current analyst targets for the stock, which is currently $44.65.

Innovative Partnerships: New partnerships have been propelling PLUG’s stock upwards movement recently and strategically allowing them to prioritize growth in target industries. Just this year, PLUG signed a contract with Groupe Renault to expand into the European fuel cell-powered vehicle market (aiming for ~30% market share) and announced an investment from SK Group to build out a green hydrogen gigafactory by 2024 in South Korea. Most recently, PLUG also announced a partnership with Airbus to study green hydrogen feasibility in air travel. This series of partnerships in varied industries is expected to create a “flywheel effect” for PLUG, positioning them to become a global powerhouse.

Hydrogen Economy & International Expansion: The growth of the green hydrogen economy is arguably the biggest driver of PLUG’s future success. PLUG has been investing in building a green hydrogen generation network to meet the European Commission’s hydrogen energy mix goals of 13%-14% by 2050. PLUG is benefitting from tailwinds making green hydrogen cheaper. PLUG stands to benefit from increased government interest in hydrogen energy in the U.S., such as the 9.5 billion allocated for hydrogen in the initial bi-partisan infrastructure bill.

PLUG Stock Price Over Last 2 Years

Source: Yahoo Finance The stock is very volatile; just this year there was a 72% decrease in stock price from January to May and a 55% increase between October and November 2021.

Risk Potential - These are the risks that justify our hold recommendation: Slow Adoption Hydrogen Economy: While the company has ambitious plans to grow revenue, the adoption of hydrogen fuel cells in the on-road transportation segment is slower than EV adoption and has left the government with less interest in hydrogen vehicle infrastructure. On-road vehicles are a big part of PLUG’s growth play. This, in addition to the price premium of green hydrogen and setback with Congressional legislation, has led to slower adoption. This will impact demand for PLUG products as well as the costs of producing hydrogen energy.

Execution Risk & Profitability: Even though Plug Power has had more than 20 years of its operations, it has still never been profitable. In 2020, PLUG’s profit margins were negative $469 million. PLUG’s growth strategy to reach profitability by 2024 is incredibly aggressive and fraught with external risk factors. Margin improvement and growth in sales are key to PLUG reaching profitability. PLUG has yet to prove commercial viability in these industries so there is significant execution and regulatory risk. PLUG’s core business also must become less capital intensive to improve margins.

Sources:

Declan Beran| November 2021

Rating: Buy Current Price: $20.65 Price Target: $27.89 Company Updates / News ● ● ● ● ● ● ● ●

Revenue (TTM): $2.66B Market Cap: $8.01B EBITDA: 1.98B P/E: 20.16 EPS: 1.05 52 Week High: $23.24 52 Week Low: $12.35 May 6th 2021: EQT announces transformative $2.9B transaction with Alta Resources.

Competitor Statistics from Q3 2021

Revenue: $3.49B

Investment Thesis:

EQT Corp., (EQT) COVID-Resilient

EQT Corporation is one of the fastest growing emerging leaders in the upstream oil and gas exploration space. As of November 5th EQT Corp is trading at $20.65. I believe that this equity is undervalued and using even the most conservative estimates I see that EQT Corp. stock will grow in the future. After running a comparable analysis with other young and emerging upstream oil and gas companies such as Antero Resources, Cabot Oil and Gas, Range Resources, and Callon Petroleum, I have set a 1-year price target of $27.89. My buy recommendation is based on my belief that while EQT Corp is in the process of paying off lots of debt, they are a financially sound company and are ready to be the leading competitor in the emerging natural gas market.

Overview: EQT Corporation, based in Pittsburgh Pennsylvania, is an American upstream oil and gas company. “Upstream” denotes that EQT focuses on the exploration and pipeline transport of natural gas and other hydrocarbon-based fuels. EQT has operations in Pennsylvania, West Virginia, and Ohio, but concentrates its assets and operations in the Marcellus and Utica Shale. In June 2021, EQT issued nearly $3 billion of debt to acquire Alta Resources wells and other assets in these Shales. Along with the largest acquisition by any company in the oil and gas space this year, EQT continues to expand as in July EQT announced they will purchase Covanta Holding Corp, a waste-toenergy company. EQT was born through M&A transactions, as “Equitable Gas,” a small oil and gas utility company, rebranded to become EQT in 2009 and then acquired Rice Energy in 2017 to create the largest natural gas producer in the United States at the time producing 1.4 Bcfe per day.

Strengths:

Revenue: $2.61B

Revenue: $1.78B

Natural gas would typically be classified as a “fossil fuel” as natural gas is made of methane and other carbon-based compounds; however, it often does not fall under as heavy scrutiny as fossil fuels like oil. While it would be dishonest not to acknowledge the negative environmental effects that natural gas extraction has on the environment, these effects are less destructive than typical fossil fuels. Despite the negative effects that natural gas has on the environment, manufacturers are divesting in coal in favor of powering factories and utilities with natural gas. Natural gas is being viewed as the transition fuel from carbon-based fossil fuels to renewable forms of energy. Renewable energy forms currently face many barriers such as battery storage and connection to the main power grid. While energy companies must allocate additional R&D resources to fixing these problems, natural gas serves as the most reliable and viable source of energy.

Decreased demand for natural gas in 2020 because of the pandemic has led to a decrease in prices initially; however, a cold winter season will increase demand and put natural gas prices back on track according to J.P. Morgan’s Natural Gas Storage Preview. Despite having a mild winter, natural gas prices remained strong and have been steadily increasing. While oil has been relatively volatile because of OPEC nations cutting production and demand increasing as COVID restrictions ease, the Henry Hub price of natural gas has been stable and has increased over 240% in the past year. As global nations end their reliance on coal and switch to natural gas, the price will continue to increase. EQT is currently the largest producer of natural gas in the United States. EQT has recently acquired Chevron’s assets in the Appalachian Valley and is possibly making a deal to acquire rival company CNX Resources. EQT is responsible for the largest M&A activity in this space for 2021 as they have issued. While an additional acquisition would not be ideal for EQT’s leverage, this would continue to increase EQT’s power in the natural gas production market. EQT is currently the anchor shipper on ETRN’s Hammerhead Pipeline. Liquified Natural Gas Exports are expected to increase because of economies returning to normal.

Risk Potential EQT’s 10k for the year 2020 had just under $5 billion of debt outstanding and management openly reports that that number can increase. While less debt would be preferable and the current debt level can detract from the equity’s value, the debt is being used to create steady cash flows as opposed to being the source of EQT’s cash flows. Currently, EQT’s debt has been used in circumstances to acquire smaller oil and gas companies and acquiring competitor’s company assets. Additional concerns raised are about the performance of EQT’s balance sheet as its overall performance is heavily reliant on natural gas prices. While EQT has made progress in increasing production efficiency and decreasing costs, EQT’s profitability is extremely reliant on the price of natural gas. While increases in free cash flow move EQT in a positive direction when mending their balance sheet, EQT’s reliance on the price of natural gas will lead to uncertainty for the company in the future. EQT fully embraces this volatile aspect of their business, and in their 10k from 2020 they directly address this concern. In this statement, EQT elaborates on the reasons they issue debt and reassures investors that their debt covenants are directly tied to natural gas prices.

Sources:

CONSUMER STAPLES

Gerald Yavorsky | October 20, 2021

Rating: Hold Current Price: $180.19 Price Target: $185.53 Company Updates / News • • • • •

Current Market Cap: $36.12 B LTM Revenue: $8.83 B LTM Net Income: $1.43 B Dividend Yield: 2.06% On October 20, T-Mobile and the Reese's brand (owned by Hershey) announced a partnership to transform a NYC brownstone and select T-Mobile stores into a special Apartment 5G to raise awareness of T-Mobile’s growing base of 308 million 5G users, and Reese’s exclusive Take 5G Bar

Competitor Statistics from Q3 2021

The Hershey Company (HSY) A Little Something for Everyone Investment Thesis: The Hershey Company’s IPO on the New York Stock Exchange in 1978 has closely followed the NASDAQ Composite Index, following a growth rate similar to the market. From 2000 to 2020, the stock has had a compound annual growth of 8.10%, while the market index had a compound annual growth rate of 7.99%. Due to Hershey’s name-brand prominence in the consumer staples industry, the stock will continue to be influenced by the market and should be a long-term hold. My hold recommendation reflects a belief that Hershey will continue to perform well due to an increase in snack trends as comfort from the COVID19 pandemic, and from a superior distribution platform that is now moving to incorporate better-for-you snacks.

Valuation:

As of October 20th, Hershey Co. is trading at $180.19. I believe that this equity is at par and expected to increase to $185.53 within this year. I arrived at this conclusion by conducting a Company Comps analysis with a LTM EV/Revenue multiplier of 4.9, which is higher than industry average. I used these assumptions based off industry competitor data and an optimistic view given Hershey’s high potential for future growth and high market share of confectionary consumer staples items.

Revenue: $4.54 B Net Income: $638.20 M

Market Share & COVID-19:

Revenue: $6.64 B Net Income: $1.08 B

Additionally, the COVID-19 pandemic has led to consumers eating more snacks, candies, and chocolates as comfort foods while staying indoors more. The general public’s desire to snack has clearly increased, as more than 47% of consumers eat 3+ snacks daily, which grew 4% from 2015. Furthermore, the international market for chocolate is projected to grow 4.6% annually through 2027 according to Grand View Research.

