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Liam Ardrey | 04/28/2022

Rating: Hold Current Price: $85.25 Price Target: $103.74 Company Updates / News 52-wk High: $91.50 52-wk Low: $52.10 Mkt Cap: 360.24B P/E: $15.85

Exxon Mobil (NYSE: XOM)

Investment Thesis Exxon Mobil Corporation (NYSE: XOM) is an American international oil and gas corporation. Since the merger between Exxon and Mobil on November 30th, 1999, the stock price has grown over 200% and has become one of the largest natural oil and gas companies internationally, bringing in over $280 billion in revenue in 2021. My hold recommendation reflects a belief that Exxon Mobil’s revenues in the short term are highly dependent on external factors and volatile gas prices. Additionally, the growth in renewable energy in the long term and new innovations in technology can affect revenue numbers.

Competitor Statistics

from Q1 2022

Valuation:

Stock Price: $85.25 Revenue: $82.89B

Rising Oil and Gas Price

Stock Price: $156.67 Revenue: $45.86B

As of April 14th, Exxon Mobil (XOM) is trading at $85.25. I believe that this equity is undervalued and expected to increase to $103.74 within this year. I arrived at this conclusion by conducting a DCF analysis with a discount rate of 7%, and a WACC of 8.64% across 5 years. I used these assumptions based on historical data and an optimistic view given Exxon Mobil’s performance history.

In recent months, oil and gas prices have been extremely volatile, mostly due to the conflicts in Ukraine with Russia. Russia provides close to 40% of Europe’s natural gas, and 25% of crude oil. Since the outbreak, oil prices skyrocketed to above $130 per barrel for the first time since 2008. But, as President Biden takes more action to curb the spike in oil prices, such as using the Strategic Petroleum Reserve, it is unknown how oil prices will react in the future.

Future Revenue Uncertainty While the expected revenue in the short term is expected to rise due to increasing oil and gas prices, in the long term they are expected to lose money after announcing an exit from Russia. Their most recent project, the ‘Sakhalin1 drilling project’, valued at $4 million, was promised to be shut down by Exxon Mobil.

Stock Price: $28.72 Revenue: $50.5B

Liam Ardrey | 04/28/2022

Exxon Mobil Stock Price (NYSE: XOM) Exxon Mobil Stock Price (NYSE:XOM) 100 90 80 70 60 50 40 30 20 10 0 2008

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Source: Yahoo Finance Risk Potential Global Politics: The future of oil and gas prices is uncertain at this point and is dependent on many current global issues. Most importantly, the duration and outcomes of the Russia/Ukraine conflict are uncertain and will generate substantial impacts on the supply of oil and natural gas. Politically, gas and oil also face many risks. The recent Windfall tax proposed on large oil companies, along with other major pushbacks impact prices and revenues of these large companies.

Competition from renewables: Due to the volatile prices of natural energy, the need for clean energy is more prevalent than ever. With crude oil and natural gas prices reaching new heights, people will want alternative ways to power their lives, either by looking at more cost-efficient ways to live or switching to renewable energy. The need to decarbonize the world is higher than ever, and investments in clean energy are looking increasingly more attractive.

Sources:

Pim Tanpisuth | April 16, 2022

Rating: Buy Current Price: $58.54 Price Target: $69.00 Company Updates / News ● Current Market Gap: $4.12 B ● Revenue: $7.89 B ● EBITDA: $0.74 B ● P/E: 12.20 ● 52wk High: $47.73 ● 52 wk Low: $62.86

Beacon Roofing Supply (BECN) Investment Thesis

Beacon Roofing Supply distributes residential and non-residential roofing materials and complementary building products. Since the start of the surge for demand in housing in 2020, the stock has grown 3.4% and is continuing to show a positive trend in its share price. My buy recommendation reflects a belief that Beacon Roofing Supply will continue to perform well, given the rising popularity of roofing material and the recent acquisition of Midway Sales & Distributing Inc.

Valuation:

As of April 16th, Beacon Roofing Supply (BECN) is trading at $58.54. I believe that this equity is undervalued and expected to increase to $69.0 within this year. I arrived at this conclusion by conducting a Comparable Company analysis against Armstrong World Industries and Cornerstone Building Brands, which are the top competitors of Beacon Roofing Supply. The model suggests an 18% upside and that the company is undervalued. Competitor Statistics from Q4 2021

Revenue: $7.89B

Roofing Material:

The housing boom in 2021 resulted in low mortgage rates, which skyrocketed housing demands. As a result, the desire for renovation such as re-roofing activity have been in demand. Re-roofing is typically more related to necessary maintenance and repairs so it is less likely to be hindered by slower economic growth. It constitutes around 80% of roofing demand and 94% of U.S. re-roofing is non discretionary. In 2021, Beacon Roofing Supply led as the 2nd largest publicly traded distributors of roofing materials in the US and Canada. It had a 20% share of the market size of roofing products of $28 B.

Merger:

Revenue: $6.29B

Revenue: $1.46B

In 2021, Beacon Roofing Supply acquired 100% of Midway Sales & Distributing Inc., a leading Midwest distributor of residential and commercial exterior building and roofing supplies. Midway Sales & Distributing serves customers across Kansas, Missouri, and Nebraska in 10 locations. This allows Beacon Roofing Supply to expand their presence in the Midwest and as a result attract more customers.

