Cracking the Maverick Code by Bill Cara

Bill Cara: Cracking the Maverick Code

December 2023

Published by Greenfield / Cara Editor: Bill Cara Etobicoke, Ontario M8X 3A3 Canada 647-868-6013 billcara@billcara.com Copyright @2023, 2024 by Bill Cara First edition December 2023 ISBN: 978-0-9879770-6-9 (eBook) 202310 ISBN: 978-0-9879770-7-6 (Paperback) 202310 All rights are reserved, including the right to reproduce this book or portions in any form.

Bill Cara: Cracking the Maverick Code

December 2023

Disclaimer & Disclosures Disclaimer: The information in 'The Maverick Investor's Handbook' is for informational purposes only and is not intended to be professional advice. The author and publisher do not guarantee the content's accuracy, completeness, or suitability and expressly deny all warranties, including fitness for a specific purpose. Any reliance on this information is at your own risk. The author and publisher are not liable for any damages or losses from using this book. Readers should exercise due diligence and consult a qualified professional for personalized financial advice. References to organizations or websites are for informational purposes only and do not imply endorsement. Readers should verify the latest information as financial markets are constantly changing. Disclosures: At the initial publication date of 'Maverick Investor,' Bill Cara was a US-registered investment advisor and a Canadian resident. However, the content of this book does not constitute financial advice and is intended for educational purposes only. The author relies on market data from reputable sources widely used in the financial industry but does not endorse competitive services. The eBook's chapters are bookmarked and hyperlinked for easy navigation, all created by the author for reliability. Some hyperlinks may lead to content behind paywalls, and the author apologizes for any inconvenience. While efforts have been made to ensure link longevity, a few may become inactive. Readers are encouraged to provide feedback for book improvement at billcara@billcara.com.

Bill Cara: Cracking the Maverick Code

December 2023

Table of Contents 1.

Preface: Beating the Dow is Beating the Market

2. Mastering the Dow 30 - A Path to Success

3. The Key to Maverick Dow 30 Company Reports

4. Which Dow 30 companies are not investable?

5. FUNDAMENTAL ANALYSIS TABLE AND LINKS

6. TECHNICAL ANALYSIS TABLE AND LINKS

7. DOW 30 COMPANIES ANALYST RECOMMENDATIONS AND SCORES

8. DOW 30 COMPANIES AVERAGE ANNUAL TOTAL RETURN PERFORMANCE

9. DOW 30 COMPANY OUTSTANDING SHARES

10. DOW 30 VALUE LINE SUMMARY TABLE

11. QUARTERLY MAVERICK REPORTS: APPLE (AAPL)

AMGEN (AMGN)

AMERICAN EXPRESS (AXP)

BOEING CO. (BA)

CATERPILLAR (CAT)

SALESFORCE (CRM)

CISCO (CSCO)

CHEVRON (CVX)

DISNEY (DIS)

DOW INC (DOW)

100

GOLDMAN SACHS (GS)

109

HOME DEPOT (HD)

118

HONEYWELL (HON)

128

IBM (IBM)

138

INTEL (INTC)

146

JOHNSON&JOHNSON (JNJ)

156

JP MORGAN (JPM)

164

COCA-COLA (KO)

174

MCDONALD’S (MCD)

182

3M CO. (MMM)

194

MERCK (MRK)

203

MICROSOFT (MSFT)

211

NIKE (NKE)

220

PROCTER & GAMBLE (PG)

231

TRAVELERS (TRV)

239

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December 2023

UNITEDHEALTH (UNH)

250

VISA (V)

258

VERIZON (VZ)

267

WALGREENSBOOTS (WBA)

275

WALMART (WMT)

283

12. Dow 30 Maverick Long-term Guidance

291

13. Choosing the Right Portfolio Management Platform

321

Bill Cara: Cracking the Maverick Code

December 2023

Preface: Beating the Dow is Beating the Market The financial marketplace is a complex web of divergent interests. Each player, whether a central banker, government agent, commercial banker, trader, or investor, has unique objectives that may not align with yours. Success is the common goal, but it’s not guaranteed for everyone, and the game isn’t always fair. The financial landscape constantly shifts due to policy changes by central banks, government tax increases, and fluctuating interest rates. Such changes create a clash of interests that impacts various market participants. As an investor, aligning with daily stock prices may not be helpful, given governments' and bankers' differing goals and strategies on the sell side. The dominance of the sell-side often leaves individual investors as casualties of these conflicting agendas. Why, then, would you on the buy side seek financial advice from entities whose interests do not align with yours? Drawing from my experience as a management consultant, I recall a client, a doctor, who learned auto mechanics to avoid being taken advantage of. Similarly, investors can learn to navigate Wall Street. Having been on both sides, I understand the tactics of the sell side and have spent years guiding investors on how to avoid falling prey to them. Success in the stock market is not as daunting as it appears. With my guidance, you can comprehensively understand investing very quickly. Call it a master's degree in a month. In practice, the key is focusing on a long-term investment strategy rather than relying on the adrenaline rush traders chase. “The Maverick Investor’s Handbook” and “Cracking the Maverick Code” offer a succinct program to help independent investors, especially beginners, make informed decisions and avoid exploitation. The Maverick program strategically targets top-tier companies in the Dow 30 index, including Nike, McDonald’s, Apple, Microsoft, and Visa. You’ll gain insights and strategies for confident DIY investing that align with your financial goals and risk tolerance.

Bill Cara: Cracking the Maverick Code

December 2023

In conclusion, successful investing requires a long-term perspective, knowledge, due diligence, and patience. Trading against powerful organizations can lead to low self-confidence and constant stress. Many short-term-focused individuals mistakenly turn to Wall Street for help. A better approach is to select a portfolio of ten top-performing Dow 30 companies that meet your personal needs and trade the stocks only at extreme market reversals. This long-game strategy, backed by solid facts, begins your confident and successful lifelong investment journey. Beating the Dow is synonymous with beating the market. Nothing more is needed. I rest my case. /Bill

Bill Cara: Cracking the Maverick Code

December 2023

Mastering the Dow 30 - A Path to Success Every Path Has a Beginning: The Dow 30 Index is Ours The Maverick Investor's Handbook focuses on the Dow 30, a group of highquality companies in the DJIA index barometer of the US stock market. This companion book provides reports on these companies, aiding you in making informed decisions. I will update the data quarterly, enabling you to monitor your investments more effectively. From a long career on Wall Street, I learned to invest in winning companies, and historical performance shows that past winners usually continue to lead. So, categorizing the Dow 30 into quartiles based on performance helps us identify investment candidates while avoiding the weakest companies with severe problems, the ones whose stocks are laggards. From The Maverick Investor’s Handbook: Whatever your path, embarking on the journey to success requires a proven strategy. For investors, it requires grounding yourself in critical thinking and tactical actions. Invest wisely in well-established blue-chip companies and leverage free electronic tools from financial data aggregators and discount brokers. Secondly, broaden your perspective by connecting with like-minded individuals and learning from seasoned investors like 93-year-old Warren Buffett and his late partner, Charlie Munger, who lived nearly a century. For novice investors, these insights empower you to decipher reality from the market's deceptive practices and make well-informed decisions. Recognize that Wall Street's primary goal is to sell risk, and your mission is to avoid it. By investing exclusively in a select group of high-quality securities, your task is to know and monitor the company's weaknesses and threats in preparation for when investor sentiment turns negative. Sound risk management decisions assure your success as an investor in a growing economy led by these corporate leaders. This simplified approach becomes your most valuable strategy in pursuing financial success. Bill Cara: Cracking the Maverick Code

December 2023

Tools for Independent Investors: Enough information is freely available online to succeed independently. Build a portfolio with blue-chip Dow 30 companies that do business worldwide, align your tolerance for risk with these companies, and practice patience by ignoring short-term market hype and drawdowns. Long-Term Investment Focus: Encouraging a long-term perspective, unlike daily trading, can be challenging for beginners. But understand that the Dow 30 has shown an average annual return of nearly 10% over the past decade, even with the dips. Reinvesting returns at an 8% annual rate would double your investments about every nine years. With all its power, influence, money, computers, and skillful employees, Wall Street’s managed mutual funds and Exchange-Traded Funds (ETFs) do not measure up. So, if we achieve these long-term goals, we win. To beginners, there are some basic terms you will need to understand. Market Capitalization: While traders focus on market cap, investors like us are more interested in the business value of a company. It's akin to considering what someone like Warren Buffett might pay for the entire company. Investors look for gaps between the market's day-to-day perception and the business's true value. Dividends and Capital Gains: Think of a dividend as a share of a company's profits given to shareholders, akin to a small gift. On the other hand, capital gains come from increased share prices over time, but they're only realized if you sell the stock. There may be capital losses, so before starting, you must understand that an adversary stands between you and success. The Stock Market Battlefield: Winston Churchill's quote, "A riddle wrapped inside a mystery inside an enigma," perfectly captures the essence of the stock market. It’s a complex battleground, and the opponents are at war. Bill Cara: Cracking the Maverick Code

December 2023

On this battlefield, Wall Street bankers, central banks, and governments play the role of our adversary. It's imperative to unravel their plans, decipher their actions, and understand the narratives that have led to their profitability and our losses. My mission is to help you win the war by providing an investment strategy and trading tactics that empower you to navigate the battlefield's complexities confidently. This unique strategy and tactics guide is called the Maverick Code. The information you need is embedded and updated in the Dow 30 company reports to be published quarterly in Cracking the Maverick Code, companions to The Maverick Investor’s Handbook. Fundamentals Matter: Corporate fundamentals, like balance sheets and income statements, are crucial in making investment decisions. Strong companies win. The Maverick program organizes what you need to know. Size and Returns: Size matters in investing. The average market cap of top-performing Dow 30 companies is significant. Even excluding the largest companies, like Microsoft and Apple, size impacts long-term Total Return. Size wins. Analyst Ratings and Independent Thinking: While Wall Street consensus ratings can be informative, developing your independent analytical approach is crucial. Don't solely rely on the adversary’s opinions. Remember, Wall Street has programs to make profits for its shareholders, and its analysts and salespeople are not independent. Summary Argument: Understand that Wall Street is a formative adversary and the Dow 30 your ally. With the Maverick program, you can customize and manage your financial assets without depending on others. Knowing the names and the assets gives you comfort and strength to win on the battlefield. In the market: "Wall Street needs you. You don't need Wall Street." /Bill Bill Cara: Cracking the Maverick Code

December 2023

The Key to Maverick Dow 30 Company Reports Maverick Dow 30 Company Reports are Quarterly, upgraded after each earnings release and again for this quarterly book publication. 1. Business Description 2. Maverick Guidance: i. Short-term guidance: Short-term technical analysis-based interpretation of 1-3 month price motion to assist Mavericks who may want to add positions into periods of weakness or reduce positions into strength. ii. Long-term guidance: 3-12 month technical analysis-based indication for important portfolio decisions. iii. A summary of beliefs and opinions that may override the established Wall Street narratives, analyst opinions, market guidance, and SWOT analysis. This is my attempt at critical thinking regarding holding this stock in a Maverick portfolio. 3. Consideration for Maverick Portfolio: a. If investable, what is the risk tolerance alignment? Most market participants do not understand how to align their tolerance for risk with the companies they invest in, which is key to prudent decision-making and sustainable portfolios. 4. Market Guidance: a. The consensus of all reporting analysts is scored on a five-point scale: •

STRONG BUY is between 1.0 and 1.5.

•

BUY is above 1.5 and below 2.5.

•

HOLD is between 2.5 and 3.5.

•

SELL is above 3.5 and below 4.5.

•

STRONG SELL is between 4.5 and 5.0.

b. The closer a score gets to 1.0, the higher the conviction of the BUY recommendation. The closer to 5.0, the stronger the SELL. c. Differences in analyst recommendations: Sometimes, one aggregator will sum up Wall Street recommendations as BUY Bill Cara: Cracking the Maverick Code

December 2023

while another will present the same as SELL. Since biases exist everywhere and no aggregator is the best interpreter of Wall Street narratives, it is wise to consider more than one source. d. Analyst price targets for the next 12 months (NTM) often vary with wide-ranging differences. We ought to examine the reasons if the anomalies are extreme. The narrower the differences, the more likely the analyst consensus will be accurate. However, analysts work for investment banks and retail brokerage firms that are self-conflicted, so the biased-laden price targets are assumed to be excessively bullish. e. Difference in Technical Analysis between aggregators using the same tools. Given that the analysis incorporates the same studies of moving averages and various technical indicators, which are mathematical facts, I find it strange that one aggregator could compute a SELL result vs a BUY result from another aggregator. But, since I don’t rely specifically on any one source of information, it’s best to record the results and observe any differences. 5. Value Line Guidance: a. Value Line is an independent research firm with a reputation over many years. The objective analysis from VL is preferable to the heavily biased Wall Street broker-dealer analysis. b. The VL Introductory Workbook is a must-read for Mavericks: c. I combine the quarterly VL analyst interpretations with the companies’ quarterly earnings report news releases. 6. Financial Performance: a. The Average Annual Total Return (change in market price plus receipt of dividends) over 10 years (and maybe 5 years) is the most important financial performance information because successful companies become successful stocks, and successful companies and stocks in the past are likely to be again in the future 3 to 5 years.

Bill Cara: Cracking the Maverick Code

December 2023

b. AATR and smoothed AATR. All stocks' market prices constantly fluctuate but often reach cycle highs and lows and pay dividends at different times, so it’s best to smooth this data. c. As an absolute figure, a stock's PE is meaningless without context. In terms of valuation dynamics, a 5 PE stock often results in a better future AATR than a 25 PE. d. PE TTM (Price-to-Earnings Trailing Twelve Months) vs. PE NTM (Price-to-Earnings Next Twelve Months). The price and earnings data fluctuate, so monitoring what has occurred in the trailing 12 months is important versus consensus analyst data for the next 12 months. A high PE TTM might indicate that a company has performed well recently, but if the PE NTM is lower, it could suggest that the market expects a decline in price or an increase in forward earnings. Conversely, a higher PE NTM could indicate that the market anticipates improved stock prices and lower earnings or flat or slower earnings growth in the future. e. PE vs. Projected 3-5-year Average Annual PE (AAPE). The historical PE provides insights into past market perceptions, allowing investors to benchmark a company's valuation changes over time and make comparisons within its industry. Conversely, the projected 3-5-year AAPE is forward-looking, indicating expectations for future earnings growth. This comparative analysis combines a retrospective view of historical valuation with a forward-looking perspective based on analysts' expectations. Investors use these insights to make informed decisions about a company's prospects, considering factors like growth expectations, market sentiment, and the broader financial landscape. 7. Operational Summaries (including Revenue, Cash Flow, Earnings): Assessing revenues, cash flow, and earnings trends over the most recent four quarters is essential for a comprehensive view of a company's financial health and growth potential. A consistent upward trend suggests a robust and expanding business. In Bill Cara: Cracking the Maverick Code

December 2023

contrast, a negative trend and any substantial fluctuation in trend raise flags and warrant a closer examination of the factors influencing the company's performance. Maverick Investors should consider these insights alongside industry benchmarks and the company's overall strategy. 8. The 3-to-5-year Operational and Financial Outlook: We look for key indicators essential for building or sustaining investor confidence: •

Revenue Growth.

•

Profitability.

•

Operational Efficiency.

•

Capital Expenditure.

•

Market Expansion.

•

Debt Management.

•

Innovation.

9. Noteworthy Strategic Developments: Are there any important board of director decisions that might materially impact long-term performance, such as mergers and acquisitions, divestitures of non-core operations, extra dividends, and share buybacks? 10. FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=DIS a. Individual company studies using FinViz. b. Group studies using FinViz. 11. Company SWOT Analysis: a. SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a valuable tool for long-term-oriented DIY investors. There is no need to be guided by self-conflicted, highly biased narratives. This information is available online and rehashed in Maverick reports to assist in critical discussions. b. Internal Strategic Factors: management and the Board's responsibility and accountability -•

Strengths

•

Weaknesses

Bill Cara: Cracking the Maverick Code

December 2023

c. External Strategic Factors: Management and the Board's longterm planning considerations -•

Opportunities

•

Threats

d. The analysis is crucial for several reasons: •

Risk Management: Identifying potential risks (Weaknesses and Threats) allows investors to proactively manage and mitigate these risks. Doing so is especially important for longterm investors who aim to weather challenges and uncertainties over an extended period.

•

Capitalizing on Strengths: Understanding a company's internal strengths helps long-term investors identify sustainable competitive advantages. Investing in companies with enduring strengths contributes to long-term success and growth.

•

Opportunity Recognition: Analyzing external Opportunities enables investors to identify potential avenues for growth and expansion. Long-term investors seek companies that can capitalize on opportunities and enhance their market position over time.

•

Competitive Positioning: Evaluating a company's internal strengths and weaknesses compared to external opportunities and threats provides insights into its competitive position. Long-term investors look for companies with a strong competitive standing.

•

Adaptability and Innovation: SWOT analysis highlights a company's adaptability and innovation potential. Long-term investors prefer companies that excel today and can evolve with changing market conditions over the years.

•

Management Evaluation: Assessing how a company's management addresses internal weaknesses and leverages strengths is crucial for long-term investors. Strong and

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December 2023

forward-thinking management is essential for sustained success. •

Risk Mitigation Strategies: Identifying threats allows longterm investors to develop effective risk mitigation strategies. Understanding potential challenges helps investors navigate uncertainties and make well-informed decisions.

•

Goal Alignment: Long-term investors often have specific financial goals, such as wealth preservation or capital appreciation. SWOT analysis helps align investment choices with these goals by providing a comprehensive overview of a company's strengths and weaknesses.

•

Informed Decision-Making: Long-term investment decisions require a deep understanding of a company's fundamentals. SWOT analysis systematically assesses critical aspects, empowering long-term investors to make informed and strategic decisions. For future editions of “Cracking,” I will try to reduce the SWOT points to the most essential for investors, as many points in the literature are not crucial to Mavericks.

12. Charts a. StockCharts 10-year charts with moving averages, MACD and RSI technical indicators, and pivot points. i. Technical Indicators ii. Moving Averages iii. Pivot Points The author’s other books (Trader Wizard 2023 and Stock Market Literacy, describe these technical analysis features in detail. b. P&F Charts: Since Point & Figure is not time-oriented, the charts provide long-term investors with a clear and simplified way to analyze trends, patterns, and significant price movements. Unlike traditional price charts, P&F charts focus on plotting price movements only. For long-term investors, this approach aligns with their emphasis on fundamental factors and helps avoid getting swayed by short-term market volatility. Bill Cara: Cracking the Maverick Code

December 2023

Key Features of Point & Figure: •

X and O Columns: X columns represent rising prices, while O columns represent falling prices.

•

Box Size and Reversal Amount: Each X or O represents a predefined price movement called the box size. Reversal amount determines when a new column begins.

•

Trend Lines: Diagonal lines help identify trends, with ascending lines indicating bullish trends and descending lines suggesting bearish trends.

Importance to Long-Term Investors of involving P&F with other technical tools: 1. Clarity in Trends: •

P&F charts emphasize trends by filtering out minor price movements that MACD analysis often misses. This clarity helps long-term investors identify and follow sustained trends over extended periods.

2. Reduced Market Noise: •

By excluding minor price fluctuations, P&F charts reduce market noise. Long-term investors can focus on significant price movements.

3. Pattern Recognition: •

Patterns like double tops, double bottoms, long tail extended action, and trend reversals are more easily recognizable in P&F charts. Long-term investors read these patterns to make informed entry/exit decisions.

4. Support and Resistance Levels: •

Clear support and resistance levels are identifiable on Point and Figure charts. Long-term investors use these levels to make strategic decisions, such as setting stop-loss orders or identifying potential breakout points.

Bill Cara: Cracking the Maverick Code

December 2023

5. Long-Term Trend Confirmation: •

Point and Figure charts are effective in confirming and analyzing long-term trends. This helps long-term investors validate the sustainability of a trend before making significant investment decisions.

•

MACD confirms trend direction.

6. Risk Management: •

Long-term investors can use Point and Figure charts to establish risk management strategies. Clear trend lines and reversal patterns aid in setting appropriate stop-loss levels.

•

Trade strategies are based on cycle analysis using the RSI tool.

7. Reduced Emotional Decision-Making: •

The simplicity of Point and Figure charts reduces the emotional aspect of investing. Long-term investors can make decisions based on objective chart patterns rather than reacting impulsively to shortterm market fluctuations.

Timing of the book versus timing of the quarterly reports of each company: “Cracking the Maverick Investor Code” is a comprehensive guide to investing in the Dow 30 companies. It combines fundamental analysis with technical trading strategies to provide a holistic market view. The book is published quarterly and includes reports on each of the Dow 30 companies for the recent quarter. These reports are updated with the latest charts and aim to clarify and expand on previous guidance and comments. Due to the varying reporting schedules of these companies, there can be a significant lag between the release of some reports and the publication of the book. To bridge this gap, the Maverick website provides timely comments and articles supplementing the book’s content. The book and reports are educational resources for novices and students, not personalized investment advice.