Revenue: $3.56 B Net Income: $380.00 M

Lily’s Sweets:

The Hershey Company’s large capability to reach a wide variety of consumers through multi-segmented product channels such as Reese’s, KitKat, Ice Breakers, and more. Because of this, Hershey ranks #1 in U.S. Confection Market for chocolates and mints, taking up 44% and 37% of the market share for each segment respectively.

On June 25th, 2021, Hershey acquired Lily’s Sweets, a high-growth, better-foryou confectionary brand for $425 million. Due to the latest health trends of reducing sugar consumption and the medical awareness of an unhealthy diet, Hershey has entered the healthy snack market by incorporating Lily’s lowsugar products such as chocolate bars, peanut butter cups, baking chips, and more. This acquisition will accelerate Hershey’s growth into this new segment.

Gerald Yavorsky | October 20, 2021

Hershey Co. vs NASDAQ Composite Index Annual Stock Growth, YE 2000-2020

Source: Yahoo Finance Risk Potential Commodity Price Increases: The Hershey Company relies on prices set for commodities and raw materials, such as cocoa, dairy products, corn products, nut products, and fuel prices. Some reasons such as political unrest in producing countries, the effects of global warming on production of crops, and changing requirements for importing and exporting raw or finished goods can lead to price increases not being able to offset potential high cost increases.

International Market Share: From 2018 to 2020, the Hershey Company saw their net sales from international customers decline from 16.1% to 13.6%. With international companies such as Nestle, Ferrero, Mars, Meiji, and more competing with international clients, Hershey may continue to have a hard time expanding their global audience from reasons such as higher tax rates, tariffs and trade barriers, or failure to build and grow a talented global collection of employees. Sources:

Rory Sheppard | November 2021

Rating: Hold Current Price: 515.62 Price Target: 506.38 Company Updates / News ● Current Market Cap: $227.1 B ● LTM Revenue: $195,929 M ● LTM Net Income: $5,007 M ● Dividend Yield: $.79 Competitor Statistics from Q3 2021

Investment Thesis:

Costco (COST) Hold in Bulk

Costco Whole Incorporated has long been a staple of the American warehouse retailer. Founded in 1976, Costco has grown to become the 10th highest revenue generator in the Fortune 500 as of 2021. Growth for Costco has been very much a historical trend; this fact has been highlighted especially thoughout the COVID-19 Pandemic My hold recommendation reflects a belief that Costco will continue to perform well, given the rising household savings and the upgrades in internal efficiencies coming out of the COVID-19 Pandemic.

Valuation:

Membership: 105.5 M Revenue: $195,929 M

Membership: 32 M Revenue: $559,151 M

Membership: N/A Revenue: $132,498 M

As of November 5rd, Costco (COST) was trading at $515.62. I believe that this equity is overvalued and expected to decrease to $506.38 within this year. I arrived at this conclusion by conducting a Company Comps analysis with a LTM EV/Revenue multiplier of 1.0, which is higher than industry average. I used these assumptions based off industry comparable company data and an cautiously optimistic perspective given Costco’s recent rise in share price in spite of uncertain economic conditions. While Costco might be slightly overvalued per my research, I think the potential for growth is still highly possible.

Supply Chain Adaptability: Amid the enduring supply chain issues currently impacting the United States’ economy, Costco has pivoted to its own strategy of getting goods to customers. Costco has prepared well for this upcoming holiday season; an action that speaks volumes about its ability to be a first-mover in the future. Additionally, the warehouse retailer has enlisted three of its own shipping vessels to work around the mainline transporters who are currently facing blockages.

E-commerce Sales: According to Supermarket News, “E-commerce sales again grew by double digits in October” for Costco. This is a positive sign, as October’s growth exceeded Septembers by 5.9%. This has coaligned with an increased shopping cart size as compared to traditional in-person shopping. While online shopping for Costco is down year over year by more than 80%, given the irregularities caused by COVID-19, “membership renewal rates were 91%” between second quarter 2021 and second quarter 2020, according to Winsight Grocery Business.

Trailing Enterprise Value to LTM Total Revenue and Price to Earnings Ratio Year-OverYear

Source: Capital IQ Risk Potential Beef and Other Meat Shortages: Of Costco’s merchandise sectors, meat and deli “were the strongest performing” in 2020 for fresh foods. This news comes in light of the supply chain issues mentioned earlier; while Costco has done well to adapt in its toy and related goods sector, it is unclear how fresh foods will be impacted.

Online Shopping: Fortunately for Costco, the shift to E-commerce has been relatively smooth. That said, with consumers trending to purchase goods online, one must be concerned about the value that can be added by investing in industrial space this past year, as Costco has done. For these investments to return value it will be critical that Costco continues to adapt to a channel of retail it has not traditionally found itself in.

Insider Selling: In the past year there has been non-existent internal buying of stock from Costco insiders. In fact, according to Nasdaq.com, insiders “sold US$18m worth of stock.” This might set off some alarm bells as this sell-off could indicate a lack of confidence in growth. However, it is unusual because since the sell-off Costco’s stock has risen quite consistently. Sources:

Joseph Rubinstein | 11/5/21

Rating: Hold Current Price: $45.20 Price Target: $50.46 Company Updates / News • • • • •

Current Market Cap: $83.11B LTM Revenue: $21.08B Net Income: Dividend Yield: 7.96% EPS (TTM): $1.49

• IQOS, Altria’s proprietary heated tobacco product, was banned from being sold in US markets on September 21, 2021 Competitor Statistics from Q3 2021

Altria (MO) Growth Beyond Cigarettes Investment Thesis: Since Altria’s listing in the New York Stock Exchange on January 12, 1972, the stock has grown more than 4,300%. Since then, Altria (formerly Phillip Morris) has grown to become one of the largest tobacco companies in the world. My hold recommendation reflects a belief that Altria will continue to deliver strong, steady sales growth with a very solid dividend yield in the 6.5-8.5% range.

Valuation: As of November 4th, Altria (MO) is trading at $45.20. I believe that this equity is slightly undervalued and expected to increase to $50.46 within this year. I arrived at this conclusion by conducting a Comps analysis, incorporating other big tobacco companies, such as Phillip Morris International, British American Tobacco. Vector and Reynolds American. I compared the financial ratios of these companies and decided to use a median multiple to calculate implied equity value. My fundamental research as well as the implied equity value has led me to the current price target.

Strong Subsidiary Brands:

Revenue: $26.15B Dividend Yield: 8.0%

Altria has a 100% stake in Phillip Morris USA, their largest subsidiary and primary source of revenue (98%). Philip Morris produces Marlboro, the most consumed cigarette brand in the United States. Altria is also a leader in the cigar industry under subsidiary Black & Mild. Altria’s acquisition activity has helped the company move past its traditional tobacco products into the smokeless tobacco, e-cigs, and nicotine patch market. Altria now holds a majority stake in Copenhagen and Skoal, 2 leading smokeless tobacco companies, and has a minority stake in Juul.

Revenue: $34.8B Dividend Yield: 8.55%

Revenue: $28.7B Dividend Yield: 5.5%

Strong Dividend & Predictable Earnings: Historically, Altria has proven that it has been able to grow its earnings while maintaining a solid 6% dividend yield on average over the last 20 years, with the last 5 years being above this range. Macroeconomic factors, such as an increase in smoking due to the pandemic and increased usage of smokeless products, point towards continued steady growth. The pandemic did not have and serious consequences on business operations which has helped Altria grow and maintain its earnings as well as grow its business segments at an average rate of 5%, with the majority of revenue growth coming from the company’s smokable products segment.

Altria vs. Philip Morris Int. & British American Tobacco 30.00% 20.00% 10.00% 0.00% -10.00% -20.00% -30.00% -40.00% -50.00% -60.00%

Altria Group, Inc. (NYSE:MO) - Share Pricing British American Tobacco p.l.c. (LSE:BATS) - Share Pricing

Philip Morris International Inc. (NYSE:PM) - Share Pricing

Source: CapitalIQ Risk Potential Legislation: On September 21, 2021, Altria’s major entry into the heatable tobacco products, IQOS, was banned from selling its product in the United States, its biggest market. While the product did not make up a significant amount of the company’s revenue –less than .5%-- the IQOS was supposed to help Altria compete with e-cigarette companies. The loss of its biggest market is a setback for growth in emerging markets for Altria.

Covid-19: As a result of Coronavirus, Altria has had some disruptions in its distributions division, which tends to make up a large portion of capital expenditures. This has delayed shipments and increased Altria’s delivery costs, but pandemic pressures have slowed down and are expected to be a non-factor after the next 2 quarters.

Single Segment Focus: Tobacco products continue to be increasingly linked to life ending diseases, which has significantly affected Altria’s value over the last 30 years. Altria has tried to counter this trend by moving into smokeless products, but cigarettes remain as the company’s primary revenue stream. To maintain strong long term growth prospects, Altria has to do a better job in diversifying its revenue streams.