Pim Tanpisuth | April 16, 2022

Daily Share Price of $BECN, $CNR, and $AWI

Source: Yahoo Finance Risk Potential Disruption of Supply Chain: Shortage of supply as a result of factors such as unanticipated demand or

delivery difficulties may lead to disruptions in distribution of roofing and specialty building materials. COVID-19 pandemic has resulted in an unexpected increase in demand for products and has also constrained Beacon Roofing Supply’s supply chain dynamics in 2021.

Volatile Raw Materials Market: Many of Beacon Roofing Supply’s products are subjected to price changes from manufacturers’ raw material costs. For instance, asphalt prices, which are one of the main materials used in residential roofing supplies, are dependent on oil prices that are constantly fluctuating. Consequently, these risks might affect the relationship Beacon Roofing Supply has with its customers.

Sources:

Benjamin Nadon-Enriquez | April 14th, 2022

Rating: Buy Current Price: $467.20 Price Target: $510.00

Northrop Grumman Corporation Investment Thesis

Company Updates / News Northrop Grumman outperforms Lockheed Martin(LMT) and Boeing(BA) Thursday April 14th.

Northrop Grumman’s stock has risen by more than 89% since 2017. Since then, Northrop Grumman has become one of the fastest growing industrials stocks. My buy recommendation reflects a belief that Northrop Grumman will continue to grow due to its exposure to high-tech, and an increasing demand for tech and growth, especially in the wake of geopolitical tensions in Ukraine, Taiwan, Russia, and China.

Valuation: As of April 2022, Norhrop Grumman (NOC) is trading at

Competitor Statistics from Q1 2022

$467.2. I believe that this equity is undervalued and expected to increase to $510 within this year. I arrived at this conclusion through a comparable company analysis by comparing metrics against two of its competitors: BAE Systems and Booz Allen Hamilton.

High Tech Defense : Northrop Grumman Corp. is standing out among its competitors when it comes to exposure to high tech defense. It has more than 40 percent exposure in growth areas. Northrop Grumman is also the prime contractor for the B-21 Bomber and Ground Based Strategic Deterrent, which according to Morgan Stanley is “similar to Lockheed Martin a decade ago with the F-35 - on the cusp of major platform-fueled growth that will provide significant visibility and stability for long-term earnings power.”

Revenue: $6.7B

Revenue: $19.52B

Revenue: $14.79B

High Inflation and Low Yield: Northrop Grumman is poised to have high dividend growth potential in the coming years. Additionally, Northrop Grumman’s diverse expertise, such as in aerospace technology, goes beyond some of its competitors’ abilities. This means that the company will have a lot of free cash flow in the future, which will in turn attract a lot of investors who yield high capital gains.

Benjamin Nadon-Enriquez | April 14th, 2022

Northrop Grumman Stock

Source: Yahoo Finance Risk Potential Lack of Further Investment in Technology: While Northrop Grumman shows promising returns and growth in the future, investors are still skeptical about the fact that defense firms seem to be stuck in their traditional ways and will continue to be steady dividend holders. This can stunt future developments in technology that will be beneficial for the company’s financial health.

Volatility: The issue with defense companies is that a lot of their strength depends on the government’s demand for defense needs. Because geopolitical events and other external events are highly volatile and unpredictable, it is not a guarantee that Northtrop Grumman will continue to grow at its expected rate.

Sources:

Ioana Nechiti | April 12, 2022

Rating: Buy Current Price: $215.98 Price Target: $264.19 Company Updates / News Market Cap: $214.41B P/E Ratio: 19.73x On April 14th, Caterpillar Inc. stock outperformed the market on a strong trading day 2022 Caterpillar products are adapting to new emission standards. Caterpillar Extends Lineup of Mobile Power Solutions Meeting EU Stage V Emission Standards with 310 KVA Cat® XQP310 Generator Set Competitor Statistics

On April 12, 2022

Caterpillar (CAT) Investment Thesis: CAT is the world's largest producer of earthmoving equipment. Besides its characteristic yellow construction machines, the company is also a major manufacturer of mining equipment, electric power generators, and petroleum engines. The three primary segments of CAT’s business are construction industries, resources, energy & transportation; the other notable portion is financing. It trades as CAT on the NYSE exchange. My buy recommendation reflects my belief that CAT will continue to benefit from a resurgence in construction and economic activity post-COVID, as well as regional-specific catalysts such as the U.S. infrastructure bill. Even though CAT may face some margin contraction due to inflationary pressures, its growth trajectory may compensate for the increase in costs.

Valuation: As of April 12, Caterpillar (CAT) is trading at $215.98. I believe that this equity is currently undervalued and expected to increase to $264.19 within this year. I arrived at this conclusion by DCF analysis using the exit multiple method from comparable companies (EV/EBITDA multiple of 21x) and a terminal growth rate of 2%, with a WACC of 5.83% across 5 years. These assumptions are based on historical data, revenue projections by region, and an optimistic view given CAT’s growth potential.

Increase in Global Industrial Activity: Stock Price: $216.30 Market Cap: $111.7B

Stock Price: $418.22 Market Cap: $134.3B

Stock Price: $22.35 Market Cap: $22.84B

As the global economy recovers from COVID-19, there has been strong growth in demand for CAT’s key businesses. Most notably, delayed construction and natural resource projects are up and running again, a shift that will likely continue into 2023. CAT is poised to capture this demand as an all-around winner in construction; the company has the most extensive sales and service network in the industry and legacy connections to its independent dealer network, as well as additional financing support from CAT Financial. Residential construction is expected to be a continuing driver of growth in North America. Sales have been increasing in the Asia Pacific, EMEA, and Latin America due to higher end-user demand, the impact of changes in dealer inventories and favorable price realization. There will also be additional tailwinds from the $1.2T 2021 U.S. Infrastructure Bill.