Bill Cara: Cracking the Maverick Code

December 2023

Which Dow 30 companies are not investable? Dow 30 companies that consistently underperform the index are obvious candidates to avoid. Others may sometimes be uninvestable depending on relevant and material changes to internal operations, finances, or external macro factors that impact an industry or the entire market. The AATR of company stocks varies depending on fluctuating share prices at the beginning and end of the time series, e.g., 5 or 10 years, so to smooth the data, I use a trailing three-month average of the AATR. As of November 10, 2023, the 10-year AATR of the Dow 30 stocks was 10.98%. That means, if on November 12, ten years earlier, the investor had invested $10,000 cash once, with a once-yearly compounding frequency over ten years, the ending investment would be $28,343.08. Market and company conditions are always changing, but as of November 14, 2023, we caution Mavericks to avoid only Boeing (BA), IBM (IBM), Dow Inc. (DOW), and Walgreen Boots Alliance (WBA). The 10-year AATR (3-month smoothing) is 7.9%, 2.3%, 6.5%, and -4.8%, respectively. At this point, we’d like to see the Dow 30 managers replace Walgreen Boots Alliance (WBA) with Amazon.com (AMZN). Similarly, Dow (DOW) could be replaced by Sherwin-Williams (SHW) or Newmont (NEM). Boeing is an interesting case. As Maverick investors seek long-term stability and the company has suffered large losses due to aircraft safety issues, Boeing stock has been excessively volatile and inappropriate for any Maverick portfolio, in our view. Those problems, however, appear to be in the past. Based on revitalized cash flow, we are reassessing the company, intending to recommend BA to some Mavericks soon. Another interesting situation is Home Depot (HD), which has performed ~5th best in Average Annual Total Return (AATR) of all Dow 30 stocks over the past ten years. That super-star status, however, resulted from ten years of central bank Quantitative Easing policies that kept money freely available at almost zero interest rates. House buyers and renovators flocked to Home Depot Bill Cara: Cracking the Maverick Code

December 2023

stores, and the company thrived. But investors look forward, not backward. Central banks have now imposed Quantitative Tightening policies, money is scarce, and interest rates have quickly risen to very high levels. House prices are falling, and mortgage demand is shrinking. Economies are slowing and likely to become seriously recessive in 2024. Retailers are already facing losses in big-ticket item sales. Consequently, we placed an AVOID recommendation on Home Depot (HD) shares. The 3Q and 4Q2023 were periods to take profits and switch investments to more attractive companies in the Dow 30. In the short-run, Home Depot shares have been strong in Q4, likely due to the potential FOMC pivot to easier money conditions, but Mavericks are long-term-oriented investors focused on fact-based risk management.

When is the Dow 30, i.e., the market, not investable? I joined the securities industry on January 2, 1981. The broad market was in a Bear phase. Short-term interest rates were about 20%, and the S&P 500 index was around 450. It's ten times higher today, close to 4500, and two-year Treasury rates are about 4.4%. In the interim, almost 43 years later, only seven years (1981, 1987, 2000-2002, 2008, and 2022) were mostly uninvestable. That means that almost 85% of the time, the stock market is a good time to invest. Mavericks do not trade the market. We invest in Dow 30 companies that are Good Companies and fit our needs. Sometimes, these Good Companies become Bad Stocks, which we determine by technical analysis, primarily by the MACD trend-based technical indicator. We use MACD in combination with cycle-based RSI momentum oscillator alerts and support and resistance pivot points of StockCharts.com SharpCharts, as well as pattern recognition studies from Point & Figure charts (see The Maverick Investor’s Handbook Chapters 4 and 19). As I opine in the Handbook, if technical analysis appears to be rocket science, you are overthinking it. Investing and trading the Maverick way is a matter of fact-based judgment, not AI or science, and certainly not the Wall Street “trust us” way. Bill Cara: Cracking the Maverick Code

December 2023

FUNDAMENTAL ANALYSIS TABLE (DECEMBER 1, 2023) Company

Ticker

Close Price

Intrinsic Value

Summary

Financials

Apple Inc

AAPL

$191.24

$148.20

AAPL Summary

Amgen Inc

AMGN

$272.45

$260.22

AMGN Summary

American Express

AXP

$173.76

$213.93

AXP Summary

Boeing Co

$233.87

$231.63

BA Summary

Caterpillar Inc

CAT

$256.76

$260.79

CAT Summary

Salesforce Inc.

CRM

$260.00

$67.89

CRM Summary

Cisco Systems I

CSCO

$48.47

$44.13

CSCO Summary

Chevron

CVX

$144.81

$174.36

CVX Summary

Disney

DIS

$92.58

$38.07

DIS Summary

Dow Inc.

DOW

$52.30

$63.25

DOW Summary

Goldman Sachs

$348.43

$328.64

GS Summary

Home Depot

$319.62

$437.30

HD Summary

Honeywell

HON

$197.78

$120.59

HON Summary

IBM

$160.55

$107.79

IBM Summary

Intel Corporation

INTC

$43.74

$8.10

INTC Summary

Johnson&Johnson

JNJ

$158.38

$111.98

JNJ Summary

JP Morgan Chase

JPM

$156.84

$111.98

JPM Summary

Coca Cola

$58.64

$68.39

KO Summary

McDonalds Corp

MCD

$285.96

$151.22

MCD Summary

3M Company

MMM

$99.85

$140.90

MMM Summary

Merck

MRK

$103.46

$35.66

MRK Summary

Microsoft

MSFT

$374.51

$276.46

MSFT Summary

Nike Inc

NKE

$113.48

$48.57

NKE Summary

Procter&Gamble

$152.66

$72.96

PG Summary

Travelers Cos

TRV

$181.98

$105.94

TRV Summary

UnitedHealth

UNH

$547.16

$604.80

UNH Summary

Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials Financials

Visa Inc

$256.45

$210.72

V Summary

Verizon

$38.58

$156.28

VZ Summary

Walgreens Boots

WBA

$20.79

$45.93

WBA Summary

Walmart Inc.

WMT

$154.34

$163.24

WMT Summary

Bill Cara: Cracking the Maverick Code

December 2023

Financials Financials Financials Financials

Intrinsic Analysis Fair Value AAPL DCF Analysis AMGN DCF Analysis AXP DCF Analysis BA DCF Analysis CAT DCF Analysis CRM DCF Analysis CSCO DCF Analysis CVX DCF Analysis DIS DCF Analysis DOW DCF Analysis GS DCF Analysis HD DCF Analysis HON DCF Analysis IBM DCF Analysis INTC DCF Analysis JNJ DCF Analysis JPM DCF Analysis KO DCF Analysis MCD DCF Analysis MMM DCF Analysis MRK DCF Analysis MSFT DCF Analysis NKE DCF Analysis PG DCF Analysis TRV DCF Analysis UNH DCF Analysis V DCF Analysis VZ DCF Analysis WBA DCF Analysis WMT DCF Analysis

TECHNICAL ANALYSIS TABLE (NOVEMBER 26, 2023) B=BUY, SB=STRONG BUY, S=SELL, SS=STRONG SELL, N=NEUTRAL. Based on various studies of moving averages and technical indicators. As the underlying data is continuously changing, the results frequently change. Maverick reports at billcara.com will update this information frequently. Analysis as at 11/26

Daily

Weekly Monthly

Apple

Investing.com

AAPL

TipRanks.com

Amgen

Investing.com

AMGN

TipRanks.com

American Express

Investing.com

AXP

TipRanks.com

Boeing Co.

Investing.com

TipRanks.com

Caterpillar

Investing.com

CAT

TipRanks.com

Salesforce.com

Investing.com

CRM

TipRanks.com

Cisco Systems

Investing.com

CSCO

TipRanks.com

Chevron Corp.

Investing.com

CVX

TipRanks.com

Disney

Investing.com

DIS

TipRanks.com

Dow Holdings

Investing.com

DOW

TipRanks.com

Goldman Sachs

Investing.com

TipRanks.com

Home Depot

Investing.com

TipRanks.com

Honeywell

Investing.com

HON

TipRanks.com

Bill Cara: Cracking the Maverick Code

December 2023

B SB SB SB B B N N S B SB SB SB

IBM

Investing.com

IBM

TipRanks.com

Intel Corp.

Investing.com

INTC

TipRanks.com

Johnson&Johnson Investing.com

JNJ

TipRanks.com

JP Morgan Chase

Investing.com

JPM

TipRanks.com

Coca-Cola Co.

Investing.com

TipRanks.com

McDonald's

Investing.com

MCD

TipRanks.com

3M Co.

Investing.com

MMM

TipRanks.com

Merck

Investing.com

MRK

TipRanks.com

Microsoft

Investing.com

MSFT

TipRanks.com

Nike Inc.

Investing.com

NKE

TipRanks.com

Procter & Gamble

Investing.com

TipRanks.com

Travelers Cos.

Investing.com

TRV

TipRanks.com

UnitedHealth Grp

Investing.com

UNH

TipRanks.com

Visa Inc.

Investing.com

TipRanks.com

Verizon Comm.

Investing.com

TipRanks.com

Walgreens Boots

Investing.com

WBA

TipRanks.com

Walmart

Investing.com

WMT

TipRanks.com

Bill Cara: Cracking the Maverick Code

December 2023

B B N B B SB S B B N SB SB B B S S B

DOW 30 COMPANIES ANALYST RECOMMENDATIONS AND SCORES (DECEMBER 22, 2023) (FINVIZ.COM) Long-term-oriented investors may find Dow 30 company analyst consensus recommendations helpful indicators due to averaging the large number of reports. However, Wall Street analysts are slow to report actions of their firms. Analyst

Average

Ticker

Company

Sector

Industry

Scores

Recommendation

MSFT

Microsoft

Technology

Software - Infrastructure

1.30

STRONG BUY

WMT

Walmart

Consumer Staple

Discount Stores

1.48

STRONG BUY

CVX

Chevron

Energy

Oil & Gas Integrated

1.52

BUY

Boeing Co.

Industrials

Aerospace & Defense

1.53

BUY

Coca-Cola

Consumer Staple

Beverages - Non-Alcoholic

1.54

BUY

MCD

McDonald's

Consumer Cyclical

Restaurants

1.55

BUY

Visa Inc

Financial

Credit Services

1.55

BUY

UNH

UnitedHealth

Healthcare

Healthcare Plans

1.56

BUY

MRK

Merck

Healthcare

Drug Manufacturers

1.57

BUY

CRM

Salesforce

Technology

Software - Application

1.71

BUY

DIS

Disney

Communication

Entertainment

1.76

BUY

JPM

JPMorgan Chase

Financial

Banks - Diversified

1.77

BUY

AAPL

Apple

Technology

Consumer Electronics

2.00

BUY

NKE

Nike

Consumer Cyclical

Footwear & Accessories

2.00

BUY

Procter&Gamble

Consumer Staple

Household/Personal Prod.

2.00

BUY

HON

Honeywell

Industrials

Conglomerates

2.08

BUY

AMGN

Amgen

Healthcare

Drug Manufacturers

2.15

BUY

Home Depot

Consumer Cyclical

Home Improvement Retail

2.15

BUY

JNJ

Johnson&Johnson

Healthcare

Drug Manufacturers

2.17

BUY

AXP

American Express

Financial

Credit Services

2.20

BUY

Goldman Sachs

Financial

Capital Markets

2.30

BUY

Verizon

Communication

Telecom Services

2.37

BUY

CAT

Caterpillar

Industrials

Farm/Construction Machines

2.46

BUY

CSCO

Cisco Systems

Technology

Communication Equipment

2.54

HOLD

DOW

Dow Inc

Basic Materials

Chemicals

2.61

HOLD

TRV

Travelers Cos

Financial

Insurance -Property/Casualty

2.64

HOLD

IBM

Technology

Information Technology

2.67

HOLD

WBA

Walgreens Boots

Healthcare

Pharmaceutical Retailers

2.78

HOLD

INTC

Intel Corp.

Technology

Semiconductors

2.88

HOLD

MMM

3M Co.

Industrials

Conglomerates

3.05

HOLD

Bill Cara: Cracking the Maverick Code

December 2023

DOW 30 COMPANIES 10-YEAR AVERAGE ANNUAL TOTAL RETURN PERFORMANCE vs DIA (ETF) (DECEMBER 8, 2023) Investing $10,000 for 10 years in the ETF vs the Dow 30 stocks proves the ETF holds good and bad companies and stocks. Maverick portfolios outperform the ETF buy & hold performance as shown by the Moderate Growth Portfolio. MSFT

$115,308.07

AAPL

$110,348.41

AAPL

$110,348.41

AMGN

$31,207.14

UNH

$87,181.51

AXP

$22,971.83

$54,210.68

$20,271.72

$51,045.63

CAT

$39,153.12

CRM

$46,589.26

CRM

$46,589.26

CAT

$39,153.12

CSCO

$30,764.26

MCD

$38,542.42

CVX

$17,776.58

JPM

$37,248.55

DIS

$13,971.57

NKE

$32,368.35

DOW

$13,220.56

AMGN

$31,207.14

$24,630.39

CSCO

$30,764.26

$51,045.63

MRK

$30,736.76

HON

$28,710.96

HON

$28,710.96

IBM

$28,710.96

IBM

$28,710.96

INTC

$22,407.26

TRV

$25,991.42

JNJ

$22,037.85

$24,630.39

JPM

$37,248.55

WMT

$24,007.20

$19,915.58

$23,184.16

MCD

$38,542.42

AXP

$22,971.83

MMM

$10,981.06

INTC

$22,407.26

MRK

$30,736.76

JNJ

$22,037.85

MSFT

$115,308.07

$20,271.72

NKE

$32,368.35

$19,915.58

$23,184.16

CVX

$17,776.58

TRV

$25,991.42

DIS

$13,971.57

UNH

$87,181.51

DOW

$13,220.56

$54,210.68

$12,590.91

MMM

$10,981.06

WBA

$5,008.01

WBA

$5,008.01

WMT

$24,007.20

DIA AATR

$28,030.19

AATR OF MGP-10 COMPANIES

$34,703.07

Bill Cara: Cracking the Maverick Code

December 2023

DOW 30 COMPANY OUTSTANDING SHARES (DECEMBER 20, 2023 DATA FROM VALUE LINE) Dow 30 companies conduct share buybacks for various reasons, including (1) To boost the remaining shares' value, (2) To enhance key ratios, improve the company's market appeal, and (3) Acknowledge limited opportunities to use that capital strategically.

Ticker AAPL AMGN AXP BA CAT CRM CSCO CVX DIS DOW GS HD HON IBM INTC JNJ JPM KO MCD MMM MRK MSFT NKE PG TRV UNH V VZ WBA WMT

Highest Latest Value Line Earlier # shares # shares # Projected Year (Mil) (Mil) 2024 (Mil) 2012 26298 15500 14000 2007 1087 535 520 2010 1197 725 715 2012 755 605 610 2012 655 507 502 2021 989 970 965 2007 6100 4066 4000 2007 2090 1840 1750 2007 1962 1830 1835 2020 743 700 690 2009 515 328 327 2009 1698 990 975 2013 784 663 663 2007 1385 915 920 2007 5818 4200 4300 2013 2821 2580 2565 2009 3942 2885 2870 2007 4636 4323 4300 2007 1165 725 720 2009 711 552 553 2009 3108 2535 2530 2007 9380 7432 7400 2007 2015 1532 1515 2007 3132 2362 2340 2007 628 230 230 2007 1253 924 922 2013 2624 1849 1830 2014 4155 4150 4100 2015 1090 863 863 2007 3973 2685 2670

Bill Cara: Cracking the Maverick Code

December 2023

DOW 30 VALUE LINE SUMMARY TABLE (DECEMBER 20, 2023) Dow 30 companies are mostly financially strong. Only Walgreens is a Safety issue. A few should be monitored closely. See links to Maverick Report Page.

Company Apple Inc

Ticker AAPL

Amgen Inc

AMGN

$278.44

$340.00 - $420.00

A++

American Express

AXP

$185.75

$175.00 - $240.00

A++

Boeing Co

$263.51

$300.00 - $450.00

Caterpillar Inc

CAT

$292.96

$290.00 - $395.00

A+

Salesforce Inc.

CRM

$264.34

$270.00 - $405.00

B++

Cisco Systems Inc

CSCO

$50.18

$65.00 - $80.00

A++

Chevron

CVX

$151.64

$225.00 - $335.00

Walt Disney Co

DIS

$93.93

$140.00 - $190.00

Dow Inc.

DOW

$54.92

$70.00 - $110.00

Goldman Sachs

$382.45

$410.00 - $555.00

A+

Home Depot Inc

$352.07

$385.00 - $470.00

A++

Honeywell

HON

$204.60

$225.00 - $275.00

A++

IBM

$161.56

$130.00 - $195.00

B++

Intel Corporation

INTC

$46.66

$50.00 - $70.00

A+

Johnson&Johnson

JNJ

$156.46

$185.00 - $205.00

A++

JP Morgan Chase

JPM

$168.45

$150.00 - $205.00

A+

Coca Cola

$58.83

$65.00 - $80.00

A++

McDonalds Corp

MCD

$290.73

$355.00 - $435.00

A++

3M Company

MMM

$106.25

$140.00 - $210.00

Merck and Co Inc

MRK

$106.49

$130.00 - $160.00

A++

Microsoft

MSFT

$373.26

$330.00 - $400.00

A++

Nike Inc

NKE

$122.64

$140.00 - $170.00

A++

Procter & Gamble

$146.17

$175.00 - $215.00

A++

Travelers Cos

TRV

$186.18

$255.00 - $315.00

A+

UnitedHealth

UNH

$524.04

$600.00 - $735.00

A++

Visa Inc

$259.99

$310.00 - $380.00

A++

Verizon

$37.57

$60.00 - $85.00

A+

Walgreens Boots

WBA

$26.03

$40.00 - $65.00

B++

Walmart Inc.

WMT

$155.53

$205.00 - $250.00

A++

Bill Cara: Cracking the Maverick Code

12-Month Analyst Target Prices $220.00 - $265.00

VL Timing 3

VL Safety 1

Financial Strength Rating

Dec. 20 Price $196.94

December 2023

A++

APPLE (AAPL) QUARTERLY MAVERICK REPORT December 24, 2023, $193.60 Apple Business Description: •

Apple designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories and sells related services. Products include iPhone, Mac, iPad, AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and accessories.

AAPL Maverick Guidance: •

Short-term recommendation: 20231215: BUY. Double-top breakout in early November.

•

Long-term recommendation: ACCUMULATE whenever the Daily RSI-7 indicator is below 30 or if below 50 when Daily RSI-7 is rising.

•

Apple continues to show resilience in facing supply chain disruptions, inflation, and unfavorable currency effects. The strong brand, diverse product and service offerings, and growing base of active devices provide a solid foundation for every Maverick Portfolio.

•

Demonstrates remarkable profitability and a strong return on equity.

•

Concerns arise from weak growth potential, high valuation, and a fragile capital structure, hence we accumulate only at cycle lows.

•

The company's ability to innovate and drive revenue growth is crucial for long-term investor confidence.

•

Investors should monitor top-line growth and assess whether recent challenges represent a temporary decline or a prolonged trend.

AAPL Consideration for Maverick Portfolio: •

AAPL is appropriate for all Maverick Investors, from Conservative to Aggressive Growth.

AAPL Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat = Moderate Buy, TipRanks = Moderate Buy

Bill Cara: Cracking the Maverick Code

December 2023

•

Consensus: 31 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 23 Buy, 8 Hold, and zero Sell. (from TipRanks) Based on 31 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $203.07, with a high forecast of $250.00 and a low forecast of $150.00. The average price target represents a +4.9% change from the last closing price of $193.60 (from TipRanks)

•

Dividend Yield: $0.24 per share paid quarterly to yield 0.55%. Dividend growth for 11 years. (from TipRanks)

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com = Daily (NEUTRAL)

Weekly (STRONG BUY)

o TipRanks =

Weekly (BUY)

Daily (BUY)

AAPL Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety: 1=best. 5=worst

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

2 of 5

•

Beta:

1.00

•

Stock’s Price Stability:

80/100

o Price Growth Persistence:

100/100

o Earnings Predictability:

85/100

•

Average Annual PE:

•

Average Annual Sales Growth in the past 5 years:

+14.5%

•

Average Annual Sales Growth for the next 5 years:

+10.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+15.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+10.0%

•

Average Annual Earnings Growth in the past 5 years:

+17.5%

•

Average Annual Earnings Growth for the next 5 years:

+10.5%

•

Average Annual Dividend Growth in the past 5 years:

+9.5%

•

Average Annual Dividend Growth next 5 years:

+10.5%

•

Average Annual Dividend Yield 3 to 5 years:

+0.7%

Bill Cara: Cracking the Maverick Code

December 2023

AAPL Financial Performance •

EPS: o 2020: $3.28 o 2021: $5.61 o 2022: $6.11 o 2023: e$6.05 o 2024: e$6.60 (from Value Line Quarterly Report)

•

PE: o Current PE:

31.36 (FinViz)

o Forward PE:

26.99 (FinViz)

o PEG Ratio:

5.11

(FinViz)

10-Year AATR: o Start date: 12/27/2013

End date: 12/26/2023

o Start price/share: $20.00

End price/share: $193.05

o Starting shares: 500.00

Ending shares:

o Dividends reinvested/share:

$7.14

o Total Return: 1,001.03%

Average Annual Return: 27.10%

o Starting: $10,000.00

Ending investment: $110,088.22

570.33

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 2023 4Q2023 (September) (released Nov. 2, 4:30 pm ET) •

Apple's fiscal 2023 fourth-quarter revenue is $89.5 billion, down 1% YoY.