Sources:

INFORMATION TECHNOLOGY

Grant Travis| November 2021

Rating: Hold Current Price: $57.07 Price Target: $65.08 Company Updates / News ● ● ● ● ● ● ● ●

Revenue (TTM): $49.82B Market Cap: $240.70B EBITDA: 15.5B P/E: 22.83 EPS: 2.5 52 Week High: $60.27 52 Week Low: $37.08 October 5th 2021: CSCO ordered to pay $1.9 billion after losing a patent infringement case

Competitor Statistics from Q3 2021

Revenue: $12.8B

Cisco Systems, Inc. (CSCO) Advanced Connectivity, COVID-Resilient Investment Thesis: Cisco designs and sells a broad range of technologies across networking, security, collaboration, applications, and the cloud. It has grown to dominate the communications equipment industry in terms of market cap and revenue. The Americas account for 59% of their total revenue, but they are growing in international markets as well. My hold recommendation reflects a belief that they are well positioned in the industry as they continue to make strategic acquisitions, capitalize on 5G opportunities, and grow in the cloud industry.

Valuation: As of November 5th, Cisco Systems (CSCO) is trading at $57.07. I believe that this equity is slightly undervalued and expected to increase to $65.08 within one year. I arrived at this conclusion by conducting a COMPS analysis with comparable companies including Arista Networks, Nokia Corporation, and Motorola Solutions. I used this analysis in conjunction with an optimistic view about the sector to value CSCO.

Strategic Acquisitions: Cisco continues to address the need to innovate through inherently-risky hightechnology acquisitions. Applications and Security segments are expected to be the drivers of growth for Cisco. They acquired Duo, a leader in cloudbased unified access security and multi-factor authentication, which boosts CSCO’S security segment. Cisco also integrated Voicea into their Webex portfolio of products to offer a transcription service that combines AI and Automated Speech Recognition (ASR) features. These acquisitions will help Cisco roll out the strongest product portfolio. This also reflects a transitioning business model towards innovative software, which has the potential to generate more recurring and stable revenue.

5G and the Cloud:

Revenue: $ 748.7M

Revenue: $6.31B

Service providers will need new levels of scale and automation from the increase in traffic due to more connected devices. The rollout of 5G also means a bigger attack surface and all-new security needs. Cisco will help service providers roll out 5G because of the increase in demand for underlying infrastructure and security that can support the increasing amount of traffic across networks. The global cloud computing market size is expected to grow from USD 445.3 billion in 2021 to USD 947.3 billion by 2026. Cisco is capitalizing on the growing market because of the company’s position as a leading provider of cloud and system management products. Cisco offers a variety of cloud-focused platforms combining networking, security, analytics, and management capabilities. They also have partnerships with major cloud service providers like Amazon, Microsoft, and Google.

Revenue of Cisco by product category from 2013 to 2021:

Source: Statista Risk Potential Uncertain Geopolitical Environment: The COVID-19 pandemic and the resulting containment measures have caused economic and financial disruptions globally. Shelter-in-place orders and other measures, including work-from-home and policies implemented to protect workers, has and could in the future impact Cisco’s supply chain. However, their revenue streams are balanced in terms of geographic segments and customer markets. They are especially well-poised with regards to their growing operations in India and China.

Potential Disruptions in Distribution Channel: A substantial portion of Cisco’s products and services are sold through its channel partners, and the remainder is sold through direct sales. Its channel partners include systems integrators, service providers, other resellers, and distributors. Cisco’s direct sales and an increasing focus on software can cushion any adverse effects.

Highly Competitive Environment: Cisco competes in highly competitive markets characterized by rapid change, converging technologies, and a migration to networking and communications solutions. They compete with numerous vendors in each product category. Each competitor may specialize in one product segment to offer niche and relative advantages. However, Cisco has a scale-advantage as they dominate new entrants in the market with regards to infrastructure and larger competitors with their track record of releasing ground-breaking products.

Sources:

Cisco Investor Relations | Investorplace.com| Yahoo Finance | NASDAQ.com |Capital IQ

Cindy Li | 11/12/2021

Rating: Buy Current Price: 74.21 USD Price Target: 88.34 USD Company Updates / News ● The 8th largest company in the Internet and Direct Marketing Retail industry listed in the US stock market, ranked by market capitalization ($49,384.7 million) ● In September 2021, eBay strategically partnered with and invest in Bidadoo, Inc., an online remarketing and auction company to transform the heavy equipment industry. Competitor Statistics from Q3 2021

Company Overview:

eBay (EBAY)

eBay Inc. owns and operates the world’s leading internet auction platform with a particular focus on unique and second-hand items. The firm operates market place linking buyers and sellers globally. The company was founded in 1995 and is headquartered in San Jose, California. eBay’s e-commerce model includes C2C (consumer-to-consumer) and C2B (consumer-to-business). Specifically, eBay belongs to the sub-industry of internet and direct marketing retail.

Investment Thesis: The buy rating is based on attractive valuation under the accelerating shift to e-commerce because of Covid-19 and eBay’s restructuring move. eBay holds a strong position in a unique and secondhand good market, leading it to sit in a special position with no matching comparable companies. Its iconic brand value also serves as a foundation for a potentially greater, longer duration to future growth. eBay reported better than expected third-quarter 2021 results. The firm’s revenue of $2.5 billion went up 10% on an FX-Neutral basis; gross merchandise volume of $19.5 billion went down 10% on an as-reported basis and down 12% on an FX-Neutral basis. On the other hand, the company also returns $2.4 billion to shareholders in Q3, including $2.3 billion of share repurchases and $116 million paid in cash dividends. Its stable revenue growth and market position throughout the years indicate that eBay is a company to consider in investing.

Etsy Market Cap: $34.5 M Revenue: $532.4 M

Valuation:

Amazon Market Cap: $1.80 T Revenue: $110.8 B

Uniqueness in the Business Model:

As of November 15th, eBay (EBAY) is trading at $74.21. I believe that this equity is undervalued and expected to increase to $88.34 within this year. I arrived at this conclusion by conducting a DCF analysis with a 4% growth, 10% operating margin, and a WACC of 5.28% across 5 years. I used these assumptions based on historical data and an optimistic view given eBay’s performance history. 5G is designed to be more reliable, have ultra-low latency, higher performance, and improved efficiency. It offers improved mobile broadband, more critical communication, and connected internet of things. Most people have been recently introduced to the concept of 5G through Apple’s recent unveiling of the iPhone 12, the first iPhone to offer 5G. T-Mobile currently is the top 5G network that covers 250 million people, more than AT&T and Verizon combined. Within the next 6 years, T-Mobile expects to increase its capacity 14x to cover 99% of Americans with 5G.

eBay’s Historical Share Price:

Source: CapitalIQ Risk Potential COVID-19: Macroeconomic uncertainty with lingering risk of new Covid variants remains the most significant downside risk, though partially offset by the surge of the e-commerce growth surge due to Covid-19. As the world eventually returns normal to the post-pendemic era, eBay needs to adjust accordingly to meet consumers’ changing demand.

Capital Structure: eBay faces flat growth, even though it targets a growing number of niche-focused contenders. It also faces fierce competition from huge e-commerce platforms such as Amazon. eBay’s balance sheet is highly levered, as it total debt takes 74.5% while total common equity takes only 25.5%, leaving it little room for error.

Sources:

Siddhant| 11/09/21

Rating: Hold Current Price: $50.39 Price Target: $59.5 Company Updates / News ● Regional Supply Chain Constraints ● Intel’s New Production Plants ● New CEO Competitor Statistics

Intel (INTC) Advanced Connectivity, COVID-Resilient Investment Thesis: My hold recommendation reflects a belief that whilst Intel may grow slowly in the short term, its restructuring plans will eventually help increase revenue growth and increase gross margins. Intel, the largest semiconductor manufacturer by revenue, has slowly lost out to its main competitors TSMC and AMD, both of which who have captured a large chunk of the semiconductor market cap. Intel aims to recapture its presence by reinvesting in its new CEO Patrick P Gelsinger. Gelsinger plans to expand Intel’s production and manufacturing capabilities to match its competitors.

from Q3 2021

Valuation: Valuation based on COMPS

Market Cap: 205.93B Revenue: $77.87B

As of November 3rd, Intel (INTC) is trading at $50.39. I believe that this equity is fairly valued and may be expected to increase to $59.50. I utilized a comparative analysis by using 5 companies within the semiconductor industry. Whilst the overall market contains companies such as AMD and NVDIA, which grew 1885% and 1474% respectively, this is not an accurate indicator of Intel’s future performance. Unlike other semiconductor companies Intel’s share price has only grown 49.93% in the last 5 years.

New Ceo: Business capabilities expansion With Gelsinger as the new CEO of Intel, the company plans to invest $20 billion on two new factories in Arizona. These factories are aimed to combat the current global chip shortage and supply chain issues in the United States. These investments aim to increase inventory, efficiency, and profit margins. Market Cap: 157.63 B Revenue: $4.31B

IOT and AI: New products and markets

Subscribers: 664.95 B Revenue: $10.92 B

Intel has also invested heavily in research and development. Its 15 year partnership with Amazon’s Web Services and “MobileEye,” it’s autonomous vehicles segment, are both promising revenue sources in the long term. Mobileye, its automotive chip subsidiary, grew 39% to $326 million.

