Weekly Roundup: Nvidia in the Spotlight

Stocks pushed ahead during this shortened trading week as three of the indexes (S&P 500, Nasdaq and Dow Industrials) cleared new all-time highs. That is an impressive feat given the seasonal trends are bearish, but don't tell that to the momentum traders/investors.

Once the momentum ball gets rolling it is tough to stop it as money flows continue to pour into the stock market. That has been the case now for a few months, but there are signs of slowing down, which makes sense following a nearly 25% surge in less than four months. However, we don't tell the markets what they should do, we simply participate and observe closely when a pullback may be underway. So far, any pullbacks like we experienced this week and last have proven to be great buying opportunities.

The driver this week of the price action was one stock - Nvidia. This company reported lights-out earnings report that propelled other stocks to join in the celebration. But we have to be aware of seasonal trends working their way through, and March is not one of the best months of the year for stocks.

Next week we have a month end and an extra day of trading, too. Thursday is leap day, and that will mark the last trading day of the month. So far the S&P 500 is sporting a 5% gain on the month and a 6.75% gain for 2024. That is pretty strong coming off such a banner year in 2023. Several strategists have targets right near where the stock market is currently, so either they raise targets for the year or stick by them and perhaps watch the indexes pass their forecast.

This past week we heard from several Fed speakers, most of which reiterated their stance on current monetary policy. For the most part, the committee is in no rush to cut rates. We also saw this view stated in the FOMC meeting minutes that were released this past Wednesday.

Catching Up on the AAP Portfolio This Week

We had several names perform well during this shortened week. Top of the list was Waste Management (WM) along with United Rentals (URI), which both hit fresh all-time highs. Coty (COTY) also was a big mover following a big surge Wednesday. Costco (COST and Mastercard (MA) crept higher as well and also hit all-time highs. Vulcan Materials (VMC), which reported a strong quarter recently, also had a strong week.

As the market became increasingly skittish ahead of Nvidia's (NVDA) quarterly earnings, we shed the remaining portion of Four-rated Deere (DE), a move that boosted our overall cash position. Our intention is to continue focusing on companies with strong earnings growth prospects, either adding to existing positions such as Waste Management, Universal Display (OLED), or Applied Materials (AMAT), or graduating a Bullpen resident to the active portfolio. We'd remind members that we are not momentum investors, but rather ones that are willing to pay for growth at a reasonable price.

With that in mind, on Thursday, we called up Nvidia from the Bullpen, establishing a $950 price target that equates to a 0.8 PEG ratio as the company's EPS grows significantly between 2023-2025. We recognize we could see some gravity take hold of NVDA shares as we move past the shock and awe of the company's January earnings report. That led us to start the position with a Two rating and a modest position size. Our plan will be to pick up more shares as opportunities present themselves.

This Week's AAP Videos and Podcasts

We cover a lot of ground during the week in our Daily Rundowns and the AAP Podcast. If you happened to miss one or more of them, here are some helpful links:

Tuesday, February 20: A Short Week With Big Implications

Wednesday, February 21: Checking Our Shopping List and Our Plan for Nvidia

Thursday, February 22: We Initiated a Nvidia Position, Now What?

Key Global Economic Readings

(Note: T is the most recent period, T-1 is the prior period's reading and T-2 is two periods back, the intent being to illustrate any trends)

Chart of the Week: XLI

With recent new all-time highs in the Dow Jones Industrials Average and the index making news with a swap (Amazon for Walgreens), let's take a look today at the SPDR Select Sector Fund - Industrial, the XLI, to see how it has performed.

Of course, the names in this ETF are quite different than what is presented in the Dow Industrials; this is because the XLI does not have too many technology companies. The ETF has Caterpillar, GE, Union Pacific, Uber, Raytheon, Honeywell and Boeing. These are mostly old-line industrial names -- not like Apple, Amazon, Microsoft and Intel that dominate the DJIA. Nevertheless, this ETF has remained strong since bottoming in October 2023, much like the other big indexes and ETFs we cover.

View Chart »View in New Window »

Notice the strong volume trends and the lengthy blue candles in the top pane on the chart. This reflects strong bullish behavior and a buy signal on the GoNoGo indicator. Moving Average Convergence Divergence (MACD) remains on a buy signal of this daily chart (pane 2), while stochastics are very strong and embedded, which means dips will likely be bought aggressively.

In the top pane we also see that the parabolic SAR (stop and reverse) is still bullish; this indicator tells us a change in trajectory before it occurs. This This indicator, which has been bullish since mid-January, should also act as good support.

All in all, the industrials have been a good place to be invested. We like this group, and if the market continues higher then a broadening out of the rally is necessary. The industrials are an important part.

Other charts we shared with you this week were:

Tuesday, February 20: S&P 500 - Weighing in on Cap-Weighted Versus Equal Weight

Tuesday, February 20: Apple (AAPL) - Apple as Market Barometer

Wednesday, February 21: Here's When We'd Move Nvidia to the Portfolio From the Bullpen

Thursday, February 22: Bullpen Name AMD is Making a Run to the Upside

The Coming Week

Coming off of Thursday's Flash February PMI reports from S&P Global and getting ready for the usual start of the new month data, we will be focusing on the February Manufacturing PMI data from ISM as well as the final version for S&P Global's January Manufacturing PMI. As we tend to do, we will be focusing on several items in those reports, including input and output costs, new orders, and employment. Each of those will shape expectations for what we will eventually find in the February data for the CPI and PPI as well as the next Employment Report. In other words, the next set of must-watch data when it comes to the Fed and potential rate cuts.

Adding another dimension to that will be the January PCE Price Index that arrives alongside the January Personal Income & Spending data. We should see further evidence that real wage growth has returned but given the upside surprises found in the January CPI and PPI data, the market will be scrutinizing the January core PCE index very closely and how it stacks up against the 2.9% year-over-year print for December. Currently, the Cleveland Fed's Inflation Nowcasting model pegs the January figure at 2.74%.