•

Earnings per diluted share increased by 13% YoY to $1.46.

•

iPhone revenue in the September quarter set a new record.

•

Services revenue also achieved an all-time high.

•

Tim Cook highlighted a strong product lineup, including the iPhone 15 series and carbon-neutral Apple Watch models. Luca Maestri, CFO, underlined the increase in the active installed base of devices.

•

Apple's board of directors declares a cash dividend of $0.24 per share of the Company's common stock, payable on November 16, 2023, to shareholders of record as of November 13, 2023.

2023 3Q2023 (June)

Bill Cara: Cracking the Maverick Code

December 2023

•

This was a mixed performance, with Q3 sales slipping -1.4% YoY but profits improving with a +5% YoY increase in EPS. However, it faces unfavorable currency effects, inflation, and higher borrowing costs.

2023 2Q2023 (March) •

Apple’s revenue and earnings improved in the March quarter, with sales down -3 % YoY but improving from the previous quarter. Foreign exchange continued to be challenging, and inflation and higher interest rates affected buying power. However, higher-margin services performed well, and iPhone sales were strong in emerging markets.

2023 1Q2023 (December) •

With December quarter sales down -5% and earnings declining slightly over 10%, Apple had a slow start in fiscal 2023. Unfavorable currency effects and COVID-19 disruptions affected sales. While the Services business set a revenue record, supply-chain issues, high inflation, and unfavorable foreign exchange rates persisted. The full-year sales estimate was scaled back.

AAPL 3-to-5-year Operational and Financial Outlook: •

Despite slower growth over the past ten years, the 3-to-5-year outlook indicates continued +10% or more growth in revenue, cash flow, earnings, and dividends.

AAPL Noteworthy Strategic Developments: •

The company is transitioning from China due to multiple factors, such as public backlash over its involvement in the CCP’s activities, calls to diversify its supply chain due to multiple setbacks, and worker strikes in multiple factories. Apple has tripled its production in India and continues to invest in Southeast Asian countries like Vietnam.

•

Apple and TSMC will manufacture Apple silicon chips in Arizona by 2024.

•

The recent spike in R&D spending could potentially signify the development of groundbreaking products, including a mixed reality device or autonomous vehicle.

AAPL FinViz Snapshot: https://finviz.com/screener.ashx?v=342&f=idx_dji&t=AAPL Bill Cara: Cracking the Maverick Code

December 2023

AAPL Company SWOT Analysis Internal Strengths: •

Strong brand and customer loyalty.

•

Diverse product and service offerings.

•

Robust ecosystem with a large base of active devices.

•

Strong financial performance with consistent profitability.

•

Strong service growth and a growing base of paid subscriptions.

Internal Weaknesses: •

US regulator ban of two flagship watches for patent infringement

•

Vulnerability to supply chain disruptions.

•

Exposure to unfavorable currency effects.

•

Dependence on iPhone sales for a significant portion of revenue.

External Opportunities: •

Growth potential in emerging markets.

•

Expansion of the Services segment.

•

Move into Virtual Reality with estimated sale of 500,000 Vision Pro headsets in 2024.

•

Continued innovation and product development.

•

Increasing demand for technology and digital services.

External Threats: •

Inflation and higher interest rates affect consumer spending.

•

Economic downturn or recession.

•

Intense competition in the technology industry.

•

Regulatory challenges and privacy concerns.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=AAPL

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=AAPL,P

Bill Cara: Cracking the Maverick Code

December 2023

AMGEN (AMGN) QUARTERLY MAVERICK REPORT December 24, 2023

$284.16

Amgen Business Description: • Amgen is a leading biotech company with 24,000 employees worldwide. Notable products, including Neulasta and Enbrel, significantly treat cancer, autoimmune diseases, and other conditions. AMGN Maverick Guidance: •

Short-term technical buy/sell recommendation: 20231215: BUY

•

Long-term portfolio recommendation: BUY

•

These shares offer solid risk-adjusted Total Return potential over 3 to 5 years, although the company faces challenges in growth and valuation.

•

Mavericks should monitor top-line growth for sustained improvements.

•

A high-paying, well-covered dividend adds to the appeal, making it suitable for conservative investors seeking insurance for their portfolios.

•

Has demonstrated a positive trajectory of recovery and growth, showcasing improved fundamentals and a promising outlook.

•

Strategic acquisitions further enhance its product pipeline and revenue streams, positioning it as a biopharmaceutical industry leader.

AMGN Consideration for Maverick Portfolio: There are four portfolios appropriate for Amgen (AMGN). Here are the five portfolios and their corresponding attributes: #2. CAUTIOUS GROWTH (RISK PROFILE SCORE=16-21): SEEKING MODEST RETURNS • Accepting low-to-moderate risk for modest medium-term returns. #3. MODERATE GROWTH (RISK PROFILE SCORE=22-29): AIMING FOR HIGH POTENTIAL • Embracing moderate risk for high long-term potential returns. #4. DYNAMIC GROWTH (RISK PROFILE SCORE=30-35): PURSUING SUBSTANTIAL GAINS • Willing to take above-average risk for substantial long-term gains. #5. AGGRESSIVE GROWTH (RISK PROFILE SCORE=36-45): CHASING MAX RETURNS • High risk for maximum potential returns, accepting sizable drawdowns in volatile markets.

Bill Cara: Cracking the Maverick Code

December 2023

AMGN Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: Based on 22 Wall Street analysts offering 12-month price targets in the last 3 months (TipRanks: 14 Buy, 6 Hold, and 2 Sell), TipRanks = Moderate Buy. MarketBeat = Moderate Buy.

•

Price Targets: The average price target is $287.38, with a high forecast of $336.00 and a low forecast of $185.00. The consensus average price target indicates a +1.1% change from the current price of $284.16.

•

Dividend Yield: $2.25per share paid quarterly to yield 3.05%.

•

Dividend growth for 12 years. (from TipRanks)

•

Technical Sentiment (based on Technical Indicators and MA’s): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Weekly (STRONG BUY)

Daily (STRONG BUY)

AMGN Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

1 of 5

•

Beta:

0.70

•

Stock’s Price Stability:

100100

•

Price Growth Persistence:

70/100

•

Earnings Predictability:

100/100

•

Average Annual PE:

•

Current PE:

19.1

•

Average Annual Sales Growth in the past 5 years:

+9.0%

•

Average Annual Sales Growth for the next 5 years:

+7.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+10.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+6.5%

•

Average Annual Earnings Growth in the past 5 years:

+8.0%

•

Average Annual Earnings Growth for the next 5 years:

+5.5%

•

Average Annual Dividend Growth in the past 5 years:

+12.5%

•

Average Annual Dividend Growth next 5 years:

+7.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.9%

•

Current Dividend Yield:

+3.16%

Bill Cara: Cracking the Maverick Code

December 2023

AMGN Value Line Commentary: Nov. 24, 2023 Here is a one-minute read of the Value Line opinion. The reader should take from it only an impression of the analyst’s conclusion. The October 31st third-quarter earnings release exhibited mixed results. Total revenues grew 4% year over year, below Street expectations, driven by a 5% increase in product sales. The 5% reflected 11% volume growth, partly offset by a 3% lower net selling price and 3% unfavorable changes to estimated sales deductions. US volumes were up 11% and international volumes by 12%, with a 27% rise in the Asia-Pacific region. Share earnings increased 6%, above consensus, mainly on revenue expansion. Consequently, the stock price rose from a low of $249.70 that day to a November 5th high of $274.95 but treaded below that level since. While investors appear satisfied by the strong volume growth, they are still waiting for stronger revenue growth, which should hopefully come with successful product launches. Long-term prospects remain positive. Amgen has several catalysts to support growth. The central driver we see is its generous R&D funding. Despite a slightly lower spend this year, 17% as a percentage of first-nine-month sales is still impressive. While demand for its existing drugs is high, the company seeks additional indications to expand the addressable market and extend patents. The pipeline also includes a growing portfolio of newly engineered drugs to treat various conditions. AMGN also expands its product portfolio via acquisitions, such as the recent Horizon Therapeutics acquisition, purchasing

licensing

product

and

technology

rights,

and

collaborating with other firms to diversify its research, pipeline, and product base. However, the stock can have temporary setbacks when the FDA initially withholds approval for any promising new product. Amgen shares have below-average long-term Total Return potential. Even so, the top-quality stock should interest income-oriented investors, given an attractive yield and dividend hikes over time. Bill Cara: Cracking the Maverick Code

December 2023

AMGN Financial Performance: •

The company’s cash flow per share of $34.30 reflects strong cash generation from operations.

•

Dividends: Amgen offers an appealing 3.32% dividend yield, with $7.04 in dividends declared per share.

•

Return on Equity: The company boasts a notable return on equity of 47%, demonstrating efficient utilization of shareholder equity.

•

EPS: o 2020:

$16.60

o 2021:

$17.10

o 2022:

$17.69

o 2023:

e$18.50

o 2024:

e$19.80 (from Value Line Quarterly Report)

PE: o Current PE:

19.40 (FinViz)

o Forward PE:

13.70 (FinViz)

o PEG Ratio:

3.72

(FinViz)

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $115.12

End price/share:

$283.90

o Starting shares: 86.87

Ending shares:

114.25

o Dividends reinvested/share: $55.00 o Total Return: 224.36%

Average Annual TR:

12.48%

o Starting: $10,000.00

Ending investment:$

$32,425.97

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 4Q2023 Company Report (to be reported in 2024) 3Q2023 Company Report (Oct. 31, 2023) •

Revenues rose 4% to $6.9 billion.

•

Product sales increased 5% driven by 11% volume growth, offset by a 3% lower net selling price.

•

Notable contributors to volume growth: BLINCYTO®, EVENITY®, Repatha®, and Nplate®.

Bill Cara: Cracking the Maverick Code

December 2023

•

US volume grew by 11%, ex-US volume by 12%, with a significant 27% growth in the Asia Pacific region.

•

GAAP EPS declined by 19% to $3.22, attributed to a net impairment charge of $650 million.

•

GAAP operating income dropped to $2.0 billion, with a margin decrease to 30.9%.

•

Non-GAAP EPS increased by 6% to $4.96.

•

Non-GAAP operating income rose to $3.4 billion, with a margin decrease to 52.0%.

•

Generated $2.5 billion of free cash flow.

2Q2023 Company Report (Aug. 3, 2023) •

Robust +6% yearly growth in total revenue, reaching $7 billion.

•

Operating Margin at 62.5%, Net Profit Margin about 36%.

•

Q2 share earnings increased by +7.5% to $5.00.

•

Positive Q2 performance contributes to a favorable FY earnings outlook.

•

Strategic focus on research, pipeline expansion, and growth initiatives for sustained success.

•

10-year Average Annual Total Return at +12.3%.

1Q2023 Company Report (Apr. 27, 2023) •

Total revenues decreased 2% to $6.1 billion, primarily due to lower Other Revenue from COVID-19 manufacturing collaboration.

•

Product sales increased by 2%, excluding a 2% negative impact from foreign exchange.

•

Volume growth of 14%, international volume grew by 22%, including 47% growth in the Asia Pacific region.

•

GAAP EPS increased by 97% to $5.28, driven by other income related to a mark-to-market gain on the investment in BeiGene, Ltd.

•

GAAP operating income decreased to $1.9 billion, with a margin decrease to 32.9%.

•

Non-GAAP EPS decreased by 6% to $3.98.

•

Non-GAAP operating income decreased to $2.8 billion, with a margin decrease to 48.3%.

•

Generated $0.7 billion of free cash flow.

Bill Cara: Cracking the Maverick Code

December 2023

AMGN 3-to-5-year Value Line Operational and Financial Outlook: Several growth catalysts reinforce Amgen’s position for sustained growth: •

•

Research Funding: Amgen’s commitment to substantial research funding drives growth by expanding indications for existing core drugs, broadening the market potential, and extending patent life. Pipeline: The company’s portfolio includes innovative drugs engineered to address a range of illnesses and conditions, enhancing its growth opportunities. Strategic Acquisitions and Collaborations: Through acquisitions, licensing agreements, and collaborations, Amgen is diversifying its R&D capabilities, expanding its pipeline, and fostering growth.

AMGN Noteworthy Strategic Developments: •

•

As of August 21, the US Federal Trade Commission (FTC) has temporarily suspended (to September 18) its challenge of Amgen’s acquisition of Horizon Therapeutics, allowing room for consideration. Amgen’s pursuit of regulatory approvals for LUMAKRAS® underscores its commitment to advancing medical solutions for critical health challenges. Subsequently, on October 6, 2023, Amgen announced that it had completed its acquisition of Horizon Therapeutics for $116.50 per share in cash, representing a transaction equity value of approximately $27.8 billion1. This followed the entry into a consent order agreement with the Federal Trade Commission (FTC) that resolved the pending FTC administrative lawsuit2. The acquisition will strengthen Amgen’s leading inflammation portfolio by adding first-in-class, early-inlifecycle medicines1. However, there is no update available on the regulatory approvals for LUMAKRAS®.

AMGN FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=AMGN

Bill Cara: Cracking the Maverick Code

December 2023

AMGN SWOT Analysis: Internal Strengths •

Robust portfolio with flagship drugs like Epogen, Aranesp, Neupogen, Neulasta, Enbrel, and Otezla.

•

Consistent success in drug development and market presence, reflected in substantial Q3 product sales of $6,548 million.

Internal Weaknesses •

High debt levels of $60.5 billion as of Sept. 30, 2023, limiting financial flexibility.

•

Heavy dependence on a few key products poses a risk to revenue and profitability.

External Opportunities •

Strong pipeline of innovative medicines (Repatha, Aimovig, Lumakras, Tezspire) for cholesterol, migraine, lung cancer, and asthma.

•

Potential for strategic acquisitions, demonstrated by the successful acquisition of Horizon Therapeutics.

External Threats •

Intense competition in the biotechnology sector leads to potential price reductions, decreased sales, and declining market share.

•

Regulatory challenges in a heavily regulated industry, with changes or non-compliance risking penalties, product recalls, and harm to company reputation.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=AMGN

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=AMGN,P

Bill Cara: Cracking the Maverick Code

December 2023

AMERICAN EXPRESS (AXP) QUARTERLY MAVERICK REPORT December 24, 2023, $185.57 American Express Business Description: •

Founded in 1850, American Express Co. is a financial services corporation that provides charge and credit card products and travelrelated services worldwide. The company operates through the Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services.

AXP Maverick Guidance: •

Short-term recommendation: 20231215: BUY. Double-top breakout Dec 11

•

Long-term recommendation: BUY WHENEVER AXP DROPS TO ACCUMULATION ZONE

•

Solid profitability and financial health but faces growth concerns and a current stock valuation that may limit its upside.

•

Mavericks should buy on spike bottoms.” But this is also time to avoid further purchases until AXP hits LT ACCUMULATION ZONE.

AXP Consideration for Maverick Portfolio: •

Appropriate for risk profile score of 16-21. The Moderately Conservative Investor aims for a balanced approach that combines growth and stability. The Maverick CAUTIOUS GROWTH portfolio is designed to achieve modest medium-term Total Returns.

•

Too many internal weaknesses and external threats and a weak 10-year Total Return performance (i.e., Insufficient growth) keep AXP from being an appropriate MODERATE or AGGRESSIVE GROWTH candidate, regardless of AXP being a Warren Buffett favorite.

AXP Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat = HOLD, TipRanks = MODERATE BUY.

•

Consensus: 17 Wall Street analysts have offered 12-month price targets for AXP in the last 3 months. There are 9 Buy, 8 Hold, and zero Sell. Based on 17 Wall Street analysts offering 12-month price targets for American Express in the last 3 months, the average price target is

Bill Cara: Cracking the Maverick Code

December 2023

$180.69, with a high forecast of $205.00 and a low forecast of $148.00. The average price target represents a -2.6% change from the last price of $185.57. •

Dividend Yield: $0.60 per share paid quarterly to yield 1.25%. Dividend growth for over 15 years.

•

Technical Analysis: o Investing.com = Daily: STRONG BUY

Weekly: STRONG BUY

o TipRanks =

Weekly: BUY

Daily: BUY

AXP Value Line Guidance: (all data from VL) (Nov. 3 Report) •

Company Financial Strength Rating:

A++

•

Share Price Safety:

2 of 5

•

Market Timing:

1 of 5

•

Technical Rank:

3 of 5

•

Beta:

1.35

•

Stock’s Price Stability:

60/100

•

Price Growth Persistence:

60/100

•

Earnings Predictability:

55/100

•

Projected Average Annual PE:

•

Average Annual Revenue Growth in the past 5 years:

10.0%

•

Average Annual Revenue Growth for the next 5 years:

12.5%

•

Average Annual Earnings Growth in the past 5 years:

7.0%

•

Average Annual Earnings Growth for the next 5 years:

8.5%

•

Average Annual Dividend Growth in the past 5 years:

8.5%

•

Average Annual Dividend Growth for the next 5 years:

11.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

1.6%

•

Current Dividend Yield:

1.38%

Bill Cara: Cracking the Maverick Code

December 2023

AXP Financial Performance •

•

EPS: o

2020:

$3.77

2021:

$10.02

2022:

$9.85

2023:

e$10.45 > e$11.75

2024:

e$10.95 > e$11.00

Current PE:

15.85

Forward PE: 13.69

PEG Ratio:

PE:

1.12

10-Year AATR: o

Start date:

12/27/2013

End date:

12/26/2023

Start price/share: $89.19

End price/share:

$185.96

Starting shares: 112.12

Ending shares:

129.65

Dividends reinvested/share: $15.37

Total Return: 141.11%

Average Annual TR:

9.20%

o Starting: $10,000.00

Ending investment:

$24,117.43

Quarterly Report Summaries (including Revenue, Cash Flow, Earnings): Q3 September 2023 Quarter: (Reported Oct. 20) • A sixth consecutive quarter of record revenue, reaching $15.4 billion, a +13% increase from the previous year. •

Record earnings per share are rising by +34% compared to a year ago.

•

Net income of $2.5 billion ($3.30 per share), compared to $1.9 billion ($2.47 per share) a year ago.

•

Strong Card Member spending, up 7% on an FX-adjusted basis.

•

Millennial, Gen Z consumers driving growth, with US YoY spending up 18%

•

Q3 consolidated total revenues net of interest expense at $15.4 billion, up 13% from a year ago.

•

Provisions for credit losses at $1.2 billion, up from $778 million..

•

Consolidated expenses at $11.0 billion, up 7% from a year ago, primarily due to higher customer engagement costs.

•

The consolidated effective tax rate is 20.9%, down from 23.6%.

•

Corporate and Other reported a Q3 pretax loss of $709 million.

Bill Cara: Cracking the Maverick Code

December 2023

Q2 June 2023 Quarter: • Earnings per share increased by 12.5% to $2.89, driven by a 12.4% rise in revenue from robust card member spending. • Millennial and Gen Z consumers are the fastest-growing customer segments. • Provision for credit losses nearly tripled due to increased net write-offs. • Cash and equivalents amounted to approximately $43.0 billion, with a common equity tier 1 capital ratio of 10.6%. • Quarterly distribution was raised by 15.4% to $0.60 per share. Stock buybacks included 20 million AXP shares for $3.3 billion, and $1.6 billion in common stock dividends were executed in 2022. Q1 March 2023 Quarter: • Revenues rose sharply due to strong card member spending levels. • Increased expenses and provision for credit losses were noted. • Earnings per share were expected to recover by 4% for the year. • The company introduced American Express Business Blueprint for small firms, focusing on digital solutions and acquisitions. • Quarterly distribution was increased by 15.4% to $0.60 a share. •

Q4 December 2022 Quarter: • Limited earnings progress despite increased revenue. • Significant upticks in provision for credit losses and total expenses. • Plans to acquire Nipendo for B2B payment automation. • Capital gains potential acknowledged, but long-term upside below Value Line median. AXP 3-to-5-year Value Line Operational and Financial Outlook: AXP Noteworthy Strategic Developments: FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=AXP

Bill Cara: Cracking the Maverick Code

December 2023

AXP SWOT Analysis:

Internal Strengths: •

Global leader with a strong market presence and financial resilience.

•

Significant brand strength and operational efficiency.

•

High customer satisfaction and loyalty.

•

Reliable supply chain and effective dealer network.

Internal Weaknesses: •

High merchant fees and premium fees perception.

•

Challenges in long-term customer relationship enhancement.

•

Lagging behind industry growth and risks from easily imitated business models.

•

Limited success outside the core business and declining traveler’s check business.

External Opportunities: •

Potential for global expansion and capitalizing on green product demand.

•

Opportunities from regulatory changes and government contracts.

•

Diversification and adapting to consumer trends.

•

Tech-driven revenue opportunities and operational optimization.

External Threats: •

Liability risks and counterfeiting risk.

•

Shortage of skilled workforce and intense competition.

•

Exposure to currency fluctuations and rising isolationism.