The Internet of Things segment of Intel, has untapped growth potential. At a 33% growth rate, it is Intel’s fastest growing segment, yet it has only generated 5% of its sales. This is an excellent growth opportunity that Intel can tap into and has proven to continue to expand. Its Internet of Things group increased 54% to $1 billion in the 3rd quarter of 2021. If Intel focuses on expanding its fast growing segments and markets it can diversify its core business portfolio instead of competing in the crowded chip market.

Intel Versus Competitors (4 Year Revenue Growth)

Source: Yahoo Finance

Risk Potential Diversification: Intel derives majority of its revenue from core operations such as Client Computing Services and its Data Center Group. These segments make up 63 and 30 percent of operating income respectively. Intel’s core operations performances have been 8 percent lower as of 2021. This drop can be attributed to an overconcentration in the Chinese market. China’s tech crackdown on its technological monopolies also led to weaker markets and supply chain constraints, which directly impacted Intel. Whilst true, as the Chinese market bounces back from regulatory fear, Intel can expect a larger geographic opportunity in that region.

Partnerships: On June 2020, Apple announced that they would be ending their partnership with Intel and producing their own microchips. Although this shift hit Intel severely, its new CEO vouches to produce the 7nanometer, a new and better quality chip that is expected to perform better than Apple’s.

Investments: Intel is relying heavily on its investments in it’s factories and labs and R&D. Even though this is true, there is a real risk in not attaining the necessary return on investments. Intel’s last quarter, showcased its net income mainly from stock investments. Overall, Intel may need to capitalize on its growing segments and its long term vision of differentiation itself from other chip production companies. This may be the catalyst to its recovery.

Sources:

Subharghya Das| November 2021

Rating: Sell Current Price: $286.37 Price Target: $242.00 Company Updates / News ● ● ● ● ● ● ● ●

Revenue (TTM): $4.6B Market Cap: $74.5B EBITDA: 189.90M P/E: NM EPS: 0.16 52 Week High: $291.28 52 Week Low: $207.10 October 20th, 2021: Pete Schlampp appointed Chief Strategy Officer ● October 19th, 2021: Workday announces a more immersive digital experience for employees with Workday Everywhere Competitor Statistics from Q3 2021

Workday, Inc. (WDAY) Advanced Connectivity, COVID-Resilient Investment Thesis:

Workday is one of the largest pure cloud-based application providers that focus on Human Capital Management (HCM) and financial applications for large enterprises. While Workday’s innovative in-memory cloud architecture is impressive, my current view of the business is primarily negative. My sell recommendation reflects this belief given that despite $4.3B in FY21 revenue, the company just generated its first GAAP EPS profit in its 15-years in FY Q2 21. Further, the majority of this revenue comes from investment gain as opposed to operations. However, there are some signs of improvement with the company announcing a more digital experience for employees with the launch of Workday Everywhere and appointing Pete Schlampp as Chief Strategy Officer.

Valuation:

As of November 5th, Workday Inc. (WDAY) is trading at $289.92. I believe that this equity is highly overvalued and expected to decrease to $242.00 within one year. I arrived at this conclusion by conducting a COMPS analysis with 5 comparable companies in the Human Capital Management industry. My assessment reflects Workday’s cone of possibilities outcome given that in comparison to its SaaS peers, the company has a rapidly decelerating revenue growth and tremendous upside potential as a critical IT provider to multiple large enterprises in combination with their exceptionally high GAAP net losses. Further, Workday’s weak balance sheet with the economy heading towards a likely downturn increases the odds and magnitude of the downside.

Workday Everywhere: Revenue: $4.7B

Revenue: $34.1B

Workday Everywhere are packaged connectors that bring Workday tasks and insights directly into digital workspaces and help organizations optimize their employee experience. Employees can quickly access Workday while in their natural flow of work without having to switch between platforms and can use the platform to deliver a streamlined and connected experience that boosts employee engagement and productivity. The transition is part of Workday’s advancement for Microsoft Teams and Slack, creating a more intuitive experience for the customer base of more than 55 million workers.

New CSO: Accelerating Company’s Path to $10B in Revenue Revenue: $1.1B

As part of Workday’s continued investment in strategy and innovation leadership, Pete Schlampp has been appointed chief strategy officer. With over 5 years at Workday and 20 years across strategy, product development, technology innovation, and marketing, he will help execute its strategic vision and growth strategy on its path to $10B in revenue.

Subharghya Das| November 2021

Price Performance (2017-2021)

Source: S&P Global Market Intelligence Risk Potential Upside Risk of Acquisition: One of the main upside risks for Workday is an acquisition by one of the larger IT suppliers. Workday’s cloud apps are expected to be exponentially more lucrative if owned and operated by larger-scale cloud-based providers with more apps to cross-sell to customers.

If Workday Financial Management goes bust: Workday Financial Management is the company’s break into a larger, even more, competitive market. The total addressable market for financials is estimated at $27B. The company has shown early success in these markets, but it will need to continue to win customers and take market share for the stock to succeed.

If founders Duffield and Bhusri leave: Workday was founded by David Duffield and Aneel Bhusri post

the hostile takeover of PeopleSoft by Oracle. Given tensions are still high between the founders and Oracle, the company’s future capital is foreseeably unstable – especially with Duffield quickly approaching 80 years of age and Bhusri having generated alternative revenue streams as a partner at Greylock Partners (early investors in Facebook, Dropbox, and Airbnb). Sources: NASDAQ.com | Yahoo Finance | CFRA | Financial Times | Bloomberg | SEC.gov | Capital IQ

HEALTHCARE

Raquel Kanner | November 2021

Rating: Buy Current Price: 93.56 Price Target: 99.76 Company Updates / News ● Shares of CVS increased by over 5% after beating Q3 expectations, adjusting earnings of $1.97 per share on revenue of $73.79 billion ● CVS Health acquired Aetna, in 2018, for $78 billion after attempts for Aetna, Cigna, Humana, and Anthem to merge and compete with United Health Competitor Statistics from Q3 2021

CVS Health Corporation (CVS)

Social Impact, COVID-Resilient, Advanced Connectivity

Investment Thesis: Since CVS Health’s listing in the New York Stock Exchange in 1996, the stock has been in increasingly high demand. Since then, CVS Health has become a well-known household name and one of the leaders in the healthcare industry, providing service both online and within its nearly 10,000 storefront locations. My buy recommendation reflects a belief that CVS Health will continue to perform well, given the rising need for access to healthcare and the availability to end the pandemic amid COVID-19.

Valuation:

As of November 12th, CVS Health (CVS) is trading at $93.56. I believe that this equity is undervalued and expected to increase to $99.76 within this year. I arrived at this conclusion by conducting a Comparative Companies’ Analysis. By comparing the values of CVS Health with its top competitors. In the end, by conducting an EV / EBITDA ratio, it is expected that CVS Health’s price is going to increase, rising to a price of $99.76. Looking at the earnings for valuation and CVS’ positive market performance, CVS’ commitment towards expansion, vaccination boosters, and efforts to end the pandemic is driving their growth and ultimately their share price.

COVID-19 and Booster Vaccines: Revenue: $284B

While COVID-19 has certainly hit the economy at its onset, it is worth noting that the market is now returning to normal. In industries such as healthcare, however, the demand for medication, medical counseling, and industry-related necessities have promoted market growth. Due to the COVID-19 booster development, CVS has offered vaccinations to every qualifying individual for free. As a result, the market has reacted in favor of CVS, resulting in the increasing value of the company.

Scaling: Revenue: $132.5B

Revenue: $297.3B

Due to CVS’ reputation as a leading corporation in the healthcare industry, it is clear that CVS has always been a well-known name in homes. Particularly, with the rise and spread of COVID-19, CVS took action by opening more locations across the country and boosting efficiency of their headquarters in Woonsocket, Rhode Island. Increased exposure to CVS resulted in increased access to facilities and increased revenue. More recently, due to rising access to receive a COVID booster, CVS has served as a dominating corporation in healthcare to distribute and track progress of their customers across the country receiving these transforming dosages. Thus, the market has reacted in favor of CVS, supporting the company’s initiative to provide a more accessible approach to ending the pandemic and reducing COVID-19 exposure.

Raquel Kanner | November 2021

Graphical Comparison of CVS Health Corporation to Its Competitors

Source: StockCharts.com Government Regulation: The healthcare industry is a necessity in our society. Companies, such as CVS, will always be present around the country, as individuals need medications, consumer staples, and a reputable service to continue throughout generations. Although CVS’ position might look positive, the risk of “Big Pharma” can drive the market, resulting in an accumulation of wealth that risks other industries in the economy.

Risk Against Vaccination for Minors: Just recently, the FDA has approved the distribution of COVID-19 vaccines in minors, stating that the benefits outweigh any noticeable key risks. While many support the decision of the FDA, including CVS Health, a subset of individuals are still hesitant about minors receiving a dosage of the COVID-19 vaccine, especially if those minors are their children. Since CVS is offering vaccinations for minors, the controversies and debate over administering the vaccine in minors might hurt the company, leading to a negative impact on CVS’ market performance.

