August Monthly Roundup: Maintaining Our Lead Through the Ups and Downs

August was a positive month for the market, but the S&P 500, Nasdaq Composite and Pro Portfolio closed the month off their mid-August highs. Market strength in the first half of the month reflected favorable economic data, which included declines in July CPI and PPI figures, even though the Iran war proceeded while traffic through the Strait of Hormuz remained subdued compared to historical levels. 

Things on that front shifted in the second half of the month, taking some of the market’s and the Portfolio’s gains as Iran threatened to close the Strait and President Trump threatened “Economic D-Day” on Iran. Oil, gas, and diesel prices rebounded, rekindling concerns over inflation pressures. Meanwhile, quarterly earnings continued and while the results and guidance were better than feared, more than a few companies, including our own Marvell (MRVL) and TJX (TJX), fell short of exuberant Wall Street whisper forecasts. 

Treasury yields were a headwind in the second half of August as well, and their climb weighed on mortgage rates and new mortgage purchase activity. And while the market was contemplating renewed inflation pressures as it saw oil prices rebound, Fed Chair Warsh’s comments at the Jackson Hole Economic Symposium on August 28 offered some clarity but hammered home the likelihood of a September Fed rate hike. 

During August, we commented on the complacent mood in the market, and with the Volatility Index ending the month near a reading of 15, many would argue it remains there. That may last a few more days, but once we move past the Labor Day holiday weekend, it will be back to business for Wall Street as the race to the end of 2026 begins. 

Tuesday, we enter September, a month that has historically been a challenging one for the stock market. As French microbiologist Louis Pasteur said, “Fortune favors the prepared mind,” and understanding that historical performance, we are on alert.

That means being ready to carefully assess developments from this week’s G-20 meeting as well as the one between President Trump and oil executives on September 1. The same goes for the critical August economic data this week and next, the Fed’s upcoming policy meeting, as well as a slew of investor conferences, and the updates they bring. 

What we’ll be aiming to determine against those learnings and others is can the S&P 500 deliver the level of EPS growth expected by the market in H2 2026 and 2027. At the end of June, consensus S&P 500 EPS estimates for 2026 and 2027 stood at $340.91 and $397.42, respectively. Closing out August, those figures now stand at $361.24 and $414.75, respectively. 

To us that means that as much as the market is focused on inflation data, developments between the U.S. and Iran and a likely Fed rate hike, the upcoming wave of investor conferences will be just as important. At those events, management teams will be discussing their businesses and fielding questions. While some may opt to update their formal guidance based on quarter-to-date developments, for the ones that don’t we’ll be reading between the lines to glean what has unfolded for the demand in their businesses but also the cost side as well. That goes for the balance of this year and initial indications for 2027.

If September lives us to its reputation as challenging month, our aim will be to mimic what we’ve done when faced with pronounced market pressure. By that we mean look for compelling risk to reward opportunities in and out of the Portfolio, as well as prudently raising capital. That should not be construed to mean a widespread exit of positions, but rather tactical ones that will allow us to improve the Portfolio’s positioning for what’s ahead. 

With that in mind, we will continue other heed incoming data, the intersection of our fundamental and technical analysis, and the volume of signals we collect. And our focus will remain on well-positioned companies poised to capitalize on pronounced multi-year tailwinds that should translate into superior EPS growth. 

As you’ll see below, we may have a long holiday weekend ahead of us, but there will be quite a bit to chew through before we get there. With that in mind, be sure to check your emails and alerts because we will have quite a bit coming your way in the days ahead.

Catching Up on the Portfolio 

Amid the market’s ups and downs through August, the Portfolio held its own against the S&P 500, resulting in it continuing to best that market average on a year-to-date basis. 

Notable performers during August included the massive move in shares of Palantir (PLTR), which made it our strongest performer by far. But only focusing on that outperformer would mean missing the double-digit gains in shares of Netflix (NFLX) and Marvell (MRVL) as well as the outperformance in Arista Networks (ANET), Axon (AXON), the First Trust Nasdaq Cybersecurity ETF (CIBR), Microsoft (MSFT) and Nvidia (NVDA) among others. Those gains were mitigated by monthly declines in shares of TJX Companies (TJX), Waste Management (WM), Paccar (PCAR), Applied Materials (AMAT) and a few others. 

Looking at the performance of the Portfolio’s EPS All-Stars basket, the more than 50% August move in El Dorado Gold (EGO), and the double-digits gains in Lumentum (LITE) and Micron (MU), led the basket to climb 13.7% in August. Good, and while that moved the needle in a meaningful way, it still left the strategy down around 7% QTD.

While August is known for summer vacations and lower trading volumes, it was a busy one for us here at the Portfolio. We started a small position in Builders FirstSource (BLDR), the ROBO Global Robotics & Automation Index ETF (ROBO), and the Health Care Select Sector SPDR Fund (XLV). We added during the month to our holdings in Neostellar (NSLR), Applied Materials (AMAT), TJX (TJX), Costco (COST), Waste Management (WM), and Broadcom (AVGO). We also locked in big gains in several positions, including Arista Networks (ANET), Microsoft (MSFT), Palantir (PLTR), and Eaton (ETN). 

At the end of August, the Portfolio’s cash position stood at 7.1% of its assets. Looking ahead to September, as we noted above, the month tends to be one of the more challenging one for the market, but that also means it could present some opportunities for us. We’ll be on the lookout for those opportunities in both existing holdings as well as those on our radar screen, but given current cash levels odds are our bite sizes will be on the smaller side. Should we see a reason to take profits in a position in the coming weeks, the probability is high that we will do so. 

Not only would ringing the register bring us some additional capital to put to work in other individual stock holdings, but when we reconstitute the EPS All-Stars basket at the end of September, we will be making our final push to bring the strategy up to 1% of the Portfolio’s assets for each of the strategy’s constituents. We’ve taken a preliminary snapshot of the reconstituted basket and it looks like we could have a decent shake-up relative to the current line-up on October 1. With the number of investor conferences ahead of us, the Fed policy meeting, and who knows what other developments in the coming weeks, we’ll take a final look as we get much closer to the reconstitution time frame. 

This Month’s Signals

Big insights are shared in our Signals alerts during the month. If you missed them, here are some quick links to them:

August 8: We’re Tracking 28 Signals Across 10 of the Portfolio’s Strategies

August 15: We’re Tracking 27 Portfolio Signals Across Our Investing Themes 

August 24: We’re Tracking 23 New Signals Across Our Investing Themes 

Key Global Economic Readings

Chart of the Week: S&P 500 – Market Cap vs. Equal Weight

The State Street SPDR S&P 500 ETF Trust (SPY) finally caught up to the Invesco S&P 500 Equal Weight ETF (RSP) after trailing for much of 2026. Of course, the RSP (equal-weighted S&P 500 index) is still ahead by about 400 basis points, but that lead was much bigger a month or so ago. For its part, the SPY (cap-weighted S&P 500 index) has been aided by strong moves in select Mag 7 names, but it still trails due to weakness in the next shelf of names (like Broadcom (AVGO), Amgen (AMGN), Intel (INTC) others). As we move into the last third of 2026 there is more uncertainty with the upcoming election and a potential shift in monetary policy.

What has been the key for the strong returns in the RSP and SPY? Look no further than earnings, which flashed a huge positive surprise in Q1 and are following up with some massive numbers in Q2.  The only problem we see is uncertainty about the future and whether this growth in earnings can continue. 

The backers of AI and the cloud would have you believe this is a renaissance period, a new industrial revolution that is just in the early innings of the game. They may be right, but we have seen/heard that movie before, so we would always suggest walking through carefully and with one hand on the door just in case.

As for performance, the RSP has been mostly sideways this past month while the SPY shows better relative gains. The two ETFs are now joined together and heading into a seasonally weak period for stocks. In 2025, September was a strong month but October and November were quite weak. We’ll see how things play out this time, but being near all-time highs and not pushing through makes for a time for the bears to make a run. If the RSP regains control, the markets may not correct as much (like before).

Other charts we shared with you this past week were:

Monday, August 24: S&P 500 – Giving Bulls the Benefit of the Doubt

Monday, August 24: Alphabet (GOOGL) – Shhhh… Alphabet Is Taking a Nap

Tuesday, August 25: Eaton (ETN) – Pullback in Eaton Is Actually a Positive

Wednesday, August 26: Eldorado Gold (EGO) – This Gold Miner Is Starting to Shine

Thursday, August 27: Marvell (MRVL) – Now It’s Marvell’s Time to Step Up

Friday, August 28 – First Trust Nasdaq Cybersecurity ETF (CIBR) – A Close Look at the Cybersecurity ETF

The Week Ahead

Coming off Friday’s Jackson Hole Economic Symposium remarks by Fed Chair Kevin Warsh, expectations for a September rate hike jumped considerably with the market now expecting a 25-basis point rate hike as a likely happening. Over the weekend, the U.S. struck a deal with Venezuela to control more than 65 billion barrels of proven oil reserves, a step toward extracting energy from the country. How soon the reserves could be drilled and who will pay to make it happen, were not immediately clear, but we see this as a positive step toward lower oil prices and inflation pressures. 

With many at the Fed focused on inflation, we will be matching up several pieces of incoming data this week and what they have to say about inflation pressures against the learnings contained in the Flash August PMI report from S&P Global. Barring a sizable drop in inflation data points found in ISM’s August PMI reports, wage data in the August Employment Report, next week’s August CPI and PPI data, and oil prices, odds are we will see the Fed deliver a rate hike in September. Given Warsh’s comments about seeing little progress on inflation and the PCE metrics he rattled off at Jackson Hole, he risks the Fed’s credibility unless data over the next two weeks give the Fed a reason not to deliver a rate cut. 

We’ll also review this week’s PMI and jobs data for the latest on the pace of job creation. As part of that, we’ll be looking at the revisions for June and July in the August Employment Report as we update our rolling three-month analysis of job gains. When we review those updated figures, we’ll look to match them against the anecdotal findings of the latest Fed Beige Book out mid-week. We’ll also be reading that Beige Book report for helpful nuggets for our position in Paccar (PCAR) and the ROBO Global Robotics & Automation Index ETF (ROBO).

We also have the first piece of Construction Spending data for the current quarter and we’ll be breaking down that July data with an eye toward our shares of United Rentals (URI). 

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

U.S.