And while it is increasingly in the rear view, we will parse the second print for 4Q 2023 GDP, comparing it to the initial reading of 4.9%. We suspect that figure will be revise somewhat lower, and we'll be interested to see what, if any, revisions were made for 4Q 2023 PCE Price Index data.

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

U.S.

Monday, Thursday, February 26

• New Home Sales - January (10:00 AM ET)

Tuesday, February 27

• Durable Orders - January (8:30 AM ET)
• S&P Case Shiller Home Price Index - February (9:00 AM ET)
• Consumer Confidence - February (10:00 AM ET)

Wednesday, February 28

• Weekly MBA Mortgage Applications (7:00 AM ET)
• GDP (Second Estimate) - 4Q 2023 (8:30 AM ET)
• Weekly EIA Crude Oil Inventories (10:30 AM ET)

Thursday, February 29

• Weekly Initial & Continuing Jobless Claims (8:30 AM ET)
• Personal Income & Spending, PCE Price Index - January (8:30 AM ET)
• Pending Home Sales - January (10:00 AM ET)
• Weekly EIA Natural Gas Inventories (10:30 AM ET)

Friday, March 1

• S&P Global Manufacturing PMI (Final) - February (9:45 AM ET)
• ISM Manufacturing Index - February (10:00 AM ET)
• Construction Spending - January (10:00 AM ET)
• University of Michigan Final Consumer Sentiment Index - February (10:00 AM ET)

International

Tuesday, February 27

• Japan: Inflation Rate - January
• Germany: GfK Consumer Confidence - March

Wednesday, February 28

• Eurozone: Economic Sentiment & Consumer Confidence - February

Thursday, February 29

• Japan: Retail Sales, Housing Starts - January
• Germany: Retail Sales, Inflation Rate - January
• UK: Bank of England Consumer Credit - January

Friday, March 1

• Japan: Jibun Bank Manufacturing PMI (Final) - January
• China NBS Manufacturing & Non-Manufacturing PMI - February
• China: Caixin Manufacturing PMI - January
• Eurozone: HCOB Manufacturing PMI (Final) - February
• UK: S&P Global Manufacturing PMI (Final) - February

The barrage of quarterly earnings reports continues next week and from a portfolio perspective it brings results from Axon (AXON) and several holdings in the First Trust Nasdaq Cybersecurity ETF (CIBR) ETF. As it relates to our shares of Coty (COTY), we will be interested in conference call comments and guidance from Inter Parfums (IPAR), while for PepsiCo (PEP) it will Utz's (UTZ) results we are digesting.

We will also continue to collect data points that will help sharpen our view on the economy as well as consumer and corporate spending. Salesforce (CRM), HP (HPQ), Best Buy (BBY), and TJX Companies (TJX) check those boxes. In terms of the housing market, we'll be matching recent homebuilder comments up against those from Trex (TREX) and TopBuild (BLD) but also Redfin (RDFN).

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

Monday, February 26

• Open: Domino's Pizza (DPZ), Pilgrim's Pride (PPC)
• Close: Trex (TREX), Unity Software (U), Workday (WDAY)

Tuesday, February 27

• Open: American Tower (AMT), JM Smucker (SJM), Sealed Air (SEE)
• Close: Axon (AXON), eBay (EBAY), Inter Parfums (IPAR), Redfin (RDFN), Splunk (SPLK),

Wednesday, February 28

• Open: Dycom (CY), TopBuild (BLD), TJX Companies (TJX)
• Close: DoubleVerify (DB), HP (HPQ), Okta (OKTA), Salesforce (CRM), Snowflake (SNOW)

Thursday, February 29

• Open: Best Buy (BBY), GoodRx (GDRX), Hormel Foods (HRL), Papa John's (PZZA), Utz Brands (UTZ),

• Close: Hewlett Packard Enterprises (HPE), Navitas Semiconductor (NVTS), Zscaler (ZS)

Friday, March 1

• Open: Hibbett (HIBB)

AAP 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

The AAP 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

AlphabetGOOGL; $143.96; 975 shares; 3.42%; Sector: Communication Services

WEEKLY UPDATE: Alphabet remains stuck in a larger range, the bigger picture though is even cloudier. The stock chart shows the price bouncing this week off the October highs, which we would consider good support and a fairly good spot to add shares. During the early part of the week, Alphabet was seeing good price action and volume, especially on Tuesday when the rest of the market was performing poorly. That's a good sign of relative strength, but Alphabet needs to build a firm base for at least three weeks if not six. In news, a California regulator suspended Waymo's (their driverless car) application to expand into Los Angeles and other areas, just a minor setback for the company. Google also released a family of open artificial intelligence models,

1-Wk. Price Change: 2.4%; Yield: 0.00%

INVESTMENT THESIS: We believe that while search and digital ad dominance are what will carry 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. 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. Lastly, 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. The company is also preparing to roll out Gemini Subscription with enterprise plans for workspace, according to a report. All good news for Alphabet.

Target Price: Reiterate $165; Rating: One

Panic Point: $125

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

ACTIONS, ANALYSIS & MORE:Investor Relations

AmazonAMZN; $174.99; 835 shares; 3.57%; Sector: Consumer Discretionary

WEEKLY UPDATE:Amazon will join the Dow Jones Industrial Average (DJIA) before the start of trading on Feb. 26, replacing Walgreens Boots Alliance (WBA) in the first change in the 30-stock index since 2020. We're not surprised by Walgreens being booted from the Dow as it was a discussion point in our podcast conversation with Freedom Capital's Jay Woods back in late November.As far as Amazon shares, they already account for ~3.7% of the S&P 500 and ~6.5% of the Nasdaq Composite, which makes them widely held. However, those money managers, mutual funds, and ETFs that track the Dow will have to add AMZN shares to their baskets. This should drive some incremental demand for the shares, but if what we've seen in the past with index changes like this, the associated bump is usually short-lived.We continue to favor AMZN shares as consumers turn to digital shopping to stretch their disposable dollars and companies continue to embrace cloud. The company's continuing focus on margins also bodes well for continued bottom line and cash flow growth. On Friday, CMB International Securities initiated coverage on AMZN shares with a Buy.