•

Unpredictable supply of innovative products and shifting consumer behavior.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=AXP

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=AXP,P

Bill Cara: Cracking the Maverick Code

December 2023

BOEING CO. (BA) QUARTERLY MAVERICK REPORT December 24, 2023, $260.44 Boeing Business Description: •

Boeing is a prominent aerospace company known for commercial aircraft like the 737, 747, 767, 777, and 787, as well as other products, including business jets, fighter jets, helicopters, guided weapons, satellites, and space launch systems. In 2022, foreign sales comprised 41% of its total revenue, and it allocated 4.3% of sales to research and development. The company, led by Chairman Lawrence W. Kellner and CEO David L. Calhoun, is headquartered in Chicago, IL, and employs 156,000 people.

BA Maverick Guidance: •

Short-term recommendation: 20231215: CAUTIOUS BUY. Long Tail Up, mid-Dec (Extended)

•

Long-term stock recommendation: IF INVESTED, BUY WHEN BA DROPS TO ACCUMULATION ZONE as cash flow issues are being quickly resolved.

•

Boeing has been working for the past year to increase production and address improvements in financial results and backlogs.

•

While there are signs of improvement in cash flow and certain growth metrics, challenges in profitability and high valuation multiples require caution. Long-term investors should monitor the company's efforts to improve operational efficiency and address its financial leverage.

•

2024 might be a turnaround story. However, many years of consecutive losses continue. Until we see hard evidence, Boeing has no place in any Maverick portfolio. Excessive volatility is the key issue.

BA Consideration for Maverick Portfolio: X = Not appropriate in any portfolio for Maverick investors. BA Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat = MODERATE BUY, TipRanks = STRONG BUY

•

Consensus: 21 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 18 Buy, 3 Hold, and zero Sell.

Bill Cara: Cracking the Maverick Code

December 2023

Based on 21 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $276.05, with a high forecast of $320 and a low forecast of $217. The average price target represents a +6.0% change from the last price of $260.44. •

Dividend Yield: No incoming dividends

•

Technical Sentiment (based on Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Daily (BUY)

Weekly (BUY)

•

Company Financial Strength Rating:

•

Share Price Safety:

3 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

3 of 5

•

Stock’s Price Stability:

20/100

•

Price Growth Persistence:

40/100

•

Earnings Predictability:

15/100

•

Average Annual PE:

NMF

•

Average Annual Sales Growth in the past 5 years:

-7.5%

•

Average Annual Sales Growth for the next 5 years:

+10.5%

•

Average Annual Cash Flow Growth in the past 5 years:

NMF

•

Average Annual Cash Flow Growth for the next 5 years:

NMF

•

Average Annual Earnings Growth in the past 5 years:

NMF

•

Average Annual Earnings Growth for the next 5 years:

NMF

•

Average Annual Dividend Growth in the past 5 years:

-25.5%

•

Average Annual Dividend Growth for the next 5 years:

+28.0%

•

Average Annual Dividend Yield 3 to 5 years:

+0.8%

BA Value Line Guidance:

BA Financial Performance: •

EPS: o 2020:

-d$20.88

o 2021:

-d$7.15

o 2022:

-d$8.30

o 2023:

e-d$4.40

Bill Cara: Cracking the Maverick Code

December 2023

o •

•

2024:

e$5.00

PE: o Current PE:

NEG

o Forward PE:

57.1

o PEG Ratio:

NMF

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $136.90

End price/share:

$262.79

o Starting shares: 73.05

Ending shares:

85.52

o Dividends reinvested/share:

$33.72

o Total Return: 102.81%

Average Annual TR:

8.43%

o Starting: $10,000.00

Ending investment:

$22,469.37

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 (September): •

Financial results showed a 13% increase in revenues and improvements in operating cash flow and net loss.

•

Reaffirmed guidance for operating cash flow and free cash flow.

•

Expect to deliver 70-80 787 airplanes and 375-400 737 airplanes.

•

Revenue is $18.1 billion, reflecting 105 commercial deliveries.

•

The total backlog is $469 billion, incl. 5,100+ commercial airplanes.

2Q2023 (June): •

Making progress in increasing plane production and deliveries.

•

The 737 narrow-body program produces 38 monthly units, and widebody 787 operations are building up.

•

Boeing expects to deliver around 400-450 planes this year and aims to increase production rates.

•

Challenges are faced in the military business, but it continues to win new business and maintains a solid backlog.

•

Aircraft support operations in the Global Services division contribute to positive financial results.

1Q2023 (March):

Bill Cara: Cracking the Maverick Code

December 2023

•

Boeing is working to increase airplane production despite challenges.

•

They aim to produce 400-450 single-aisle 737 planes this year and increase production rates.

•

The production of the 787 wide-body model is expected to improve.

•

Boeing has a substantial backlog of 4,500 planes worth $334 billion.

•

Challenges in the Defense, Space & Security division are noted, but positive orders are received.

4Q2022 (December): •

Boeing's Airplanes segment is working to increase production to meet strong demand.

•

They are awaiting federal approval for enhanced cockpits on certain configurations of the 737.

•

The production of the 787 Dreamliner is expected to improve.

•

Engine supply problems are gradually being resolved.

•

The Defense, Space & Security division faced challenges in the past but is making progress.

•

Global Services is experiencing steady growth in revenues and operating income.

BA 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates a return to growth in revenue and earnings.

BA Noteworthy Strategic Developments: On Dec. 11, Stephanie Pope was appointed Executive Vice President and Chief Operating Officer. Pope will report directly to Dave Calhoun, CEO. BA FinViz Snapshot: https://finviz.com/screener.ashx?v=171&t=BA

Bill Cara: Cracking the Maverick Code

December 2023

BA Company SWOT Analysis Internal Strengths: 1. Strong Brand and Market Position: Boeing is globally recognized in 150 countries for quality and innovation, attracting diverse customers.. 2. Diverse Product and Service Portfolio: Boeing offers a wide range of products, including commercial and military aircraft, reducing dependence on a single product line. 3. Strong Market Share: Second-largest aerospace company. Boeing's size provides economies of scale and industry influence. 4. High Innovation: Boeing is known for pioneering innovations like standards in lightweight composites and fuel efficiency. 5. Strong Relationships: Boeing maintains meaningful relationships with suppliers and partners, recognizing their contributions. 6. Business Model Resilience: Boeing demonstrates resilience by responding flexibly to market changes, as seen during the pandemic. 7. Employer Brand: Boeing's strong employer brand is reflected in its ranking on Forbes's Best Employer list. Internal Weaknesses: 1. Financial Performance: Boeing reported a net loss despite increased revenues, indicating challenges in cost management and profitability. 2. Supply Chain Disruptions: Ongoing supply chain disruptions and labor instability adversely impact financial position and cash flows. 3. Flawed and Unsafe Design: Boeing's flawed 737 Max design is a significant weakness following the 2019 crashes. 4. Over-Outsourcing: Heavy reliance on outsourcing led to layoffs at key suppliers, affecting 737 Max production. 5. Overdependence on US Contracts: Boeing's reliance on US government contracts makes it vulnerable to US politics and economic factors. 6. Supply Chain Issues: Management strategies lead to supply chain challenges impacting operations. 7. Poor Labor Management: Ineffective labor management practices, like firing employees forming a union, are evident.

Bill Cara: Cracking the Maverick Code

December 2023

8. Declining Revenue: Intensifying competition resulted in declining revenue over the years. 9. Losing Market Share: Boeing trails Airbus in new orders and deliveries. 10. Declining R&D Expenditure: Reduced R&D spending resulted in costly product development decisions like the 737 Max failure. 11. Safety Issues: Concerns about the safety of Boeing's aircraft have been raised. 12. Extreme Reliance on US Government: Boeing heavily depends on US government contracts for defense and security revenue. External Opportunities: 1. Market Recovery: Boeing can benefit from the rebound in demand for air travel as the global economy recovers from the pandemic. 2. Technological Advancements: Investment in technologies like AI, autonomous systems, and sustainable aviation can lead to innovative products and services. 3. Military Drones: The Russia-Ukraine war has permanently changed the importance of crewless vehicles. 4. Eco-Friendly Planes: Committing to reducing the carbon footprint through advanced technologies. 5. Growing Space Market: Expanding space market and US Space Force. 6. Rising Demand for Satellite Technology: Expanding satellite market. 7. Growing Electric Aircraft Market: Growth of electric planes. External Threats: 1. Regulatory Risks: Non-compliance with safety and environmental regulations could lead to penalties and reputational damage. 2. Competitive Pressure: Intense competition with major players like Airbus affects pricing, market share, and profitability. 3. Public Perception: Safety concerns can permanently affect public perception, making it challenging to regain trust. 4. Looming Recession: Economic downturns may reduce air travel. 5. Terrorist Attacks: Threats of terrorist attacks affecting air travel. 6. Trade War: Trade disputes affecting access to the European market.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=BA

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=BA,P

Bill Cara: Cracking the Maverick Code

December 2023

CATERPILLAR (CAT) QUARTERLY MAVERICK REPORT December 24, 2023, $290.36 Caterpillar Business Description: •

Caterpillar Inc. is a global manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Its product range includes a variety of machinery and tools for construction, mining, and related industries. The company also provides financing and insurance services for its products. Caterpillar, founded in 1925, is based in Irving, Texas.

CAT Maverick Guidance: •

Short-term recommendation: 20231215: CAUTIOUS BUY. Double-top breakout Dec 11 (quite extended)

•

Long-term portfolio recommendation: 1Q2024 BUY WOULD BE HIGH RISK. EXCELLENT LONG-TERM BUY AT $200. FIRM TECHNICAL SUPPORT AT $180.

•

Global economic headwinds CANNOT be ignored in 1H2024.

CAT Consideration for Maverick Portfolio: •

Appropriate for risk profile score of 22-29. The Moderate Investor seeks to balance caution and ambition, aiming for reasonable growth while managing risk. The Maverick #3 MODERATE GROWTH portfolio is designed to maintain a stable yet potentially rewarding strategy by including conservative and moderately aggressive Dow 30 stocks.

•

Appropriate for risk profile score of 30-35. The Moderately Aggressive Investor is willing to take on higher risk for the potential of higher returns. The Maverick #4 DYNAMIC GROWTH portfolio includes a higher allocation of high-growth-oriented Dow 30 stocks to align with this risktolerant approach.

•

Appropriate for risk profile score of 36-45. The Aggressive Investor is open to significant risk for the potential of maximum returns in the #5 Maverick AGGRESSIVE GROWTH portfolio.

CAT Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat = Hold, TipRanks = MODERATE BUY

Bill Cara: Cracking the Maverick Code

December 2023

•

Consensus: 14 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 9 Buy, 4 Hold, and 1 Sell. Based on 14 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $275.86, with a high forecast of $350.00 and a low forecast of $210.00. The average price target represents a -5.0% change from the last price of $290.36.

•

Dividend Yield: $1.30 per share paid quarterly to yield 1.72%.

•

Dividend growth for 15+ years. (from TipRanks)

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Weekly (BUY)

Daily (BUY)

CAT Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst

•

Share Price Safety:

2 of 5

•

Market Timing:

1 of 5

•

Technical Rank:

3 of 5

•

Stock’s Price Stability:

70/100

•

Price Growth Persistence:

75/100

•

Earnings Predictability:

50/100

•

Average Annual PE:

15.0

•

Current PE:

14.8

•

Average Annual Sales Growth in the past 5 years:

+5.0%

•

Average Annual Sales Growth for the next 5 years:

+9.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+8.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+11.5%

•

Average Annual Earnings Growth in the past 5 years:

+15.5%

•

Average Annual Earnings Growth for the next 5 years:

+14.5%

•

Average Annual Dividend Growth in the past 5 years:

+7.5%

•

Average Annual Dividend Growth next 5 years:

+5.0%

•

Average Annual Dividend Yield 3 to 5 years:

+1.7%

•

Current Dividend Yield:

+1.93%

Bill Cara: Cracking the Maverick Code

December 2023

A+

CAT Financial Performance: •

•

EPS: o Fy2020:

$6.09

o FY2021:

$10.81

o FY2022:

$13.87

o FY2023:

e$20.40

o FY2024:

e$20.20

o FY2025:

e$21.79 (from Koyfin)

o Current PE:

14.80

o Forward PE:

12.64

o PEG Ratio:

1.45

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $90.87

End price/share:

$295.63

o Starting shares: 110.05

Ending shares:

144.40

o Dividends reinvested/share: $35.69 o Total Return: 326.90%

AVERAGE ANNUAL TR:

15.62%

o Starting: $10,000.00

Ending investment:

$42,707.32

Quarterly Reports Summaries (incl. Revenue, Cash Flow, and Earnings): Q3 2023 Report: October 31, 2023 •

Sales and revenues: $16.8 billion (12% increase from Q3 2022)

•

Primary increase due to favorable price realization and higher sales volume

•

Operating profit margin: 20.5% (compared to 16.2% in Q3 2022)

•

Adjusted operating profit margin: 20.8% (compared to 16.5% in Q3 2022)

•

Profit per share: $5.45 (compared to $3.87 in Q3 2022)

•

Adjusted profit per share: $5.52 (compared to $3.95 in Q3 2022)

•

Enterprise operating cash flow for nine months ended September 30, 2023: $8.9 billion

Bill Cara: Cracking the Maverick Code

December 2023

•

Enterprise cash at end of Q3: $6.5 billion

•

Dividends paid in the quarter: $0.7 billion

•

Caterpillar common stock repurchased in the quarter: $0.4 billion

Q2 2023 Report •

Sales: $17.3 billion

•

Strong demand from various end markets, especially construction and mining

•

Dealers’ higher prices and inventory replenishment efforts contributed to positive results

•

Adjusted operating profit margin: around 21%

Q1 2023 Report •

Sales: $15.86 billion (17% increase)

•

Benefited from strong price gains, higher volume, and lower manufacturing costs

•

Operating margin: 21.1%

Q4 2022 Report •

Sales: $16.597 billion (20% increase)

•

Growth achieved through a combination of price increases and higher sales volume

•

Offset the negative impact of currency fluctuations and elevated manufacturing costs

These reports reveal several trends and changes over the past four quarters: 1. Sales and Earnings Growth: Caterpillar's sales and earnings per share have shown strong growth over the four quarters, indicating the company's sustained performance and market demand.

Bill Cara: Cracking the Maverick Code

December 2023

2. Cash Flow: The company's cash flow per share has consistently increased, demonstrating Caterpillar's strong cash generation capability and effective financial management. 3. Dividends: Dividends declared per share have gradually increased, reflecting the company's commitment to providing returns to its shareholders alongside its robust financial performance. 4. Capital Spending: Capital spending per share has increased moderately over the quarters, reflecting the company's investment in its operations and growth initiatives. 5. Margins: While the operating margin has declined slightly, it remains healthy, indicating efficient cost management and sustainable profitability. The net profit margin slightly increased in Q3, suggesting improved operational efficiency and effective revenue management. 6. Book Value: The book value per share has experienced significant growth over the quarters, reflecting the company's increased asset base and strengthened financial position. 7. Return on Equity and Total Capital: Both return on equity and return on total capital have shown consistent improvement, indicating Caterpillar's effective utilization of resources. 8. Common Shares Outstanding: The number of outstanding shares has slightly decreased over the quarters, reflecting potential share repurchases or other corporate actions. 9. Dividends to Net Profit: The percentage of all dividends to net profit has shown a downward trend.. CAT 3-to-5-year Value Line Operational and Financial Outlook: •

The outlook indicates continued revenue and earnings growth.

•

The company's long-run outlook is cautiously optimistic.

CAT Noteworthy Strategic Developments CAT FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=CAT Bill Cara: Cracking the Maverick Code

December 2023

CAT SWOT Analysis: Internal Strengths •

Strong global brand and market position.

•

Efficient distribution network.

•

Diversified portfolio across industries.

•

Emphasis on innovation and R&D.

•

Robust financial services and customer support.

•

Effective capital expenditure management.

Internal Weaknesses •

Vulnerability to economic cycles.

•

Intense competition.

•

Exposure to currency fluctuations.

•

Regulatory compliance risks.

•

Supply chain disruptions.

•

Reliance on dealer network performance.

•

Need for increased investment in new technologies.

External Opportunities •

Expansion into emerging markets.

•

Focus on renewable energy and sustainable products.

•

Diversification through strategic partnerships.

•

Expansion of aftermarket services.

•

Investment in digitalization.

•

Focus on workforce development.

External Threats •

Economic downturns.

•

Intense competition.

•

Regulatory challenges.

•

Geopolitical tensions and trade conflicts.

•

Fluctuations in commodity prices.

•

Currency fluctuations.

•

Technological disruption.

•

Cybersecurity risks.

•

Talent retention challenges.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=CAT

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=CAT,P

Bill Cara: Cracking the Maverick Code

December 2023

SALESFORCE (CRM) QUARTERLY MAVERICK REPORT December 24, 2023 $266.34 Salesforce Business Description: • Salesforce, Inc. is a prominent customer relationship management (CRM) player, offering cloud-based software for sales, customer service, marketing, and data analytics. CRM Maverick Guidance: • • •

•

Short-term recommendation: 20231215: BUY. Double-top breakout Dec 18. The short-term cycle is overbought and high risk. Long-term stock recommendation: BUY WHENEVER CRM DROPS TO ACCUMULATION ZONE Salesforce has demonstrated consistent growth, resilient financial performance, and strategic initiatives that align with the evolving tech landscape, especially in AI. While the recent price trend is negative, the company’s overall outlook remains promising. The current valuation is stretched. Aggressive Maverick Investors in Salesforce (CRM) should consider a reduced position and wait for a more favorable entry point, as the current stock price offers only average upside potential over the next 18 months and 3 to 5 years. Having substantially reduced positions in 3Q2023, Mavericks are avoiding additional purchases pending a $180 price or lower, which we project in late 1Q2024.

CRM Consideration for Maverick Portfolio: •

Salesforce (CRM) is suitable for the #5 AGGRESSIVE GROWTH Maverick Investor Portfolio for those with a risk profile score of 36 to 45.

CRM Market Guidance: NOTE FREQUENT CHANGES • Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= MODERATE BUY. •

Consensus: 38 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 26 Buy, 11 Hold, and 1 Sell. Based on 38 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $278.09 with a high forecast of

Bill Cara: Cracking the Maverick Code

December 2023

$350 and a low forecast of $159. The average price target represents a +4.4% change from the last price of $266.34. •

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Weekly (BUY)

Daily (BUY)

CRM Value Line Guidance: • Financial Strength Rating: • Share Price Safety: • Market Timing:

B++ 3/5 2/5

Technical Rank: Stock’s Price Stability:

3/5 60/100

•

Price Growth Persistence: Earnings Predictability: Average Annual PE:

90/100 25/100 NMF

•

Current PE:

95.6

•

Average Annual Sales Growth in the past 5 years:

+18.0%

•

Average Annual Sales Growth for the next 5 years:

+7.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+42.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+7.5%

•

Average Annual Earnings Growth in the past 5 years:

+76.0%

•

Average Annual Earnings Growth for the next 5 years:

+18.0%

•

Average Annual Dividend Growth in the past 5 years:

NIL

•

Average Annual Dividend Growth for the next 5 years:

NMF

•

Average Annual Dividend Yield 3 to 5 years:

NIL

•

Current Dividend Yield:

NIL

• • • •

CRM Financial Performance: •

EPS: o Fy2020:

$6.09

o FY2021:

$10.81

o FY2022:

$13.87

o FY2023:

e$20.40

o FY2024:

e$20.20

o FY2025:

e$21.79 (from Koyfin)

Bill Cara: Cracking the Maverick Code

December 2023

•

PE: o Current PE:

14.80

o Forward PE:

12.64

o PEG Ratio:

1.45

10-Year AATR: o Start date:

12/27/2013 End date:

o Start price/share: $54.45

End price/share:

o Dividends reinvested/share:

12/26/2023 $266.22

o Total Return:

388.93%

AVERAGE ANNUAL TR:

o Starting:

$10,000.00 Ending investment:

17.19% $48,875.85

CRM Value Line Commentary: Sept. 29 • Salesforce shares have experienced a period of stagnation in the last three months after a robust 50% price surge in 2023. Despite this recent plateau, the stock is anticipated to outperform the broader market in the next six to 12 months, indicated by a Timeliness rank 2. Strong fiscal second-quarter results, with July-period revenues reaching $8.6 billion (an 11% YoY increase) due to resilient global cloud product demand, contribute to this positive outlook. Earnings per share exceeded

•

expectations at $1.28, driven by cost-cutting initiatives that boosted operating margins. Management's optimistic outlook for the full fiscal year, supported by encouraging factors like cloud product demand, AI market share gains, and successful past acquisitions, led to an increase in the top- and bottom-line estimates for the current fiscal year. The revised estimates stand at $34.75 billion for revenue and $3.35 per share for earnings. Salesforce's strategic move involves the acquisition of Airkit.ai, an early-stage company specializing in AI-powered customer service applications. While financial details were not disclosed, the acquisition aligns with Salesforce's positioning in the growing AI market, emphasizing its potential for revenue growth. CEO Marc Benioff highlighted the significant impact of AI on the business world during a recent conference, positioning Salesforce favorably to capitalize on the evolving AI revolution. Despite the company's promising prospects, the recommendation is for patient

Bill Cara: Cracking the Maverick Code

December 2023

investors to wait for a more attractive entry point, as the current quotation offers only average price upside potential over the 18-month and 3- to 5-year windows. While acknowledging Salesforce's strong business outlook, the suggestion is for buy-and-hold accounts to defer capital commitments at the present valuation. Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Company Report (11/29) •

Fiscal Q3 revenue: $8.72B, 11% YoY increase, 10% in constant currency.