Monday, August 31

Dallas Fed Manufacturing Index (August) – 10:30 AM ET

Tuesday, September 1

LMI Logistics Index (August) – 6:00 AM ET

S&P Global Manufacturing PMI (August) – 9:45 AM ET

ISM Manufacturing PMI (August) – 10:00 AM ET

JOLTs Job Openings & Quits (July) – 10:00 AM ET

Construction Spending – July (10:00 AM ET)

Dallas Fed Services Index (August) – 10:30 AM ET

Wednesday, September 2

MBA Mortgage Applications Index (Weekly) – 7:00 AM ET

ADP Employment Change Report (August) – 8:15 AM ET

Factory Orders (July) – 10:00 AM ET

EIA Crude Oil Inventories (Weekly) – 10:30 AM ET

Fed Beige Book – 2 PM ET

Thursday, September 3

Challenger Job Cuts (August) – 5:30 AM ET

Initial & Continuing Jobless Claims (Weekly) – 8:30 AM ET

Imports/Exports (July) – 8:30 AM ET

Nonfarm Productivity and Unit Labor Costs (Q2 2026) – 8:30 AM ET

S&P Global Services PMI (August) – 9:45 AM ET

ISM Non-Manufacturing PMI (August) – 10:00 AM ET

EIA Natural Gas Inventories (Weekly) 10:30 AM ET

Friday, September 4

Employment Report (August) – 8:30 AM ET

International

Monday, August 31

China: NBS Manufacturing and Non-Manufacturing PMI (August)

Tuesday, September 1

China: Rating Dog Manufacturing PMI (August)

Japan: S&P Global Manufacturing PMI (August)

Eurozone: S&P Global Manufacturing PMI (August)

UK: S&P Global Manufacturing PMI (August)

Eurozone: Inflation Rate (August)

Thursday, September 3

China: Rating Dog Services PMI (August)

Japan: S&P Global Services PMI (August)

Eurozone: S&P Global Services PMI (August)

UK: S&P Global Services PMI (August)

Eurozone: PPI (July)

Friday, September 4

UK: New Car Sales (August)

Eurozone: Retail Sales (July)

We have a modicum of companies reporting next week, including the Portfolio holding Broadcom (AVGO). No doubt market watchers will be sizing up the reported top and bottom line and revised guidance, but the focus will also include what is said about Broadcom’s custom silicon business. Earlier this year, management saw a line of sight to $100 billion in revenue from that effort in 2027, and we, as well as many others, will be looking for n meaningful update this week.

While Broadcom is the only Portfolio holding reporting, Palo Alto Networks (PANW), Hewlett Packard Enterprise (HPE), Ciena (CIEN), Dell (DELL), and Zscaler (ZS) will be a treasure trove of fresh data points for us to connect back to our holdings. As we do so, we’ll be mindful of what those learnings could mean for existing price targets and ratings. 

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

Monday, August 31

• Open: Science Applications (SAIC)
• Close: Frontline (FRO)

Tuesday, September 1

• Open: Medtronic (MDT),
• Close:  Credo Technology (CRDO), Palo Alto Networks (PANW)

Wednesday, September 2

• Open: Brown-Forman (BF.B), Sprinklr (CXM),
• Close: Broadcom (AVGO), Hewlett Packard Enterprise (HPE), NetApp (NTAP), PVH (PVH), Snowflake (SNOW)

Thursday, September 3

• Open: Ciena (CIEN), Campbell’s (CPB), Victoria’s Secret (VSXY),
• Close: Ambarella (AMBA), Dell (DELL), Wealthfront (WLTH), Zscaler (ZS)

Portfolio Investor Resource Guide

• Economic Data: Here’s a List of Links to the Key Economic Data We Closely Watch
• Investing Terminology: 16 Key Terms Club Members Should Know
• 10-Ks: Want to Know About a Stock? Read the Company’s Reports
• 10-Qs: Unlock the Numbers and Key Information Behind Your Stock With the 10-Q
• Income Statement: Our Cheat Sheet to Understanding This Financial Document
• Balance Sheet, Cash Flow Statements, and Dividends: How to Know If a Company Is Off-Kilter? Read Its Balance Sheet
• Valuation Metrics: Everyone Wants a Value. Here’s How Investors Can Find
• Thematic Investing 101 Webinar
• Like the Benefits of ETFs? Let’s Talk About Models

The Portfolio Ratings System

1 – Buy Now (BN): Stocks that look compelling to buy right now.

2 – Stockpile (SP): Positions we would add to on pullbacks or a successful test of technical support levels.

3 – Holding Pattern (HP): Stocks we are holding as we wait for a fresh catalyst to make our next move.

4 – Sell (S): Positions we intend to exit.

ONES

American Express AXP; $330.17; 700 shares; 3.67%; Sector: Financial Services

UPDATE: Following little movement in July, shares of American Express (AXP) finished August down slightly. The lack of movement can be traced to little company news during the month. Meanwhile, we continue to collect data points indicating well-off consumers continue to spend, and we are encouraged by the rise in disposable personal income found in the July Personal Income and Spending data. We will continue to watch income gains vs. inflation pressures, but let’s remember, the real key to Amex’s earnings lies in the company’s card fee revenue stream. As we noted in our alert discussing Amex’s Q2 2026 results, Amex’s card fees reached record levels of $2.86 million in the quarter, up 15.4% year over year, and were the fastest-growing revenue line in the quarter. That reflects Amex reaping the benefits of its card refresh efforts, which led the number of cards in force to reach 155.1 million with an average fee per card of $131. Simple math tells us that is well above the H2 2025 average of 152 million cards in force and net fee per card of $120.50. With card fees driving 70% of Amex’s pretax income, that step-up alone suggests management’s guidance is conservative. But during the Q2 2026 earnings call, Amex management said card-fee growth is expected to accelerate in the current quarter and exit the year in the high teens. That telegraphs a rise in Amex’s pretax income and EPS in the coming quarters. Keeping that in mind, when we annualize the $8.81 in EPS Amex generated in H1 2026, it implies $17.62 in EPS for 2026. This adds to our thinking that Amex’s guidance is once again skewing conservative. When Amex management presents at the Barclays Global Financial Services Conference on September 16, we’ll be listening for comments about transaction volumes, but our focus will be on the Platinum Card refresh and what that means for card-fee growth. Between now and then, we will keep a close eye on the technical set up for AXP shares, which have been building a base near the 200-day moving average. 

August Price Change: -1.8%; Yield: 1.1%

INVESTMENT THESIS: American Express is a globally integrated, membership-driven payments company, providing customers with access to products, insights, and experiences that enrich lives and build business success. The company has four reportable operating segments: U.S. Consumer Services (USCS), Commercial Services (CS), International Card Services (ICS), and Global Merchant and Network Services (GMNS). American Express targets the premium consumer space by continuing to deliver membership benefits that span our customers’ everyday spending, borrowing, travel, and lifestyle needs, expanding its roster of business partners around the globe, and developing a range of experiences that attract high-spending customers. In 2025, the company’s net card fee revenue accounted for 72% of its pre-tax income, which we see as providing a differentiated business model that should continue to grow as Amex wins new card members and drives its average fee per card higher.

Target Price: Reiterate $400; Rating: One

Checkpoint: $290

RISKS: Slowdown in consumer spending, competition, membership growth, merchant acceptance, and lack of new product innovation.

Applied Materials AMAT; $458.39; 395 shares; 2.88%; Sector: Semiconductors

UPDATE: Following their sharp fall in July, shares of Applied Materials (AMAT) declined further in August, bringing their QTD decline to more than 30%. That points to a steep correction in the shares. While we prudently rang the register on AMAT shares back in late June near $623.94, in late August we made a move to rebuild our position in the semi-cap equipment company. One of the catalysts for that decision was the revelation by Nvidia that it will be supply constrained through at least the end of 2027. Another was the continued reminders that chip capacity for PCs, smartphones, and other end markets are under pressure as chip suppliers look to meet AI and data center demand. Those findings increase our confidence in Applied’s outlook, including the one for the current quarter. When the company delivered its quarterly results in mid-August, it guided its top-line for the current October quarter to between $9.75 billion to $10.75 billion. The midpoint of that guidance, $10.25 billion, is way ahead of the $9.84 billion market consensus, and equates to just over a 50% year-over-year increase. It’s also another double-digit increase sequentially. As we trace those figures back, they are supported by rising capex levels from key chip vendors like Taiwan Semi, Micron, Samsung, SK Hynix and others. During the earnings call, management confirmed the favorable pricing environment and pointed to it helping lift margins further in the coming quarters. That helps explain why management’s bottom-line guidance for the current quarter of $3.82 to $4.22, with a midpoint at $4.02, is up 15% sequentially and 85% year over year. With tight chip capacity expected to remain in place through 2027 and into 2028, that favorable pricing environment should remain in place, helping Applied deliver another year of significant top- and bottom-line growth in coming quarters. We will review our $800 AMAT price target following Applied’s presentation at the Citi 2026 Global TMT Conference on September 8 and the Goldman Sachs Communacopia & Technology conference the following day. As we mark those dates, we’ll also circle October 13-15 for Semicon West. For those unfamiliar with it, that event is a big one for the semi-cap industry and Applied is a prominent sponsor.

August Price Change: -9.7%; Yield: 0.4%

INVESTMENT THESIS: The outlook for semiconductor capital equipment, an industry that delivered ~$133 billion in 2025, remains very bright. SIA sees industry deliveries rising to $145 billion this year and $156 billion in 2027, and others see a continued step function higher through 2030. Underpinning that forecast is continued spending on AI and data centers, and corresponding equipment, as well as other connected devices, including appliances as well as cars and trucks. Applied Materials holds a leading position in the global semiconductor wafer fabrication equipment (WFE) market, with a market share estimated at approximately 19% in 2025. As a broad-portfolio supplier, it dominates in deposition (44% share) and maintains a strong presence in etch, CMP, and ion implantation tools. Major customers include TSMC, Samsung, Intel, SK Hynix, and Micron, along with key partnerships involving Apple and Texas Instruments

Target Price: Reiterate $800; Rating: One

Checkpoint: $425

RISKS: Customer capital spending levels, currency, and economic risk. 

Broadcom Inc. AVGO; $370.34; 588 shares; 3.46%; Sector: Technology

UPDATE: Shares of Broadcom (AVGO) finished August down mid-single digits, making them a drag on the Portfolio’s QTD performance. We used the market’s reaction to the expanded Google-Marvell relationship to pick up more Broadcom shares at $374.46 on August 21. In making that trade, we called out Broadcom’s long-term relationship that spans through 2031 as well as reminded members about the $30 billion multi-year chip win with Apple. We continue to see Broadcom’s custom AI silicon and networking businesses benefiting from rising AI adoption and expanding usage, especially with Nvidia being capacity constrained and Broadcom customers bringing their chip to third-party customers. When Broadcom reports on September 2, we’ll be looking for an update to CEO Hock Tan’s $100 billion 2027 forecast for the custom silicon business. Part of that will be reviewing Tan’s comments about known custom silicon customers that include Google, Meta, ByteDance, Anthropic and OpenAI. Program wins as well as the overall increase in hyperscaler and neocloud capital spending levels for this year and 2027 should help investors wrap their heads around the CEO’s forecast. We will also be connecting the dots back from other demand drivers for Broadcom’s business, including cybersecurity, enterprise software, and industrial chip solutions. The combination of custom AI chips, networking and VMware gives Broadcom multiple avenues to participate in enterprise AI spending. We’ll have much more to say on AVGO shares later this week. 

August Price Change: -4.9%; Yield: 0.7%

INVESTMENT THESIS: We became shareholders in Broadcom to participate as the company benefits from the buildout of digital infrastructure, including AI, data center, and custom AI chips, as well as demand for its software and services segment, which includes private cloud, mainframe software, cybersecurity, and enterprise software. Broadcom reports its business in two segments – Semiconductor Solutions (58% of sales and 51% of operating income) and Infrastructure Software (42%, 49%). The Broadcom management team has developed a track record of delivering organic growth and growth by acquisition, with the latter positioning the company to better position itself to meet developing demands. More recent acquisitions include Brocade Communications, CA, Inc., Symantec Enterprise Security, and VMware.

Target Price: $525; Rating: One

Checkpoint: $330

RISKS: Economic, governmental regulations, geopolitical developments, cyclical, and investment risk.