1-Wk. Price Change: 3.2%; Yield: 0.0%

INVESTMENT THESIS: We believe upside will result from Amazon's continued eCommerce dominance, AWS's continued leadership in the public cloud space, and ongoing growth of the company's advertising revenue stream, which feeds off Amazon's eCommerce business. Additionally, we believe profitability will continue to improve as AWS and advertising account for a larger portion of total sales as both these segments sport higher margins than the eCommerce operation. 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.

Target Price: Reiterate $200; Rating: One

Panic Point: $140

RISKS: High valuation exposes the stock to volatile swings, eCommerce has exposure to slower consumer spending and competition, management is not afraid to invest heavily, potential headwinds resulting from new eCommerce 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.

ACTIONS, ANALYSIS & MORE:November Retail Sales Offer Pleasant Surprise to Help Propel Market Higher, Investor Relations

Coty Inc.COTY; $13.10; 12,850 shares; 4.11%; Sector: Consumer Discretionary

WEEKLY UPDATE: On Tuesday, Coty gave an upbeat presentation to the Consumer Analyst Group of New York (CAGNY). Heading into that Coty reiterated its fiscal 2024 guidance that calls for 9%-11% life for like (LFL) revenue growth and 11%-12% adjusted EBITDA growth. Reading between those figures, Coty is telegraphing continued margin expansion, something we covered in our post-earnings note to members. In that note, we also discussed management's plans to further deleverage Coty's balance sheet, something that should drop more earnings to its bottom line in the coming quarters. Management shared a 13% operating margin target for Prestige compared to the 9.8% achieved in 2023. That along with continued balance sheet leverage reduction tells us Coty should continue to deliver favorable EPS growth in the coming quarters. The same day Coty signed a new agreement with luxury Italian fashion house, Etro, to produce and distribute its signature fragrance lines and home scent collections beyond 2040. The two companies will also work together to explore new categories and innovations to grow the brand's beauty portfolio. We see this latest win speaking to Coty's expanding its higher-margin Prestige offering. On Friday, TD Cowen upgraded COTY shares to Outperform with a $16 target, slightly ahead of our price target.

1-Wk. Price Change: 10.1%; Yield: 0.0%

INVESTMENT THESIS: Founded in Paris in 1904, Coty is one of the world's largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling luxury and mass-market products in more than 130 countries and territories. The company derives almost 45% of its revenue from the Americas, 44% from Europe, the Middle East, and Africa, and the balance from Asia Pacific. By revenue category, Prestige drives 62% of Coty's revenue but more than 80% of its operating income with the balance derived from its Consumer Beauty segment. Management intends to further grow the Prestige business, expanding its prestige fragrance brands, through the ongoing expansion into prestige cosmetics, and the building of a comprehensive skincare portfolio leveraging existing brands. Management is also targeting margin improvement at its Consumer Beauty brands as well as expanding its presence in China across both of its reporting segments. China's beauty and personal care market is expected to grow at a quicker pace of 5.4% per annum through 2027, putting it at $70 billion-$75 billion by 2027.

Target Price: $15; Rating: One

Panic Point: $10

RISKS: Industry competition and consolidation, product efficacy and safety, currency, and brand licensing.

ACTIONS, ANALYSIS & MORE:We're Making Our Portfolio a Little More Beautiful Today, We're Adding a Name to the Bullpen, Investor Relations.

Vulcan Materials Company VMC; $257.23 ; 613 shares; 3.85%; Sector: Building Materials

WEEKLY UPDATE: Analyzing weekly rail traffic data published by the Association of American Railroads shows sequential improvement for nonmetallic mineral traffic, a positive for Vulcan's aggregates volumes. Next week brings the January Construction Spending report, and when we tear into it, we will remember the month's activity could see some winter weather impact. However, with an early spring expected, warmer temps should see construction activity rebound especially as stimulus dollars continue to flow. We will continue to mine housing data, particularly for single-family construction activity, which would be an incremental tailwind for Vulcan and our shares. We are also starting to see the flow of funds associated with the CHIPS Act, and we expect that to become a tailwind for United in the coming quarters. This week RBC Capital boosted its VMC price target to $269 while Truist lifted its target to $300 from $260.

1-Wk. Price Change: 0.8% Yield: 0.7%

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

Target Price: Reiterate $300; Rating: One

Panic Point: $195

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

ACTIONS, ANALYSIS & MORE:We're Raising 6 Panic Points as Markets React to a Dovish Fed Pivot,Initiation Post, Investor Relations

TWOs

AppleAAPL; $182.52; 700 shares; 3.12%; Sector: Technology

WEEKLY UPDATE: Apple, for the first time, captured the top seven positions in the global list of best-selling smartphones in 2023, according to Counterpoint Research's Global Monthly Handset Model Sales Tracker. According to preliminary data from that firm, U.S. smartphone sales declined 10% year over year in January mainly driven by the underperformance of low-end segments while Apple outperformed most brands with its iPhone continuing to gain share. The next known catalyst for Apple will be the February revenue report from Taiwan Semiconductor (TSM) in early March. As we move closer to Apple's WWDC event in June we expect the Apple rumor mill will kick in. One such report speculates the 2024 iPhone model will ramp up AI computing cores while others point to generative AI features coming to the next series of iPhones. Coming out of the 2024 CES, AI-enabled devices are expected to hit shelves later this year, but we expect Apple will be mum on this until WWDC. That said, we do not think Apple will want to be left behind in the AI race. Also, this week Apple released a free new iPhone app for tracking real-time sports data, its latest move to boost its sports content and news offerings. We have some room to expand the portfolio's exposure to AAPL shares, something we are inclined to do as we move past the seasonally weakest quarter for smartphone sales.

1-Wk. Price Change: 0.1% Yield: 0.5%

INVESTMENT THESIS: While we acknowledge that near-to-midterm 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. Lastly, also see upside resulting from increased adoption of wearables (think the Apple Watch) and potential new product announcements such as an AR/VR headset or an update on Project Titan, the company's secretive autonomous driving program.