•

GAAP operating margin: 17.2%, non-GAAP operating margin: 31.2%.

•

Remaining performance obligation: $23.9B, 14% YoY increase.

•

GAAP EPS: $1.25, non-GAAP EPS: $2.11.

•

Share repurchases: $1.9B in Q3.

•

Q4 FY24 revenue guidance: $9.18B to $9.23B, 10% YoY increase.

•

Full-year FY24 revenue guidance: $34.75B to $34.8B, 11% YoY increase.

•

GAAP operating margin guidance for FY24: 14.5%, non-GAAP: 30.5%.

•

Operating cash flow growth guidance for FY24 raised from 30% to 33% YoY.

•

Marc Benioff was satisfied with the strong quarter, highlighting profitable growth plan execution.

•

Salesforce: Third-largest enterprise software company, leading AI CRM, and top enterprise apps company.

2Q2023 Company Report •

July 2023: Q2 results show an 11% YoY revenue increase to $8.6 billion.

•

Growth attributed to strong global cloud product demand.

•

Exceeded consensus with $1.28 per share earnings.

•

Cost-cutting initiatives led to higher operating margins.

1Q2023 Company Report •

Steady growth in quarterly revenues. Indicates continued growth.

•

Annual revenues for fiscal 2023: $34,750 million.

CRM 3-to-5-year Value Line Annual Outlook: •

Revenue Growth Potential:

Bill Cara: Cracking the Maverick Code

+7.5% December 2023

•

Cash Flow Growth Potential:

+7.5%

•

Earnings Growth Potential:

+18.0%

•

Dividend Growth Potential:

+0.0%

•

Salesforce’s operational outlook remains positive, with expectations of solid top- and bottom-line growth in the near term. As macroeconomic conditions improve, the demand for its products is expected to rise, particularly as clients increase their IT spending.

•

The company’s balance sheet is in excellent condition, with substantial cash reserves and a relatively low debt-to-capital ratio. The long-term focus on AI, exemplified by the introduction of AI Cloud, positions the company well for future growth.

CRM Noteworthy Strategic Developments: CEO Marc Benioff has emphasized the potential of AI in shaping the future of business, and Salesforce appears well-positioned to leverage this trend for revenue growth. In broadening its capabilities, Salesforce acquired Airkit.ai, a company specializing in AI-powered customer service applications. While details of the acquisition were not disclosed, this move underscores the commitment to capitalizing on the burgeoning AI market. CRM FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=CRM

Bill Cara: Cracking the Maverick Code

December 2023

CRM SWOT Analysis: • Internal Strengths o Salesforce excels in CRM with widely recognized software. o Cloud-based accessibility enhances widespread adoption. o Platform allows building custom applications for specific needs. o Robust ecosystem with numerous add-ons and integrations. o Strong brand and reputation in the software industry. o Strong free cash flow supports expansion into new projects. o Demonstrates good ROI in new projects, diversifying revenue streams. o Strategic investment in a strong brand portfolio. o Proven success in entering new markets and minimizing risks. o Successful track record of mergers and acquisitions for operational optimization. o Highly skilled workforce through education and training. •

Internal Weaknesses o The strong competition requires continuously increased capital for investment. o Financial planning inefficiencies are indicated by liquid asset and liquidity ratios. o High labor outflow leads to increased spending on employee training. o Challenges in integrating companies with different work cultures. o Lack of clearly defined positioning and unique selling proposition. o Relatively expensive software poses challenges for small businesses. o Complexity in learning and setting up Salesforce's software. o Integration challenges with other systems may require specialized expertise. o Security concerns due to cloud-based nature require strong protocols. o Dependence on partnerships for certain features and services makes the company vulnerable to disruptions.

Bill Cara: Cracking the Maverick Code

December 2023

•

External Opportunities o Expansion into untapped markets, particularly in emerging markets. o Growth through acquisitions to add capabilities and expand offerings. o Continual investment in new technologies, such as AI and machine learning. o Focus on vertical industries, developing specialized solutions. o Increased emphasis on enhancing customer experience through tools and technologies. o Adoption of a new environmental policy to benefit from emerging technologies. o Impact of new taxation policies on business operations and profitability. o Opportunities through government and free trade agreements. o Utilization of online channels for reaching new customers. o Potential benefits from economic recovery and increased consumer spending.

•

External Threats o Intense competition from established players like Microsoft, SAP, and Oracle impacts market share. o Risk of cybersecurity threats and data breaches, potentially damaging reputation and business. o Dependency on partnerships for delivering features and services, susceptible to disruptions. o Potential legal actions and liability claims due to fluctuating laws and product standards. o International operations expose the company to currency fluctuations and political uncertainties.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=CRM

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=CRM,P

Bill Cara: Cracking the Maverick Code

December 2023

CISCO (CSCO) MAVERICK QUARTERLY REPORT December 24, 2023 $50.09 Cisco Systems Business Description: •

Cisco Systems is a prominent provider of Internet Protocol-based networking and related products, facilitating data transfer, voice, and video across various networks. They offer services associated with these products and have a significant international presence, with

foreign businesses accounting for 42.2% of their 2022 revenues. The company’s employment is about 83,300. Founded in 1984. CSCO Maverick Guidance: • •

•

• • •

Short-term recommendation: 20231215: TEMPORARILY AVOID Long-term recommendation: NEUTRAL. Long-term trend is up, but vulnerable to reversal as short-term cycle is somewhat extended on upside. I considered CSCO for the Maverick Moderate Growth Portfolio due to its high +10.8% 10-year average annual Total Return. But I did not want to overload the diversified 10-stock portfolio with three technology sector companies as I selected Apple (AAPL) and Microsoft (MSFT) for their average annual total performance at +27.8% and +28.2%. CSCO offers solid risk-adjusted Total Return potential over 3 to 5 years. A well-covered dividend adds to the stock's appeal, making it suitable for conservative investors seeking insurance holdings for their portfolios. My deep financial review for the upcoming years indicates satisfactory expectations for revenue per share, cash flow per share, earnings per share, dividends declared per share, capital spending per share, book value per share, common shares outstanding, P/E ratio, relative P/E ratio, dividend yield, revenues, operating margin, depreciation, net profit, income tax rate, net profit margin, working capital, long-term debt, shareholder equity, return on total capital, return on shareholder equity, retained earnings to common equity, and dividends to net profit. Cisco is a very stable company with Value Line ratings of A++ for Financial Strength and #1 for Safety.

Bill Cara: Cracking the Maverick Code

December 2023

•

Cisco has experienced fluctuations in its backlog, with efforts to reduce it while navigating supply chain challenges. The company has seen growth in various financial metrics but remains cautious about economic growth uncertainties. Management is exploring AI-driven solutions and expects earnings growth to outpace revenue growth, pricing actions, and share buybacks to drive earnings per share.

CSCO Consideration for Maverick Portfolio: There are five portfolios appropriate for Cisco (CSCO). Here are the five portfolios and their corresponding attributes: #1. Conservative (Risk Profile Score=10-15): Prioritizing Capital Preservation • Minimal risk for capital preservation with low expected returns. #2. Cautious Growth (Risk Profile Score=16-21): Seeking Modest Returns • Accepting low-to-moderate risk for modest medium-term returns. #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential • Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains • Willing to take above-average risk for substantial long-term gains. #5. Aggressive Growth (Risk Profile Score=36-45): Chasing Maximum Returns •

High risk for maximum potential returns, accepting sizable drawdowns in volatile markets.

CSCO Market Guidance: NOTE FREQUENT CHANGES • •

Analyst Ratings: MarketBeat= HOLD TipRanks= HOLD. Consensus: 16 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 3 Buy, 13 Hold, and zero Sell. Based on 16 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $52.83, with a high forecast of $63 (DOWN FROM PREVIOUS $76) and a low forecast of $46. The average price target represents a +5.5% change from the last price of $50.09.

•

Dividend Yield: $0.39 per share paid quarterly to yield 3.2%. Dividend growth for over 13 years. (from TipRanks)

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com = Daily (BUY)

Weekly (SELL)

o TipRanks =

Weekly (NEUTRAL)

Daily (NEUTRAL)

Bill Cara: Cracking the Maverick Code

December 2023

CSCO Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

1 of 5

•

Stock’s Price Stability:

95/100

•

Price Growth Persistence:

70/100

•

Earnings Predictability:

100/100

•

Average Annual PE:

•

Average Annual Sales Growth in the past 5 years:

+4.5%

•

Average Annual Sales Growth for the next 5 years:

+4.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+6.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+5.5%

•

Average Annual Earnings Growth in the past 5 years:

+7.0%

•

Average Annual Earnings Growth for the next 5 years:

+6.5%

•

Average Annual Dividend Growth in the past 5 years:

+9.0%

•

Average Annual Dividend Growth next 5 years:

+8.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.7%

CSCO Financial Performance: •

•

EPS: o 2020:

$3.21

o 2021:

$3.22

o 2022:

$3.36

o 2023:

$3.89

o 2024:

e$3.90

PE: o Current PE: 14.85 o Forward PE: 12.18 o PEG Ratio:

•

2.32

10-Year AATR: o Start date:

12/27/2013 End date:

o Start price/share: $22.02 Bill Cara: Cracking the Maverick Code

End price/share: December 2023

12/26/2023 $50.28 77

o Starting shares:

454.13

Ending shares:

620.46

o Dividends reinvested/share: $12.30 o Total Return:

211.97%

Average Annual TR:

o Starting:

$10,000.00 Ending investment:

12.05% $31,207.14

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 1Q2024 Company Report (reported November 15) •

Revenue: $14.7 billion, up 8% YoY.

•

GAAP Net Income: $3.6 billion, GAAP EPS: $0.89.

•

Non-GAAP Net Income: $4.5 billion, Non-GAAP EPS: $1.11.

•

GAAP EPS: $0.89, up 37% YoY; Non-GAAP EPS: $1.11, up 29% YoY.

•

Total software revenue and subscription revenue up 13% YoY.

•

Total ARR: $24.5 billion, up 5% YoY; product ARR up 10% YoY.

•

RPO: $34.8 billion, up 12% YoY; product RPO up 14% YoY.

•

Strong Q1 revenue across Cisco's portfolio, fueled by investments in Generative AI, Cloud, Security, and Full Stack Observability.

Q2 FY 2024 Guidance: •

Revenue: $12.6 billion to $12.8 billion.

•

EPS: GAAP: $0.59 to $0.64; Non-GAAP: $0.82 to $0.84.

FY 2024 Guidance: •

Revenue: $53.8 billion to $55.0 billion.

•

EPS: GAAP: $2.97 to $3.08; Non-GAAP: $3.87 to $3.93.

4Q2023 Company Report (FY2023 reported August 16) • • • •

•

Revenue: $15.2 billion (16% YoY increase) GAAP EPS: $0.97 (43% YoY increase), Non-GAAP EPS: $1.14 (up 37% YoY) Operating cash flow: $6.0 billion (62% YoY increase) Business model transformation progress (Q4 FY 2023): o Total software revenue: Up 17% YoY o Software subscription revenue: Up 20% YoY o Total ARR: $24.3 billion (up 5% YoY), Product ARR: Up 10% YoY o RPO: $34.9 billion (up 11% YoY), Product RPO: Up 12% YoY Q4 FY 2023 Results: o Revenue: $15.2 billion (16% YoY increase) o GAAP EPS: $0.97 (43% up YoY), Non-GAAP EPS: $1.14 (up 37% YoY) FY 2023 Results:

Bill Cara: Cracking the Maverick Code

December 2023

o Revenue: $57.0 billion (11% YoY increase) o GAAP EPS: $3.07 (up 9% YoY), Non-GAAP EPS: $3.89 (up 16% YoY) • Q1 FY 2024 Guidance: o Revenue: $14.5 billion to $14.7 billion o GAAP EPS: $0.79 to $0.84, Non-GAAP EPS: $1.02 to $1.04 • FY 2024 Guidance: o Revenue: $57.0 billion to $58.2 billion o GAAP EPS: $3.19 to $3.32, Non-GAAP EPS: $4.01 to $4.08 3Q2023 Company Report •

Actively reduced backlog, initially three to four times historical average.

•

Reduction aided by improved supply availability, increased product shipments, and growth in Secure Agile Networks category.

•

33% YoY increase in Secure, Agile Networks; double-digit growth in switching revenue.

•

Backlog expected to continue decreasing, much to be delivered in the first quarter of the following year.

•

Approximately 40% of 2024 revenue has already been secured.

•

Faced challenges: 14% YoY decline in Q4 orders, service providers responsible for half.

•

Modest top-line growth expected in fiscal 2024, cautious due to macroeconomic uncertainty.

•

Higher share buybacks and pricing adjustments expected to boost earnings per share.

•

Exploring AI to drive demand, launched Silicon One switching chips for AI data traffic.

2Q2023 Company Report •

Consequences of easing supply constraints in April quarter.

•

Improved component availability led to shorter lead times and reduced backlog.

•

Customers slowed new orders, focusing on existing inventory.

•

Aim to return product backlog to normal by early 2024.

•

Sees elongated sales cycles, project delays, and reduced spending.

•

23% YoY drop in total orders.

Bill Cara: Cracking the Maverick Code

December 2023

•

Anticipated modest revenue growth in fiscal 2024, with earnings outpacing revenue growth.

1Q2023 Company Report •

January quarter: 7% YoY increase in revenue, 5% rise in EPS.

•

Growth attributed to backlog drawdown.

•

Some orders had longer sales cycles, but deal sizes and closing rates remained strong.

•

Increased full-year 2023 revenue outlook, citing a strong backlog.

•

22% YoY decrease in product orders in January quarter.

•

Cautiously optimistic, noting steady demand, design wins, and a robust sales pipeline.

The 3-to-5-year Value Line Operational and Financial Outlook: •

Looking ahead, Cisco anticipates a ‘modest’ increase in revenue for fiscal 2024, with earnings expected to grow faster. The company is confident about its prospects, supported by recent price increases, expense management, and share buybacks. However, the company emphasized the need for improved demand visibility before making new commitments.

CSCO Noteworthy Strategic Developments: CSCO FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=CSCO

Bill Cara: Cracking the Maverick Code

December 2023

CSCO SWOT Analysis Internal Strengths: •

Robust revenue growth with a significant increase in net income.

•

Increased focus on software and subscription models, aligning with industry trends.

Internal Weaknesses: 1. Networking Market Dependence: Reliance on networking products exposes it to market fluctuations and technological disruptions. 2. Competition from Low-Cost Alternatives: Low-cost Asian manufacturers threaten Cisco’s market share and profitability. 3. Slow Adaptation to Trends: Criticism for slow adaptation to emerging trends impacts Cisco’s competitive edge. External Opportunities: •

Cloud Computing Growth: Opportunities from the increasing adoption of cloud computing represent a substantial market.

•

Strategic Partnerships: Pursuing partnerships and acquisitions to expand offerings and strengthen the company's competitiveness.

•

Cybersecurity Solutions: Growing demand for cybersecurity solutions provides an opportunity to expand its security product offerings.

•

Managed Services and Subscription Models: Avenues for recurring revenue and long-term customer relationships through managed services and subscription-based models.

External Threats: •

Intense Competition: Rivalry from competitors like Huawei, Juniper Networks, Arista Networks, and Hewlett Packard Enterprise, leading to pricing pressures and reduced market share.

•

Rapid Technological Changes: Continuous investment in research and development is required to stay competitive.

•

Global Economic Uncertainties: Economic fluctuations, trade disputes, and political instability can impact international business.

•

Talent Acquisition and Retention: Attracting and retaining top talent is crucial for competitiveness and innovation, and losing key personnel can negatively affect the company's performance.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=CSCO

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=CSCO,P

Bill Cara: Cracking the Maverick Code

December 2023

Chevron (CVX) QUARTERLY MAVERICK REPORT December 24, 2023 $151.05 Chevron Business Description: Chevron Corporation is one of the largest oil companies in the world, with operations in over 180 countries in all aspects of the oil, natural gas, and geothermal energy industries. The company also has interests in alternative energy sources, such as biofuels and wind power and marketing of chemicals. Founded in 1879 and is headquartered in San Ramon, California. CVX Maverick Guidance: •

Short-term technical buy/sell recommendation: 20231215: AVOID/SELL

•

Long-term portfolio recommendation: BUY/NEUTRAL

•

Shares offer solid risk-adjusted Total Return potential over 3 to 5 years.

•

A well-covered dividend adds to the stock's appeal, making it suitable for conservative investors seeking insurance holdings for their portfolios.

•

Chevron has experienced fluctuations in its financial performance over the past three reports because of pricing environments, production levels, and strategic initiatives. Despite many challenges, its focus on sustainability, shareholder value, and growth positions it well for the future. Chevron remains well-positioned as one of the largest global oil companies and a great selection for the Maverick Investor’s portfolio.

•

The recent price trend has been bearish, and the technical indicators are neutral. But the long-term Bull trend is intact, and the intermediate and long-term technical indicators remain bullish. During short-term weakness there is no reason to remove CVX from the portfolio.

CVX Consideration for Maverick Portfolio: There are two portfolios appropriate for Chevron (CVX). #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential • Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains • Willing to take above-average risk for substantial long-term gains. Bill Cara: Cracking the Maverick Code

December 2023

CVX Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY, TipRanks= MODERATE BUY

•

Consensus: 18 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 12 Buy, 6 Hold, and zero Sell.

•

Based on 18 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $179.59, with a high forecast of $201 and a low forecast of $148. The average price target represents a +18.9% change from the last price of $151.05.

•

Dividend Yield: $1.51 per share paid quarterly to yield 4.01%.

•

Dividend growth for over 15 years. (from TipRanks)

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (NEUTRAL)

o TipRanks =

Weekly (BUY)

Daily (NEUTRAL)

CVX Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst

•

Share Price Safety:

3 of 5

•

Market Timing:

4 of 5

•

Technical Rank:

2 of 5

•

Beta:

1.15

•

Stock’s Price Stability:

65/100

•

Price Growth Persistence:

45/100

•

Earnings Predictability:

5/100

•

Average Annual PE:

•

Forward PE:

10.6

•

Average Annual Sales Growth in the past 5 years:

+4.5%

•

Average Annual Sales Growth for the next 5 years:

+13.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+6.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+14.0%

•

Average Annual Earnings Growth in the past 5 years:

+31.5%

•

Average Annual Earnings Growth for the next 5 years:

+19.5%

Bill Cara: Cracking the Maverick Code

December 2023

•

Average Annual Dividend Growth in the past 5 years:

+4.5%

•

Average Annual Dividend Growth next 5 years:

+7.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+1.5%

•

Current Dividend Yield:

+4.18%

CVX Financial Performance •

•

EPS: o 2021:

$13.98

o 2022:

$12.39

o 2023:

e$12.25

o 2024:

e$16.80

o Current PE:

10.76

o Forward PE

10.00

o PEG Ratio:

---

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

1226/2023

o Start price/share: $125.23

End price/share:

$152.41

o Starting shares: 79.85

Ending shares:

121.49

o Dividends reinvested/share: $48.53 o Total Return: 85.16%

AATR:

6.35%

o Starting: $10,000.00

Ending investment:

$18,511.78

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Company Report (reported October 27): •

Q3 2023 earnings: $6.5 billion, $3.48 per share (diluted). Compared to Q3 2022: $11.2 billion, $5.78/share (diluted).

•

Adjusted earnings in Q3 2023: $5.7 billion, $3.05 per share (diluted).

•

Current quarter includes one-time tax benefit of $560 million in Nigeria and pension settlement costs of $40 million.

•

Foreign currency effects increased earnings by $285 million.

•

Record year-to-date cash returned to shareholders: $20.0 billion.

•

Acquired PDC Energy, Inc. and majority interest in ACES Delta, LLC.

•

Announced agreement to acquire Hess Corporation.

Bill Cara: Cracking the Maverick Code

December 2023

2Q2023 Report (August): •

Impact on financial performance from lower upstream realizations and decreased margins on refined product sales.

•

Q2 filing reported unfavorable comparisons.

•

Record production from the Permian Basin provided support.

•

PDC Energy acquisition added 1+ billion barrels of oil in proved reserves.

•

Expected to contribute an additional $1 billion to free annual cash flow.

1Q2023 Report (May): •

Sales and earnings per share expected to decline due to challenging pricing environment and modest production decrease.

•

Focus on expanding lower-emission businesses.

•

Partnership to introduce plant-based oil with a lower carbon profile.

•

Initiatives with Bunge and Corteva, and agreement with JERA for carbon capture projects show commitment to sustainability.

•

Stock's performance is expected to track broader market averages with long-term potential for improvement.

4Q2022 Report (February): •

Strong results for Q4 2022 with increased sales and share earnings.

•

Solid production levels, favorable pricing provided positive outcomes.

•

Measures to enhance shareholder value, including dividend increase and $75 billion share repurchase authorization.

•

Focus on maximizing returns for investors.

•

Chevron's long-term prospects appear favorable as a major player in the energy sector.