Sources:

Radhe Melwani | 11/05

Rating: Sell Current Price: $456.07 Price Target: $346.91 Company Updates / News ● EPS: 20.68 ● P/E Ratio: 21.96x ● Revenue: $22.8B

UnitedHealth Group (UNH) Healing Stock Prices Together Investment Thesis: Since UnitedHealth Group’s listing in the New York Stock Exchange on October 19, 1984, the stock has grown more than 3,255%. Since then, UnitedHealth Group has grown to be the world's eighth largest company by revenue, the second largest healthcare company, and, if measured by net premiums, the largest insurance company. As of March 31, 3031, the UnitedHealth Group had a market capitalization of $400.7 billion. My sell recommendation reflects a belief that UnitedHealth Group's performance has a high potential to decrease, likely due to risk's including its decreasing market share, predictions based on Q2 2020, and its reputation risk.

Valuation: Competitor Statistics from Q3 2021

As of November 5th, UnitedHealth Group (UNH) is trading at $456.02. I believe that this equity is overvalued and expected to decrease to $346.91 within this year. I arrived at this conclusion by conducting a comparable company analysis using UnitedHealth Group and its competitor's forward P/E values, UnitedHealth Group's predicted earnings for 2021, and UnitedHealth Group's total shares outstanding.

Optum: Stock Price: $93.72 Revenue: $268.7 B

Optum is UnitedHealth Group's health care provider and pharmacy benefit management. It was formed by merging UnitedHealth Group's pharmacy and care delivering services into a single brand. Optum has three main pillars: OptumHealth, OptumInsight, and OptumRX. As of 2020, Optum has cared for over 10 million people. Optum includes Medicare Advantage plans which reduces costs and increases benefits for consumers.

Stock Price: $421.82 Revenue: $121.9 B

Optum's growth is predicted to increase between 13% and 14% and is expected to comprise 50.5% of UNH's total earnings. It will also be integral to expanding UNH's Medicare Advantage business.

CMS Star Scores:

Stock Price: 214.20 Revenue: $160.4B

CMS Star growths are based on HEIDS/Clinical Outcomes, Health Outcome Survey, Consumer Assessment of Healthcare Provers and Systems, and Administrative Measures. Having a high CMS Star Score provides a business advantage as companies are entitled to higher premiums paid by CMS for its members. As of 2020, 96% of UnitedHealth Group's Medical Advantage members joined a contract rated 4.5 stars or higher. Additionally, multiple contracts, some with a quarter-million enrollees, attained the five-star rating.

Radhe Melwani | 11/05

UnitedHealth Group's Historical Net Income

Source: Statista Risk Potential Market Share: After the Affordable Care Act increased access to health insurance, the demand for employersponsored coverage greatly decreased. This means that having access to networks to doctors and providers has become significantly more important. UnitedHealth Group terminated doctors within multiple states, affecting over 10,000 patients. By reducing their network, the company is losing market share in the United States.

Q2 2020: The Q2 2020 comp was generally profitable for health insurance companies due to the extreme deferral of hospital visits and the procedures pronounced to the public, resulting in low medical loss ratios. The United Health Group, however, had a low $7.12 per share in earning on Q/Q revenue growth of around 2.5%. This could potentially translate to a discouraging prediction of earnings in 2021.

Reputation: In 2019, Optum was accused of racial bias when a study by Science, stated that the "algorithm used to manage the healthcare of millions of Americans shows dramatic biases against black patients". The study then discussed how allegedly Optum underestimates the amount of care black patients need in comparison to white patients and that less money is spent on black patients in comparison to white patients. This study garnered traction for criticism against Optum and other health providers. Sources:

Anthem, Inc. (ANTM) Expecting More

Emma Braff| November 2021

Rating: Buy Current Price: $428.76 Price Target: $480.63 Company Updates / News • • • •

EPS (TTM): 22.23 PE Ratio (TTM): 19.29 Market Cap: 104.066B Revenue: $35.8B

Competitor Statistics from Q3 2021

Investment Thesis:

Healthcare provider Anthem, Inc., (formerly WellPoint, Inc.) ranked 23rd on the Fortune 500, delivers a broad range of healthcare plans and products. My buy recommendation is due to Anthem’s innovative business model, strategic acquisitions, membership coverage growth, and positive Q3 financials. It reflects a prediction that Anthem’s membership will continue to grow and that the company will continue to innovate to boost profits.

Valuation: As of November 2nd, Anthem (ANTM) is trading at $428.76. I believe that this equity is undervalued and expected to increase to $480.63 within this year. I arrived at this conclusion by conducting a DCF and comparative analysis with 1.8% projected EBITDA and revenue growth. I used these assumptions based off of historical data and an optimistic, but relatively conservative, view given Anthem’s performance history.

Acquisitions:

Revenue: $41.0B

Revenue: $20.8 B

Anthem has historically been a dynamic company, improving and optimizing its model in order to keep up with industry changes. For instance, it continues to grow and optimize its Medicaid Medicare coverage, acquiring additional health plans from other companies including WellCare health (January 2020), Beacon Health, and AmeriBen. These acquisitions support Anthem’s diverse business model, which makes it more sustainable and conducive to growth. Furthermore, Anthem acquired myNEXUS in April of 2021, which speaks to improvements within their home-based health services in addition to their efforts to properly automate and utilize data in their healthcare offerings. This purchase sets Anthem apart from other healthcare companies that are struggling to move their businesses forward in an age of digitization and automation. Automation thus seems to be less of a risk for the firm.

Third Quarter Report:

Revenue: $6.8B

According to the Q3 earnings report, Anthem’s revenue of $35.8 billion is up 15% from 3Q 2020. This resulted in a high profit margin of 4.2%. Additionally, the company’s net income increased by $1.29 billion from 3Q 2020 to $1.51 billion. Overall, Anthem reflects a stable stock given that its Blue Cross Blue Shield licensure brand is a competitive option utilized by many large corporations when providing employee coverage. The company’s medical enrollment increased by 2.4 million members year over year and 730,000 members in 3Q to 45.1 million members. They are also continuing to supply dividends, giving $1.13 to shareholders in 2021.

Anthem, Inc. Historical Net Income

Source: Wall Street Journal Risk Potential Regulation: Changes within healthcare legislation present substantial risks to Anthem, as many of their products and services are dependent on regulative realties within the healthcare sector. Along those lines, increases in medical costs can also prove threatening to Anthem’s products and customers.

Covid-19: Deferred medical care as a result of the pandemic, in addition to new variants of the COVID-19 virus, have the potential to contribute to potential increasing medical costs.

EPS Concerns: Anthem’s stock price is tracking ahead of earnings growth, given that EPS has risen by an average of 9% for the past 3 years, while the share price has increased by an average of 18% per year. However, since my analysis leads me to expect more net income growth in the coming years, more growth should be expected.

Sources:

David Oron | November 5th, 2021

Rating: Buy Current Price: 638.77 Price Target: 648.52 Company Updates / News ● FDA to Consider Regeneron's Covid-19 Antibody for Full Approval ● Second Dupixent(R) (dupilumab) Phase 3 eosinophilic esophagitis trial to demonstrate significant disease improvements Competitor Statistics from LTM

[COMPANY LOGO FIRST]

Revenue: $55.169 B EBITDA: $27.280 B

Revenue: $25.484 B EBITDA: $12.421 B

Revenue: $27.482 B EBITDA: $15.3 B

Regeneron Pharmaceuticals

Immense Value in the Pharmaceutical Space

Investment Thesis: Since Regeneron’s IPO in April 1991, coupled with its several decade history, the Biopharmaceutical company has shown to be a leader in the healthcare space. My buy recommendation reflects a belief that Regeneron will continue to perform well, given the importance of an innovative and effective pharmaceutical industry highlighted by the COVID-19 Pandemic.

Valuation: Comps Analysis was conducted for Regeneron’s stock price against 5

main competitors: AbbVie, Amgen, Gilead Sciences, Biogen, and Bristol MyersSquibb. A median multiple was selected given the volatility of the markets of the past year, and the implied share price of 648.52 sells at a 1.5% premium. This reinforces our rating to buy Regeneron.

Dupixent: Dupixent, or Dupilumab, is Regeneron’s most innovative technology yet. Essentially, it is a recombinant human IgG4 antibody to the IL-4 receptor that blocks the immune response in several organs and can treat illnesses and conditions such as asthma and atopic dermatitis. In recent years, immunotherapy to treat diseases have garnered a lot of interest, and Regeneron has been and will continue to drive development in this life-saving space.

Increased R&D Expenses: Regeneron has continued to increase their Research & Development budget from roughly $2.6 Billion to $2.8 Billion in 2020, a nearly 8% increase. Management intends to increase their R&D budgets indefinitely. With several promising projects in the pipeline, such as CEMIPLIMAB, a PD-1 antibody for immunoncology therapies or FASINUMAB for osteoarthritis pain, the company’s future is bright.