Favorable Metal Prices Boost Mining Equip. Demand: Prices of minerals and metals have increased almost 50% throughout the pandemic and remained high due to their role as a “safe asset” during extreme market volatility. These increased prices will continue to boost mining activity and demand for mining equipment, especially in LATAM.

Ioana Nechiti | April 12, 2022

Energy Transition Creating New Construction Demand: Although CAT’s Energy division has not recovered from COVID-related decreases in oil and gas production, the global shift towards alternative energy sources necessitates construction activity, especially in EMEA and North America. Oil and gas could also potentially see long-term growth as the Russia-Ukraine conflict is shifting oil production.

CAT’s Stock Price Over the Last Two Years (April 2019 - April 2022)

Source: Yahoo Finance Risk Potential Inflationary Pressures Decreasing Margins: CAT’s business is dependent on prices of input metals and commodities. Increasing steel prices and manufacturing costs may reduce margins if CAT cannot proportionately increase prices of equipment. Our financial assumptions accounted for a minimal decrease in profit margins.

Slow Long Term Growth in Key Markets: There are also headwinds facing CAT’s key construction and fossil-fuel production end markets. Remaining worker and supply chain shortages may hinder revival of construction activity. The shift to work-from-home practices may also decrease demand for future office building construction. CAT’s fossil-fuel end-market may experience future decreases in oil and gas drilling.

Pandemic Recovery Priced-In: CAT’s stock price has increased since the end of 2020, signaling that some aspects of the investment thesis may be priced in. However, we believe that growth will still continue due to the remaining backlog in pandemic construction projects and favorable macroeconomic factors and prices.

Vikas Reddy | April 2022

Rating: Sell Current Price: $2,167.42 Price Target: $1,971.02 Company Updates / News Acquired GetaRoom for $1.2B, entering B2B distributor market As of March 8th, bookings in Europe dropped 10% due to ongoing conflict in Ukraine Revenue (LTM): $10.96B Market Cap: $90.52B Competitor Statistics

from Q4 2021

Booking Holdings (BKNG) Investment Thesis: Booking Holdings is an American technology company that is a global leader in travel fare search engines like Kayak.com, Booking.com, and Priceline.com. My sell recommendation stems from uncertainty about the magnitude of Booking Holding’s recovery from COVID-19. While the company is performing strongly, and is positioned to lead the market in the coming years, it is difficult to predict how strongly and when the travel industry’s recovery from COVID-19 will take hold, especially when global conflicts, like in Ukraine may slow down the company, whose business is reliant on Europe.

Valuation: In April of 2022, Booking Holdings (BKNG) is trading at $2,167.42. Based on a Comps analysis incorporating competitors of TripAdvisor, Expedia, Airbnb, American Express, and Trip.com, I arrived at the conclusion that this stock is overvalued and is expected to decrease to $1,971.02. This overvaluation might be the result of overconfidence in travel rebounding in 2022 and the company’s ability to lead that growth. Similarly, findings suggest that investors are placing confidence in Booking Holdings’ growth based on the rebound of leisure travel, without taking into account business travel. But, with worldwide conflicts and COVID-19 waves that could drastically affect finances, it is difficult to say with full confidence that the stock will remain overvalued.

Strong Recovery from COVID-19: Revenue: $3.0B

Booking Holdings holds the largest portion of the online travel agency (OTA) market in North America, followed closely by Expedia. Due to the COVID19 pandemic, online bookings have fallen drastically, with an initial drop of 59% at the height of the pandemic. However, as scientists indicate a return to normalcy in the near future, travel has begun to surge, with at least 71% of Americans planning for leisure travel in 2022 in a survey by TripAdvisor. This figure is up 8% compared to 2019.

Revenue: $2.3B

Mergers and Acquisitions:

Revenue: $241M

In November of 2021, Booking Holdings acquired GetaRoom for $1.2 billion, entering the B2B hotel room distributor market. Bookings Holdings has used mergers and acquisitions historically to position itself in multiple markets. Previous acquisitions include OpenTable for restaurants, Kayak for air travel, and RentalCars for domestic travel. These subsets have given investors increased confidence in the company’s ability to withstand changes, which is especially important with potentially unpredictable consumer trends in travel. Having GetaRoom further allows Booking Holdings to position itself in a new market in preparation for an oncoming travel boom.

Vikas Reddy | April 2022

Booking Holdings Share Price Over 5 Years Compared to Expedia and TripAdvisor

Source: Yahoo Finance Risk Potential Volatility from Ukraine Conflict: Booking Holdings has a large presence in Europe with a 67.7% market share in Europe, with the second-largest player in the market, Expedia, only holding 12.8% of the market share. In turn, Bookings Holdings stock has expressed volatility due to the conflict between Russia and Ukraine. As of March 8th, the company found room occupancy dropped by 10% in Europe, reflecting that there is still significant risk for the company to consider. This would cause share prices to drop, making it a less profitable sell for the time being.

New Waves of Covid-19: With the BA.2 variant of COVID-19 rising soon after recovery from the Omicron outbreak, travel faces another risk of downturn due to employee shortages from quarantined workers. However, consumer perception is significantly more apathetic to newer waves so far, indicating that Bookings Holdings may not experience many significant changes in its growth. The risk in this thesis arises should Bookings strongly outperform the rest of the travel search engine industry in attracting post-pandemic bookings.