•

Investments in traditional and new energy initiatives.

CVX 3-to-5-year Value Line Operational and Financial Outlook: •

Financial strength and potential for future growth noted despite shortterm challenges.

CVX Noteworthy Strategic Developments: CVX FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=CVX Bill Cara: Cracking the Maverick Code

December 2023

CVX SWOT Analysis: Internal Strengths: •

Diversified Operations: Operations in 180+ countries span exploration, production, refining, and marketing, mitigating the impact of volatility.

•

Strong Financial Position: Solid balance sheet, significant cash flows, and a robust credit rating enable investments and shareholder returns.

•

Technology Leadership: Leading in advanced drilling, reservoir modeling, and data analytics enhances efficiency.

Internal Weaknesses: • • • • •

Exposure to Market Volatility: Financial performance is still influenced by energy market volatility. Dependence on Non-renewable Resources: Primary businesses in fossil fuels face environmental and regulatory pressures. Environmental and Social Risks: Operations carry risks of oil spills, gas flaring, and land use impacts. Legal and Regulatory Risks: High regulation raises compliance costs. Competition from Alternative Energy: Growth of alternative sources threatens traditional businesses, requiring adaptation.

External Opportunities: • Expansion into Renewable Energy: Opportunities in solar, wind, and geothermal power for diversified energy portfolio. • Investment in New Technologies: Carbon capture, advanced biofuels, and EV charging infrastructure for a lower carbon footprint. • Expansion in Emerging Markets: Potential growth in Asia, Africa, and Latin America for new revenue streams. External Threats: • Environmental and Regulatory Pressures: Climate change concerns may increase regulatory scrutiny and compliance costs. • • •

Geopolitical Risks: Operations in politically unstable regions pose risks of civil unrest, terrorism, and asset expropriation. Technological Disruptions: Electric vehicles and renewables may disrupt Chevron's traditional business. Economic Downturns: Global economic downturns could reduce energy demand and commodity prices, impacting revenue.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=CVX

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=CVX,P

Bill Cara: Cracking the Maverick Code

December 2023

Disney (DIS) QUARTERLY MAVERICK REPORT December 24, 2023 $91.02 Disney Business Description: Disney's complex business encompasses various entertainment and media operations, making it a major player in the global entertainment industry. •

Media Networks: This includes cable and broadcast TV networks like ABC, ESPN, and Disney Channels.

•

Parks, Experiences, and Products: Offers Disney theme parks, resorts, and cruise lines, as well as Adventures by Disney and merchandising.

•

Studio Entertainment: Responsible for creating, producing, and distributing films, including properties like Disney, Pixar, Marvel, Lucasfilm (Star Wars), and 20th Century Studios.

•

Direct-to-Consumer & International (DTCI): Includes Disney's streaming services, including Disney+, Hulu, and ESPN+, and international television operations.

•

Content Distribution: Distributing content through various platforms, including online, mobile, video on demand, pay, and syndicated TV.

•

Consumer Products: Disney monetizes its intellectual properties (IPs) through licensing, publishing, video games, and retail sales, focusing on properties like Marvel, Pixar, and Star Wars.

•

Acquisitions: Disney has made significant acquisitions, e.g., Pixar (2006), Marvel (2009), Lucasfilm (2012), and 21st Century Fox (2019).

DIS Maverick Guidance: •

Short-term recommendation: 20231215: BUY. Potential upside or downside breakout.

•

Long-term recommendation: BUY/NEUTRAL. Bought following triplebottom break-down on 03Jul23.

•

Weakening financial strength must be watched but is not critical.

•

A weak Average Annual Total Return (AATR), but the future looks more promising, especially if political problems in Florida get sorted.

•

Earnings are unpredictable but expected to be solid in the next report.

Bill Cara: Cracking the Maverick Code

December 2023

DIS Consideration for Maverick Portfolio: •

Appropriate for Mavericks with a risk profile score of 22-29 who seek to balance caution and ambition, aiming for reasonable growth while managing risk. The #1 Maverick MODERATELY CONSERVATIVE portfolio is designed to maintain a stable yet potentially rewarding strategy by including conservative and moderately aggressive stocks.

•

DIS is inappropriate for Mavericks with a risk profile score below 22, who aim for stability with a Maverick CAUTIOUS GROWTH portfolio.

•

With its positive leaning earnings report on November 8, DIS might soon be recommended for Mavericks willing to take on higher risk for the potential of higher returns in a MODERATE GROWTH portfolio.

DIS Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= STRONG BUY

•

Consensus: 22 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 17 Buy, 5 Hold, and ZERO Sell.

•

Based on 22 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $109.67, with a high forecast of $120 and a low forecast of $94 (Up from $71). The average price target represents a +20.5% change from the recent price of $91.02.

•

Dividend Yield: $0.30 per share paid quarterly. Beginning December.

•

Dividend growth for 17 days.

•

Technical Sentiment (Technical Indicators and Moving Averages): 1. Investing.com = Daily (SELL)

Weekly (NEUTRAL)

2. TipRanks =

Weekly (NEUTRAL)

Daily (BUY)

DIS Value Line Guidance: • • • • • • • •

Financial Strength Rating: Share Price Safety: Market Timing: Technical Rank: Stock’s Price Stability: Price Growth Persistence: Earnings Predictability: Average Annual PE:

Bill Cara: Cracking the Maverick Code

A 2 of 5 4 of 5 5 of 5 80/100 45/100 10/100 19 December 2023

• • • • • • •

Current PE: 72 Average Annual Sales Growth in past 5 years: +3.00% Average Annual Sales Growth for the next 5 years: +6.00% Average Annual Cash Flow Growth in past 5 years: -14.0% Average Annual Cash Flow Growth for the next 5 years:+22.0% Average Annual Earnings Growth in past 5 years: -40.0% Average Annual Earnings Growth for the next 5 years: +65.0%

DIS Financial Performance: •

EPS: 2020: 2021: 2022: 2023: 2024:

d$1.57 $1.11 $1.75 e$1.25 e$2.60

o Current PE: o Forward PE o PEG Ratio:

72.08 17.61 4.25

o o o o o •

•

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $74.35

End price/share:

$90.95

o Starting shares: 134.50

Ending shares:

146.58

o Dividends reinvested/share: $9.41 o Total Return: 33.31%

Average Annual TR:

2.92%

o Starting: $10,000.00

Ending investment:

$13,336.20

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 4Q2023 Company Report (November 8): •

Revenues: Quarter +5%, Year +7% compared to prior-year quarter and prior year, respectively.

•

Diluted EPS (continuing operations): Quarter $0.14 (vs. $0.09 prior year), Year $1.29 (vs. $1.75 prior year).

•

Excluding certain items: Quarter $0.82 (vs. $0.30 prior year), Year $3.76 (vs. $3.53 prior year).

Bill Cara: Cracking the Maverick Code

December 2023

•

Disney+: Added nearly 7 million core subscribers in Q4.

•

Key streaming content: Elemental, Little Mermaid, Guardians of the Galaxy Vol. 3, Ahsoka, and Moving.

•

Combined streaming businesses expected to reach Q4FY24 profitability.

•

Domestic ESPN: Revenue and operating income grew YoY in FY2022 and FY2023.

•

Experiences operating income: Over 30% growth YoY, with growth across all international sites.

•

Cost management: Now target $7.5 Billion annualized efficiency.

•

Expect significant free cash flow growth in FY2024 vs. FY2023, approaching pre-pandemic levels.

Q2023 Company Report: •

Disney faced challenges in the fiscal Q3 mainly from its Media and Entertainment Distribution segment, impacting full-year profits.

•

Earnings per share likely fell by 29% for the fiscal year, but revenues increased by approximately 8%.

•

CEO Bob Iger's efforts to restructure the company, reduce costs, and restore creativity are in progress.

•

Disney aims to reduce operating costs by $5.5 billion and expects its Direct-to-Consumer business to turn profitable by the end of FY2024.

•

Earnings are expected to double this year, with mid-single-digit revenue growth. The stock price faced recent pressure, and activist investor Nelson Peltz increased his stake in the company, potentially seeking a board seat.

March 2023 Quarter: •

Disney's stock faced pressure after reporting earnings and lackluster guidance for its streaming segment.

•

On an adjusted basis, Disney had a decent performance in the fiscal second quarter, with doubled profits from continuing operations and a 13% revenue increase.

•

However, the bottom line decreased by nearly 14% YoY.

Bill Cara: Cracking the Maverick Code

December 2023

•

Disney raised prices for its streaming services but reported declining Disney+ subscribers and global subscription levels.

•

Management's efforts aim to counter challenges in the competitive media landscape through brand and content investments, bundling subscriptions, cost-cutting, and potential divestitures.

December 2022 Quarter: •

Disney underwent a strategic restructuring program focusing on streaming segments, a reorganization of operations, and cost-cutting, including layoffs.

•

The fiscal Q1 saw an 11% increase in share net and 8% revenue increase.

•

Restructuring and pricing initiatives are expected to strengthen results and counter market challenges.

•

Revenue is projected to grow at a 5%-10% rate in the coming two years, with earnings per share anticipated to rise by 10%-15% in fiscal 2023 and an additional 30% in the following year.

•

Disney's stock price experienced volatility due to leadership changes and activist investor involvement but may present an entry point for patient investors with long-term prospects.

DIS 3-to-5-year Value Line Operational and Financial Outlook: •

Revenue Growth Potential:

+6.0%

•

Cash Flow Growth Potential:

+22.0%

•

Earnings Growth Potential:

+65.0%

•

The 3-to-5-year outlook indicates higher revenue and a turnaround in cash flow and earnings with a prospect of future dividends.

•

The long-run outlook is cautiously optimistic, focusing on Bob Igor’s restructuring program and the potential to sell off non-core pieces.

DIS Noteworthy Strategic Developments:

DIS FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=DIS&p=m

Bill Cara: Cracking the Maverick Code

December 2023

DIS SWOT Analysis: Internal Strengths •

Strong Brand Recognition: Disney is globally recognized with a rich history and beloved characters, fostering a loyal and multigenerational fan base. Their marketing approach, including experiential marketing, has been highly effective.

•

Diversified Business Portfolio: Disney's diverse range of business segments, including media networks, parks and resorts, studio entertainment, consumer products, and interactive media, provides risk mitigation and market opportunity capitalization.

•

Successful Theme Park Operations: Disney's theme parks are among the world's most popular and profitable, drawing millions of visitors annually. The company's theme park operations consistently achieve success, offering immersive and engaging experiences for guests.

•

Strong Intellectual Property Portfolio: Disney possesses iconic and valuable brands, such as Marvel, Star Wars, Pixar, and National Geographic, providing a significant competitive edge and creating popular and lucrative franchises. Recently, Disney held the record for seven of the all-time Hollywood film blockbusters, eight if you include their joint ownership of Titanic with Paramount.

•

Innovation and Creativity: Disney is known for its innovation and creativity, staying ahead of competitors, and remaining relevant by adapting to changing consumer preferences and technological advancements in various business segments.

Internal Weaknesses •

Dependence on Key Franchises: Disney's financial success relies heavily on key franchises like Star Wars, Marvel, and Pixar, making it vulnerable to their performance.

•

Vulnerability to External Factors: Disney is susceptible to external factors like economic changes, geopolitical events, and natural disasters, impacting its financial performance, as seen during the COVID-19 pandemic.

Bill Cara: Cracking the Maverick Code

December 2023

•

Heavy Reliance on Licensing and Merchandising: While profitable, Disney's reliance on licensing and merchandising carries the risk of overexposure or over-licensing of its brands.

•

Competitive Pressure: Disney faces substantial competition from other media and entertainment companies, with new players potentially threatening its market share and financial performance.

External Opportunities •

Expand Streaming Services: Disney can grow its streaming services through new content and partnerships.

•

Develop New Franchises: Disney can create innovative intellectual property based on its successful track record.

•

Expand International Presence: Leveraging its strong global brand, Disney can expand in new and emerging markets.

•

Leverage Emerging Technologies: Use VR, AR, and AI technologies to engage consumer experiences.

•

Capitalize on Business Synergies: Disney can integrate its business segments for mutual benefit, such as incorporating characters into various media.

External Threats: •

Competition from Other Media Companies: Facing significant competition, Disney's market share and performance are at risk.

•

Economic Downturns: Fluctuating global economies can impact consumer spending and Disney's financial performance.

•

Changing Consumer Preferences: Adapting to shifting trends is crucial for Disney to remain relevant and competitive.

•

Natural Disasters and Unforeseen Events: Events like pandemics and natural disasters can disrupt operations and supply chains, affecting Disney's financial performance.

Bill Cara: Cracking the Maverick Code

December 2023

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=DIS

Bill Cara: Cracking the Maverick Code

December 2023

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=DIS,P

Bill Cara: Cracking the Maverick Code

December 2023

Dow Inc (DOW) QUARTERLY MAVERICK REPORT December 24, 2023, $55.12 Dow Inc. Business Description: •

Dow Inc. is a global leader in specialty chemicals and materials, operating

in 160+ countries with around 37,000 employees. They focus on innovative solutions for global challenges like sustainable energy, water conservation, and food security, serving many industries and types of consumers. DOW Maverick Guidance: •

Short-term recommendation: 20231215: NEUTRAL. DOUBLE BOTTOM BREAKDOWN ON OCT 12. Potential high-risk upside breakout late Dec.

•

Long-term recommendation: ACCUMULATE ON WEAKNESS ONLY IF INTERESTED IN DIVIDEND YIELD.

•

Has growth, profitability, and cash flow challenges. Operating cash flow declined ~30% in past year. While capital expenditures are down 7.6%, they remain significant compared to free cash flow.

•

A healthier operating improvement is anticipated going forward, with good potential for long-term capital gains and generous dividend yield.

•

Patient, income-seeking Mavericks seeking exposure to the chemicals sector may find Dow Inc. shares appealing. Otherwise, avoid it.

DOW Consideration for Maverick Portfolio: •

DOW is not appropriate in any Maverick portfolio. Too many unknowns.

•

It is currently under review as business conditions appear to be improving.

DOW Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat= HOLD, TipRanks= MODERATE BUY

•

Consensus: 15 Wall Street analysts have offered 12-month price targets in

the last 3 months. There are 4 Buy, 11 Hold, and zero Sell. (from TipRanks) Based on 15 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $55.67, with a high forecast of $60 and a low forecast of $52. The average price target represents a +1.0% change from the recent price of $55.12. •

Dividend Yield: $0.70 per share paid quarterly to yield 5.1%.

Bill Cara: Cracking the Maverick Code

December 2023

100

Dividend growth for 5 years. •

Technical Sentiment (Technical Indicators and Moving Averages): o

Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

TipRanks =

Weekly (BUY)

Daily (BUY)

DOW Value Line Guidance: 1. Company Financial Strength Rating:

Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst 2. Share Price Safety:

3 of 5

3. Market Timing:

3 of 5

4. Technical Rank:

3 of 5

5. Stock’s Price Stability:

60/100

6. Price Growth Persistence:

NMF

7. Earnings Predictability:

NMF

8. Average Annual PE:

12.0

9. Forward PE:

15.6

10. Average Annual Sales Growth in the past 5 years:

N/A

11. Average Annual Sales Growth for the next 5 years:

+6.5%

12. Average Annual Cash Flow Growth in the past 5 years:

N/A

13. Average Annual Cash Flow Growth for the next 5 years:

+5.5%

14. Average Annual Earnings Growth in the past 5 years:

N/A

15. Average Annual Earnings Growth for the next 5 years:

+5.0%

16. Average Annual Dividend Growth in the past 5 years:

N/A

17. Average Annual Dividend Growth next 5 years:

+5.0%

18. Average Annual Dividend Yield 3 to 5 years:

+4.2%

DOW Financial Performance: •

•

EPS: •

2020:

$1.66

•

2021:

$8.98

•

2022:

$6.25

•

2023:

e$2.75

•

2024:

e$4.25

PE:

Bill Cara: Cracking the Maverick Code

December 2023

101

•

Current PE:

28.2

•

Forward PE:

15.6

•

PEG Ratio:

---

10-Year AATR: •

Start date: 03/20/2019

End date:

12/26/2023

•

Start price/share: $49.80

End price/share:

$55.71

•

Starting shares: 200.80

Ending shares:

258.55

•

Dividends reinvested/share: $13.30

•

Total Return: 44.04%

Average Annual TR:

7.95%

•

Starting: $10,000.00

Ending investment:

$14,406.50

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 (September) Oct. 24 report: •

In Q3 of 2023, Dow Inc. reported GAAP earnings per share: $0.42; operating earnings per share (EPS): $0.48, down from $1.11 in the previous year and $0.75 in the prior quarter, excluding significant items.

•

Net sales: $10.7 billion, a -24 % decrease year-over-year and a -6 % decrease sequentially.

•

Volume: It decreased -6 % year-over-year but increased +1% sequentially (+3% excluding merchant hydrocarbon energy sales).

•

Local price: Declined -18% year-over-year and -7% sequentially, mainly due to lower feedstock and energy costs.

•

Equity losses: -$7 million, improved from -$58 million in the previous year and -$57 million in the prior quarter.

•

GAAP net income: $327 million.

•

Operating EBIT: $626 million, down from $1.2 billion in the previous year, primarily due to lower local prices. Sequentially, Op. EBIT decreased by $259 million.

•

Cash provided by operating activities – continuing operations: $1.7 billion, down -$282 million year-over-year, but up +$311 million QoQ. Achieved cash flow conversion of 103% on a trailing 12-month basis.

•

Returns to shareholders: Totaling $617 million in the quarter, including $492 million in dividends and $125 million in share repurchases.

Bill Cara: Cracking the Maverick Code

December 2023

102

2Q2023 (June) •

In Q2 of 2023, Dow Inc. reported unfavorable results, with a 27% decline in top-line revenue compared to the previous year.

•

This decline was attributed to lower demand and prices across all operating segments, driven by slower macroeconomic activity.

•

The Packaging and Specialty Plastics segment was affected by lower polyethylene prices, reduced input costs, and decreased sales in olefin and aromatics.

•

The Industrial Intermediates and Infrastructure segment experienced reduced demand for consumer durables, building and construction products, and industrial applications.

•

Despite increased demand for building and construction products and electronics, the Performance Materials & Coatings segment faced challenges due to price declines in siloxanes and acrylic monomers.

•

Earnings per share for the quarter were $0.75, significantly lower than the prior year.

•

Dow is expected to face ongoing challenges, with a significant pullback in sales and earnings for 2023.

•

However, the company's aggressive cost-cutting measures are expected to lead to improved earnings in the future.

•

Dow's competitive advantages include feedstock flexibility, global scale, and geographic diversity.

•

While Dow remains vulnerable to global economic weakness, its stock is predicted to track the broader market averages in the short term.

1Q2023 (March) •

Dow Inc. shares have experienced recent price declines.

•

Unfavorable financial results were reported for the March quarter, and this trend is expected to continue in the June quarter.

•

Macroeconomic weaknesses are anticipated to impact all of Dow's operating segments.

•

The company's cost-cutting efforts, aiming for $1 billion in savings this year, are expected to support profitability.

Bill Cara: Cracking the Maverick Code

December 2023

103

•

A moderate decline in top-line revenue and significantly lower earnings per share for 2023 are foreseen.

•

Long-term prospects are more positive, as industry fundamentals remain strong, and Dow is well positioned in the chemicals sector.

•

Demand in Dow's markets is expected to improve despite potential challenges as the broader economy recovers.

•

Competitive advantages for Dow include global scale, feedstock flexibility, geographic diversity, and cost control measures.

•

The company has collaborated to develop renewable plastic and sustainable finishing materials for automotive and upholstery industries.

DOW 3-to-5-year Value Line Operational and Financial Outlook: •

In the long term, the shares offer potential for worthwhile mid-range Dow 30 Total Returns, supported by a generous dividend yield. This makes them attractive to income-seeking investors in the chemicals sector.

Noteworthy Strategic Developments: FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=DOW

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December 2023

104

Company SWOT Analysis Internal Strengths •

Diverse Portfolio: Dow spans specialty chemicals, advanced materials, AgroSciences, and plastics.

•

Global Reach: Operates in 160+ countries, offering tech-based solutions globally.

•

Vertical Integration: Controls manufacturing stages globally.

•

Strategic Collaborations: Engages in ventures to boost product range.

•

Global Workforce: Employs 40,000+ worldwide.

•

Innovation Track Record: Successful history of product innovation.

•

Market Expansion: Proficient in entering and succeeding in new markets.

•

Supply Chain Resilience: A strong supplier base mitigates bottlenecks.

•

Distribution Network: Robust, reaching most potential markets.

Internal Weaknesses •

Supplier Reliance Risk: Overreliance on suppliers increases vulnerability.

•

Legal Challenges: Legal issues and lawsuits impact brand and finances.

•

Credibility Damage: Espionage allegations harm credibility, requiring tech investments.

•

Attrition Impact: High attrition raises training costs compared to peers.

•

Product Range Gaps: Gaps provide entry points for new competitors.

•

Marketing Improvement Needed: Marketing needs enhancement for better competition.

•

Limited Diversification Success: Struggles to expand beyond the core business.

•

Culture Hindrance: Current culture limits success in diversification.

•

Restrictive Structure: Organizational structure hampers expansion possibilities.