Stock Growth Over Past 5 years

Source: Yahoo Finance Risk Potential Competition: The biotechnology and pharmaceutical industries are very crowded spaces. Long development timelines and increasing regulatory barriers require larger investments and longer payback periods. This can result in project failure if a close competitor has the advantage. However, the pharmaceutical industry will exist forever, so there is always room for Regeneron to grow.

Talent Acquisition: One of the key components to a successful pharmaceutical company is attracting talented professionals to develop pipelines and lead innovative research. With hundreds of pharmaceutical companies, it is difficult to stand out. Regeneron must continue to differentiate itself from its competitors by emphasizing their entrepreneurial culture. In doing so, they will be able to attract and retain the best and brightest professionals in the space.

Sources:

TELECOMMUNICATIONS

Sarah Boyle | November 5, 2021

Charter Communications Inc. (CHTR)

Rating: BUY Old Dog is Learning New Tricks to Compete Current Price: $689.68 Investment Thesis: Price Target: $875.95 Founded in 1993, Charter Communications is one of the largest telecommunications Company Updates  Market Capitalization: $123.6 B  Total Revenue Growth from Q3 2020 to Q3 2021: 9.2%  Adjusted EBITDA from Q3 2020 to Q3 2021: 13.9%  LTM EV/Revenue: 6.5x  CFO Chris Winfrey was promoted to Charter’s COO in October 2021  Spectrum introduced the lowest phone plan in the telecom industry ($29.99/month per unlimited line) in October 2021 Competitor Statistics

and mass media companies. Charter operates multiple subsidiaries rooted in wireless and broadband services. Its most notable being Spectrum Mobile: an entity that provides cable television and internet broadband coverage across the U.S.

My buy recommendation reflects a belief that Charter Communications’ commitment to wireless product innovations and to strategic management changes resulted in strong 2021 Q3 financials that will boost the stock’s value in the long-term.

Valuation: At the time of this report Charter Communications (CHTR) is trading at $689.68. I believe that this equity is undervalued and will increase to $875.95 within the next year. I arrived at this conclusion by conducting a comparable company’s analysis with Comcast Corp, Liberty Global, DISH Network Corpor, Verizon Communications Inc., and Netflix, Inc. Based on this comparison, Charter’s EV/Revenue placed its implied per share value between the industry’s 50th and 75th percentiles.

Product Innovation:

from Q3 2021

There are two trends in the telecommunications industry that are driving innovation that Charter has been able to capitalize on: 5G, the market’s transition to streaming bundles from cable. 5G is the 5th generation mobile network that is designed to be more reliable, have ultra-low latency, higher performance, and improved efficiency. Streaming services, such as Netflix, have grown in popularity over the past decade and more consumers are “cutting the cord” by cancelling cable services.

Customers: 26.0 M Revenue: $48.1 B

Charter’s Q3 report showed that they are capturing value in 5G and streaming bundles in its various product mixes. Marketing of Charter’s services are showcasing its improved broadband network coverage over the past year. Also, Spectrum’s Original is a streaming platform is growing a customer network and new TV packages are including other streaming services.

Management Changes: Subscribers: 19.0 M Revenue: $103.6 B

Subscribers: 214 M Revenue: $7.5 B

In October 2021, Charter Communications has committed to its innovation by transforming its head leadership. The Chief Operating Officer retired earlier than anticipated and now the former Chief Financial Officer, Chris Winfrey, has taken that role. Winfrey has been described as a forward thinker that has always looked beyond financials to drive the company’s growth. Looking into the future, Charter Communications has outlined that it is implementing a new strategy into its operations. Management is focusing on harassing its unique assets of a superior broadband network infrastructure to execute consumer-focused decisions. This new strategy was unveiled at the Q3 investor meeting which signals a new era for the company that can equate to unprecedented growth.

Historical Stock Price Over the Past 5 Years Showcases Charter Continues to Grow

Source: Yahoo Finance Risk Potential Competition’s Acquisitions: In early October, Comcast closed a deal to acquire Masergy: a cloud computing and software company. Masergy’s human capital and technological infrastructure will likely be the driver of Comcast’s push into the digital streaming market. This acquisition can give Comcast a larger competitive advantage in the traditional telecommunications market; however, Charter’s subsidiary Spectrum is likely working on a similar infrastructure that will drive the company’s digital transformation.

Consumer Trends: It is no secret that the end consumers of television’s desires have shifted since Charter Communications’ founding in 1993. People are not seeing the value in cable television and landline packages which is one of Charter’s largest revenue streams. As Netflix, HBO, and other content-driven digital companies crowd the telecommunications ecosystem, it can be difficult for a traditional company to compete effectively even with product innovation and management changes.

Slowing KPI Growth Rates: In this year’s Q3 Report, subscriber rates in all four of Charter’s customer segments (Internet, Video, Voice, and Mobile Lines) decreased since 2020 Q3. This has been a trend in the industry over the past year as Comcast and Verizon reported similar decreases. With the adaption of 5G networks, new product mixes, and dynamic strategies being implemented in the industry, this declining subscriber growth will likely increase in the long-term. Sources: Charter Communications, Inc. Investor Relations | The Hollywood Reporter | Investors.com | Statistica | Yahoo Finance | SEC.gov | Capital IQ | The Wall Street Journal | Business Wire

Jack Rebillard | 11/12/21

Rating: Hold Current Price: $52.52 Price Target: $56.07 Company Updates / News • • • • • • • •

LTM Revenue: $134.2B EBITDA: $50.3B Net Income: $22.0B Current Assets: $40.3B Long-Term Debt: $143.0B EV/EBITDA: 7.4 LTM P/E: 9.8 Verizon recently forced to delay part of 5G rollout amid FAA concerns

Competitor Statistics from Q3 2021

5G Coverage: 230M LTM Revenue: $134.2B

5G Coverage: 287M LTM Revenue: $79.7B

5G Coverage: 230M LTM Revenue: $173.5B

Verizon Communications Inc. (VZ) The Two Faces of Debt Investment Thesis: Verizon shares have fallen over 15% since all-time highs just two years ago. Over the same period, share prices of other S&P 500 telecommunications stocks have grown nearly 50% on average. My hold recommendation reflects the belief that Verizon will continue to be outpaced by their competitors in terms of share growth. However, owning Verizon should still appeal to investors who are looking for high dividend yields and a hedge against rising inflation throughout the global economy.

Valuation:

As of November 11th, Verizon shares are trading at $52.52. Over the next 12 months, Verizon has the potential to reach a share price of $56.07. I arrived at this conclusion by taking a weighted average between revenue and EBITDA valuation multiples and a comparable company analysis with AT&T, TMobile, and Comcast assuming a 3% annual growth rate.

5G Growth: Earlier this year, Verizon made a significant investment greater than $50B to earn the rights to transmit over a majority of the C-band spectrum. As a result of this capital investment, Verizon has been able to grow their 5G network and provide coverage to 230 million people nationwide. This has been incredibly important for the company’s bottom line, as 5G is one of the company’s primary revenue growth channels. As cities continuously build out their 5G infrastructure, Verizon has been able to leverage its spectrum rights to acquire new customers and push out competitors. In fact, Verizon has been largely successful in capturing market share from smaller telecommunications competitors who lack the scale necessary to fund 5G projects. However, over the same period, Verizon has been largely ineffective in taking market share away from its main rivals, AT&T and T-Mobile.

Rising Inflation: For growth stocks, rising inflation is troublesome since the Federal Reserve typically increases interest rates. As inflation continues to outpace estimates, projections for when rates will increase are constantly being moved forward as oddsmakers now predict they will adjust during June 2022. However, Verizon is better characterized as a value stock, and is therefore not as harshly affected by these raised rates. Verizon has a sizeable balance of long maturity, fixedrate debt. Therefore, any increase in inflation will decrease the real value of this debt compared to earnings, which would be advantageous. In fact, a sizeable basket of long debt maturity stocks has already outperformed short debt maturity stocks by 7% this year, a trend that will benefit companies like Verizon into the future.

Jack Rebillard | 11/12/21

Twelve-Month Share Price Performance of the Three Largest Telecommunication Firms 15.00% 10.00% 5.00% 0.00%

-5.00% -10.00% -15.00% 1-Dec

1-Jan

1-Feb

1-Mar

1-Apr Verizon

1-May AT&T

1-Jun

1-Jul

1-Aug

1-Sep

1-Oct

1-Nov

T-Mobile

Source: Google Finance Risk Potential Sizeable Debt: Although Verizon’s large debt balance was previously posited to be a comparative advantage, maintaining and continually adding onto long term debt positions carries significant risk. Firstly, holding debt requires that Verizon dedicates cash flows to principal and interest payments, which means they have less to reinvest into their core business. Secondly, Verizon will likely find it more challenging to find financing for working capital, capital expenditures, debt service requirements, debt refinancing, and acquisitions in the future. Thirdly, large debt makes Verizon less flexible in planning and reacting to changing market conditions, which is particularly concerning given the ever-changing economic conditions created by the COVID-19 pandemic.