Increasing Flight Prices: On Tuesday, March 8th, Qantas CEO Alan Joyce warned of a 7% fare increase on all tickets, with some experts predicting this number to be closer to 10-15%. Due to increased demand for travel, with increasing oil prices from the Russia-Ukraine conflict, flight operation expenses have skyrocketed. Booking Holdings could see its customers traveling to fewer long-distance destinations as a result, and see holdings like Kayak take drops in business that could affect the company at large.

Sources:

Gerald Yavorsky | 04/11/2022

Rating: Hold Current Price: $584.67 Price Target: $576.10 Company Updates / News Costco membership surges as demand for competitive gas prices rises Current Market Cap: $252.63B P/E Ratio: 45.93 Price/Sales: 1.21 Profit margin: 2.62% (ttm) Beta (5Y monthly): 0.66 Shares Outstanding: 443.22M

Costco Wholesale Corp (COST) Investment Thesis:

Since Costco’s listing on the NASDAQ on December 5th, 1985, the stock has grown more than 5600%. Since then, Costco has grown to be the 2nd largest retailer in the world, just being beat by Walmart. My hold recommendation reflects a belief that Costco’s performance will stay consistent due to their customer loyalty, deeply discounted bulk items, and the success of the Kirkland brand. I believe that the stock will stay at about the same price or increase very slightly according to my DCF analysis; economic trends and consumer demand shifts might inhibit maximum growth.

Valuation:

Competitor Statistics

As of April 4th, Costco Wholesale Corp (COST) is trading at $584.67. This equity is expected to decrease slightly to $576.10 within this year. I arrived at this conclusion by conducting a DCF analysis with a WACC of 5.63% and EV/EBITDA multiple of 12.7, which is slightly larger than the competitor median multiple of 10.5 across 5 years. I used these assumptions based off of historical data and an optimistic view given Costco’s performance history and extremely successful brand image. The implied share price I calculated was $576.10, but Costco’s market positioning, brand image, membership success, and lowest gas prices currently might all increase the stock value.

Members: 114.8M Revenue: $51.90B

Kirkland Signature Brand Success:

from Q1 2022

Members: 5.5M Revenue: $4.36B

Costco’s private label brand, Kirkland Signature, is responsible for 31% of Costco’s top-line growth, or growth of revenues/gross sales. In 2021, the brand had sales of $59 billion (up $7 billion from 2020), and their prices are at least 20% cheaper than other comparable national brands, such as BJ’s Berkley Jensen brand. With this, Costco has less reliance on suppliers and can manage inventory better, utilizing data from sales to focus on the most profitable items. The brand reduces the chaos customers may encounter when shopping and provides an image of reliability, consistency, and familiarity.

Costco’s Membership Consistency:

Customers: 140M Revenue: $152.90B

Costco’s membership fees grew from $946 million to $967 million from November 21, 2021, to February 13, 2022. Furthermore, Costco now has 62.5 million household members with an almost 92% membership renewal rate. In 2021, they grew membership fees by 9.5%, which increased revenues by 3.9 billion. Although the majority of revenue comes from store sales, membership fees account for about 77% of net income, and is an essential component of the business model. The recurring billing aspect with Costco’s program increases cash-flow consistency, predictability, and customer loyalty. With such a high retention rate of customers, Costco spends almost nothing on marketing, sales, or advertising, which saves them money on the bottom line.

Gerald Yavorsky | 04/11/2022

Costco’s Stock Growth Often Outperforms Popular Consumer Staples ETFs

Source: Yahoo Finance Risk Potential Competition with Subscription-Based Shopping: Retailers such as Walmart, Target, and Amazon are strong competitors for Costco with the subscription-based model of shopping. Amazon Prime has over 200 million members, Target Circle has over 100 million members, and Walmart+ has over 32 million members. Furthermore, Walmart-owned Sam’s Club, which has 47 million members, and Kroger’s, which introduced their new Kroger Boost subscription model, are all fighting to get consumers to sign up for their loyalty programs.

Lacking Omnichannel Experience: Omnichannel retailing is growing, which shapes how quickly and easily consumers want to shop. Digital shopping through mobile phones, tablets, computers, and other devices is at an all-time high; in fact, e-commerce grew 14.2% in 2021. Costco’s user experience (UX) of their e-commerce is low, having issues with order tracking & returns, poor product lists and filtering, and poor on-site search.

Consumer Spending: The Consumer Price Index jumped 7.9% in February 2022, the largest 12-month increase since January 1982. Consumer staple prices of gasoline and food have been increasing with gasoline prices up 38% this year and household grocery bills increased by 8.6% in the last twelve months. These price increases might cause less shopping in bulk due to squeezes on household budgets, which is what Costco is known for. Sources:

Emma Braff | April 2022

Rating: Buy Current Price: $106.00 Price Target: $132.60 Company Updates Annual Stats (2021) Diluted EPS: $5.95 Dividends per Share: $2.00 Revenue Growth Over Prior Year: 8.6% Gross Profit Margin: 17.5% Same Store Sales Growth: 8.9%

CVS Health (CVS) Investment Thesis CVS is one of the largest healthcare companies offering retail services through drugstores, pharmacy benefits management (PBM), and health insurance. With currently about 9,900 pharmacy stores across the U.S., CVS possesses substantial market share in the healthcare space. CVS stock has a buy rating because of its innovative approach to servicing consumers, balancing its businesses, and plans to engage in more acquisitions of clinics and physician services. Along with other initiatives, CVS is planning for the rise in the percentage of elderly Americans and is increasing access to primary care services. The company plans to convert 1,000 of its current stores to Health HUBS in order to offer more convenient health services. These different businesses are integrated well and target different areas of the industry.