Target Price: Reiterate $205; Rating: Two

Panic Point: Reiterate $165

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

ACTIONS, ANALYSIS & MORE: FY3Q21 Earnings Analysis (7/27/21), Apple Product Launch Event Takeaways (4/20/21), Takeaways from WWDC (6/22/20), Initiation (1/4/10), Investor Relations

Applied Materials Inc.AMAT; $197.16; 275 shares; 1.32%; Sector: Semiconductor Manufacturing

WEEKLY UPDATE:During the week it was announced GlobalFoundries (GFS) will receive a $1.5 billion grant from the U.S. government to boost domestic chip manufacturing, as part of the US CHIPS and Science Act. This is the latest sign funds associated with that reshoring effort are starting to flow, but it could soon be joined by an even larger announcement. The Biden administration is reportedly in talks to confer more than $10 billion in subsidies to Intel (INTC). Some may call out the White House as the 2024 presidential race begins to heat up, but from our perch, these announcements are some of the catalysts we've been waiting for as it relates to our position in Applied Materials. Late in the week, consensus-smashing guidance from Nvidia pointed to chip industry capacity becoming incrementally tighter, another positive for semi-cap demand.

1-Wk. Price Change: -1.2% Yield: 0.6%

INVESTMENT THESIS: Applied provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. With its diverse technology capabilities, Applied delivers products and services that improve device performance, power, yield, and cost. Applied's customers include manufacturers of semiconductor chips, liquid crystal, and organic light-emitting diode displays, and other electronic devices. Applied operates in three reportable segments: Semiconductor Systems (73% of 2022 revenue, 78% of 2022 operating income), Applied Global Services (22%, 19%), and Display and Adjacent Markets (5%, 2%). Key customers include Samsung (12% of 2022 sales), Taiwan Semiconductor (20%), and Intel (10%). The company has a rising dividend bias with the current annualized dividend reaching $1.28 per share vs. the 2017 dividend of $0.43 per share and 2018's $0.64 per share.

Target Price: Reiterate $225; Rating: Two

Panic Point: $165

RISKS: Manufacturing and Supply Chain, Competitive Factors, Government Regulation, Technology Change.

ACTIONS, ANALYSIS & MORE:We're Pulling This Name Up From the Bullpen, Investor Relations.

Axon Enterprise Inc.AXON; $270.63; 620 shares; 4.09%; Sector: Aerospace & Defense

WEEKLY UPDATE: Positive results and guidance from Axon competitor Motorola Solutions (MSI) confirmed continued strength in public safety demand as well as the accelerating adoption of cloud-based video. We see that setting a nice stage for Axon's quarterly results on February 27. In that report, we will be looking for continued margin expansion as well as continued growth in the company's recurring revenue streams. We will also be curious for details on how Axon will be leveraging AI to drive productivity improvements across its customer base. Our thinking is that cost savings will help drive customer retention as well as new program wins. As we mark our calendars, we should also add Axon presenting at the Morgan Stanley Technology, Media & Telecom Conference on March 6.

1-Wk. Price Change: 0.3% Yield: 0.00%

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 and Software & Sensors. 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. President Biden's fiscal year 2023 budget requests a fully paid-for new investment of approximately $35 billion to support law enforcement and crime prevention -- in addition to the President's $2 billion discretionary request for these same programs. 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.

Target Price: Reiterate $290; Rating: Two

Panic Point: $225

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

ACTIONS, ANALYSIS & MORE:Strong Demand Bodes Well for This Conducted Energy Devices Firm, Initiating a New Position in a Public Safety Technology Name, Investor Relations.

Bank of America Corp.BAC; $33.92 ; 4,000 shares; 3.31%; Sector: Financial Services

WEEKLY UPDATE:During an interview given this week, Bank of America CEO Brian Moynihan said the bank sees consumer spending still growing at 4%-5%, far slower than what it was but still a healthy clip, in our view, that supports the evolving picture of the economy continuing to grow above trend. Moynihan shared the view consumers will "get used" to 6%-7% mortgages. While that may eventually be the case, our thinking is it's not likely to happen overnight especially as older Americans heading for retirement contemplate downsizing but doing so means a greater mortgage rate compared to a few years ago. In terms of the Fed and monetary policy, Moynihan is on board with our thinking we could see three cuts this year. What Moynihan didn't discuss in detail was investment banking, a market that is part of our becoming incrementally bullish on BAC shares. We will continue to monitor that activity because of the strong operating leverage it brings to Bank of America as well as business and consumer lending metrics. On Thursday, Reddit filed an initial public offering naming Goldman Sachs (GS), Morgan Stanley, JPMorgan, and Bank of America Securities as lead underwriters. From a technical perspective, BAC shares have a strong support level near $30-$31 and if we see the shares reach those levels, we may look to round out our position size. Members will want to mark their calendars because Bank of America's next quarterly dividend of $0.24 will be paid on March 29 to shareholders of record as of February 29.

1-Wk. Price Change: -0.5% Yield: 2.8%

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 67 million consumer and small business clients with approximately 3,900 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 56 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 basis, 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%. Bank of America pays a quarterly dividend of $0.22 per share.

Target Price: $37; Rating: Two

Panic Point: $28

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

ACTIONS, ANALYSIS & MORE:We're Upgrading and Building Upon a Position, We're Initiating a Bank Position, Investor Relations

Costco WholesaleCOST; $737.93; 240 shares; 4.32%; Sector: Consumer Staples

WEEKLY UPDATE: While there were no new Costco-specific developments this week, on its earnings conference call Walmart (WMT) shared consumers are looking for value, which speaks to Costco's value proposition for its members. We continue to see the company gaining wallet share as consumers continue to face inflation pressures. The next known catalyst for COST shares will be the eventual membership price increase, something that should drive its high-margin membership revenue higher. Costco will report its quarterly results on March 7.

1-Wk. Price Change: 1.9% 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 bricks-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 vs. other retailers and its plans to open additional warehouse locations in the coming quarters should drive retail volumes and the higher-margin membership fee income as well. We also appreciate management's approach to capital returns and their willingness to return cash when it is in excess on the balance sheet.