Costco Wholesale COST; $943.89; 230 shares; 3.45%; Sector: Consumer Staples

UPDATE: Factoring in the slight dip in August, shares of Costco (COST) closed the month up low-single digits quarter to date. Like many of you, we find that frustrating in the face of the company’s string of stellar monthly sales reports that leave little question it continues to gain consumer wallet share when compared to monthly Retail Sales reports and Walmart’s July 2026 quarter U.S comp sales. Coming into 2026, a December 2025 survey from PYMNTS found that about 40% of consumers were living paycheck to paycheck out of necessity, waiting on their next paycheck to cover expenses signals. That was before the re-acceleration in inflation pressures that began earlier this year. With oil and gas prices moving higher, the rekindling of inflation pressures, which are outpacing average hourly income gains, bodes well for further gains at Costco. To us, the key to Costco’s business is the relationship between growing the number of warehouse locations, which feeds the membership revenue stream and merchandise volumes. Provided Costco doesn’t make the location-over-saturation mistake we’ve seen from the likes of Starbucks and others, we are inclined to remain owners of the stock to capture further upside and the benefit of future special dividend payments. In late August, we used the weakness in retailer shares following quarterly results from Walmart to scoop up some additional COST shares for the Portfolio near $935. As we put August behind us, we will mark our calendars for Costco’s August sales report on September 2 and its Q4 2026 earnings on September 24. 

August Price Change: -0.8%; Yield: 0.6%

INVESTMENT THESIS: We like Costco’s long-term prospects, driven by a club-based operating model that focuses on volumes, not margins, and therefore offers its customers a value proposition of everyday low prices. The strength of this model has created an incredibly loyal customer base with low churn and continued share gains in both brick-and-mortar and e-commerce. This is a global concept, evidenced by the strength of sales both in the U.S. and abroad, which includes an emerging China opportunity. We see the company’s membership model as a key differentiator versus other retailers, and its plans to open additional warehouse locations in the coming quarters should drive retail volumes and the higher-margin membership fee income as well. We also appreciate management’s approach to capital returns and their willingness to return cash.

Target Price: Reiterate $1,150; Rating: One

Checkpoint: $900

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

Neostellar Capital NSLR; $10.13; 22,695 shares; 3.65%; Sector: Financial Services

UPDATE: Following a double-digit fall in July, shares of Neostellar Capital (NSLR) were largely flat in August. During the month we used the post Q2 2026 earnings selloff to pick up additional shares given the steep discount to the company’s net asset value (NAV) per share and potential monetization events in the coming quarters. Our plan with NSLR is to play the long game and capture the benefit on the company’s NAV per share as it monetizes more of its investment portfolio. That pending list includes OpenAI, Whoop, VastData, Plaid, and TensorWave among others. When Wall Street is back from the beach and other late summer vacations, we will want to note conversations about the IPO market and pending transactions starting after the Labor Day holiday. As we do that, we’ll also keep tabs on funding rounds for others in Neostellar’s portfolio as that would likely lead to a step up in the company’s net asset value per share. Barring that, we aren’t likely to see a meaningful lift in the NAV per share figure until IPO activity picks back up. That means we are in a bit of a holding pattern with NSLR shares. Normally that would trigger a rating downgrade, but measured against the NAV per share figure of $13.44, NSLR shares are already trading at a steep discount.

August Price Change: -0.2%; Yield: 4.9%

INVESTMENT THESIS: Neostellar Capital is a business development company (BDC) that invests in high-growth, venture-backed private companies. As Neostellar monetizes those portfolio investments through either IPO or M&A transactions, it must pay out most of its earnings to shareholders in the form of dividends. What’s important to factor into our thinking is that Neostellar’s strategy isn’t to hold public company investments but rather to monetize them following the lock-up expiration. Sometimes this can be immediate, and sometimes it can be in stages, but when that monetization occurs, it triggers dividend payments. And because a BDC must pay out at least 90% of its taxable income through dividends to shareholders, there is the possibility of a special dividend to hit that qualifying threshold late in the year. As we think about this, it means that we should focus on total return with NSLR, which is defined as capital gains in the shares plus dividends received while owning them. What this means is even if we see NSLR shares trade sideways or move lower, depending on the size of the dividend payments in the coming quarters, the position’s total return could still be sizable for the Pro Portfolio. Neostellar’s portfolio holdings at the end of Q2 2026 included OpenAI, Whoop, Plaid, TensorWave, Vast, Blink Health and others.

Target Price: $17; Rating: One

Checkpoint: $8.50

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

Nvidia Corp. NVDA; $220.78; 970 shares; 3.40%; Sector: Technology

UPDATE: For the first half of August, shares of Nvidia (NVDA) climbed from $195 entering the month to $225. In the second half, the shares traded off amid renewed concerns of the company flexing its balance sheet to fund AI and AI infrastructure companies, a move that would secure future revenue for Nvidia. However, when Nvidia delivered its July 2026 quarterly results that bested expectations, and shared expectations for its revenue in fiscal 2028 (which matches with calendar 2027) to grow 70% year over year, a figure that was well past the 45% consensus forecast. CEO Jensen Huang said that demand is even greater, but the company is contending with supply constraints. At the same time, Nvidia also telegraphed its gross margin for that year will be around 72%-73% compared to the 72.4% posted in the July 2026 quarter. While below gross margins in past quarters, the guidance includes the expected ramp of Nvidia’s next chipset, Vera, which should account for ~20% of revenue in the current quarter. On the back of that guidance, we lifted our NVDA price target to $300 from $280 and the shares climbed, ultimately finishing August up nearly 10% Even at that new target, NVDA shares are still cheap on a price-to-earnings/growth (PEG) ratio basis. As we move through the coming quarters, we will continue to revisit our target for this One-rated position based on new information on hyperscaler and neocloud capital spending as well as monthly and quarter revenue reports from Taiwan Semiconductor, Foxconn, Dell, Hewlett Packard Enterprise and others. During the July 2026 quarter, Nvidia repurchased $20 billion in stock, roughly 94 million shares per the filed 10-Q, leaving ~$99 billion under the current authorization. Given management’s comment about returning excess free cash flow net of strategic uses, we could see another leg up in that buyback program or perhaps another dividend increase in the coming quarters. 

August Price Change: 10.0%; Yield: 0.5%

INVESTMENT THESIS: Nvidia is well-positioned to benefit from ramping AI and data center spending. The company pioneered accelerated computing to help solve the most challenging computational problems. Nvidia is now a full-stack computing infrastructure company with data-center-scale offerings that are reshaping the industry. The company’s full stack includes the foundational CUDA programming model that runs on all Nvidia GPUs, as well as hundreds of domain-specific software libraries, software development kits, or SDKs, and Application Programming Interfaces, or APIs. This deep and broad software stack accelerates the performance and eases the deployment of Nvidia accelerated computing for computationally intensive workloads such as artificial intelligence, model training and inference, data analytics, scientific computing, and 3D graphics, with vertical-specific optimizations to address industries ranging from healthcare and telecom to automotive and manufacturing. Nvidia reports in two business segments: Compute & Networking and Graphics. The Compute & Networking segment (78% of revenue, 85% of operating income) is comprised of Data Center accelerated computing platforms and end-to-end networking platforms, including Quantum for InfiniBand and Spectrum for Ethernet; NVIDIA DRIVE automated-driving platform and automotive development agreements; Jetson robotics and other embedded platforms; Nvidia AI Enterprise and other software; and DGX Cloud software and services. The Graphics segment (22% of revenue, 15% of operating income) includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU, or vGPU, software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse Enterprise software for building and operating metaverse and 3D internet applications.

Target Price: $300; Rating One

Checkpoint: $175

RISKS: Market and interest rate risk, credit risk, country risk, and operational risk, including cybersecurity.

TJX Companies TJX; $133.91; 1,605 shares; 3.41%; Sector: Financial Services

UPDATE: We used the post-earnings pullback in shares of TJX Companies (TJX) following the company’s July 2026 earnings report to pick up additional shares for the Portfolio on August 19. As the shares move lower over the ensuing days into an even deeper oversold condition, we scooped up more shares on August 28 at $134.80. While TJX closed August down double digits, which put the shares below our August 19 pick-up price near $146, several data points received after TJX’s earnings report keep us positive on the company’s positioning and the outlook for the shares heading into the holiday shopping season. Comparing July quarter comp sales for TJX against other retailers confirms consumers are not only being more choosey with their spending dollars, they are shifting their spending to off-price realtors like those in TJX’s line-up. Consolidated margins at TJX rose to 11.9% in the July 2026 compared to 11.4% in the year-ago quarter and management upped its outlook for this year to 12% to 12.1% excluding the impact of tariff refunds. That implies a better margin profile in the second half of the year, which is also seasonally stronger for the company given holiday shopping. We are also encouraged by TJX stepping up its planned footprint expansion to a total of 7,500 locations compared to 5,262 at the end of the July quarter. In our view, the company is tapping into the cash-strapped consumer investment theme that we have, recognizing the number of consumers that struggle financially. PNC Bank finds that 67% of Americans struggle while Lending Club puts the figure closer to 60%. Gas prices back above $4 per gallon and the risk of renewed inflation pressures amid the fresh use of tariffs by Trump only improve the tailwind we see on TJX’s business as we approach the holiday shopping season. 

August Price Change: -14.9%; Yield: 1.2%

INVESTMENT THESIS: The TJX Companies is the leading off-price apparel and home fashions retailer in the United States and worldwide. It has over 5,200 stores and six branded e-commerce sites that offer a rapidly changing assortment of quality, fashionable, brand-name, and designer merchandise at prices generally 20% to 60% below full-price retailers’ regular prices on comparable merchandise. The company operates in four segments: Marmaxx and HomeGoods, both in the U.S.; TJX Canada, and TJX International. TJX looks to capitalize on opportunities to acquire merchandise at substantial discounts that regularly arise from the production and flow of inventory in the apparel and home fashions marketplace. These opportunities include, among others, closeouts from brands, manufacturers, and other retailers; special production direct from brands and factories; order cancellations; and manufacturer overruns. We see that positioning TJX extremely well, as consumers feel the pinch of ongoing inflation pressures and their efforts to stretch the disposable spending dollars they do have, including tapping discounted shopping locations. When TJX reported its January 2026 quarter, management shared plans to grow the company’s footprint. During the May 2026 earnings call, management signaled they are actively evaluating raising their long-term store count target beyond 7,000, pointing to adjacent markets and new ventures. Exiting the April 2026 quarter, TJX’s total store count stood at 5,262 locations. 

Target Price: $185; Rating: One

Checkpoint: $120

RISKS: Operational, strategic buying programs, and competitive risks, as well as consumer spending patterns.