Valuation: Competitor Statistics

from Q1 2022

P/E (TTM): 17.59 Revenue: $290,912.0 M

P/E (TTM): -49.73 Revenue: $24,419.7 M

P/E (TTM): 6.00 Revenue: $135,948.0 M

The implied share price from DCF is $132.60, which represents a premium of 25.1% in comparison to the current market price. This target price applies a forward EV/EBITDA of 11.4x the current. A comparative analysis of CVS to competitors including Walgreens, Rite Aid, Cigna, United Health, and Anthem also reveals that the company is undervalued.

Increased Income: This positive outlook reflects the company’s success in integrating its different businesses, innovating and improving its offerings, and continued financial growth. Total revenues have increased since 2020, despite an expected decrease in demand following the crux of the pandemic. Revenues increased from $267.908 billion in 2020 to $290.912 billion in 2021, with retail revenues specifically increasing from $91,918.0 million to $100,105.0 million. Net income increased as well, from $7.179 billion to $7.910 billion.

ESG Efforts: One of CVS’ most recent ESG efforts is their work in the housing equity space. The health care company is investing $15.3 million into a Northside affordable housing development in San Antonio, which is contributing to an overall unprecedented investment in affordable housing. This appeals to the increasing number of investors interested in ethically-minded companies and prefer to see tangible actions over ESG-buzzwords.

Emma Braff | April 2022

LTM Closing Price per Share $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 CVS

WBA

RAD

Source: Yahoo Finance Risk Potential Balance Sheet: Recently, CVS has been experiencing elevated debt levels. While the company is making improvements to its assets—with assets rising to $60 billion from $56.3 billion—current liabilities expanded from $62 billion to $67.8 billion. The company’s current ratio is 0.88, which reflects a concerning imbalance between current assets and current liabilities, calling into question their current cash position. Much of this debt could likely be attributed to CVS’ acquisition of Aetna. CVS’ mixed balance sheet can be broken down accordingly: The net cash position of CVS rose from $10.8 billion to $12.5 billion during the past 12 months and the healthcare retailer has made an effort to pay down its debt levels. The company’s long-term debt fell to $51.9 billion from $59.2 billion 12 months ago with $4.2 billion considered current. However, recent debt concerns can be offset by CVS’ variety of products and stable, diversified business, which ultimately makes the risk relatively low. Another hopeful sign is that a dividend increase has been approved for 2022. Additionally, CVS will be able to cut more costs through its plans to close about 300 stores per year for the next three years.

Recent Costs: The market will continue to tighten as the Fed takes a strong stance against inflation, but some of these expenses can be passed onto the consumer. Additionally, CVS has been facing backlash due to the opioid crisis, and the company will pay $484 million to the state of Florida to settle opioid claims.

Competition: Amazon’s acquisition of PillPack represents a rival in the prescription drug delivery business. Additionally, Amazon also launched online pharmacy Amazon Pharmacy. This move by data giant AMZN represents a threat to CVS’ market share. However, since CVS already has largely established businesses with a variety of pharmaceutical servicing options, the company is positioned to defend its market share. Sources:

Raquel Kanner | May 2022

Rating: Buy Current Price: $112.49 Price Target: $120.00 Company Updates / News Collaboration with a variety of companies in numerous industries to allow for easier transactions (e.g. Uber and Facebook Marketplace) Revenue (TTM): $25.37B as of 12/31/2021 PayPal acquired Honey for over $4B in January 2020 (its largest acquisition to date) and more recently signed a deal with NBCUniversal for shoppable content As of 04/12/2022, CFO and executive Vice President John Rainey has resigned, joining Walmart Inc. as its CFO. He is being succeeded by senior vice president Gabrielle Rabinovitch as interim CFO Competitor Statistics

from Q1 2022

Revenue: $24.11B

PayPal Holdings Inc (PYPL) Investment Thesis: Since PayPal’s listing in the New York Stock Exchange in 2002 (as a subsidiary of eBay), the stock has been in increasingly high demand. Since then, PayPal has become an industry leader in Information Technologies, specifically regarding its easily accessible application on widespread technologies and its ecommerce aspect that allows for connectivity around the world from all users. My buy recommendation reflects a belief that PayPal will continue to profit off of the shift to e-commerce and increased online connectivity as society shifts to modern forms of transactions.

Valuation:

As of April 6th, PayPal Holdings Inc. (PYPL) is trading at $112.49. I believe that this equity is undervalued and expected to increase to $120. I arrived at this conclusion by conducting a comparable company analysis and P/E ratios. I used these assumptions based on historical data and an optimistic view given PayPal Holdings’ performance history. PayPal additionally currently holds a P/E ratio of 23.19, while the Information Technology sector has an overall P/E ratio of -2.3. This stark contrast between PayPal and its larger industry reveals the success of the company and how its earnings will potentially lead to high expectations for its future growth. Looking at the earnings for valuation and PayPal’ positive market performance, we are seeing that PayPal’ commitment towards expansion, vaccination boosters, and efforts to end the pandemic is driving their growth and ultimately their share price.