Target Price: Reiterate $760. Rating: Two

Panic Point: $615

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

ACTIONS, ANALYSIS & MORE:After Costco's 'Gold Star' Results, We're Hiking Our Price Target, Initiation (1/27/20), Investor Relations

Elevance Health Inc.ELV; $514.09; 275 shares; 3.45%; Sector: Health Care

WEEKLY UPDATE: Medicare Advantage (MA) membership during the 2024 enrollment period increased by 1.17 million, or 3.7%, since Q3 to 33.1 million in January, including one month of the open enrollment period. On an annual basis, the period's membership gains in both absolute and percentage terms slowed for a third consecutive year. However, about 4.1 million Americans will turn 65 this year and that surge will continue through 2027. This suggests continued growth in MA membership. Outside of that organic growth, Elevance management has shared its plans to be acquisitive in the coming year, moves that should add to its membership base. Those prospects led ELV shares to hit a new 52-week high this week but with the shares flirting with overbought territory following a strong run from $440 in late October, members should hold off adding to their ELV positions near-term.

1-Wk. Price Change: 0.3%; Yield: 1.3%

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

Target Price: Reiterate $550; Rating: Two

Panic Point: $410

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

ACTIONS, ANALYSIS & MORE:We're Trimming One Stock to Add to Another,2021 Annual Report, 2Q 2022 Earnings Report, Investor Relations.

The Energy Select Sector SPDR FundXLE; $85.96; 1,435 shares; 3.01%; Sector: Energy

WEEKLY UPDATE: Energy continues to push upwards. It is not only crude oil that is near a breakout but also natural gas that has seen a nice bid over the last couple of sessions. It all adds up to higher energy prices for the consumer, which may be strapped for cash after paying for higher gas prices at the pump. But we own the XLE for the nice diversification between crude and natural gas. Exxon Mobil (XOM) and Chevron (CVX) are the biggest names in the ETF and have a huge footprint in both areas. The chart of XLE is improved, we would grade this a B and may upgrade to an A with a move above the $86 resistance. Beyond that point we see little in the way until the $92 area, last fall's high point. The indicators for XLE are all pointing bullish, so we will continue to hold this well-diversified ETF for awhile longer.

1-Wk. Price Change: 0.5%; Yield: 3.9%

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

Target Price: Reiterate $90; Rating: Two

Panic Point: $75

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

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

First Trust Nasdaq Cybersecurity ETFCIBR; $56.15; 2,530 shares; 3.47%; Sector: Cybersecurity

WEEKLY UPDATE: CIBR shares were dragged lower but were not hit as hard as those of Palo Alto Networks (PANW) following its disappointing quarterly results and guidance. That speaks to our favoring diversified exposure brought to the portfolio through CIBR, which own a basket of 30 cybersecurity companies. Despite its outlook, Palo Alto Networks shared that "the threat landscape continues to challenge our customers with increasing scale and sophistication of attacks." That reinforces our wanting portfolio exposure to cybersecurity stocks because cyberattacks are an expanding pain point. Several other CIBR holdings are reporting next week and those aggregate results will tell us if Palo Alto's softer-than-expected guidance was company-specific or something more widespread.

1-Wk. Price Change: -3.0% Yield: 0.0%

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 $62; Rating: Two

Panic Point: Reiterate $48

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

ACTIONS, ANALYSIS & MORE:We're Swapping One Cybersecurity Stock for Another, ETF Product Summary

Lockheed Martin Corp.LMT; $431.12; 330 shares; 3.47%; Sector: Aerospace & Defense

WEEKLY UPDATE: We continue to be baffled by the performance of Lockheed Martin. The stock may have made a nice bottom last week, and a little sideways base-building would probably be the best situation for now. It is truly frustrating to own a high-quality name that simply does not participate with the rest of the market. We consider Lockheed a best-of-breed name and while the chart reflects consolidation, the fundamentals for the company have never been better. Just this week more large contracts were announced. The LMT International President said the company is looking for more suppliers outside of the U.S. Last week the company stated they would be increasing production of weapons systems in high demand.

1-Wk. Price Change: 1.7% Yield: 2.9%

INVESTMENT THESIS: Lockheed Martin is the largest defense contractor globally and has dominated the Western market for high-end fighter aircraft since the F-35 program was awarded in 2001. Lockheed's largest segment is aeronautics, which is dominated by the massive F-35 program. Lockheed's remaining segments are rotary and mission systems, which is mainly the Sikorsky helicopter business; missiles and fire control, which creates missiles and missile defense systems; and space systems, which produces satellites and receives equity income from the United Launch Alliance joint venture. Historically, the stability of defense spending has been a haven during periods of economic uncertainty, and we see that repeating once again even as geopolitical conflicts are likely to lead to incremental demand for Lockheed's products. The company has increased its dividend consistently over the last 19 years and is widely expected to boost it again in the coming days. In October 2022, Lockheed announced its board authorized the purchase of up to an additional $14.0 billion of LMT stock under its share-repurchase program.

Target Price: $520; Rating: Two

Panic Point: $360

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

Marvell Technology Inc.MRVL; $67.58; 2,340 shares; 3.86%; Sector: Technology

WEEKLY UPDATE: When Nvidia reported its January quarter results, its data center revenue rose 27% sequentially and more than 400% year over year. That showcased the strength of AI and data center-related chips and bodes very well for Marvell's largest end market, which is data center. Marvell will report its quarterly results on March 7. While Marvell is one of the portfolio's larger positions, based on the strength of the company's upcoming earnings report and guidance we may need to revisit our current $80 price target.

1-Wk. Price Change: 1.9%; Yield: 0.4%

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%-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 vs. 19 GB in 2023 and 15 GB in 2022.