Waste Management WM; $218.92; 878 shares; 3.05%; Sector: Industrials

UPDATE: After lifting our Waste Management (WM) price target to $265 from $255 on July 29, the shares traded off modestly in August. That late-month move lower led to them being a drag on the Portfolio’s QTD performance. In the face of that drag, we continue to see an improving margin profile at the company. That profile is being driven by selectivity and focus on the core residential waste business, and further margin gains at the Healthcare Solutions business, which is now “fully integrated.” In our view, for the next several quarters, Waste Management is likely to remain a margin-driven story first, helped along by the power of incremental pricing and cost containment. Based on the company’s first-half revenue of $12.9 billion and management’s midpoint revenue guidance of $26.375 billion, WM should deliver around 4% revenue growth in H2 2026 compared to H1 2026. But what should take center stage is the expected much faster growth in adjusted EBITDA. Management reaffirmed its 2027 adjusted operating EBITDA target between $8.15 billion and $8.25 billion versus the $3.9 billion achieved in the first two quarters of this year. That implies around 9% adjusted EBIDTA growth between the first and second half. Further integration and pricing action for the Healthcare Systems business bodes well for further margin gains in 2027. Meanwhile, further pricing steps in the core residential waste business as well as further pruning of less profitable routes should be another margin driver next year. WM pegs its free cash flow target between $3.75 billion and $3.85 billion. Here’s the thing: With more than 70% of its free cash flow target for the year already in hand, we would not be surprised to see those higher margins lead to a step up in free cash flow expectations for H2 2026. Given the expected free cash flow growth and WM’s comment about the Healthcare Solutions business now being fully integrated, our thinking is the management team is likely to renew its focus on nip-and-tuck M&A transactions. While WM is the largest waste company in North America, roughly half the market is served by small- to mid-sized competitors. That gives the company ample room for the management team to further consolidate a fragmented waste industry and use its playbook to wring costs out of those acquired businesses. Over time that points to rising EPS and cash flow levels that can be used to fund other acquisitions, buybacks or dividends. As we see it, the Waste Management story is one worth sticking with, especially if margin expansion prospects and the ones for free cash flow are growing faster than the company’s top line. That led us to to pick up some additional WM shares in late August at $224.66. Based on the upside to our price target and the improving technical picture, we also upgraded WM shares to a One rating. 

August Price Change: -3.4%; Yield: 1.7%

INVESTMENT THESIS: Waste Management’s revenue by reportable segment is 61% collection, 21% disposal, 10% healthcare solutions, 6% recycling, and 2% renewable energy. AS you can see, the core business is the inelastic waste removal business for residential, enterprise, and other customers.  The company has built its footprint through a series of acquisitions and excelled at wringing costs out of them, driving free cash flow, dividends, and funding incremental acquisition activity. While the residential business is sticky, the commercial business should continue to benefit from non-residential construction activity. Margins should continue to inch higher due to disciplined pricing and increasing use of automation. We are in the early days of WM Healthcare Solutions, but we see the business growing as management integrates and cross-sells against its core business and flexes the ability to integrate nip-and-tuck acquisitions as it has at the core waste business. Here, too, we see room to consolidate a fragmented industry, which makes this a natural fit for Waste Management. 

Target Price: $265; Rating: One

Checkpoint: $210

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

TWOS

Alphabet GOOGL; $339.35; 600 shares; 3.23%; Sector: Communication Services

UPDATE: Shares of Alphabet (GOOGL) trended lower in August, adding to their modest decline QTD, but even so the shares closed August up in the high-single digits on a YTD basis. Despite the dip, Google continued to win back search engine market share with the latest data putting its share at 91.32%, the highest level in over a year. Coupled with the company’s YouTube reach, which per data from Nielsen continues to lead every individual TV distributor with a 13.5% share of total U.S. TV viewing, up from 12.8% a year earlier. Those figures leave Google well positioned as advertising dollars continue to shift toward digital platforms. It also means the company should benefit from record political ad spending this year. During August, the company’s Gemini App crossed 1 billion users, making it Google’s fastest-growing product ever. Also during the month, AI lab Mirendil signed a multi-year partnership with Google Cloud to source compute capacity to power its self-accelerating AI. That win as well as figures reported by software companies for AI adoption and usage point to another step up in Google Cloud backlog compared to the $514 billion exiting Q2 2026. Google management expects to convert just over half of that $514 billion into actual revenue over the next two years. Ball Park that at ~$260 million and it’s roughly a six-fold increase compared to the Google Cloud revenue delivered in H1 2026. In our view, that explains why Alphabet raised its 2026 capital spending guidance to $195 billion–$205 billion, up from $180 billion–$190 billion and reiterated another leg up in next year’s capex. To be clear, we are not fans of the company’s negative free cash flow for Q2 2026 and the prospects for it to continue in the coming ones but we understand the backlog levels at Google Cloud provide support for that buildout, and the company’s ability to monetize that added capacity. With Nvidia sharing it will remain capacity constrained at least through the end of 2027 if not longer, we see a vibrant opportunity for Google’s custom silicon effort. Morgan Stanley pegs that opportunity near $200 billion in revenue over the next few years. Beyond the company’s operating segments, Google is one of the largest institutional holders of SpaceX (SPCX) with 551.2 million shares. Other holdings include 2 million shares of Arm Holdings (ARM), 8.9 million of AST SpaceMobile (ASTS), 35.2 million shares of Planet Labs (PL), and 3.5 million shares of CME Group (CME). To that we will want to track the expanded relationship with Marvell, which includes a warrant to purchase up to 58.97 million MVRL shares at $206.58 subject to qualifying product purchases. Those investments aside, which could be sources of funding for Google’s capex plans, we continue to see the company well positioned across the digital advertising and AI landscape. The shares face a tight band of resistance between $335 and $350, and that has us looking for potential catalysts that could break it out of that range to the upside. 

August Price Change: -4.7%; Yield: 0.2%

INVESTMENT THESIS: We believe that while search and digital ad dominance are what will carry the shares in the near-to mid-term, longer-term, it is the company’s artificial intelligence “moat” that will provide for new avenues of growth.  Alphabet surpassed 350 million paid subscriptions across Google One and YouTube. AI is what has made the company’s search, video, and targeted ad capabilities best-in-class and is the driving force behind the company’s success in voice (Google Home) and autonomous driving (Waymo). Furthermore, we believe it is this AI expertise that will also make the company more prevalent in other industries, including healthcare via its subsidiary Verily, as AI and machine learning continue to disrupt operations across industries. As of mid-2206, Google’s Gemini app had over 900 million monthly active users. Adding to our positive view of the company’s future opportunities, we believe that Alphabet’s free cash flow generation and solid balance sheet set it apart and are what will allow the company to continue taking chances on far-out, ground-breaking, and potentially world-changing projects, as well as fund capital returns to shareholders. We will continue to monitor advertising spend as well as the competitive landscape for the company’s core Search and Advertising business. 

Target Price: Reiterate $410; Rating: Two

Checkpoint: $305

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

Amazon AMZN; $259.77; 801 shares; 3.30%; Sector: Consumer Discretionary

UPDATE: Following their double-digit move in July, shares of Amazon (AMZN) drifted a few percentage points lower in August, leaving them still a stronger QTD performer for the Portfolio. Multiple data points received during the month confirm Amazon remains well positioned in the digital shopping space as consumers look to maximize their spending dollars as we transition from the Back to School to year-end holiday shopping season. Indications of rising AI adoption and expanding usage from software companies and other data points bode well for the continued ramp at Amazon Web Services. During Amazon’s earnings call, management reminded investors that data-center capital is spent up to two years before monetization can begin but they generate revenue immediately upon opening. Management also addressed the market’s concern over AI spending and free cash flow saying, “As we get a few years out and the revenue growth outpaces the incremental CapEx growth which will happen at some point, the resulting revenue, free cash flow and return on invested capital is very compelling.” However, management’s revised capex forecast of $220 billion for this year means a big step up in spending in H2 2026. Even at that higher spending level, the company said it will not have enough capacity to meet all of its 2026 demand. Combined with management’s comments above, it means that, like other hyperscalers, we’re likely to see 2027 capex at Amazon be higher year over year. This means, just like with the other hyperscalers, we’ll want to keep track of Amazon’s operating cash flow and the margins that drive it. In terms of our current Two rating, a pullback back to the 50-day moving average near $247 would likely trigger our revisiting that rating, subject to what the forces were that led that to happen. Although Amazon is not slated to present at any September investor conferences, we will look to connect learnings from software companies and other Amazon partners that are making those presentations. Looking at the chart, we see a large gap following Amazon’s Q2 2026 earnings report that has yet to be filled. Closing that gap would mean AMZN shares falling to near $239, which also syncs with the 200-day moving average. A return to that level heading into what is a seasonally strong time of year for Amazon would trigger a rethink on our Two rating. 

August Price Change: -4.3%; Yield: 0.0%

INVESTMENT THESIS: We believe that upside will result from Amazon’s continued e-commerce dominance, AWS’s continued leadership in the public cloud space, and the ongoing growth of the company’s advertising revenue stream, which feeds off Amazon’s e-commerce business. Additionally, we think profitability will continue to improve as AWS and advertising account for a larger portion of total sales, as both these segments sport higher margins than the eCommerce operation. While we believe the increasing share of the revenue from these higher-margin businesses will be key to driving profitability longer-term, we think margins on eCommerce stand to improve as the company’s infrastructure is further built out and economies of scale further kick in. The embedded call option is that management is always looking to enter a new space and generate new revenue streams. Outside of the company’s core businesses, per recent 13F-HR filings, Amazon holds a stake of 158.36 million shares in Rivian, 225,428 shares in Marvell, as well as positions in other companies. It has also committed to a $50 billion investment in OpenAI.

Target Price: Reiterate $325; Rating: Two

Checkpoint: $225

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

Apple AAPL; $316.85; 750 shares; 3.77%; Sector: Technology

UPDATE: After regaining most of the June’s lost ground in July Apple (AAPL) shares inched further ahead in August. With the benefit of hindsight, our decision to trim back the Portfolio’s position in mid-July at $331.26 was a prudent one. Several months ago we noted our concerns over memory and other component constraints as companies like Micron shifted capacity to meet AI and data center demand at the expense of PCs and other end markets. We also suspected there would be a pull forward in demand by consumers and businesses ahead of potential shortages but also higher prices as OEMs looked to protect margins and pass through those higher component costs. We are seeing that flow through the system as showcased by the growing number of hardware price increases from Amazon, Dell, Microsoft, HP, Lenovo, and others. What’s different with Apple is the pending launch of new iPhone models alongside the overhauled Apple Intelligence and Siri AI. Morgan Stanley estimates that more than 850 million active iPhones are incapable of running basic Apple Intelligence queries, while over 1.3 billion devices cannot use the most advanced AI-powered Siri features. That suggests the potential for a massive upgrade cycle, provided the upcoming iOS 27 software release delights exiting iPhone users and wins over current Android ones. And yes, they will likely carry higher price tags, but taking this into account, Apple recently launched its Apple Upgrade program, which is a new program provided by Klarna that spreads payments for Apple products between 12 to 36 months depending on the product. And those higher price tags, along with the phase in of ones for other Apple products in June, give us reason to think the market could be underestimating Apple’s revenue in the December quarter and for 2027. What we see in upcoming quarterly shipment data matched against Apple’s product prices will tell us if our thinking is correct. Based on that shipment data as well as consumer reception to iOS 27, Apple Intelligence and Siri AI as well as the upcoming new iPhone models, we’ll revisit our price target as needed. All of this means we will be assessing what Apple brings to market in the coming months, but especially what it unveils for iPhone in early September. 

August Price Change: 2.6%; Yield: 0.3%

INVESTMENT THESIS: While we acknowledge that near-to-mid-term performance remains heavily influenced by iPhone sales, the dynamic is shifting as investors finally place greater emphasis on Services growth. We are bullish on the 5G upgrade cycle and believe longer-term upside will continue to come as Services revenue grows its share of overall sales. Services provide for a recurring revenue stream at higher margins, a factor that serves to reduce earnings volatility while allowing for a higher percentage of sales to fall to the bottom line; as a result, we believe that Services growth and the installed base are much more important than how many devices the company can sell in each 90-day period. In addition to improved profitability, we also believe the transparent nature of this revenue stream will demand an expanded price-to-earnings multiple as segment sales grow. Furthermore, we believe that Apple’s desire to push deeper into the healthcare arena will help make its devices invaluable as more life-changing features are added and the company works to democratize health records.