E-Commerce Sales: PayPal provides a reasonable and effortless approach to consumer spending. Domestic transactions via PayPal require no external fees, while credit cards only result in a 3.4% plus $0.30 extra charge. Internationally speaking, there are more charges; nonetheless, PayPal’s online system allows for smooth transactions that allow for increased consumer spending. Furthermore, online platforms encourage the use of PayPal for online payments. Many online retailers allow for a form of “cash back” or discount when using PayPal, resulting in increased use among consumers.

Revenue: $17.66B

Revenue: $761.2M

Ubiquity Across Partnerships: In addition to the online payments PayPal offers that provides for efficient e-commerce, the company, since its independent ownership in 2015, has excelled in a multitude of services offered to companies in a wide variety of industries. Through its debit and credit card readers for small merchants, online payments, and lines of credit, PayPal has collaborated with corporations such as Shopify, Visa, Uber, and Instagram.

Raquel Kanner | May 2022

Twelve-Month Share Price Performance of PayPal and its Top Competitors

Source: Yahoo Finance Risk Potential Rise in Unemployment: As of March 2022, the United States’ unemployment rate reached 3.6%, totaling 6 million Americans across the country. Although the unemployment rate is stabilizing, there was an increase of over 11% between January 2020 and April 2020, particularly because of the pandemic and the impacts of COVID-19. Thus, as individuals begin to return to work in both in-person and remote settings, there is an increased concern over consumer spending and economic boundaries that must be addressed when assessing PayPal’s future.

Higher Inflation Impacting Consumer Spending: PayPal has projected its annual revenue growth to range between 15% and 17% for 2022, while the public estimates its growth to reach 17.9%. While this slight decrease in percentages seems worrisome, CEO Dan Schulman agrees in the acceleration of PayPal’s revenue in the latter half of 2022, yet he continuously thinks about the negative implications of inflation, particularly on supply chain concerns and consumer spending via PayPal-based platforms. However, PayPal’s services will continue to be in high demand, particularly as a result of the increasing contactless payment trends and the easily accessible online transaction system PayPal offers. While PayPal’s earnings might not look as optimistic as the company initially hoped, this corporation is one that will continue to stabilize and hopefully grow into a leader of the FinTech revolution.

Sources:

Joseph Rubinstein | 4/29/2022

Rating: Hold Current Price: $43.59 Price Target: $54.43 Company Updates / News Intel CEO Pat Gelsinger announced on 4/29/2022 that the company’s chip shortage is expected to last until 2024. Global semiconductor demand is expected to grow at a rate of 7-9% per year. The company has announced plans to build new fabrication plants in Mexico, Ohio, France, and Germany to meet growing demand.

Intel Corporation (INTC) Investment Thesis Since Intel Corporation’s listing in the NASDAQ on October 13, 1971, the stock has grown more than 50,000%, after 13 stock splits. Intel’s largest business segment is client computing, with the company being the largest x86 microprocessor manufacturer in the world, found in nearly every PC. The company also operates in the data center and non-volatile memory segments. My hold recommendation reflects a belief that Intel Corporation will face stronger competition across all its business lines and will be forced to invest more heavily into its segments as a result.

Valuation: As of April 13, Intel Corporation (INTC) is trading at $45.67. I believe that this equity is slightly undervalued and expected to increase to $54.43 within this year. I arrived at this conclusion by conducting a DCF analysis with a 5.7% sales growth, 22% capital expenditures/sales, 26% operating margin, and a WACC of 5.78% across 5 years. I used these assumptions based on historical data and an increasing cost of equity and capital as a result of expected increased competition.

Market Share:

Competitor Statistics

from Q1 2022

Revenue: $16.7B

Intel holds an approximate 74% market share in the microprocessors industry, which is the company’s main driver of revenue, accounting for 51% in 2021. Intel has been able to maintain this dominant position for decades but has recently been losing market share to AMD. While it is unlikely that the company will lose any significant amount of market share, competitors from across the world, such as Taiwan Semiconductor and Samsung, will ramp up their efforts to steal market share from Intel in the post pandemic economy. This will inevitably force IBM to invest more heavily across its business lines to promote innovation, sales, and marketing efforts. I believe this will negatively impact the company’s return on equity, which the company will make up for with increased revenues.

Foveros Innovations:

Revenue: $10.9B

Revenue: $244B

In late 2019, Intel announced Foveros, a technology which allows microprocessor chips to be stacked virtually. Initially expected to be a large tailwind for the business, the company’s first product launch, dubbed Lakefield, was discontinued after a year – with the company citing shifting market demand. The company has pledged to invest over $3.5 billion into a facility in Mexico that manufactures crucial Foveros materials. These unexpected investments are beginning to add up for Intel, and with increasing competition in the virtual stacking industry from Taiwan Semiconductor, this product could prove to be more of a headwind.

Joseph Rubinstein | 4/29/2022

Intel Corp. 5 Year Performance Versus AMD, NVDA & ^SPX

Source: Capital IQ Risk Potential Semiconductor Shortage: Intel predicts that it will face a semiconductor manufacturing shortage until 2023, which could negatively impact customer relations and affect future transactions. While the primary cause of the shortage is an excess of demand, it is possible that by the time the company finishes expanding its capacity, this demand will have returned to normalcy.

Return to Work: Work at home proved to be a major tailwind for Intel, with the company capitalizing on the increased need for PCs in every salaried worker’s homes. The return to work will likely slow down demand for products with Intel components in the short term, before stabilizing to a pre-pandemic equilibrium.

Product Innovation: Intel competes with other computer processing companies on product innovation, which has been a significant lag for the company in the last few years. While Intel used to be the leading innovator in this field, it is now racing to keep up with AMD and Taiwan Semiconductors.