Target Price: Reiterate $80; Rating: Two

Panic Point: $58

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

Mastercard MA; $473.42; 275 shares; 3.18%; Sector: Info. Tech

WEEKLY UPDATE: News of a big merger this week between competitor Discover Financial (DFS) and Capital One (COF) sent Mastercard and it's other competitors down sharply early in the week, but as is often the case the hype seems to be short-lived and the power returns to the strongest names. Mastercard is a brand like no other and remains the preferred card of most cardholders. Merging with Capital One is not going to make Discover better than Mastercard, it might even weaken their brand. Mastercard stands to benefit down the road if this merger creates problems for consumers. The stock bounced back this week after being hit hard and closed at a new all-time high Thursday. With very strong technical signals in place this stock is ready to make a move to $500 and beyond.

1-Wk. Price Change: 1.1% Yield: 0.6%

INVESTMENT THESIS: Mastercard is a card network company that benefits from the secular shift away from cash transactions and toward card-based and electronic payments. On Covid-19 dynamics, we view MA as a "reopening" play and an economic recovery play within technology because its cross-border volumes fell sharply during the pandemic but will rebound as mobility increases and travel restrictions ease. Mastercard has more international exposure relative to Visa (V), making its growth outlook more susceptible to new travel restrictions. However, we view MA as the better long-term play as we are betting on that inevitable recovery.

Target Price: Reiterate $490 Rating: Two

Panic Point: $380

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

McDonald's Corp.MCD; $297.75; 455 shares; 3.31%; Sector: Consumer Cyclical

WEEKLY UPDATE: We continue to see the company gaining favor with consumers as they contend with ongoing inflation pressures and budgets sapped by credit card borrowings and student debt payments. McDonald's plans to open 10,000 restaurants over the next four years and tap the $100 billion specialty drinks and coffee market, for which it currently has only modest exposure, through its new CosMc's initiative. We also see McDonald's reaping the benefit of technology and other productivity investments as well as new smaller footprint locations while its competitors contend with higher minimum wages and the looming increase to $20 per hour for California fast food workers on April 1. Late in the week, McDonald's released its annual report and as we review it we will share incremental insights with members.

1-Wk. Price Change: 2.0%; Yield: 2.2%

INVESTMENT THESIS: The company franchises and operates McDonald's restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries. Of the 40,275 McDonald's restaurants at year-end 2022, approximately 95% were franchised. The U.S. market accounts for ~40% of total revenue, International 50%, and International Developmental Licenses Markets & Corporate ~10%. With consumers facing continued inflation pressures, we see McDonald's winning consumer wallet share as it benefits from pricing action put in place in recent quarters and improving input costs.

Target Price: $325; Rating Two

Panic Point: $240

RISKS: Consumer spending, competition, supply chain interruption, franchise business model, employment challenges.

ACTIONS, ANALYSIS & MORE:We're Moving This Bullpen Name Up to the Portfolio, Here's Why We're Adding This Name to the Bullpen, McDonald's Investor Relations.

Microsoft Corp.MSFT; $410.34; 325 shares; 3.25%; Sector: Technology

WEEKLY UPDATE: This week we learned Microsoft plans to use Intel's (INTC) manufacturing technology to make a forthcoming chip that the software maker designed in-house as it looks to secure a steady supply of chips for its data center operations. With Nvidia's confirmation of the accelerating AI wave with its January quarter results and guidance, we lifted our price target for Microsoft shares to $450 from $390. Next week brings quarterly results from HP (HPQ) and HP Enterprises (HPE), and their comments on the PC market and AI adoption may give us cause to lift our MSFT target again. For now, our MSFT panic point remains at $350 but we will look to bring that up as MSFT shares move toward our revised price target.

1-Wk. Price Change: 1.6% Yield: 0.7%

INVESTMENT THESIS: We believe the cloud to be a secular growth trend and that 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 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: $450; Rating: Two

Panic Point: Reiterate $350

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

ACTIONS, ANALYSIS & MORE:FY4Q21 Earnings Analysis (7/27/21), Ignite 2021, Microsoft Acquires ZeniMax (9/22/20), CEO Satya Nadella on CNBC (3/25/20), CEO Satya Nadella speaks at the World Economic Forum (1/23/20)

Morgan StanleyMS; $86.55 ; 1,575 shares; 3.33%; Sector: Financial Services

WEEKLY UPDATE: We continue to read about new IPO filings, including the one from semiconductor company Astera Labs, which per its S-1 filing, named Morgan Stanley and JPMorgan (JPM) as lead underwriters. On Thursday, Reddit filed an initial public offering naming Goldman Sachs (GS), Morgan Stanley, JPMorgan, and Bank of America Securities as lead underwriters. That shores up our thinking that improving investment banking activity at Morgan Stanley should drive incremental operating leverage and bottom-line performance in the coming quarters. With strong support for MS shares between $82-$83, we'd consider rounding out our position near those levels. We will also continue to watch post-IPO action looking for good follow-through, which would support an improving outlook for the IPO market. That would be another catalyst for us to add to our MS position and potentially revisit our MS price target.

1-Wk. Price Change: 0.1%; Yield: 3.9%

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 2024 continues to build with recent additions including Panera Bread, Reddit, Fanatics, and Skims, which is backed by Kim Kardashian. This along with the Fed increasingly likely to start cutting rates in H1 2024, suggests we are far closer to the IPO window opening on a sustained basis than we have been in some time. 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's investment banking business. Marginally lower rates could also generate a pick-up in M&A activity as the cost of capital with rates improving. As the Fed continues its cutting cycle to get rates back to normalized levels, that effort would also reduce rates for stock market alternatives, ones that quashed the "there is no alternative" trade earlier this year. That along with folks continuing to be behind in retirement savings bodes well for Morgan's wealth management business in the coming quarters.

Target Price: $97; Rating Two

Panic Point: $72

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

ACTIONS, ANALYSIS & MORE:We're Exiting Chipotle, Initiating Morgan Stanley, and Adding to 2 Names, We're Closely Eyeing Morgan Stanley as an IPO Boost Looks Likely, Investor Relations.