Target Price: Reiterate $350; Rating: Two

Checkpoint: $280

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

Arista Networks ANET; $195.69; 1,100 shares; 3.42%; Sector: Technology

UPDATE: Shares of Arista Networks (ANET) finished August up in the high-single digits, putting their year-to-date gain at more than 40%. The catalyst for that move was the company’s Q2 2026 results and upsized guidance, which led us to increase our price target to $225 from $180. Arista raised its full-year 2026 guidance for the third time this year, to $12.6 billion, implying roughly 40% annual growth. That’s $2.1 billion above the original analyst-day target and $1.1 billion above the company’s May forecast. Management did remind us that supply chain shortages exist in the form of industry-wide component tightness and that is likely to persist through 2027. That is helping temper our expectations and price target compared to some others across Wall Street. However, component price increases are expected to hit Arista after it burns through its existing backlog of components, which we take to mean in the next few quarters. That is also tempering our expectations and price target. Given the strong run in ANET shares leading up to the company’s earnings report, we took some profitable chips off the table at $192.98. During the earnings call, Arista said that at least for now, it’s visibility is limited to around two quarters, which means its line of sight for this year is far greater than it was back in May. However, it also means its view on 2027 is still coming into focus. And it also means that, to the extent supply chain issues can be overcome, Arista should be able to convert more of the $6.9 billion in total deferred revenue exiting June at a brisker pace. With that in mind, we’ll be closely following management’s comments when it presents at the Goldman Sachs Communacopia + Technology Conference 2026 on September 8. We will look for opportunities to build back our ANET position at lower prices. We will caution that the decision to do so will be weighed against prospects and entry points for other existing Portfolio positions as well as any other prospects that we may be entertaining at that time. 

August Price Change: 8.5%; Yield: 0.0%

INVESTMENT THESIS: Arista Networks engages in the development, marketing, and sale of data-driven, client-to-cloud networking solutions for AI, data center, campus, and routing environments in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Its cloud networking solutions consist of Extensible Operating System (EOS), a publish-subscribe state-sharing networking operating system offered in combination with a set of network applications. The company offers data center, cloud, and AI networking, cognitive adjacencies, and cognitive network software and services. It also provides post-contract customer support services, such as technical support, hardware repair, and replacement parts beyond standard warranty, bug fixes, patches, and upgrade services. The company serves a range of industries comprising internet companies, cloud service providers, financial services organizations, government agencies, media and entertainment, healthcare, oil and gas, education, manufacturing, industrial, and others. Two of Arista’s largest customers in the last few years are two Portfolio holdings you’ll quickly recognize — Microsoft and Meta. Per Arista’s 10-K filings, both Meta and Microsoft each account for more than 10% of revenue. Other named customers include Amazon’s AWS, Google Cloud, Anthropic, Canva, SAP, Shopify, Apple, Oracle, Bank of America, and Accenture.

Target Price: $225; Rating: Two

Checkpoint: $145

RISKS: Economic, customer, supply chain, and competition risks.

Axon Enterprise AXON; $566.56; 388 shares; 3.49%; Sector: Aerospace & Defense

UPDATE: Like several other holdings, Axon’s shares made a strong move for most of August, but faded toward the end of the month. For August in full, the shares rose more than 7% leaving them up double-digits on a QTD and YTD basis. From a different perspective, the shares have soared more than 50% from our last purchase near $378 in mid-April, and are still below the $626.60 level at which we locked in a slice of gains in early July. We remain bullish on the stock, especially following the company’s June 2026 quarterly results that showed another step up in future contracted bookings. Axon’s future contracted bookings rose more than 40% year over year (6% quarter over quarter) to $15.1 billion. That’s nice visibility, in our view, and with 20%-25% of that expected to ship in the next months it provides solid support for 2027 revenue. The balance of that $15.1 billion helps support the company’s $6 billion 2028 revenue target, which compares to the $3.7 billion expected for this year. Annual recurring revenue at Axon continues to rise, hitting $1.6 billion exiting Q2 2026 compared to $1.2 billion a year ago, with ~95% coming from subscription plans. As revenue grows, that subscription level should continue to provide us with a nice line of sight for revenue in coming quarters, bringing more support for that 2028 top-line target. Given the telegraphed comments for added margin pressure in the current quarter that we discussed in our analysis, we will want to see those margins rebound in Q4 2026-Q1 2027 to gain greater comfort with Axon’s 2028 adjusted EBITDA target of 28%. Potential upcoming catalysts for Axon shares include management presenting at the Goldman Sachs Communacopia & Technology Conference on September 8, the Wolfe Research TMT Conference on September 9, and the Piper Sandler Growth Frontiers Conference on September 15. We’ll also be listening for any sizable program wins that would lead to another step up in Axon’s total contracted bookings. That includes more details on the $1.5 billion Department of Homeland Security counter-unmanned-aircraft-systems program that Axon was named in alongside several other vendors. 

August Price Change: 7.4%; Yield: 0.0%

INVESTMENT THESIS: Axon Enterprise develops, manufactures, and sells conducted energy devices and cloud-based digital evidence management software designed for use by law enforcement, corrections, military forces, private security personnel, and private individuals for personal defense. The company operates in two segments: Taser (recently renamed Connected Devices) and Software & Sensors (recently renamed Software & Services). Taser develops and sells CEDs used for protecting users and virtual reality training. Software & Sensors manufactures fully integrated hardware and cloud-based software solutions such as body cameras, automated license plate reading, and digital evidence management systems. Axon delivers its products worldwide and gets most of its revenue from the United States. According to Mordor Intelligence, the wearable and body-worn cameras market on its own was valued at $1.62 billion in 2020 and is expected to reach $424.63 billion by 2026. Public safety organizations are increasingly adopting cloud solutions, leading to significant spending in this area. The digital spending in public safety is projected to reach $201 billion by 2027.

Target Price: Reiterate $700; Rating: Two

Checkpoint: $400

RISKS: Manufacturing and supply chain, competitive factors, government regulation, and technology change.

Bank of America Corp. BAC; $61.94; 3,999 shares; 3.93%; Sector: Financial Services

UPDATE: In August, shares of Bank of America (BAC) moved sideways after their sizable gain in July, leaving them up in the high-single digits QTD and double-digits so far this year. We continue to see BofA benefiting from investment banking activity while volatile markets keep trading volumes elevated. We expect the tailwind for those revenue drivers continuing in the second half of the year. As we see the strong investment banking backlogs at Goldman Sachs, JPMorgan Chase, Morgan Stanley, BofA and others become announced transactions and offerings, that would be a catalyst for us to once again revisit our BAC target. Share gains at its wealth management business are also a nice positive as  are the findings in the most recent Federal Reserve Senior Loan Officer Opinion Survey (SLOOS). That report found stronger stronger demand for commercial and industrial loans from large and middle-market firms but weaker demand for residential real estate loans. The net result should be a positive for BofA’s commercial bank activity, but should the Fed deliver a rate hike in September, we may see that activity slow in the final quarter of the year. The same SLOOS report also showed higher standards for credit card loans, which suggests another headwind for consumer spending. When BofA management makes the rounds in upcoming investor conferences, we’ll be focused not only on revenue-facing comments but also on cost containment and productivity initiatives. We’ll be looking to determine how much incremental operating leverage BofA could deliver in the coming quarters. Those learnings could be another reason for us to revisit our BAC target, and potentially our Two rating.

August Price Change: 0.0%; Yield: 2.1%

INVESTMENT THESIS: Bank of America is one of the world’s leading financial institutions, serving individual consumers, small- and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumers and small business clients with approximately 3,700 retail financial centers, approximately 15,000 ATMs, and award-winning digital banking with approximately 59 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking, and trading across a broad range of asset classes, serving corporations, governments, institutions, and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories, and approximately 35 countries. From a reporting perspective, the company’s business breaks down as follows: Net Interest Income breakdown: Consumer Banking 57%, Global Banking 23%, Global Wealth & Investment Management 14%, and Global Markets 6%; Income Before Tax breakdown: Consumer Banking 42%, Global Banking 27%, Global Wealth & Investment Management 16%, and Global Markets 15%. 

Target Price: $70; Rating: Two

Checkpoint: $45

RISKS: Financial markets, fiscal, monetary, and regulatory policies, economic conditions, and credit ratings.

The Boeing Company BA; $207.78; 825 shares, 2.72%; Sector: Industrials

UPDATE: Shares of Boeing (BA) finished August down in the low-single digits, which we attribute primarily to members of SPEEA, the Society of Professional Engineering Employees in Aerospace, rejecting Boeing’s four-year contract offer. The SPEEA folks also voted convincingly to give the negotiating team the power to declare a strike when the contract expires on October 6. Given the ramp in Boeing’s backlog and the focus by management on increasing delivery levels, we noted our lack of surprise by the SPEEA. We also doubt the new management team is looking to repeat the strikes that plagued Boeing in 2024 and 2025. With direct labor representing a rather small portion of an aircraft’s cost, given Boeing’s backlog and the focus on increasing aircraft production levels, odds are we will see a meeting of the minds between the two parties take place. As such, our plan is to selectively increase the Portfolio’s exposure to BA shares. Giving comfort in that decision as well higher delivery levels ahead, the FAA will certified Boeing’s 737 Max 7 and similar certification for the 737 Max 10 is expected later this year. On August 24, Boeing received a contract worth up to $131.23 billion from the U.S. Air Force. The indefinite-delivery/indefinite-quantity contract covers production and support work on F-15 Eagle Weapon System capabilities for the Air Force. Our view has been the company’s Defense, Space & Security segment is one that provides a solid, multi-year base while management strives to lift production levels at the Commercial Airplane segment. This win extends that runway and it also should provide some added wiggle room for Boeing to revisit union negotiations to head off a potential October 6 strike. We are eyeing the $205-$210 level for a potential add, subject to fresh developments. As we look at that window, we are also watching for a flattening in the MACD indicator for the shares. The next known catalyst will be Boeing publishing its August deliveries by mid-September. 

August Price Change: -3.9%; Yield: 0.00%

INVESTMENT THESIS: Boeing is an aerospace company that reports its business in three operating segments – Commercial Airplanes (47% of 2025 sales), Defense, Space & Security (30%), and Global Services (23%). Our focus is on Boeing’s Commercial Airplane business, the operational leverage and EPS improvement that should follow increasing production levels. Factors fueling the rise in new aircraft demand, which is reflected in Boeing’s multi-year backlog, include pandemic passenger travel, the need to replace aging, inefficient fleets, and supply chain delays that have artificially tightened aircraft availability. Industry projections indicate that airlines will require over 43,000 new aircraft — primarily single-aisle jets — to meet rising passenger traffic and replace older, less efficient models.

Target Price: $265; Rating: Two

Checkpoint: $190

RISKS: Industry demand, defense spending, supply chain, and competitive risk.

Builders FirstSource; BAC; $66.40; 3,999 shares; 3.93%; Sector: Financial Services

UPDATE: In early August, we called up shares of Builders FirstSource (BLDR) to the Portfolio from the Bullpen, starting out with a small position. The reason we opted to make this move was the sharp rebound in BLDR shares in May and June when oil prices retreated. While we are still waiting to see if this latest round of U.S and Iran negotiations leads to a sustained peace agreement that would reduce inflation’s tailwind, we do not want to miss a potential rebound in BLDR. Toward the end of August, as oil prices started to once again retreat, renewed tariff concerns and their impact on inflation came into focus. However, as we discussed with you on August 24, when we look at the Trump tariff on plywood from Canada, the country is responsible for only 10%-15% of imported softwood plywood in the U.S. We continue to examine levels to build up the Portfolio’s exposure to BLDR shares, and one level we are watching closely is near $65, which is where the shares bottomed in mid-May and late July. With back-to-back resistance levels between $75-$77, odds are we will need to inflation headwinds fade and mortgage rates soften to drive BLDR shares through those resistance points. With purchase mortgage applications falling in July and August, if August inflation data confirms the potential for a September rate hike, we may need to revisit BLDR shares place in the Portfolio. 