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Jeremy Herring | April 2022

Rating: Hold Current Price: $27.33 Price Target: $28.53 Company Updates / News Revenue (TTM): $1.076 B Market Cap: $15.89 B 52 Week High: $49.03 52 Week Low: $22.72 In late March 2022, Qualtrics launched Digital Experience Metrics (DX Metrics), allowing clients to directly connect customer feedback to their bottom line In October 2021, Qualtrics acquired Clarabridge, the industry leader in omnichannel conversational analytics, for $1.13 B Competitor Statistics

from Q4 2021

Revenue: $316 M

Revenue: $117.3 M

Qualtrics International Inc. (XM) Investment Thesis: Qualtrics first went public in January of 2021, a little more than a year ago at an IPO price of $45.50. Within a month they hit their all-time high of $54.90 then rose and fell through the end of 2021 and began steadily falling since the beginning of 2022. I am recommending a hold on Qualtrics. This is backed by a turbulent first year going public. However, there is evidence proving that they are continuing to expand their business and customer base, especially in this new market for exploitable data.

Valuation: As of April 3rd Qualtrics (XM) is trading at $27.33. I believe that this equity is slightly undervalued and expected to increase to $28.53 within this year. I arrived at this conclusion by conducting a comparable company analysis with other companies in the industry such as Momentive AI and Zendesk. I used Enterprise Value and Revenue multiple to come to my final price target.

Customer Obsessed: “Customer Obsessed” comes from their defining “TACOS” business model. As a subscription-based company, Qualtrics relies heavily on customer loyalty as a source of revenue. They have grown into a global enterprise because of its ability to listen and respond to customer desires. Adding new products and services as requested by customers. Qualtrics is a software-based company that “helps customers build the world’s best experience management programs”. The company has added more than 3,000 new customers in 2021, adding to a total of over 13,500 clients. In addition, they work with 85% of Fortune 500 companies and work with notable names across all industries. Both of those figures are intended to grow in the coming years.

Mergers, Acquisitions, and Expansion: Qualtrics is a fast-growing company, with current annual revenue of 1.076 billion, and expecting that to increase 40% in each of the next two years A key component of that strategy is acquiring other companies. In 2021 alone, they acquired three different software companies that add to their array of teams. Revenue: $128 M

In addition to external acquisitions, they have also committed to internal Research and Development to grow their business. Spending more than $300 million in 2021 on R&D.

Jeremy Herring | April 2022

Qualtrics Revenue vs Competitors

Source: Capital IQ Risk Potential Competitive Market: While the market for consumer and experience data overall is relatively new, the demand has dramatically increased. Qualtrics may have been one of the first in the field and are currently an industry leader, they are by no means alone. Companies such as Survey Monkey, offering similar products and services, are not far behind and are growing at similar rates.

Covid-19: As a result of the Covid-19 pandemic, there have been substantial changes in every industry, in all reaches of the globe. Because Qualtrics has customers in 120 countries this can potentially lead to an effect on Qualtrics’ subscription revenues if industries need to shutter again and adjust their spending habits.

Adaptiveness and Relevancy: This market is new, with demand exceptionally high, for very specific products that Qualtrics is currently providing. However, consumer demand is liable to be extremely volatile because this is such a new and changing industry. If Qualtrics is not able to adapt and respond to changes in consumer demands quickly it will lose customers and be overtaken by competitors. In addition, Qualtrics need to continue attracting new customers or will risk losing out on millions of dollars in additional revenue.

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Emily Hong | 4/29/22

Rating: Hold Current Price: $41.03 Price Target: $43.52 Company Updates / News Market Cap: 214.97 B LTM Revenue: 116.38 B LTM Rev/Share: 25.39 EBIDTA: 34.62 B EV/EBITDA: 8.12 Universal Orlando pushing to open new additional theme park by Summer of 2025. Competitor Statistics

from Q1 2022

Investment Thesis

Comcast (NASDAQ: CMCSA)

Since Comcast’s listing on the NASDAQ Stock Exchange on June 29, 1972, the stock has grown more than 680%. Since then, Comcast Corporation has grown to become a multinational conglomerate and a powerful player in the telecommunications industry. My sell recommendation reflects a belief that while Comcast has historically been a consistent stock, the stock will see heightened performances in the coming years from the gradual increase in tourism and the remodeling of traditional workspaces to permanently integrate technology, but dwindling numbers in terms of subscriptions, especially within the United States.

Valuation:

As of Friday, April 29th 2022, Comcast Corporation (CMCSA) is trading at $41.03. Based on a comparable analysis with similar players in the industry such as Verizon Communications Inc. and The Walt Disney Company, a median EV/EBITDA multiple projects forth an expected future share price of $43.52. This analysis, paired with additional fundamental research, backs up my recommendation to hold.

Increased Tourism: Price/Sales (LTM) 1.90 Revenue (LTM): $116.38 B

Price/Sales (LTM) 3.27 Revenue (LTM): $72.99 B

Despite its primary focus in telecommunications, Comcast carries a strong presence in the recreational theme park fields. Prior to the COVID outbreak, Theme Parks alone made up nearly 10% of Comcast’s EBITDA, which after COVID has fallen to the 5% range. As owner of Universal Theme Parks, Comcast has a lot of gain from loosening of COVID-19 restrictions and the gradual increase of tourism to pre-pandemic or higher levels. Additionally, Universal Orlando’s plan to open its upcoming theme park by summer of 2025 places the company on a strong path of continued upward trajectory, first through increased activity in existing parks and then later with its newer expansions, both in the United States and potentially globally.