Nvidia Corp. NVDA; $788.17 ; 67 shares; 1.29%; Sector: Technology

WEEKLY UPDATE: We called up NVDA shares from the Bullpen following the company's stellar January quarter results and consensus-crushing guidance fueled by accelerating spending on AI. Dramatically higher EPS revisions across Wall Street and our updated valuation framework that derives our $950 price target led us to begin a starter position in the shares. With AI investing growing, more AI use cases being announced and prospects for AI-related headlines to continue, something that will continue to drive market enthusiasm, the risk we run by not beginning a position in NVDA is the portfolio is left sitting on the sidelines. While we would rather not miss out on the next leg in the shares, we also recognize we could see some gravity take hold of NVDA as we move past the shock and awe of the company's January earnings report. That led us to start the position with a Two rating and a modest position size. Our plan will be to pick up more shares as opportunities present themselves.

1-Wk. Price Change: 4.0%; Yield: 0.0%

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, or AI, 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: $950; Rating Two

Panic Point: $640

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

ACTIONS, ANALYSIS & MORE:Here's Why We Added Nvidia to the Portfolio, By Initiating Nvidia Now, Here's What We Don't Want to Miss,Investor Relations.

PepsiCo Inc.PEP; $169.60; 800 shares; 3.31%; Sector: Consumer Defensive

WEEKLY UPDATE: We remain positive on Pepsi though the stock remains in a holding pattern. The chart shows a very stubborn PEP just cannot break above the 200-day moving average, which it challenged twice in 2024. Eventually we believe this stock heads much higher but for Pepsi it is more about time than price. What that means simply is we need to see more time pass before we see more dollars come to the stock. Basically PEP trades between $164 and $174; until that breaks we are in a range. During the week Pepsi announced partnerships with David Beckham and Thierry Henry for their Lay's brand.

1-Wk. Price Change: 2.0%; Yield: 3.0%

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

Target Price: Reiterate $210; Rating: One

Panic Point: $145

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

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

Qualcomm Inc.QCOM; $154.91; 1,040 shares; 3.93%; Sector: Technology

WEEKLY UPDATE: We would look to revisit the Two rating as we move past this seasonally slow quarter and get confirmation the smartphone market is ramping. One source for that confirmation is monthly revenue reports from Taiwan Semiconductor (TSM), a key partner for Qualcomm and its fabless chip strategy. Another will be reports surrounding China's Lunar New Year, one of the biggest gift-giving holidays. We will be watching smartphone sell-through from this event and also inventory levels when it is over, especially for the Android market. We will also be watching for product announcements that leverage the AI capabilities housed in Qualcomm's Snapdragon chips. As those wins increase, we suspect the market will begin to rethink not only how it values QCOM shares but also the 2024-2025 smartphone upgrade cycle. As that happens, we will revisit our current price target as warranted. Qualcomm will pay its next $0.80 per share quarterly dividend on March 21 to shareholders of record on February 29.

1-Wk. Price Change: 1.5%; Yield: 2.1%

INVESTMENT THESIS: Qualcomm focuses on foundational technologies for the wireless industry, including 3G (third generation), 4G (fourth generation), and 5G (fifth generation) wireless technologies and processor technologies including high-performance, low-power computing, and on-device artificial intelligence technologies. As a connected processor company, its technology roadmap aims to enable the connected intelligent edge (the next generation of smart devices) across industries and applications beyond handsets, including automotive and the Internet of Things (IoT). Qualcomm has three reportable segments: QCT (Qualcomm CDMA Technologies) semiconductor business, which develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in mobile devices; automotive systems for connectivity, digital cockpit, and ADAS/AD; and IoT including consumer electronic devices; industrial devices; and edge networking products. QCT accounts for 80%-85% of revenue. QTL (Qualcomm Technology Licensing) licensing business grants licenses or otherwise provides rights to use portions of the company's intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. QTL accounts for ~15% of Qualcomm's revenue but contributes a greater portion of the company's operating income.

Target Price: $175; Rating Two

Panic Point: $125

RISKS: Customer risk, technology advancement, competition risk, third-party supplier, and manufacturing partner risk.

ACTIONS, ANALYSIS & MORE:We're Making Another Call to the Portfolio's Bullpen, Here's When We'd Consider Taking a Position in Qualcomm, Qualcomm Investor Relations

SPDR Gold Shares ETFGLD; $188.62; 312 shares; 1.44%; Sector: Commodities

WEEKLY UPDATE: Gold remains a source of funds (sellers), but still trades well higher than $2,000 per ounce. That is an important level as the metal has been above there for some time now. The GLD, however, has been soft, correcting from a recent high in late December. All is not lost though, we still see gold going higher by perhaps more than 10% this year, which means above $2,250 per ounce. With so many uncertainties in the world right now gold is a great hedge against turmoil. In addition, inflationary fears continue to hamper central banks and their policy boards.

1-Wk. Price Change: 1.2% Yield: 0.0%

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

Target Price: Reiterate $200; Rating: Two

Panic Point: $165

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

United RentalsURI; $658.23; 232 shares; 3.73%; Sector: Industrials

WEEKLY UPDATE: Next week brings the January Construction Spending report, and when we tear into it, we will remember the month's activity could see some winter weather impact. However, with an early spring expected, warmer temps should see construction activity rebound especially as stimulus dollars continue to flow. We will continue to mine housing data, particularly for single-family construction activity, which would be an incremental tailwind for United and our shares. We are also starting to see the flow of funds associated with the CHIPS Act, and we expect that to become a tailwind for United in the coming quarters.

1-Wk. Price Change: 1.2% Yield: 1.0%

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, shipbuilders, utilities, retailers, and infrastructure entities; commercial construction rentals represented approximately 46% of rental revenue, primarily reflecting rentals related to the construction and remodeling of facilities for office space, lodging, healthcare, entertainment, and other commercial purposes; and residential rentals 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 Infrastructure Bill; and the company's nip-and-tuck acquisition strategy that should further enhance its geographic footprint. In January, the company announced a fresh $1 billion buyback authorization following the completion of $4 billion in share repurchases over the 2012-2021 period.