August Price Change: -6.3%; Yield: 0.0%

INVESTMENT THESIS: Builders FirstSource is a leading U.S. supplier of structural building products, value-added components and services to the professional market for new residential construction and repair and remodeling. The company delivers integrated homebuilding solutions by manufacturing, supplying, and installing a full range of structural and related building products. The company operates approximately 585 locations in 43 states across the U.S. For the year ended 2025, Builders’ top-10 customers accounted for 14% of net sales, with its largest customer accounting for 4% of net sales. The company’s larger customers are comprised primarily of the largest national production homebuilders, including D.R. Horton, Lennar, Pulte Homes, Toll Brothers, and Meritage Homes. 

Target Price: $80; Rating: Two

Checkpoint: $60

RISKS: Interest rate risk, housing and mortgage demand, economic and cyclical pressures.

Eaton Corp. ETN; $401.88; 510 shares; 3.26%; Sector: Industrials

UPDATE: Shares of Eaton (ETN) were a strong performer for the Portfolio in the first half of August, rising from around $362 in late July to a high of $478 on August 12. That day, August 12, we rang the register locking in a 62% on that slice of ETN shares. Subsequent to the move, the shares traded off leading them to close August down in the low-single digits. As we made that move, after reviewing updated electric utility spending plans as well as AI and data center capacity additions, we boosted our ETN price target to $500 from $450. Given the lift in our price target as well as the multi-year build out of data center and electrical capacity, we are inclined to remain ETN shareholders at least until we see signs that AI usage is peaking. Our current expectation is that will not be anytime soon, but we will continue to track relevant metrics and revise that thought as necessary. Eaton’s Q2 2026 orders at the Electrical America segment climbed 41% during the quarter, putting the segment’s backlog at $3.8 billion, up 33% year over year. Similarly, trailing 12-month orders at Electrical Americas led segment backlog to climb more than 100% compared to year-ago levels. While the magnitude of gains was not as high at the Aerospace segment, segment backlog was up 28%, year over year, and book-to-bill levels point to it climbing further. We continue to see strong multi-year tailwinds across Eaton’s businesses, and the benefit of that on revenue, profits and EPS is what we aim to capture with the shares. We will continue to examine potential entry points to rebuild the Portfolio’s position and for members to scale up their ETN holdings to match the Portfolio’s position size. 

August Price Change: -3.2%; Yield: 1.1%

INVESTMENT THESIS: Eaton is an intelligent power management company that makes products for data center, utilities, industrial, commercial, machine building, residential, aerospace, and mobility markets. That business is positioned to capitalize on the mega trends of electrification, energy transition, and digitalization. We see Eaton helping address the power pain point created by data center, EV charging infrastructure, and other drivers of electricity demand. Research estimates that data center power demand will grow 160% by 2030, accounting for 3% to 4% of global power, up from 1% to 2% today. Data centers will use 8% of U.S. power by 2030, compared with 3% in 2022.

Target Price: Reiterate $500; Rating: Two

Checkpoint: $370

RISKS: Raw material costs, labor costs, end market volatility, and government legislation.

First Trust Nasdaq Cybersecurity ETF CIBR; $100.15; 2,435 shares; 3.87%; Sector: Cybersecurity

UPDATE: Shares of the First Trust Nasdaq Cybersecurity ETF (CIBR) made a sharp move higher in the first half of August, but fell alongside the rest of the market amid Iran war uncertainty and rising Treasury yields. Renewed concern over the impact of AI on cyberattacks led to a late-month snapback in the shares, putting them up in the high-single digits for August and more than 35% YTD.  The sharp move in CIBR in early August reflected the back-to-back reports of AI models hacking other companies, first at OpenAI and Anthropic and then Meta. These events mixed with others that showcase bad actors leveraging AI to expand cyberattacks reaffirms our bullish stance on cybersecurity spending. It also bolsters our view that cybersecurity should be a part of every investor’s portfolio. We continue to favor the diverse exposure offered by CIBR shares. After adding further to our CIBR position on July 30, the Portfolio’s CIBR plate is rather full, however, we will continue to examine favorable entry points for newer Pro members and those underweight the shares relative to the Portfolio. Near-term we are eyeing the shares relative to their 50-day moving average to see if that level remains one of support over becomes something else. If we saw CIBR shares pull back closer to their 100-day moving average near $85, that would lead to contemplate our Two rating. 

August Price Change: 9.1%; Yield: 0.3%

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

Target Price: Reiterate $105; Rating: Two

Checkpoint: $75

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

Marvell Technology MRVL; $211.66; 865 shares; 2.91%; Sector: Technology

UPDATE: After a painful July pullback in Marvell (MRVL), which afforded us the opportunity to add shares at $176.83 on July 30, MRVL stock bounced back hard in August. While still a drag on the Portfolio’s QTD performance, with four months to go in 2026 MRVL shares are up nearly 150% YTD, well ahead of the S&P 500. We would note that MRVL shares ended August with a whimper following the market’s reaction to Marvell’s beat-and-raise earnings report. Revenue for the quarter surged 37% year over year to $2.74 billion, above Wall Street’s call for $2.72 billion and the company forecast adjusted earnings per share of $1.05 to $1.15 on revenue of $3.15 billion at the midpoint of a range. Wall Street anticipated earnings of $1.08 a share and $3.04 billion in revenue. However, leading up to Marvell’s earnings after the market close on August 27, MRVL shares soared from a low near $163 in late July to more than $241. That’s a big move and we benefited by picking up more shares for the Portfolio just below $177 on July 30. However, that 48% move in the shares also set very high expectations. Helping fuel those high expectations was the second factor, Marvell’s recent deal that would allow Google to buy up to $12.2 billion in shares as part of an expanded relationship on custom chips that has the potential to equate to $120 billion in revenue for Marvell through 2033. As we pointed out in our alert discussing the expanded relationship, it would be presumptuous to automatically award $120 billion in revenue to Marvell. What was not really discussed by Marvell on its earnings call was its expanded relationship with Google other than management indicating that will become a significant contributor in calendar 2028. Management pointed to Marvell’s upcoming October 6 Investor Day, hinting it will have much more to say then on the Google relationship. We suspect that event will be similar to Marvell’s 2025 Custom AI Investor Event in that it will include a multi-year forecast for the company’s custom silicon business as well as its overall revenue outlook. And with Nvidia saying it will be capacity constrained for some time to come, that reinforces the opportunity for Marvell, as does the growing focus on total cost when it comes to AI and AI infrastructure. Between now and the October event, there is a high probability MRVL shares trade sideways, but that will be determined by comments from other companies about AI and AI infrastructure during September investor conferences. Two such high-profile events will be the Goldman Sachs Communacopia & Technology Conference on September 8-11 and the Citi Global Tech Conference that spans September 8-9. Also on our radar screen include quarterly results from Dell and Hewlett Packard Enterprise and monthly revenue reports from Taiwan Semiconductor and Foxconn. For those whose MRVL position size is below the one we have in the Portfolio, we see nice support for the shares near $221 and $211. If the recent pullback delivers a positive test of that $221 level, that would potentially be a nice place to add. But a better one, from a risk-to-reward profile, would be after a positive test near $211.

August Price Change: 12.8%; Yield: 0.1%

INVESTMENT THESIS: Marvell is a fabless supplier of high-performance standard and semi-custom infrastructure semiconductor solutions. These solutions power the data economy, enabling the data center, carrier infrastructure, enterprise networking, consumer, and automotive/industrial end markets. With roughly 75% to 80% of Marvell’s revenue stream tied to digital infrastructure, we see it continuing to benefit from rising content consumption and creation. Pointing to that rising demand that necessitates network densification and the build of digital infrastructure, Ericsson sees global monthly average usage per smartphone reach 46 gigabytes (GB) by the end of 2028, versus 19 GB in 2023 and 15 GB in 2022.

Target Price: Reiterate $340; Rating: Two

Checkpoint: $140

RISKS: Technology risk, customer risk, competition risk, reliance on manufacturing partners, and supply chain constraints.

Meta Platforms META; $572.34; 337 shares; 3.06%; Sector: Communication Services

UPDATE: After collapsing in July, shares of Meta (META) rebounded modestly in August following the announcement it had settled with a coalition of state attorney generals. Per those reports, Meta agreed to pay a maximum of $17.1 billion to resolve claims brought by states, which is a far, far smaller figure than those banded about in the financial press. We are also hearing reports that figure will be paid over multiple years, lessening the risk of a near-term cash crunch. The settlement also reveals that Meta has agreed to make changes for teenage users of Facebook and Instagram nationwide, including daily usage limits and nighttime blocks. It also includes “enhanced age assurance measures” that would prevent children from using the apps, and making additional tools for parents and guardians. In our view, this removes a large unknown hanging over the shares and potential financial risks to the company, and that led us to upgrade META shares to a Two from Three on August 26. Given the relatively muted reaction, Meta remains a “show me” story. While we continue to see the company and its platforms benefiting from record-setting political ad spend this year, the question over funding its massive capex spending remains. That has us interested in what the company may say about its previously teased cloud compute business, which would help defray that capex cost. As it relates to our new Two rating, we see multiple layers of resistance ahead for the shares between $593 and $623. For now, we’ll let the market digest developments and see where the shares settle out. Based on that, we’ll be able to pinpoint potential pickup points. The next known Meta event is Meta Connect that will be held on September 23-24. That event could be where Meta reveals a consumer-facing AI agent and tease a new AI model  targeted for October.

August Price Change: 2.8%; Yield: 0.4%

INVESTMENT THESIS: Meta segments its business between Family of App Products, which includes Facebook, Instagram, Messenger, Threads, and WhatsApp, and Reality Labs Products, which includes its metaverse and investments and future product R&D. Family of Apps accounts for about 99% of the company’s revenue and 100% of the company’s operating profits. Substantially all of Meta’s revenue is currently generated from advertising on Facebook and Instagram. Family daily active people (DAP) were ~3.6 billion on average for the June 2026 quarter. Meta forecasts its expenses to run between $165 billion-$169 billion this year while also spending $130 billion-$145 billon on capex, a significant increase year over year with a large step up in H2 2026 compared to H1 2026. Meta is positioned to benefit from the ongoing shift toward digital advertising and the adoption of AI across its entire product offering. We recognize Meta is ramping up capital spending as part of the current AI arms race, but we see that as an investment that has the potential to drive greater productivity and monetization as it expands its core advertising business further across all of its platforms. As the company shifts into harvesting that investment, we could see a step up in margins, much like we saw in 2023.

Target Price: $850; Rating: Two

Checkpoint: $530

RISKS: Ability to add and retain users and user engagement; marketing spend; new products or changes to existing ones; competitive risk, geopolitical risk. 