Remodeling of Offices:

Price/Sales (LTM) 1.67 Revenue (LTM): $133.61 B

In additional to its other product lines and services, Comcast Corporation recently introduced a new Business Gateway, a high-speed Wi-Fi connectivity device with services targeted specifically towards companies that see retained high rates of digital work. Despite the country’s gradual return to higher levels of tourism and academia’s return to in-person school, increased numbers of workspaces and companies are electing to maintain hybrid work. Business Gateway should expect to see sustained demand over the next couple of years as companies shift to build stronger work-from-home and digital labor infrastructure, and Comcast will reap benefits.

Emily Hong | 4/29/22

CMCSA Stock Prices over Last 2 Years: 70 65 60 55 50 45 40 35 30

Source: Yahoo Finance Risk Potential Stagnating User Base: The primary risk that Comcast Corporation faces is the stagnation of its user base statistics, especially in the United States. Recent trends in “cord-cutting” have shown drastic falls in levels of television and other cable service subscriptions in favor of rising streaming services such as Netflix and Hulu. In fact, the company saw a loss of nearly 1.5 million TV subscribers in 2021, which makes up nearly 8% of its users.

Chinese Politics: Last fall, in the year of 2021, NBC’s Universal Group opened, in accordance with the Beijing Tourism Group, the Universal Beijing Park that cost approximately $6.5 billion to build. US-China relations and media politics play a role in the popularity of this large investment, and that, paired with the rise of COVID-19 within China and the country’s commitment to COVID-zero, leaves the park in a position that’s potentially tied into the fickleness of public opinion and political optics.

Stock Market Correction: Having progressed through a period of high investor confidence and the market’s overall bullish disposition, it proves plausible that upcoming months may display market corrections that lower optimistic investors’ trading tendencies to pre-pandemic levels of normalcy. This proves a possible explanation for the fairly recent decline in Comcast stock prices. However, the company’s fairly strong foundation paired with projects in the near and far future provides it the ability to hold its ground during these times. Sources:

Daniel Nieto| April 2022

Rating: Buy Current Price: $17.97 Price Target: $21.83 Company Updates / News March 2022 – Ryan Cohen made a 9.8% stake in the company April 2022 – The earnings call was disappointing, revealing a weak holiday period Mid 2021 – 40 million customers Early 2022 – 35 million customers

Competitor Statistics from Q1 2022

Bed Bath and Beyond (BBBY) Investment Thesis Bed Bath and Beyond has grown to become one of the dominant players in the retail-store market for home goods but has fallen on tough times the past decade. It has been characterized by management mistakes and being too slow to respond to new trends. However, driven by new activist investors, the company appears to have a path forward to reclaim its former glory. My buy recommendation reflects a belief that Bed Bath and Beyond will rebound from a tough year, given the continued popularity of activist investor Ryan Cohen and the long-term infrastructure investing.

Valuation: As of April 13th, Bed Bath and Beyond (BBBY) is trading at $17.97. I believe that this equity is undervalued and expected to increase to $21.83 within this year. I arrived at this conclusion by conducting a DCF analysis and a comparable company analysis with its closest competitors. I based these assumptions off of historical data and an optimistic view given Bed Bath and Beyond’s long term plans.

Ryan Cohen:

Net Income: $(391.5)M Revenue: $8.5B

Net Income: $688.5M Revenue: $3.7 B

It should not be overstated the popularity that famous activist investor Ryan Cohen still has over retail investors. He has become one of the faces of the meme stock movement and has recently announced a 9.8% stake. The stock immediately rose to a high of $27.23 after the announcement, as the meme stock movement immediately jumped on the stock. Since he has become a major stakeholder, he has put three independent directors on the board. His plan for the company is aggressive and is trying to tackle the problems that have faced the company for the last decade. He has pushed to spin off the Buy Buy Baby brand. The proceeds from the sale can pay off the company’s debt; and to see if the company should be in the hands of a private-equity firm.

Renewed Focus on Infrastructure:

Net Income: $8.4B Revenue: $96.2B

As the company has struggled to recover from the COVID-19 pandemic, there have been calls from investors to modernize and focus on new growing trends and infrastructure. So far, the company has been prioritizing this shift. The company has seen a new CEO and major replacements on the board of directors the past few years. It has also been investing in a new data hub to better track its products, as well as investing in new distribution centers. Most importantly, the company has been focused on online retail.

Daniel Nieto| April 2022

Stock Price of Bed Bath and Beyond Compared To Top Competitors

Source: Yahoo Finance Risk Potential Supply Chain Concerns: During the most recent earnings call, the CEO Mark Tritton said that their rough earnings were related to the continued supply chain issues. Notably, the CEO pointed that a reason for a dip in sales was due to about 30% of inventory that was unavailable to sell because it was stuck upstream in distribution centers. This has been a problem for the industry, and it has become increasingly necessary to invest in supply infrastructure as the company has the past year. The concerning part is how slow the company has been to recover from these problems, as competitors have been seen to be rebounding or have already recovered.

Declining Customer Base: The decline of customers has been incredibly concerning. The firm has seen multiple periods of decline in both its revenue and customer base. The common denominator for both problems has been that the company has not had the inventory that customers want in stock. As more customers see that Bed Bath and Beyond has struggled the past few years, they have been leaving in droves. It has become more important than ever for the company to innovate and rely on the new gained popularity brought on by the meme stock movement.

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