Supply Chain: Like most companies, Verizon has been adversely affected by global supply chain issues and part shortages. Verizon is particularly exposed to these risks since they directly depend on suppliers to provide them with fiber, switch and network equipment, smartphones, and wireless devices, all of which are central to their core operations. To compound this problem, Verizon depends exclusively on one vendor for chipsets and other services deemed essential so slowdowns or failures of specific vendors could jeopardize Verizon’s entire 5G growth strategy.

Labor Unions: Around a quarter of Verizon’s workers are unionized. And even though Verizon has agreements with both the Communications Workers of American and the International Brotherhood of Electrical Workers, subsequent negotiations could lead to higher costs, due to higher wage expenses and work slowdowns. In addition, a minority of workers are active in unions for bargaining, which have more unpredictable success levels than standard unions and could have unknown effects on Verizon’s operations and future financial performance. Sources:

Adelyn Carney | November 15, 2021

Rating: BUY Current Price: $159.25 Price Target: $190.50 Company Updates / News ● Market Capitalization: $319.2 B ● Total Revenue Growth from Q3 2020 to Q3 2021: 45% ● Q3 Operating Income: $2.38 B ● FY 21 EV/EBITDA: 30.6x ● Disney+ will launch in South Korea and Taiwan on November 12th and Hong Kong on November 16th ● CEO Bob Chapek announced on November 10th that Disney is preparing to create its own metaverse ● Q4 earnings missed estimates, and the increase in Disney+ subscriptions has slowed down Competitor Statistics from Q3 2021

Subscribers: 214 M Revenue: $7.5 B

Walt Disney Co. (DIS) Investing in Disney is a Plus Investment Thesis: Share prices of Walt Disney, the massive media and entertainment conglomerate with ownership of companies such as 21st Century Fox, Pixar, Marvel, ABC, and National Geographic, have increased dramatically since the start of the pandemic in March of 2020, reaching an all-time high of $201.91 in March of 2021. My buy recommendation reflects the belief that Disney’s share price will increase in the long run as consumer preferences are shifting from movie theaters to streaming services, and as Disney+ taps into international markets, especially Asia Pacific markets.

Valuation: As of November 10th, Walt Disney (DIS) shares are trading at $159.25. I believe that this equity is undervalued and expected to increase to $190.50 within the next year. I arrived at this conclusion by conducting a Comparable Company Analysis, comparing Disney to Netflix Inc., Comcast Corporation, ViacomCBS Inc., Fox Corporation, and Roku Inc., and using the FY 21 EV / EBITDA multiples and assuming a 1.8% expected US GDP growth rate.

Bundles: Disney offers a bundle containing access to Disney+, ESPN+ and Hulu. It is ranked as one of the best streaming bundle deals in terms of price and content. Since there are over 200 streaming services available today, many of which are very niche in their offerings, bundles incentivize consumers to purchase the services because they don’t have to commit to a single service, and they also don’t have to pay for several services separately. The Disney bundle consists of an ad-supported plan for just $13.99/month and an ad-free plan for $19.99/month. Having both options increases the customer base since a large portion of the population may not be able to afford the ad-free bundle and/or are willing to sit through advertisements. A recent study revealed that nearly two-thirds of viewers would opt for an ad-supported plan over an ad-free plan.

Parks, Experiences, and Products: Subscribers: 19.0 M Revenue: $30.3 B

Subscribers: 55 M Revenue: $680 M

Disney’s Parks, Experiences, and Products segment reported $4.3 billion in revenue in Q3, celebrating the first profit the segment has experienced since the start of the pandemic in March of 2020. Previously, revenue from Parks & Resorts was on a steady incline and accounted for almost one-third of total revenue every quarter from Q1 of 2016 to Q2 of 2020. As more people get vaccinated, and as the end of COVID-19 is in sight, many people, who previously restricted their traveling, will begin planning vacations, and Disney World will no doubt be a popular destination in the minds of many.

Disney Share Price Over Past 5 Years

Source: Yahoo Finance Risk Potential Globalization: Disney+ is not available globally. Whereas Netflix is currently available in 190 countries, Disney+ is only available in 53 countries, including the US, Canada, several European countries, and Australia. It is lacking a presence in Asia. Currently, the only Asian countries the streaming service is available in is India, Indonesia, and Japan. Although Disney+ is set to launch in South Korea on November 12th, 2021, this is far behind Netflix, which began expansion into South Korea in 2015. Netflix currently offers several K-Dramas, including the much-hyped Squidgame, which reached 111 million views, the biggest launch in its history. However, Disney+ is a relatively new platform and will release 18 local-language originals in the coming year, and plans on creating 50 Asia-Pacific originals by 2023.

Niche Content: Disney+’s library contains many older, family-friendly movies, but it’s lacking in new and original content. Although the classics are good to have on hand, younger generations are looking for new content rather than rewatching the same movies and shows over and over again. Disney+ attempted a hybrid release - both online and in theaters - with Marvel’s “Black Widow,” but its box-office performance coupled with Scarlett Johansson’s lawsuit support the claim that an exclusive theatrical release is far more profitable. So, as of now, there isn’t much new, exclusive Disney+ content.

Antitrust Concerns: In 2019, Disney purchased 21st Century Fox for $71.3 billion, one of the largest media acquisitions in history. Although it was approved by the US Justice Department, it has caused much unrest as many are worried Disney is becoming too monopolistic. The merger has been compared to that of AT&T and WarnerMedia. Sources: The Walt Disney Company Investor Relations | The Walt Disney Company | The Hollywood Reporter | Forbes | CNN Business | Yahoo Finance | SEC.gov | Capital IQ | The Wall Street Journal | Nasdaq | Vox

MEME STOCKS

Meghan O’Leary | November 2021

Rating: Hold Current Price: $10.78 Price Target: $11.72 Company Updates / News ● BlackBerry partners with Google and Qualcomm on QNX software for electric vehicles ● Blackberry partners with Okta, Mimecast, Stellar Cyber and XM Cyber for cybersecurity offers ● Blackberry announces plan to sell large portion of patents to undisclosed buyers, likely to occur this quarter Competitor Statistics from Q2 2021

$IBM: $118.96 Revenue: $18.7B

$CSCO: $56.82 Revenue: $12B

$CTSX: $89.68 Revenue: $812M

Blackberry (BB) $BB to the Moon? Investment Thesis: Blackberry is a Canadian-based cybersecurity company that began trading on the NYSE on October 16, 2017. Originally producing pagers, smartphones, and other electronic devices, it now produces cybersecurity software used by various organizations, governments, and in electric vehicles My hold recommendation reflects decreasing revenue but promising future deals and opportunities, as well as Blackberry’s position in several growing sectors.

Industry Overview: BlackBerry's business primarily covers three segments: cyber security, internet of things, and licensing. Blackberry reported a total addressable market of $45B in 2021, with $15B for Iot and $30B for cybersecurity, and expects a TAM of $89B in 2025, with $45B for Iot and $44B for cybersecurity and a 19% CAGR. The global cybersecurity market is forecasted to rise to $345B by 2026, representing nearly 10% CAGR, and BlackBerry is already well positioned in the industry, with several government contracts. The market is expected to grow from $381.30B in 2021 to $1,854.76B in 2028, with a CAGR of 25.4%, with Blackberry a key player, particularly amongst electric vehicles. One of Blackberry’s top products is QNX, an operating system for automobiles, and 19 of the top 25 electric vehicles are using the company’s QNX operating system design. Another one of Blackberry’s top products is IVY, a software platform for automakers to collect vehicle sensor data, which is being developed in partnership with Amazon. Ivy is the auto-app store that BlackBerry is developing in partnership with Amazon, and automakers have been increasingly stating that they will be looking to purchase digital car subscription services.

Financials: However, as of the latest Q2 reportings, Blackberry’s revenue is down 32.4% year over year, totalling $175 million during the quarter. Cyber security revenues were $120 million (flat Y/Y), IoT revenues were $40 million (increasing 29% Y/Y), while licensing revenues were only $15 million (a 86% Y/Y decrease). Quarterly net loss was $144 million, a loss of 25 cents per share, compared with last year’s Q2 net loss of $23 million, a loss of 4 cents per share. Gross profit declined from $199 million in the year-ago quarter to $112 million this quarter. Total operating expenses increased from $221 million to $253 million, and operating loss was $141 million compared with a loss of $22 million a year ago.

Meghan O’Leary | November 2021 Not all was negative. Blackberry produced both a positive operating cash flow of $12 million and a positive free cash flow of $13 million, indicating that the revenue losses may not significantly impact the future of Blackberry. Additionally, the R&D/Sale ratio is close to 25%, indicating Blackberry can continue to develop new software.

Blackberry’s Future: Blackberry has endured a volatile year, with a high just over $28 but a low of $7.71, likely due to its status as a “meme stock”. Despite some key software products with solid customer bases and projected future growth, revenue was down this quarter, likely due to pandemic related shortages in the auto industry. However, Blackberry’s key products and related partnerships are well positioned and show promise in industries poised to grow. Blackberry has also announced that they are “80% certain” of a deal to sell a majority of their patents to undisclosed buyers, which would generate proceeds but affect licensing revenue moving forward. However, with somewhat shaky fundamentals currently and decreasing performance, much of the bullish attitude towards Blackberry comes from pure speculation on Blackberry fully utilizing its positions in growing industries. and their developing products being successful.