Microsoft Corp. MSFT; $507.29; 310 shares; 2.50%; Sector: Technology

UPDATE: Similar to July, shares of Microsoft (MSFT) were a big outperformer for the Portfolio in August, and that nearly double-digit gain generated a QTD return of more than 35%. On August 11, we used that aggregate July and August climb to lock in triple-digit profits at $502.37, a move that bookended our June 26 purchase of shares at $371.20. We opted to make that move following the sharp post-earnings move in MSFT shares, which landed them into a deeply overbought condition. Would we be open to re-building the position at lower prices? Subject to available cash on hand, where MSFT shares are trading and other opportunities at the moment, the answer is we would be so inclined given the growing influence of Microsoft’s cloud compute business. Exiting the June quarter, the company’s commercial RPO stood at $678 billion vs. the $59.3 billion in Microsoft Cloud revenue for the quarter. Microsoft’s capex is expected to ramp further in support of building out needed capacity and Microsoft management made sure to say it expects to remain free-cash-flow positive over the coming 12 months. What they did not mention was a targeted number, which reading between the lines means we should expect further free cash flow compression as spending ramps into the back half of calendar 2026 and beyond. Microsoft’s margin guidance also suggests it will continue to manage the impact of that ramping capacity. For fiscal 2027, the team guided to full-year operating margin down less than a point, which tells us the AI infrastructure drag on gross margin is expected to persist, but the operating leverage story — double-digit revenue growth in the coming year vs. mid-to-high-single-digit opex growth — should keep operating margin roughly stable rather than eroding. The long-term play for us remains the same — waiting for when that capex finally translates into durable free cash flow growth rather than just revenue growth. That likely means MSFT shares will bob and weave in the coming months, and that keeps our Two rating and $500 price target intact for now. With Microsoft slotted to present at the Goldman Sachs Communacopia & Technology Conference on September 9 and the Citi Global Tech Conference on September 10, learnings could prompt some price target movement on our part. 

August Price Change: 9.2%; Yield: 0.8%

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

Target Price: $500; Rating: Two

Checkpoint: $345

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

Morgan Stanley MS; $213.5132; 1,150 shares; 3.90%; Sector: Financial Services

UPDATE: After rising modestly in July, shares of Morgan Stanley (MS) added another low-single digit gain in August, leaving the shares up ~20% YTD. While there were some lingering questions over the timing for OpenAI’s eventual IPO following Cerebras and SpaceX breaking below their respective IPO prices, Morgan Stanley’s Q2 2026 results bested market expectations fueled by investment banking strength, favorable trading volumes, and asset management businesses. We see the tailwind for those revenue drivers continuing in the second half of the year. As we see the strong investment banking backlogs at Goldman Sachs, JPMorgan Chase, Morgan Stanley, BofA and others become announced transactions and offerings, that would be a catalyst for us to once again revisit our MS target. When Goldman reported its Q2 2026 results, it indicated that its investment banking backlog hit a five-year high, and that bodes well for offerings and dealmaking activity, especially at Morgan Stanley given its league table positioning. We will also keep tabs on new IPO filings, and which companies are named as leading those transactions. Expected transactions we are tracking closely include those for Anthropic, Databricks, Oura, Inspire Brands, Nscale, and Switch. We will also continue to follow M&A activity as well as equity and debt issuances. Meanwhile, market developments are likely to keep trading volumes elevated as we move past August. That is a combination that keeps us bullish on MS shares as Wall Street gets back to work in September and we begin the year-end push. In our view, a pullback in MS shares that lands them near $205 would be a level for members who are underweight MS shares to take note. Morgan Stanley’s new quarterly dividend of $1.15 per share, which was announced shortly after the results of the Fed’s annual bank stress tests, was paid on August 14. Alongside its Q2 2026 results, Morgan Stanley also reauthorized a multi-year common equity share repurchase program of up to $20 billion, without a set expiration date, beginning in the third quarter of 2026. We see that bringing nice support for the shares. The next known potential catalyst for MS shares will be Morgan’s presentation at the Barclays Global Financial Services Conference on September 15.

August Price Change: 1.3%; Yield: 2.2%

INVESTMENT THESIS: Morgan Stanley reports in three business segments: Institutional Securities (42% of trailing 12-month revenue, 38% of trailing 12-month Income Before Tax), Wealth Management (48%, 55%), and Investment Management (10%, 6%). While the IPO window has yet to reopen, the potential IPO class for 2025 continues to build with recent additions including Klarna and StubHub. That would be a boon to private equity firms and others that have been nursing IPO candidates during the dark period and a positive for Morgan Stanley’s investment banking business. Expected deregulation under the Trump administration is a potential catalyst for Morgan’s M&A business. Meanwhile, folks continuing to be behind in retirement savings bodes well for Morgan Stanley’s wealth management business in the coming quarters, while continued market volatility bodes well for its equity trading business.

Target Price: $225; Rating: Two

Checkpoint: $180

RISKS: Market and interest rate risk, credit risk, country risk, and operational risk, including cybersecurity.

Netflix Inc. NFLX $81.05; 2,505 shares; 3.22%; Sector: Communication Services

UPDATE: After moving sideways in July, shares of Netflix (NFLX) were a quiet performer in August with their double-digit climb. Compared to the S&P 500’s August move, that makes NFLX a big outperformer for the month. Helping power that move was the revelation by management following the conclusion of its 2026 Upfront presentation of upcoming movies, series, and live sports, that Netflix nearly doubled its ad commitments, meeting the streaming giant’s goal for the year. Shortly thereafter, following word Netflix was closing two video-game studios as it looks to be “more focused on its execution,” that renewed focus on cost combined with the doubled ad commitments led us to upgrade NFLX shares to a Two rating from Three. The gaming studio cuts leave Netflix with a central gaming team that works with external developers, and a dedicated first-party studio, Helsinki-based Next Games, which produced many of the company’s couch-centric party games. We see this move lining up rather well with the business model Netflix has put in place for movies and other programming. What we’ll look to see down the road is if Netflix expands its advertising efforts to include games, a move that would help offset game development. We are collecting data for streaming market share against that for broadcast and cable TV viewing. What we’ve seen in the latest data, which only runs through May, is that streaming continues to take share from the others, hitting 48.6% of total TV viewing. Alphabet’s YouTube remains the dominant player with about 14% share of total TV viewing, and Netflix is holding steady at around 8%. As we get the streaming data from June and potentially July, that will give us a reason to revisit our NFLX target. We’ll also continue to monitor what’s coming soon to Netflix to determine if there is a breakout hit returning or a new one on the way. 

August Price Change: 13.0%; Yield: 0.0%

INVESTMENT THESIS: Netflix is one of the world’s leading entertainment services offering TV series, films, games and live programming across a wide variety of genres and languages. With over 325 million paid memberships, Netflix serves a global audience approaching one billion people. In the second half of 2025, Netflix members watched 96 billion hours on Netflix, up 2% (+1.5 billion hours) year over year vs. a 1% increase in the first half of the year. We attribute that to the company’s growing slate of proprietary content, live events, including sports, and a growing market for games. The company’s revenue is ~45% from the U.S., 31% EMEA, 12% Latin America, and 11% Asia-Pacific. We see Netflix and its growing content slate well positioned to benefit from the ongoing shift to streaming from broadcast and box office content, with margins poised to benefit from a combination of pricing actions and growing exposure to the higher margin advertising revenue.

Target Price: $85, Rating: Two

Checkpoint: $70

RISKS: Consumer spending and economic risk, content development and content licensing risks and competitive risks.

Paccar Inc. PCAR; $124.13; 1,080 shares; 2.13% Sector: Industrials

UPDATE: After climbing double digits in July, shares of Paccar (PCAR) gave back a portion of those gains, leaving them up in the low single-digits QTD. Despite that setback, the drivers that led us to initiate and scale the Portfolio’s position in PCAR shares remain intact. Those drivers include the confluence of rising heavy truck orders in the U.S. and Europe as well as domestic truck freight activity and tight industry capacity. Those factors and the Q1 2027 EPA mandate pull forward we discussed when initiating our position continued to drive pronounced year-over-year gains in heavy truck orders. In late July, management said that Paccar’s order book was essentially full through Q3 and roughly 90% full for the year already, with build slots expected to sell out within the next month or two. When we get the August industry truck orders levels in the coming days, odds are we will know if those remaining build slots for 2027 are taken. This means incremental demand is increasingly getting pushed into 2027. That, along with favorable pricing conditions, led management to guide current-quarter consolidated operating margins to a “strong” 14.5%, with further improvement expected in the final quarter of the year. We will continue to follow monthly industry order figures, freight traffic metrics and related data and revisit our new price target as necessary. We will also watch key support levels for PCAR shares as we look to smartly increase the Portfolio’s exposure to them.

August Price Change: -6.4%; Yield: 1.1%

INVESTMENT THESIS: Paccar is a multinational company that reports in three operating segments: Truck (68% of sales), Parts (24%), and Financial Services (8%). Paccar’s heavy-duty and medium-duty trucks are marketed under the Kenworth, Peterbilt, and DAF nameplates. Key factors affecting the Truck segment earnings include the number of new trucks sold in the markets served and the margins realized on the sales. The Portfolio’s play with Paccar shares is the pull forward in truck demand ahead of the EPA 2027 mandate that will result in tougher 2027 NOx engines regulations and add ~$10,000 to the cost of truck. Helping soften that blow, business owners and owner-operators can utilize 100% bonus depreciation (restored by the One Big Beautiful Bill Act) or Section 179 expensing to write off the entire purchase price of a qualifying heavy commercial vehicle, including new Class 8 and Class 5-7 trucks. With data from ACT Research finding the average age of a U.S. Class 8 tractor is 6.3 years, the highest in more than a decade, the ability to fully depreciate a new truck in its first year is likely a factor helping to drive replacement demand. The pull forward in demand should drive favorable operating leverage inside Paccar, and that is what we aim to benefit from by owning the shares. 

Target Price: $155; Rating: Two

Checkpoint: $115

RISKS: Commercial truck demand, competition and industry pricing, inflation, and interest rate risks.

Palantir Technologies PLTR; $186.38; 1,130 shares; 3.34%; Sector: Financial Services

UPDATE: On the back of the company’s stellar Q2 2026 results very early in the August, shares of Palantir (PLTR) were a notable performer for us during the month. The gains of nearly 50% led the shares to close up almost 60% QTD. After picking up a slug of PLTR at $107.26 in late June, we locked in gains on those shares and others not once but twice in August. The first was at $162.63 on August 4, which locked in a profit of more than 100%. We followed that with some mindful portfolio management on August 25 at $173.3 and an even larger gain just shy of 120%. Following those actions, we end August with PLTR shares accounting for around 3.34% of the Portfolio’s assets. For the current quarter, Palantir sees its top-line coming in between $2.16 billion to $2.164 billion, up double-digits sequentially and more than 80% compared to the year-ago quarter. Doing some basic math, we can deduce Palantir current sees its Q4 2026 revenue around $2.4 billion. What this tells us in the company’s H2 2026 revenue should grow more than 28% compared to H1 2026. As AI adoption and usage widens further, there is reason to think Palantir’s outlook for H2 2026 skews conservative. What we like even more than that revenue outlook is the continuing step up in the company’s margin profile, which has been rising steadily in recent quarters and based in inferred guidance for Q4 2026 looks to remain relatively steady despite that revenue jump to close out the year. This also tells us that free cash flow should be stronger in the coming quarters, adding further to the company $9.4 billion in net cash on the balance sheet. 