Target Price: Reiterate $700; Rating: Two

Panic Point: $525

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

ACTIONS, ANALYSIS & MORE:Initiating a Position in This Equipment Rental Company, We're Adding This Equipment Rental Company to the Bullpen, Investor Relations

Universal DisplayOLED; $171.89; 460 shares; 1.93%; Sector: Technology

WEEKLY UPDATE: Universal Display reported mixed December quarter results after Thursday's market close. While the company's bottom line easily beat consensus expectations, revenue for the quarter came in at $158.3 million modestly missing expectations. Universal's guidance for the coming year calls for its top line to be in the range of $625 million-$675 million compared to $576.4 million last year but that range skews wider at the low end compared to the Wall Street consensus of $666 million for 2024. On the earnings call, management struck a cautious tone like we have seen other companies do in the current earnings season. We are in the seasonally weakest quarter for smartphones, but as we've discussed before guidance from Skyworks (SWKS) and Qorvo (QRVO) point to this year having a smaller seasonal decline between the December and March quarters than we've seen in the past. Overall, the smartphone markets appear to be far healthier compared to year-ago levels, and the expected ramp in larger format as well as foldable models with greater organic light emitting diode penetration bodes well for Universal's business in the coming quarters. Outside of smartphones, OLED TV and PC monitor growth, the burgeoning OLED automotive market, as well as AR, VR wearables, gaming, and signage bode support continued revenue and EPS growth at Universal. Our plan is to let the market digest analyst revenue and EPS revisions for OLED before making our next move. Once the shares settle out, we will look to pick up additional OLED shares given the expected adoption of organic light-emitting diode displays across a growing array of applications. The company boosted its quarterly dividend by more than 14% to $0.40 per share. The dividend is payable on March 29, 2024, to shareholders of record on March 15, 2024. While it offers a small dividend yield, we view that increase as a signal of brighter things ahead. 

1-Wk. Price Change: -5.4% Yield: 0.9%

INVESTMENT THESIS: Universal Display focuses on the development and commercialization of organic light-emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, monitor, wearable, tablet, notebook, personal computer, augmented reality (AR), virtual reality (VR), and automotive markets. This adoption reflects advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor, and manufacturing cost. Universal's business strategy is to develop new OLED materials and sell existing and new materials to product manufacturers for display applications, such as mobile phones, televisions, monitors, wearables, tablets, portable media devices, notebook computers, personal computers, and automotive applications, and specialty and general lighting products. The company also looks to license its OLED material, device design, and manufacturing technologies to those manufacturers. As such, Universal has a significant portfolio of proprietary OLED technologies and materials with more than 5,500 patents issued and pending worldwide.

Target Price: Reiterate $210; Rating: Two

Panic Point: $145

RISKS: Patent and Intellectual property protection; maintaining OLED manufacturing and customer relationships; technology risk; market risk.

ACTIONS, ANALYSIS & MORE:Here's Why We're Calling Universal Display Up From the Bullpen, Investor. Relations

Waste ManagementWM; $208.05; 425 shares; 2.16%; Sector: Industrials

WEEKLY UPDATE: Coming into this week, Citi boosted its price target on WM shares to $225 from $215 while Cowen upped its target to $220 from $200. Those moves follow our price target increase to $220 from $205 last week. On Thursday, S&P Global's Flash February Manufacturing PMI pointed to a continued upturn in domestic manufacturing, a positive for Waste's non-residential facing business. Next week brings the January Construction Spending report, another expected positive for that same business. With WM shares in overbought territory, we would suggest members hold off purchasing the shares despite our increased price target. We will be looking to add more WM shares at more attractive levels.

1-Wk. Price Change: 3.2% Yield: 1.4%

INVESTMENT THESIS: 2024 will see more nonresidential construction activity because of the Biden Infrastructure Law, but now we can finally factor in activity for the CHIPs Act, which saw its first award this week. Other potential drivers include spending associated with the Inflation Reduction Act, including the much-awaited start of building out a nationwide network of EV charging stations. Recently President Biden announced an $8.2 billion passenger rail project, which will likely take several quarters to come onstream, leading us to think it's more of a 2025 catalyst. Alongside that bright outlook for Waste's commercial business, automation efforts and pricing power in its sticky residential business should drive margins and EPS generation higher in the coming quarters.

Target Price: Reiterate $220; Rating: Two

Panic Point: $170

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

ACTIONS, ANALYSIS & MORE:Here's the Latest on Waste Management, Google, and Applied Materials, We're Adding Waste Management to the Portfolio, and Boosting 3 Price Targets, Investor. Relations

THREEs

ProShares Short QQQ ETFPSQ; $8.97; 4,070 shares; 0.89%

WEEKLY UPDATE:We continue to hold the PSQ as a short-term hedge against downside activity. It mostly acts as a dampener against volatility, which we saw kick up a couple weeks back. We don't need to be reminded about 2022 when the bear market mauled any investor in its path. We like having this protection working as you never know when a sudden drop will happen that could cause much more pain than wished for.

1-Wk. Price Change: -1.4%; Yield: 0.0%

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

Target Price: N/A

Panic Point: N/A

RISKS: Because PSQ shares track the inverse of the Nasdaq 100 Index, PSQ shares will move lower when the Nasdaq 100 Index moves higher.

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

ProShares Short S&P 500 ETFSH; $12.30; 3,310 shares; 0.99%

WEEKLY UPDATE:Much like the PSQ we hold the inverse of the SPY (SH) for hedging purposes. We have to understand markets do not go up everyday without giving back some ground. Uptrends do have pullbacks, and having the SH allows us to dampen the volatility and have some protection in place should the markets have more than a modest pullback. We were happy to have the protection in place recently when the markets fell more than 2% in one session. Shares were down this week as the markets rose again.

1-Wk. Price Change: -1.5%; Yield: 0.0%

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

Target Price: N/A

Panic Point: N/A

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

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

At the time of publication, Acton Alerts PLUS was long BAC, AXON, COTY, LMT, ELV, GLD, SH, PSQ, XLE, PEP, MA, CIBR, AMZN, AMAT, URI, MSFT, MRVL, OLED, GOOGL, NVDA, COST, MS, AAPL, VMC, MCD, QCOM and WM.