$BB vs the S&P 500

Source: The Motley Fool

Sources:

Anthony Lopardo | November 2021

Rating: Hold Current Price: $6.55 Price Target: $11.36 Company Updates / News ● ● ● ● ● ● ●

Revenue (TTM): $2,940,000 Market Cap: $834.17M EBITA: -58.06M P/E: 5.90 EPS: .26 52 Week High: $42.96 52 Week Low: $6.02

● In February 2021, WKHS lost a $6 Billion contract for 165,000 vehicles from the USPS after being long considered as a favorite to win the bid.

Workhorse Group Inc. (WKHS) Social Media Fueled Rise & Fall Investment Thesis:

Since Workhorse’s listing in the New York Stock Exchange on July 10th, the stock has grown more than 450% to date. Since then, Workhorse has grown to one of the most innovative producers of sustainable transportation and last mile delivery vehicles. Its services also include a telematic interface to allow for mobile management of delivery fleets. My hold recommendation reflects a belief that Workhorse will continue to develop exceptional products to leverage its first mover advantage in the electric last-mile delivery industry.

Valuation:

As of November 5th, Workhorse (WKHS) is trading at $6.55. I believe that this equity is undervalued and expected to increase to $11.36 within one year. I arrived at this conclusion by conducting a DCF analysis with a 13.8% growth, 1096% operating margin, and a WACC of 13% across 5 years. I used these assumptions based off historical data and an optimistic view given Workhorse’s history.

Last-Mile Delivery:

Competitor Statistics

Last-Mile Delivery is an $18 Billion market with over 350,000 last mile delivery vehicles purchased by US fleets each year. Workhorse licensed the technology and production rights of its W-15 electric pickup truck to Lordstown Motors on order to focus its production capacity solely on last mile delivery vehicles. The firm’s production capacity now exceeds 60,000 vehicles per year. Therefore, it is scalable to meet rising demand.

Revenue: $2,940,000

To complement its delivery trucks, WKHS has developed and patented the Horsefly, an electric drone delivery system that is compatible with c1000 trucks. This product would allow for a form of “cross selling” - putting multiple Workhorse products in use for the same customer to increase switching costs and customer retention. An effective implementation of this strategy would greatly strengthen the firm’s business model.

from Q3 2021

Metron:

Revenue: $7,737,300,000

Revenue: $130,938,000,000

Metron is Workhorses Cloud-based, database-driven proof-of performance monitoring system that provides clients with real time information and allows fleet operators to maximize route efficiency and energy use. WKHS is one of the only companies that can provide a tracking software AND the physical delivery vehicles, further contributing to its ability to cross sell.

Daily Stock Price Performance of $WKHS, $OSK, and $GM

Source: Capital IQ Risk Potential Limited Diversification: While Workhorse has a first mover advantage in the electric last-mile delivery industry, it only has three offerings, and its core product, the C1000 delivery truck is fundamentally no different than any other electric delivery truck on the market. With the firms only two other offerings largely dependent on the success of this product, any changes in ecommerce demand or failure to secure truck sales could spell trouble for the Workhorse’s future revenues. FAA Approval: The compatibility of Workhorses Horsefly drone delivery system is an exciting differentiator, especially given its compatibility with C1000 trucks. However, the Federal Aviation Administration has not yet approved the Horsefly for commercial use. To scale this product, Workhorse needs to secure this approval. Approvals take 12-24 months, so the firm will not see revenue from its drones for at least one year, if its use it approved at all.

Low Sales: Workhorse has secured contracts to sell trucks to First Ryder and the UPS, however, these were small

quantity and not recurring. Workhorse must find a way to increase sales to mitigate the large quarterly losses it has incurred the previous 4 quarters.

Sources:

Lavinia Burchielli | November 2021

Rating: Hold Current Price: $202.10 Price Target: $130.05 Company Updates / News ● Revenue (TTM): $5.587B ● Market Cap: $15.459B ● EBITA: -$74.5M ● P/E: N/A ● EPS: -0.99 ● 52 Week High: $483.00 ● 52 Week Low: $10.72 ● In July 2021, GameStop announced its plans to rebrand the Canadian company, EB Games. All EB Games products, store locations, and online store will go by the brand name GameStop by the end of the year. Competitor Statistics from Q2 2021

Revenue: $1.18B

GameStop Corp. (GME) $GME COVID-19 Resilient? Investment Thesis: Gamestop is an American retailer that sells video games, gaming merchandise, and consumer electronics around the world. Since GameStop’s initial listing in the New York Stock Exchange on February 12th, 2002 at $18.00 per share, the stock has grown a significant amount. Since then, GameStop has become the largest video game retailer worldwide with 4,860 stores located in Europe, Canada, New Zealand, Australia, and the U.S. My hold recommendation reflects a belief that GameStop is currently overvalued due to its high share price being caused by external factors. This, in combination with the stock’s overall volatile nature, leads me to recommend a hold.

Valuation: As of November 12th, GameStop Corp. (GME) is trading at $202.10. I believe that this equity is overvalued and expected to decrease to $130.05 within this year. I arrived at this conclusion by conducting a DCF analysis with a 25.63% growth rate, -2.73% operating margin, and a WACC of 14.45%. I used these assumptions based on historical data and GameStop’s overall performance history.

PowerUp Loyalty Program: GameStop offers its customers the option to sign up for the PowerUp Loyalty Program as a way for members to save money and accumulate points. Members also receive a 10% bonus trade-in credit on accessories, games, and systems for 1 year, along with exclusive offers and events. Especially with the prevalence of COVID-19, GameStop will be heavily relying on its PowerUp Loyalty Program to drive its e-commerce sales as stores worldwide shut down.

Diversification: Revenue: $11.85B

Revenue: $1.75B

A prominent element in GameStop’s comeback strategy is the overarching goal to diversify the products the company manufactures and distributes. In the latest annual report, GameStop has announced the company’s plan to expand its products to include computers, monitors, PC gaming, game tables, gaming TVs, and mobile gaming products. This diversification will allow GameStop to sell a wider array of products to its customers, making it more competitive in the market.

Lavinia Burchielli | November 2021

Daily Share Price Performance of $GME, $BBY, and $EA:

Source: Yahoo Finance Risk Potential In-Game Purchases: There has been a prevalence of in-game purchases in the video game industry where users directly make payments to video game creators. Although in-game purchases have been a high driver of growth, GameStop does not receive any of the benefits. It is important to note that even though the in-game purchases for the gaming industry are expected to grow at 19.8% annually through 2027 to reach $340.7B, GameStop is not intrinsically making any more money.

COVID-19: As a result of the Coronavirus pandemic, GameStop had to shut down all its U.S. locations, resulting in a 17% decrease in in-store sales. However, because of the 519% increase in e-commerce sales, GameStop is naturally shifting towards selling most of its products online.

Diversification Concerns: Although GameStop’s plan to diversify its products was created with the intention of increasing revenue for the company, there is a major concern. Producing game console hardware and software is not a good idea in the long run due to the general shift of gaming going digital. In addition, GameStop would face an even greater competition with the company, Best Buy. It will be difficult for GameStop to attract Best Buy’s customers, especially as Best Buy is currently having an incredible 2021 first quarter growth sales of 37.2%. Consequently, GameStop’s diversification plan might not yield such promising results as initially predicted.

Sources:

SECTOR ANALYSTS FALL 2021 John Hanna Industrials jlh462@cornell.edu Declan Beran Energy djb384@cornell.edu Daniel Nieto Financials djn66@cornell.edu Steven Dong Consumer Discretionary qd46@cornell.edu Joseph Rubinstein Consumer Staples jir39@cornell.edu Emma Braﬀ Healthcare erb249@cornell.edu Grant Travis Information Technology gt325@cornell.edu Jack Rebillard Media & Telecommunication jar575@cornell.edu Anthony Lopardo Meme Stocks al835@cornell.edu

ASSOCIATES FALL 2021 Cindy Li ql287@cornell.edu Sarah Boyle sab463@cornell.edu David Oron dao48@cornell.edu Ashley Zhang abz6@cornell.edu Rory Sheppard rps238@cornell.edu Lavanya Pinnepalli lp386@cornell.edu Subharghya Das sd559@cornell.edu Gerry Yavorsky gy54@cornell.edu Zoe Robbins Rutkovsky zrr5@cornell.edu Alexa Cooper arc245@cornell.edu Ioana Nechiti in55@cornell.edu Kaitlyn Lau kl737@cornell.edu

Nick Ono nko3@cornell.edu Ryan Kim rbk73@cornell.edu Ben Nadon-Enriquez bkn8@cornell.edu Quinn Montgomery wqm2@cornell.edu Adelyn Carney ac964@cornell.edu Radhe Melwani rm967@cornell.edu Raquel Kanner rk747@cornell.edu JP Spak jps434@cornell.edu Liam Ardrey wa62@cornell.edu Meghan O’Leary mco56@cornell.edu Siddhant Dahiya sd542@cornell.edu Lavinia Burchielli lb742@cornell.edu

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Logo Credit Allen Luo akl389@cornell.edu

Fall 2021 Cornell Equity Research Report