August Price Change: 51.5%; Yield: 0.0%

INVESTMENT THESIS: Palantir Technologies specializes in big data analytics and builds software platforms that help organizations integrate, analyze, and make sense of vast amounts of data for both commercial and government clients. While much has been made about the company’s exposure to the federal government, its software is used across 90 industries, and the larger global government sector accounted for 55% of revenue last year. The balance was from the commercial sector. Exiting 2025, Palantir’s U.S. Commercial remaining deal value (RDV) stood at $4.38 billion, up 145% year over year, and its Total Contract Value (TCV) stood at $10.8 billion, up 128% year over year. We will continue to monitor Palantir’s RDV and deferred revenue metrics. Key items to watch include continued diversification of its customer base across industries and increasing revenue per customer. Because we are still in the relatively early innings of AI adoption, we are inclined to be long-term owners of PLTR shares.

Target Price: $220; Rating: Two

Checkpoint: $120

RISKS: Economic and IT budget spending risk, technology risk, competition and competitive pressures, and customer acquisition risk. 

Robo Global Robotics and Automation ETF ROBO; $80.44; 575 shares; 0.73%; Sector: Technology

UPDATE:  After adding shares of the Robo Global Robotics and Automation ETF (ROBO) to the Bullpen on August 3, we began an initial position on August 5 with a Two rating and a $95 price target. In August, ROBO shares were a drag on the Portfolio. Our play with the shares is to capture the growing adoption of robotics and automation as companies focus on driving productivity while confront demographic realities. Grandview Research sees the global industrial robotics market growing to $78.9 billion by 2033, up from $41.9 billion in this year and $37.8 billion in 2025. We aim to grow the Portfolio’s exposure over time and in keeping with our Two rating, we are monitoring the shares to see if market pressures give us a nice opportunity near the next layer of support at $77, better known as the 200-day moving average. 

August Price Change: -5.7%; Yield: 0.0%

INVESTMENT THESIS: The ROBO Global Robotics & Automation Index ETF invests in global companies that are driving transformative innovations in robotics, automation, and artificial intelligence (RAAI), including companies that create technology to enable truly intelligent systems that can sense, process, and act, and companies that apply those technologies to deliver RAAI-enabled products — including robots — to businesses and consumers. The ETF’s underlying basket is broken down into two categories — Application (55%) and Technologies (45%). Application includes to manufacturers and industrial automation (21%), logistics automation (10%), autonomous systems (7%), healthcare (7%), food & agriculture (6%), business process automation (3%), and 3D printing 1%. Technology includes actuation (14%), computing and AI (14%), sensing (10%), and integration (7%). 

Target Price: Reiterate $95; Rating: Two

Checkpoint: $70.

RISKS: Economic and business cycle risk; capital spending and geographic risk, technology risk.

State Street Health Care Select Sector SPDR ETF XLV; $170.54; 395 shares; 1.07%; Sector: Health Care

UPDATE: We began an initial position in the shares of the State Street Health Care Select Sector SPDR ETF (XLV) on August 5 with a Two rating and a $180 price target. This move added exposure to the health care sector, something the Portfolio was lacking. XLV shares were a contributor to the Portfolio’s August performance making them a nice add to our holdings. Healthcare spending in the U.S. is expected to grow at an average rate of around 5.4% annually between 2025 and 2034, reaching nearly $9 trillion and accounting for more than 20% of GDP. Part of that trajectory reflects our aging-of-the-population theme. We’ve opted for the brand exposure offered by the ETF’s structure, and our plan is to grow the Portfolio’s ETF exposure over time. 

August Price Change: 4.5%; Yield: 0.0%

INVESTMENT THESIS: The State Street Health Care Select Sector SPDR ETF provides exposure to companies in the pharmaceuticals; health care equipment and supplies; healthcare providers and services; biotechnology; life sciences tools and services; and healthcare technology industries. Top holdings include Eli Lilly (16.0%), Johnson & Johnson (10.4%), AbbVie (7.4%), Merck & Co. (5.9%), and United Health (5.6%). 

Target Price: Reiterate $180; Rating: Two

Checkpoint: $144

RISKS: Drug approval, pricing pressure, funding changes, R&D spending, patent expiration, and litigation risk.

United Rentals URI; $1,038.00; 200 shares; 3.30%; Sector: Industrials

UPDATE: Shares of United Rentals (URI) treaded water through most of August, but renewed market thinking for a September rate hike weighed on the shares late in the month. That left the shares down in the mid-single digits in August. We continue to see United’s core rental business benefiting from nonresidential construction activity that is being powered by re-shoring activity as well as power and data center capacity additions and infrastructure projects. Single-family housing remains a headwind, but at some point that headwind will fade. As the seasonally strong time of year for construction activity continues, fleet productivity at United should remain elevated, which should also bode well for incremental pricing action. Those conditions should remain intact for most of H2 2026, unless we fall prey to earlier-than-usual winter weather. Our focus will remain on non-residential construction activity with the next data point being the July Construction Spending report that will be published on September 1. We’ll continue to watch the intensity of inflation tailwinds and what that may mean for interest rates and project borrowing costs. In the near-term, if the market becomes convinced the Fed may need to do more to tame inflation, that would likely weigh on URI shares. That may trigger some prudent maneuvering with the Portfolio’s position, which means we will remain focused what incoming data tell us. Included in that are coming investor conference presentations from construction and construction equipment companies. In the first half of 2026, United completed $750 million in share repurchases and following the Q2 2026 results, management reiterated its $1.5 billion repurchase target to for this year.

August Price Change: -3.8%; Yield: 0.7%

INVESTMENT THESIS: United Rentals, the largest equipment rental company in the world, operates throughout the United States and Canada and has a limited presence in Europe, Australia, and New Zealand. It serves industrial and other non-construction, commercial (or private non-residential) construction, and residential construction. Industrial and other non-construction rentals represented approximately 50% of rental revenue, primarily reflecting rentals to manufacturers, energy companies, chemical companies, paper mills, railroads, ships, utilities, retailers and infrastructure entities; commercial construction rentals represented approximately 46% of rental revenue, primarily reflecting rentals related to the construction and remodeling of facilities for office space, lodging, healthcare, entertainment and other commercial purposes; and residential rentals around 4% of revenue. We see the company benefiting on three fronts — the seasonal uptick in construction spending, the release of funds and projects associated with the five-year Biden administration infrastructure bill, data center construction and other re-shoring projects, and the company’s nip-and-tuck acquisition strategy that should further enhance its geographic footprint. From a technical perspective, the next layer of meaningful support clocks in near $870, and should we see the shares fall to that level, it would prompt some reconsideration of our Two rating. 

Target Price: Reiterate $1,250; Rating: Two

Checkpoint: $930

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

Welltower Inc. WELL; $236.24; 640 shares; 2.40%; Sector: Real Estate

UPDATE: Shares of Welltower (WELL) were little changed in August, leaving them up in the low-single digits QTD and more than 25% YTD. As more of the company’s increasingly senior health care portfolio crosses the 90% and 95% occupancy thresholds, pricing power should kick in. That suggests that as occupancy growth continues, we should see an acceleration in revenue per occupied growth with that trickling down to margins and the bottom line. However, not all of that pricing benefit will be captured near-term as Welltower continues to ramp occupancy in newer locations and at recently acquired operations. Over time as properties are folded into the Welltower systems, we should see occupancy levels rise followed by improving pricing and revenue per room over time. That tells us that while Welltower is guiding its year-over-year, same-store net operating income (NOI) growth in the range of 18.0% to 21.5% for this year, we should see another double-digit figure in 2027. There are a few things that we are keeping our eyes on. First, is the ability to properly staff its facilities given immigration policies and labor. While Welltower focuses on the high-end senior housing market, which should help insulate it to some degree, the ability to attract and retain caregivers remains critical. Second, as Welltower looks to grow its asset base and shift its mix further toward senior housing, a move we like, the topic of interest rates and borrowing costs to fund those transactions and bring those properties up to Welltower standards is the other. In terms of our Two rating, WELL shares can be rather choppy at times and some of that can be traced back to our second item to watch, discussed above. Should we see WELL shares pull back toward support near $232, that is a potential pick-up point, but if market forces pulled the shares closer to $220 that could trigger a re-think for our current Two rating.

August Price Change: 0.8%; Yield: 1.5%

INVESTMENT THESIS: Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in major, high-growth markets in the United States, Canada, and the United Kingdom, consisting of senior housing, post-acute communities, and outpatient medical properties. We see the company benefiting from the intersection of the demographic shift that is the aging population and the looming pain point that is the shortage of inventory for senior housing, which fell below 1% in Q2 2025, according to the National Investment Center for Seniors Housing & Care. Over the next five years, more than 4 million boomers will hit age 80, and that’s in addition to the roughly 4% of the U.S. population that was 80-plus years old in 2024. As this demographic shift unfolds, we should see a relatively steady growth rate in Welltower’s revenue, NOI, and FFO, which, in turn, given its REIT status, should drive its payable dividend stream higher. Because of the favorable demographic tailwind and lower interest rate path telegraphed by the Federal Reserve, which should reduce construction costs over time, as well as bring REIT stocks back into favor, we intend to be long-term holders of WELL shares. Our plan is to build the position size methodically, increasing the Portfolio’s dividend stream along the way.

Target Price: $265; Rating: Two

Checkpoint: $215

RISKS: Operational risk, operator and tenant risk, competitive risks, and acquisition risk.

Not Rated

EPS All-Stars Model; 5.4%; Sector: N/M

UPDATE: On July 1, we reconstituted the strategy’s basket for Q3 2026, and in keeping with the higher starting position size at the start of Q3 2026, we upsized the Portfolio’s positions in Ciena (CIEN), Eldorado Gold (EGO), Lumentum Holdings (LITE) and Rocket Companies (RKT). We also started new positions in SiTime Corp. (SITM) and Seagate Technology (STX). Following a difficult July, the basket rebounded, passing into the black only to give back some of that progress as renewed Iran war uncertainty and rising Treasury yields weighed on the market. Quarter to date, the strategy is down ~7% compared to down more than 18.2% exiting July and the gain of more than 66% in Q2 2026. Given the nature of the model, the only time we may adjust its composition during the quarter is if a company is acquired. Otherwise, the model is set until the next reconstitution. The current basket is well positioned to benefit from rising AI and data center capex levels and the demand for memory, networking and related equipment. There are no price targets or ratings for each of the positions that make up the basket. That same selection process will be repeated quarterly, which means housekeeping for the model should be minimal. It also means you can expect minimal activity to occur at quarter-end and the start of the new quarter. The next reconstitution cycle for the EPS All-Stars model will be September 30 and October 1. At that time, we may consider further increasing the Portfolio’s exposure to the basket.

August Price Change: 13.7%

INVESTMENT THESIS: EPS All-Stars is a basket of large-cap companies that offer the fastest rate of EPS growth over a multi-year period. That basket is screened regardless of industry sector or sub-sector, which means the down-selected list of companies can span a wide array of sectors. The focus is on earnings growth because earnings growth is often seen as a signal of a company’s competitive strength, operational efficiencies, and future growth potential. Shares of companies that provide historically consistent earnings growth faster than the stock market receive premium valuations compared to those awarded to the S&P 500. And as we’ve often discussed with you, multiple expansion paired with earnings growth tends to drive outperformance relative to the market, better known as alpha. The basket of eight stocks is reconstituted on a quarterly basis to reflect updated EPS expectations for the current year and the following one.

Target Price: N/M

Checkpoint: N/M

RISKS: Macro and end-market risk, individual company risk, and consensus EPS expectations.