•

Financial Inefficiency: Inefficient financial planning and cash utilization.

External Opportunities: •

Polyolefin Films Expansion: Expand capacity for polyolefin encapsulate films.

•

Global Innovation Leadership: Leverage global leadership in innovation.

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December 2023

105

•

Renewable Energy Demand: Meet increased demand for renewable energy and agricultural productivity.

•

Asset Divestment for Value Creation: Accelerate value creation through non-core asset divestment.

•

Government Agreements for Market Opportunities: Seize market opportunities from government agreements and tech standards.

•

Stale Cash Flow for Investment: Utilize stable free cash flow for investments in new technologies.

•

Competitive Dilution through Market Development: Dilute competitors' advantages via market development.

Threats •

Revenue decline and sensitivity to weakening economic conditions.

•

Environmental compliance costs impacting margins.

•

Intense competition and potential lawsuits in various markets.

•

Rising raw material costs affect profitability.

•

The threat of new technologies from competitors or disruptors.

•

New environmental regulations under the Paris Agreement.

•

Exposure to currency fluctuations and volatile political climates.

•

Rising wage levels and increasing prices in China.

•

Liability laws vary in different countries.

•

Changing consumer buying behavior from online channels impacts the supply chain model.

Bill Cara: Cracking the Maverick Code

December 2023

106

Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=DOW

Bill Cara: Cracking the Maverick Code

December 2023

107

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=DOW,P

Bill Cara: Cracking the Maverick Code

December 2023

108

GOLDMAN SACHS (GS) QUARTERLY MAVERICK REPORT December 24, 2023 $380.65 Goldman Sachs Business Description: Goldman Sachs Group, Inc. is a leading global investment banking, securities, and investment management firm. The company provides clients with a wide range of financial services. GS Maverick Guidance: •

Short-term recommendation: 20231215: CAUTIONARY BUY. Long Tail up (extended action) in mid-Dec. Ignore Wall Street excessive bullishness.

•

Long-term recommendation: BUY in Accumulation Zone.

•

Faces short-term growth, profitability, and cash flow challenges.

•

Although caution is advised, Goldman Sachs deserves to be in Moderately Aggressive Portfolios, particularly if interested in income.

GS Consideration for Maverick Portfolio: Here are the two portfolios and their corresponding attributes for GS inclusion: #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential • Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains • Willing to take above-average risk for substantial long-term gains. GS Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings— MarketBeat= MODERATE BUY, TipRanks= MODERATE BUY

•

Consensus: 16 Wall Street analysts have offered 12-month price targets in

the last 3 months. There are 11 Buy, 5 Hold, and zero Sell. Based on 16 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $388.87, with a high forecast of $468 and a low forecast of $315. The average price target represents a +2.2% change from the recent price of $380.65. •

Dividend Yield: $2.75 per share paid quarterly to yield 2.7%. Dividend growth for 15+ years.

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•

Technical Sentiment (Technical Indicators and Moving Averages): o

Investing.com= Daily (STRONG BUY)

Weekly (STRONG BUY)

TipRanks=

Weekly (BUY)

Daily (BUY)

GS Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety:

2 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

4 of 5

•

Beta:

1.20

•

Stock’s Price Stability:

75/100

•

Price Growth Persistence:

55/100

•

Earnings Predictability:

50/100

•

Average Annual PE:

11.0

•

Current PE:

17.0

•

Average Annual Sales Growth in the past 5 years:

+8.0%

•

Average Annual Sales Growth for the next 5 years:

+8.0%%

•

Average Annual Earnings Growth in the past 5 years:

+10.0%

•

Average Annual Earnings Growth for the next 5 years:

+1.0%

•

Average Annual Dividend Growth in the past 5 years:

+7.5%

•

Average Annual Dividend Growth next 5 years:

+14.5%

•

Average Annual Dividend Yield 3 to 5 years:

+3.2%

•

Current dividend yield:

+3.07%

GS Financial Performance: •

•

EPS: •

2020:

$30.47

•

2021:

$59.45

•

2022:

$30.06

•

2023:

e$26.00

•

2024:

e$35.00

•

Current PE:

17.02

•

Forward PE:

10.16

•

PEG Ratio:

1.77

PE:

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•

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $176.35

End price/share:

$381.61

o Starting shares: 56.71

Ending shares:

68.34

o Dividends reinvested/share: $48.60 o Total Return: 160.81%

Average Annual TR:

10.06%

o Starting: $10,000.00

Ending investment:

$26,086.10

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): Q3 Quarter-ending September 2023 •

Net Revenues: $11.82 billion (3Q23), $34.94 billion (YTD)

•

Net Earnings: $2.06 billion (3Q23), $6.51 billion (YTD)

•

EPS: $5.47 (3Q23), $17.39 (YTD)

•

Global Banking & Markets: $8.01 billion in net revenues

•

Asset & Wealth Management: $3.23 billion in net revenues, with assets under supervision at $2.68 trillion

•

Platform Solutions: $578 million in net revenues, a 53% increase from the prior year

•

Book Value per Common Share: Increased by 1.5% during the quarter and 3.4% during the first nine months of 2023 to $313.83

•

Strategic Goals: Announced agreements to sell GreenSky and Personal Financial Management

Q2 Quarter-ending June 2023 •

Goldman Sachs faced mixed results in the first half of the year.

•

Earnings experienced a significant year-over-year decline.

•

Revenues, bolstered by interest income, showed strong growth.

•

The share net plummeted by 60% during the June quarter.

•

Revenues surged nearly 74% compared to 2022 figures (excluding interest income, the top line fell by 9%).

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Q1 Quarter-ending March 2023 •

Goldman Sachs faced challenges as its stock declined amidst turmoil in the banking and financial sectors.

•

The stock trailed broader market averages, facing concerns about its performance in a tough macroeconomic environment.

•

Earnings per share fell by 18% in the March quarter, driven by rising operating expenses and market difficulties.

•

Revenues increased by 77% year-over-year, including interest income from the rising interest rate environment (excluding this income, revenues were down 6%).

•

The company implemented strategic business improvements, including selling part of its Marcus loan portfolio, with plans to divest the remainder of its consumer banking business.

Quarter-ending December 2022 •

The banking and financial services sectors, including Goldman Sachs, were impacted by the turmoil in the lending industry.

•

Bank stocks faced pressure in mid-March following the failures of several lenders.

•

Fears of wider sector problems arose when UBS acquired Credit Suisse.

•

President Biden, the Federal Reserve, and the FDIC provided support to ease anxiety.

•

Near-term forecasts were revised, with revenues reaching $68.71 billion in 2022 (excluding interest expense), while earnings per share dropped due to increased interest expenses.

•

2023 estimates were adjusted to $50.00 billion in revenues and $33.50 in earnings per share.

•

The threat of continued volatility remains, but Goldman Sachs shares offer decent risk-adjusted upside potential in the intermediate and long term.

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GS 3-to-5-year Value Line Operational and Financial Outlook: •

Revenue Growth Potential:+8.0%

•

Earnings Growth Potential:+1.5%

•

Dividend Growth Potential:+14.5%

Noteworthy Strategic Developments Goldman Sachs has made strategic business improvements, including selling parts of its Marcus loan portfolio, and divesting its consumer banking business. These moves align with a renewed focus on core Asset Management and Global Banking and Markets operations, which should help the company withstand difficult macroeconomic and operating conditions. FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=GS

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GS SWOT Analysis: Internal Strengths •

Global Presence: •

Operates in major financial centers worldwide with 60% of net revenue in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa.

•

Serves a diverse client base including corporations, financial institutions, governments, and individuals.

•

Diversified Business Model: •

Revenue streams from investment banking, trading, asset management, and wealth management provide stability and resilience against market fluctuations.

•

Brand and Reputation: •

Over 150 years of building a strong brand and reputation.

•

Competitive advantage attracting clients and employees, facilitating access to capital and liquidity.

Internal Weaknesses: •

•

High Operational Costs: •

Driven by substantial compensation and benefits expenses.

•

Especially impactful during periods of lower revenue.

Legal and Regulatory Issues: •

Challenges in a highly regulated industry have resulted in penalties, reputation damage, and reduced investor confidence.

External Opportunities: •

Digital Transformation: •

Significant growth potential in the rising popularity of digital financial services.

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•

Expansion in Asset and Wealth Management: •

Focus on expanding the asset and wealth management business.

•

Offers higher and more stable returns compared to traditional activities.

External Threats: •

Regulatory Changes: •

Extensive industry regulation with potential impacts on operations and profitability.

•

Changes, such as increased capital requirements, can limit risktaking.

•

Geopolitical Uncertainties: •

Global operations expose the company to geopolitical uncertainties.

•

Risks include political instability, trade disputes, and changes in economic policies.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=GS

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=GS,P

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HOME DEPOT (HD) QUARTERLY MAVERICK REPORT December 24, 2023, $348.59 Home Depot Business Overview: •

The Home Depot, Inc. operates a chain of 2,322 retail building supply and home improvement warehouse stores across the US, Canada, and Mexico (as of January 29, 2023). Acquired Hughes Supply in January 2006. The average store size is approximately 104,000 sq. ft. indoor plus a 24,000 sq. ft. garden center, stocking about 35,000 items. Product lines include building materials, lumber, floor/wall coverings, plumbing, heating, electrical, paint, furniture, seasonal and specialty items, hardware, and tools. Employs 471,600 and is based in Atlanta, GA.

HD Maverick Guidance: •

Short-term recommendation: 20231215: HIGH RISK BUY with Double-top breakout mid-Dec

•

Long-term portfolio recommendation: NEUTRAL. NEGATIVE IF RECESSION.

•

Stellar performance for the past decade peaked in 2023 with the January quarter (end of FY2022). Because of Fed tightening and the lower consumer savings and available funds, the FY2023 and FY2024 will be challenging, BUT profitability and cash flow indicators are strong and 2025 (post recssion) looks favorable.

•

Analyst Consensus NTM PE at 20 is too high. With FY2023 earnings of $15 and a 16 PE, the 12-month target I have is $240.

•

Home Depot is a great company that will suffer during tough economic times and higher mortgage costs for house buyers and renovators.

HD Consideration for Maverick Portfolio: •

During a normal economic backdrop, Home Depot (HD) is appropriate for any Maverick risk profile.

•

Due to the anticipated economic recession in the US, confirmed by current technical analysis, HD shares should be avoided if risk averse.

HD Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY, TipRanks= MODERATE BUY

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•

Consensus: 25 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 16 Buy, 8 Hold, and 1 Sell. Based on 25 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $333.88, with a high forecast of $387 (UP FROM $371) and a low forecast of $245. The average price target represents a -4.2% change from the last price of $348.59.

•

Dividend Yield: $2.09 per share paid quarterly to yield 2.4%. Dividend growth for over 15 years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Weekly (BUY)

Daily (BUY)

HD Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

4 of 5

•

Stock’s Price Stability:

95/100

•

Price Growth Persistence:

100/100

•

Earnings Predictability:

95/100

•

Projected Average Annual PE:

•

Current PE:

21.2

•

Average Annual Sales Growth in the past 5 years:

+12.5%

•

Average Annual Sales Growth for the next 5 years:

+6.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+16.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+6.5%

•

Average Annual Earnings Growth in the past 5 years:

+18.0%

•

Average Annual Earnings Growth for the next 5 years:

+6.5%

•

Average Annual Dividend Growth in the past 5 years:

+18.5%

•

Average Annual Dividend Growth next 5 years:

+7.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.5%

•

Current Dividend Yield:

+2.56%

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119

HD Financial Performance •

•

EPS o 2020:

$11.94

o 2021:

$15.53

o 2022:

$16.69

o 2023:

e$15.25

o 2024:

e$16.10

o Current PE:

21.23

o Forward PE:

21.22

o PEG Ratio:

2.14

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $81.64

End price/share:

$349.31

o Starting shares: 122.49

Ending shares:

154.30

o Dividends reinvested/share: $48.68 o Total Return: 438.99%

Average Annual TR:

18.34%

o Starting: $10,000.00

Ending investment:

$53,890.97

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Quarterly Report Summary (October) (Reported November 14) o Reported sales of $37.7 billion for the third quarter of fiscal 2023, a -3.1% decrease from the same period in FY2022. o Comparable US sales for 3QFY2023 decreased by -3.5%. o Net earnings for the third quarter of fiscal 2023 were $3.8 billion, or $3.81 per diluted share, beating estimates of $3.75, compared to 3QFY2022, $4.3 billion, or $4.24 per diluted share. o Fiscal 2023 guidance narrowed: •

Sales and comparable sales are expected to decline between -3 % and -4 % compared to fiscal 2022.

•

Operating margin rate is projected to be between 14.2% and 14.1%.

•

The tax rate is estimated at approximately 24.5%.

•

Interest expense of around $1.8 billion.

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•

Diluted EPS declined between -9% and -11% compared to fiscal 2022.

o Full-year guidance adjustment and the prospect of the first annual sales drop since 2009 did not prevent a premarket stock price increase. o While not optimistic, the revised guidance narrowed the worst-case scenario, potentially viewed positively given economic uncertainties. o CEO Ted Decker acknowledged continued customer engagement in smaller projects but noted pressure in big-ticket, discretionary categories. 2Q2023 Quarterly Report (July) o Sales were down 2% year-over-year in the July quarter. o Comparable store sales fell by -2 %, contrary to an expected -4 % decline. o Customers shifted to smaller ticket items amid a slowdown in existing home sales. o Higher mortgage rates and home prices impacted home-improvement spending. o Big-ticket product sales ($1000+ items) saw a 5% decline over 12 months. o Lumber prices fell 40%, reducing sales by about -1%, but overall revenues remained healthy. o Management invested $1 billion in labor force retention and training, affecting margins. o Earnings were $0.20 per share, surpassing forecasts in the July period. o Expansion potential with an addressable market of $950 billion annually. o Approved an additional $15 billion share repurchase, retiring over 20 million this year. o The housing shortage in the US is expected to support long-term results, but I anticipate the first annual sales decline over a decade due to economic uncertainty. o Suggested waiting for a better entry point before initiating new positions. o The highest Safety ranking and above-average dividend yield make it attractive on a risk-adjusted basis. Bill Cara: Cracking the Maverick Code

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1Q2023 Quarterly Report (April) o Home Depot is expected to report declining sales for fiscal 2023, breaking a decade-long trend. Sales are projected to fall -3.5% in 2023. o Comparable-store sales in the first quarter decreased by -4.5%, leading to a -4.2% reduction in overall sales. o Sales declined despite an inflationary environment that boosted overall prices. o Do It Yourself (DIY) and Professional divisions experienced declines YoY. o Factors contributing to the sales weakness included adverse weather on the West Coast, declining lumber prices, and economic uncertainty. o Softness initiated in big-ticket items like patios and appliances, spreading to other segments. o Residential construction business and remodeling spending stalled due to a sharp rise in mortgage rates, impacting home sales. o Management is investing $1 billion in workforce wages to attract and retain trained employees. o Higher wages are impacting the bottom line amid sales softness, leading to an expected nearly 10% drop in earnings per share to $15.05 from 2022. o Neutrally ranked Home Depot shares are holding up well despite an anticipated earnings decline. o A large share repurchase program, above-average dividend yield, and a healthy balance sheet support the stock. o Total Return potential over the next 3 to 5 years is below average. o A general housing shortage could position Home Depot well once mortgage rates decline, but earnings per share may not exceed 2022 record results until 2025. o Continued inflation, lower disposable income, and an uncertain economic outlook might offer a better entry point for investors before operational improvement. Bill Cara: Cracking the Maverick Code

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4Q2022 Quarterly Report (January) o Home Depot shares have faced pressure since the last report, declining by 15% due to a slightly softer fiscal 2022 earnings report. o Management's announcement of rising employee wages impacting profit growth in the coming year contributed to the share decline. o Efforts to increase compensation for hourly workers and place additional managers on store floors to enhance customer experiences will cost $1.0 billion in 2023, reducing profits by about -$0.70 per share after taxes. o Full-year earnings are expected to decline by 5%, contrary to the previous forecast of +4% growth. o Anemic sales trends are likely to persist, with same-store sales increasing by 0.3% year-over-year in the January quarter. o Average tickets rose by +5.8% to $90 per store visit, but visits dropped -6%. o Higher mortgage rates slow home sales and related preparation and remodeling. o Economic growth is slow and uncertain, contributing to ongoing sales challenges. o Anticipated flat overall revenues for the full year 2023. o Despite a modest bottom-line decline, profits are expected to remain healthy. o On a risk-adjusted basis, long-term investors are advised to continue holding the stock. o There is a housing shortage in the US, and as inflation is controlled, the potential for the Federal Reserve to reduce interest rates benefits the company. o An above-average dividend yield is expected to support the shares. HD 3-to-5-year Operational and Financial Outlook: •

Longer-term capital appreciation potential over the next 3 to 5 years is modestly below average.

•

Concerns over continued growth in revenue and earnings.

HD FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=HD Bill Cara: Cracking the Maverick Code

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HD SWOT Analysis: Internal Strengths 1. Market Leadership: As the largest home improvement retailer, Home Depot benefits from economies of scale, competitive defense, and market dominance. 2. Consistent Profitability: The company's sustained increase in net income margin underscores strong profitability, supporting financial resource accumulation. 3. Value-Centric Approach: Home Depot's commitment to competitive pricing, including a price-matching program, emphasizes value for customers. 4. Diverse Product Range: Offering a wide array of home improvement products under one roof, from tools to construction materials, enhances customer convenience. 5. Excellent Customer Service Culture: Focusing on excellent customer service and employee recognition contributes to an enhanced shopping experience. 6. Effective BOPIS Strategy: Home Depot's efficient Buy Online, Pick Up In Store (BOPIS) strategy contributes to profitability and growth. 7. Employee-Friendly Policies: Employee-focused policies, such as college fee assistance, contribute to retaining high-performing employees. 8. Loyal Customer Base: A customer-centric approach has built a loyal customer base, fostering repeat visits. 9. Eco-friendly Initiatives: The ECO Program provides environmentally friendly options, appealing to eco-conscious consumers. 10. Strong Brand Value: Home Depot's emphasis on brand-building has resulted in being ranked as the 32nd most valuable brand globally. Internal Weaknesses 1. Limited Geographical Diversification: Overreliance on the US and Canada poses a weakness as these markets approach maturity. Bill Cara: Cracking the Maverick Code

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2. International Expansion Gap: Limited international presence, primarily in Mexico, represents a missed expansion opportunity. 3. Infrastructure Challenges: Aging infrastructure poses challenges, impacting digital transformation efforts. 4. Late eCommerce Adoption: Delayed entry into eCommerce, compared to competitors, represents a missed growth opportunity. External Opportunities 1. Global Expansion: Explore growth opportunities in emerging markets like India and China for expanded market reach. 2. Boost Online Sales: Increase the current 6% share of online sales, aiming for industry-average levels (10%) to enhance competitiveness. 3. Strategic Partnerships: Establish partnerships with local home improvement retailers to facilitate entry into emerging markets. 4. Acquisitions for Growth: Consider acquiring struggling brands, such as Bed, Bath & Beyond, to enter new market segments and help growth. 5. Diversify Offerings: Venture into furnishing and interior design solutions to provide comprehensive home décor and furnishing options. External Threats 1. Intense Competition: Significant competition from Lowe's and Amazon challenges market share, necessitating strategic responses. 2. Economic Downturn Risks: Potential economic challenges and a postpandemic recession may impact major construction and home improvement projects, affecting year-over-year profit growth. 3. Price Deflation Impact: Significant drops in lumber prices (18% of total revenue) impact overall performance and meeting financial expectations. 4. Labor Strikes Possibility: Recent demands for a 20% pay. Strengthening employee bargaining power, particularly under the USMCA, increases the risk of strikes, potentially disrupting operations.

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10-Year Historical Price Chart: https://stockcharts.com/h-sc/ui?s=HD

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Point & Figure Chart:

https://stockcharts.com/freecharts/pnf.php?c=HD,P

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HONEYWELL (HON) QUARTERLY MAVERICK REPORT December 24, 2023: $205.64 Honeywell Business Description: Honeywell International Inc. is a US-based multinational conglomerate that operates in several sectors: 1. Aerospace: Honeywell’s Aerospace segment offers various aircraft engines, integrated avionics, systems, and services for various aviation sectors, including aircraft manufacturers, airlines, military, and space. They also serve airport operations. 2. Home and Building Technologies (HBT): HBT provides products, software, and technologies for homeowners and building owners. Their offerings include HVAC control, security, and fire safety products. 3. Performance Materials and Technologies (PMT): PMT specializes in advanced materials, process technologies, and automation solutions. They offer petrochemicals, refining, gas processing, hydrogen, and automation control solutions across various industries such as oil and gas, pulp and paper, power generation, and more. 4. Safety and Productivity Solutions (SPS): SPS delivers products, software, and connected solutions that enhance productivity, workplace safety, and asset performance. They cater to a wide range of markets, including aerospace, automotive, healthcare, manufacturing, and transportation. HON Maverick Guidance: NOTE FREQUENT CHANGES •

Short-term: 20231215: HIGH RISK BUY. BEARISHNESS REVERSED TO START NOV. IN A NEW BULL PHASE. CURRENT VALUATION SUGGESTS CAUTION.

•

Long-term: ALTHOUGH I LIKE THE STABILITY, I AM NEUTRAL MAVERICKS SHOULD MONITOR TOP-LINE GROWTH FOR SIGNS OF SUSTAINED DECELERATION.

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•

Some earnings were negatively impacted by exiting the Russian market and a decline in the safety and productivity arm.

•

The company anticipates improvements in 2024, particularly in areas like automation and performance materials. More recurring sales are expected, which is favorable in this investment climate.

HON Consideration for a Maverick Portfolio: There are three portfolios appropriate for Honeywell (HON). Here are the three portfolios and their corresponding attributes: #2. Cautious Growth (Risk Profile Score=16-21): Seeking Modest Returns Accepting low-to-moderate risk for modest medium-term returns. #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains Willing to take above-average risk for substantial long-term gains. HON Market Guidance: •

Analyst Ratings: MarketBeat= HOLD, TipRanks= MODERATE BUY

•

Consensus: 13 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 9 Buy, 3 Hold, and 1 Sell. Based on 13 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $217.62, with a high forecast of $250 (DOWN FROM $265) and a low forecast of $175. The average price target represents a +5.8% change from the recent price of $205.64.

•

Dividend Yield: $1.08 per share paid quarterly to yield 2.03%. Dividend growth for over 5 years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks =

Weekly (BUY)

Daily (BUY)

HON Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

4 of 5

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A++

129

•

Stock’s Price Stability:

95/100

•

Price Growth Persistence:

100/100

•

Earnings Predictability:

95/100

•

Projected Average Annual PE:

•

Current PE:

21.2

•

Average Annual Sales Growth in the past 5 years:

+12.5%

•

Average Annual Sales Growth for the next 5 years:

+6.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+16.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+6.5%

•

Average Annual Earnings Growth in the past 5 years:

+18.0%

•

Average Annual Earnings Growth for the next 5 years:

+6.5%

•

Average Annual Dividend Growth in the past 5 years:

+18.5%

•

Average Annual Dividend Growth next 5 years:

+7.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.5%

•

Current Dividend Yield:

+2.56%

HON Financial Performance •

•

EPS o 2020:

$7.10

o 2021:

$8.05

o 2022:

$8.78

o 2023:

e$9.15

o 2024:

e$10.10

o Current PE:

24.79

o Forward PE:

20.07

o PEG Ratio:

3.31

PE:

10-Year AATR: • • • • • •

Start date: 12/27/2013 End date: Start price/share: $86.89 End price/share: Starting shares: 115.09 Ending shares: Dividends reinvested/share: $30.66 Total Return: 194.01% Average Annual TR: Starting: $10,000.00 Ending investment:

Bill Cara: Cracking the Maverick Code

December 2023

12/26/2023 $208.04 141.32 11.38% $29,390.05 130

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Report (reported October 16): •

Sales: $9.2 billion, reported sales up 3%, organic sales up 2%.

•

Orders: Up 10%, backlog up 8% YoY to a record level of $31.4 billion.

•

Aerospace Sales: Up 18%, with double-digit growth in both Commercial Aviation and Defense and Space.

•

Operating Margin: Up 140 basis points to 20.9%; Segment Margin up 80 basis points to 22.6%.

•

Earnings Per Share: $2.27, exceeding high end of guidance range.

•

Capital Deployment: Deployed $2.0 billion, including repurchasing 5.3 million Honeywell shares.

•

The 2023 outlook includes sales of $36 billion to $37 billion and earnings per share between $8.80 and $9.20. Value Line estimate is $9.15.

•

The company foresees improvements in 2024, particularly in the areas of automation and performance materials.

2Q2023 Report: •

Honeywell anticipates 2023 sales and earnings growth of +4%.

•

Commercial aerospace and the process solutions arm were key drivers of revenue growth in the second quarter of 2023.

•

Efficiencies in safety and protection areas helped profitability.

•

The backlog at the end of the quarter reached an all-time peak of $30.5 billion, up +2% year over year.

•

Sales for the year are expected to be just under $37 billion, with earnings per share estimated at $9.15.

•

The company made a $700 million strategic acquisition of Compressor Controls Corporation, expanding its energy transition offerings in industrial control and automation sectors.

2Q2023 Report: •

The 2024 outlook includes annual earnings growth exceeding 10%, driven by improved productivity and increased demand, pushing sales past $39 billion

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•

Sales and earnings are expected to grow by about 4% in 2023, with some upside potential if the global economy remains strong.

•

Q1 showed strength in the aerospace and performance materials units.

•

The backlog increased 6% to $30.3 billion, with aerospace significant.

•

Management provided a 2023 outlook with sales expected between $36 billion and $37 billion and the 2023 EPS estimate increased to $9.15.

4Q2022 Report: •

While some segments showed weakness in the 4Q2022, Honeywell is one of the sector’s strongest companies.

•

The company’s forward-looking estimates were adjusted down.

•

The 2023 earnings estimate was reduced to $9.05 per share.

HON 3-to-5-year Value Line Operational and Financial Outlook •

The company’s long-run outlook is cautiously optimistic, focusing on capitalizing on opportunities in areas like automation and performance materials. The Quantum Solutions arm is expected to excel, capitalizing on the expanding quantum computing market.

•

A strategic partnership with HSBC Bank and a competitive edge in quantum technology offer growth opportunities.

HON Noteworthy Strategic Developments •

On Dec. 8, Honeywell agreed to acquire the security business of Carrier Global Corp. for an enterprise value of about $5 billion, which marks the biggest deal since 2015 for the maker of jet engines and gas detectors.

•

Honeywell Aerospace is collaborating with Department of Energy on a hydrogen fuel storage system for crewless aerial vehicles. The collaboration involves testing fuel cartridge technology, fuel cell evaluation, and supply-chain support for this innovative project.

•

A succession plan was announced, with Vimal Kapur taking over as CEO from Darius Adamczyk.

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HON SWOT Analysis: Internal Strengths •

Diversified Business: Honeywell operates in various sectors, which include aerospace, home and building technologies, performance materials and technologies, and safety and productivity solutions. This diversification helps the company mitigate risks associated with any one sector.

•

Strong R&D Capabilities: Honeywell is recognized for its strong focus on research and development, creating innovative products and solutions that establish a strong market position.

•

Global Presence: With operations in over 70 countries and sales in more than 150 countries, Honeywell has a significant international footprint. This global presence allows it to serve a broad customer base and diverse markets.

•

Brand Reputation: Honeywell has a well-established brand image known for high-quality and reliable products and solutions, which enhances customer loyalty and acquisition.

•

Sustainable and Smart Solutions: Honeywell’s commitment to integrating digital technology with physical products to create smart, safe, and sustainable solutions aligns with current global trends, positioning them for future growth.

•

Strong Relationships with Stakeholders: Honeywell has developed strong relationships with its stakeholders, including customers, suppliers, and government entities. These relationships contribute to a stable supply chain and growth opportunities.

Internal Weaknesses: •

Over-reliance on Suppliers: Honeywell relies on numerous suppliers for raw materials, making its production susceptible to supply chain disruptions caused by unforeseen circumstances.

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•

Complexity in Management: Managing a diverse portfolio across various countries and sectors can lead to administrative complexity, potentially affecting organizational efficiency.

•

Impact of Economic Cycles: Certain segments, like aerospace, are subject to the cyclical nature of industries. Economic downturns can significantly affect these segments and Honeywell’s performance.

•

Regulatory Risks: Operating globally, Honeywell must comply with the laws and regulations of multiple countries. Changes in these regulations could significantly impact its operations.

•

Dependency on Government Contracts: A substantial portion of Honeywell’s revenue comes from government contracts. Government policy or budget changes, particularly in the defense sector, can impact the company’s performance.

•

Environmental Concerns: Some of Honeywell’s operations involve substances that could harm the environment. This exposes the company to environmental regulations and potential liabilities.

•

Technological Disruption: Rapid technological advancements pose a risk of obsolescence or reduced competitiveness for some of Honeywell’s products, necessitating ongoing and substantial R&D investment to stay ahead.

External Opportunities: •

Digital Transformation: Honeywell can expand its digital products and services, leveraging its expertise in integrating physical and digital technologies.

•

Sustainability and Energy Efficiency: Increasing demand for energy-efficient and environmentally friendly products aligns with Honeywell’s building technologies and performance materials offerings.

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•

Emerging Markets: Growing middle-class populations in emerging markets offer opportunities for Honeywell’s home, building technologies, and other products and services.

•

Industrial Automation and IoT: The automation and IoT trend helps prospects in the safety and productivity solutions segment.

•

Aerospace Recovery: As the aerospace industry rebounds postCOVID-19, Honeywell’s aerospace segment stands to benefit.

•

Government Spending on Infrastructure and Defense: Increased government spending in infrastructure and defense sectors presents opportunities for Honeywell’s diverse portfolio.

Threats: •

Economic Uncertainty: Global economic instability, especially during events like the COVID-19 pandemic, can impact Honeywell’s business across segments.

•

Regulatory Changes: Compliance with various regulations in different countries and industries is critical, as changes or noncompliance can have severe consequences.

•

Competitive Pressure: Intense market competition may result in price pressures, potential market share loss, or the need for increased investment in technology and innovation.

•

Supply Chain Disruptions: Disruptions in global supply chains can affect the availability of raw materials and components for their products, stemming from political, trade, or environmental factors.

•

Technological Disruption: Rapid technological advances may render Honeywell’s products or services obsolete, necessitating continuous innovation to remain competitive.

•

Environmental and Climate Risks: Honeywell’s operations face environmental risks, and a heightened focus on sustainability and climate change impacts could lead to stricter regulations and increased operational costs.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=HON

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=HON,P

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IBM (IBM) QUARTERLY MAVERICK REPORT December 24, 2023, $162.14 IBM Business Description: •

IBM is an information technology company offering integrated solutions that leverage IT and business process knowledge. It operates through segments including Software, Consulting, Infrastructure, Financing, and Others. The Software segment focuses on hybrid cloud and software solutions. The Consulting segment integrates strategy, experience, technology, and operations. The Infrastructure segment provides hybrid cloud solutions optimized for AI integration. The Financing segment facilitates client and commercial financing for IT acquisitions. IBM was founded in 1911 and is headquartered in Armonk, NY.

IBM Maverick Guidance: •

Short-term recommendation: 20231215: BUY. ASCENDING TRIPLE-TOP BREAKOUT NOV 13.

•

Long-term recommendation: CAUTIOUS BUY for high dividend yield. Long-term trend is up 3 years now due to strong profitability and improved financial performance. But Mavericks need to focus on longterm market growth and the current high valuation.

•

If primarily interested in dividend income, IBM is a LT BUY. Otherwise, IBM is lacking in shareholder value and not a suitable portfolio selection as the 10-year Average Annual Total Return is a dismal Dow 30 4th Quartile.

IBM Consideration for Maverick Portfolio: X = Not appropriate for Maverick investors, but presently under review. IBM Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= HOLD,

TipRanks= MODERATE BUY

•

Consensus: 8 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 3 Buy, 5 Hold, and zero Sell. Based on 8 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $156.71, with a high forecast of

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$179.00 and a low forecast of $130.00. The average price target represents a -3.4% change from the recent price of $162.14. •

Dividend Yield: $1.66 per share paid quarterly to yield 4.09%. Dividend growth for over 15 years.

•

Technical Sentiment (from Technical Indicators and Moving Averages): o Investing.com= Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Weekly (BUY)

Daily (BUY)

Value Line Guidance: •

Company Financial Strength Rating:

B++

•

Share Price Safety:

3 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

3 of 5

•

Stock’s Price Stability:

90/100

•

Price Growth Persistence:

5/100

•

Earnings Predictability:

85/100

•

Average Annual PE:

14.0

•

Current PE:

21.7

•

Average Annual Sales Growth in the past 5 years:

-3.5%

•

Average Annual Sales Growth for the next 5 years:

Nil

•

Average Annual Cash Flow Growth in the past 5 years:

-2.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+2.0%

•

Average Annual Earnings Growth in the past 5 years:

-7.0%

•

Average Annual Earnings Growth for the next 5 years:

+3.5%

•

Average Annual Dividend Growth in the past 5 years:

+1.5%

•

Average Annual Dividend Growth next 5 years:

+3.5%

•

Average Annual Dividend Yield 3 to 5 years:

+1.5%

Financial Performance: •

EPS: o 2020:

$8.67

o 2021:

$9.97

o 2022:

$9.13

o 2023:

e$9.55

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•

o 2024:

e$10.10

o Current:

21.65

o Forward PE:

16.37

o PEG Ratio:

7.73

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $176.94

End price/share:

$163.21

o Starting shares: 56.52

Ending shares:

86.09

o Dividends reinvested/share: $57.60 o Total Return: 40.50%

Average Annual TR:

3.46%

o Starting: $10,000.00

Ending investment:

$14,052.88

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 (September Quarter) (Oct. 25 release) IBM reported its 3Q2023 earnings with the following key highlights: •

Revenue of $14.8 billion is up +4.6% (3.5% at constant currency).

•

EPS (GAAP) $1.86, Non-GAAP $2.20

•

Software revenue is up +8%, up +6% at constant currency.

•

Consulting revenue is up +6%, up +5% at constant currency.

•

Infrastructure revenue is down -2%, down 3% at constant currency.

•

Gross Profit Margin: GAAP 54.4% is up +1.7 points; Operating (Non-GAAP) 55.5%, up +1.6 points.

•

Pre-Tax Income Margin: GAAP 12.7% is up +44.6 points; Operating (NonGAAP) 15.6%, up +1.7 points.

•

Year-to-date net cash from operating activities of $9.5 billion is up +$3.0 billion; free cash flow of $5.1 billion, up +$1.0 billion.

Segment Results for the Third Quarter: •

Software revenues of $6.3 billion, up +7.8% (+6.3% at constant currency).

•

Consulting revenues of $5.0 billion, up +5.6% (+5.0% constant currency).

•

$3.3 billion Infrastructure rev., down -2.4% (-3.2% constant currency).

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IBM's full-year 2023 expectations include: •

Constant currency revenue growth of 3-5%, with currency expected to be about a one-point headwind.

•

Free cash flow of about $10.5 billion, up more than +$1 billion year to year.

2Q2023 (June) •

Revenues were $15.48 billion, slightly below the previous year.

•

Positive results from the Software and Consulting segments, driven by hybrid cloud and AI capabilities.

•

Weak performance in the Infrastructure division due to product cycle dynamics and tough comparisons.

•

Share earnings of $2.18, a 6% decrease due to increased labor costs and lower volumes, partially offset by favorable pricing and productivity initiatives.

•

Anticipated solid top-and bottom-line growth for the year, with expected constant currency revenue growth between 3% and 5%.

•

Plans to improve margins through better portfolio mix, productivity initiatives, and price increases to offset inflationary pressures.

•

Recent acquisitions to bolster the hybrid cloud and AI strategy.

•

Expected 5% growth in share earnings for the year.

•

While IBM shares are projected to track market averages in the short term, the stock is expected to offer limited price appreciation potential over the 3- to 5-year period. Nonetheless, its 4.5% dividend yield could attract income-seeking investors.

1Q2023 (March) •

Slight revenue growth compared to the previous year, with a 4% increase excluding the impact of unfavorable foreign exchange rates.

•

Strong performance from the Software and Consulting segments is driven by demand for hybrid platforms, transaction processing, and data and customer experience transformation projects.

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•

Decline in sales from the Infrastructure segment due to weaker demand for infrastructure support.

•

Share earnings of $1.36, slightly below the previous year, attributed to the impact of unfavorable foreign exchange rates despite a favorable product mix.

•

Revised top-line estimate for 2023 to $62.3 billion and maintained bottom-line estimate at $9.40 per share.

•

Expected constant currency revenue growth between 3% and 5% for the year.

•

I anticipated good results from the software group, including contributions from Red Hat and decent growth from the consulting segment driven by application operations and business transformation services.

•

Predicted widening margins for the year due to increased revenues, a favorable product mix, higher sales prices, and ongoing productivity improvement initiatives.

•

IBM shares are projected to trail the broader market averages in the short term, with a dividend yield of 4.9% that could attract incomeseeking investors. However, over the 3- to 5-year period, the stock is expected to offer limited price appreciation potential.

IBM 3-to-5-year Value Line Operational and Financial Outlook: • The outlook indicates continued slow growth in revenue and earnings. •

The company's long-run outlook is cautiously optimistic.

IBM Noteworthy Strategic Developments: • In December, IBM and Meta (Facebook) launched AI Alliance to focus on collaborative open-source AI research and development with nearly 50 other organizations; partners include Intel, Oracle, NASA, and others.

IBM FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=IBM

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IBM SWOT Analysis Internal Strengths: •

Pioneer of cloud technologies, including the Blue Cloud program.

•

Strong brand reputation and value.

•

Diversified businesses across various divisions.

•

Geographical diversification in revenue generation.

•

Interrelated products for effective up-selling.

•

Consistent investment in research and development.

Internal Weaknesses: •

The main focus is on product customization for large and medium enterprises.

•

Generic products with low barriers to entry.

•

Declining popularity and brand value.

•

Stiff competition from industry leaders.

•

Legal challenges impacting reputation.

•

Expensive solutions are limiting affordability.

External Opportunities: •

Expand software divisions for higher profitability.

•

Leverage growing demand for cloud services.

•

Capitalize on accelerated digital transformation.

•

Pursue more expansions and acquisitions.

•

Focus on consultancy services expansion.

•

Seize opportunities for technological advancements.

•

Interpret market trends and consumer behavior.

External Threats: •

Intense competition in the cloud computing market.

•

Potential impact of a slowing global economy.

•

Heightened competition from industry leaders.

•

Negative effects of the COVID-19 pandemic.

•

Risks associated with currency fluctuations and changing economic policies.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=IBM

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=IBM,P

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Intel (INTC) QUARTERLY MAVERICK REPORT December 24, 2023, $48.00 Intel Business Description: Intel Corp. is a computer product and technology company known for designing, manufacturing, and selling computers, networking, data storage, and communication platforms. It leads manufacturing microprocessors, the central unit of many types of computers. The company operates: •

Client Computing Group (CCG): Typically largest revenue generator and focuses on processors/platforms for laptops, desktops, and tablets.

•

Data Center and AI (DCAI): Hardware and software solutions for data centers, including powerful processors and chips optimized for enterprise-level tasks, cloud computing, and network infrastructure.

•

Programmable Solutions Group (PSG): Specializes in fieldprogrammable gate arrays (FPGAs), which are chips that can be programmed for specific tasks post-manufacturing.

•

Network and Edge (NEX): Computing system solutions from fixedfunction hardware to programmable hardware for cloud software.

•

Accelerated Computing Systems and Graphics (AXG): Offers CPUs and GPUs for high-performance computing, gaming, and AI workloads.

•

Mobileye: For driving assistance and self-driving solutions.

INTC Maverick Guidance: •

Short-term recommendation: 20231215: ACCUMULATE ON WEAKNESS after Oct 23 P&F Double Bottom Breakdown Pattern, 2023 was followed by the DOUBLE-TOP BREAKOUT DEC 11

•

Long-term portfolio recommendation: LT trend is up. CAUTIOUS BUY, but market barely holds long-term technical support, and analysts differ widely in their expectations for the company’s future.

•

We expect earnings are going to improve going forward: o 3rd quarter earnings (Oct. 26 report) +$0.41 (Beat by +$0.20) o 4th Quarter earnings are estimated to be $0.33 vs. $0.10 in the same quarter a year ago, so look for improving operations.

•

Despite earnings surprises, sustaining profitability and growth is hard.

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INTC Consideration for Maverick Portfolio: •

Intel (INTC) is appropriate for a risk profile score of 22-29. The Moderate Investor seeks to balance caution and ambition, aiming for reasonable growth while managing risk. The Maverick #3 MODERATE GROWTH portfolio is designed to maintain a stable yet potentially rewarding financial strategy by including a mix of conservative and moderately aggressive Dow 30 stocks.

•

Also appropriate for a risk profile score of 30-35. The Moderately Aggressive Investor is willing to take on higher risk for the potential of higher returns. The Maverick #4 DYNAMIC GROWTH portfolio includes a higher allocation of high-growth-oriented Dow 30 stocks to align with this risk-tolerant approach.

INTC Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= HOLD

TipRanks =HOLD.

•

Consensus: 28 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 5 Buy, 20 Hold, and 3 Sell. Based on 28 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $40.42, with a high forecast of $68 (UP FROM $56) and a low forecast of $17.00. The average price target represents a -15.8% change from the last close at $48.00.

•

Dividend Yield: $0.13 per share paid quarterly to yield 1.54%. Dividend growth has been established only for 6 months and is dubious.

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Daily (BUY)

Weekly (BUY)

INTC Value Line Guidance: •

Company Financial Strength Rating:

A+

•

Share Price Safety:

2 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

5 of 5

•

Beta:

0.90

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•

Stock’s Price Stability:

70/100

•

Price Growth Persistence:

50/100

•

Earnings Predictability:

45/100

•

Average Annual PE:

12.0

•

Current PE:

21.7

•

Average Annual Sales Growth in the past 5 years:

+7.5%

•

Average Annual Sales Growth for the next 5 years:

NMF

•

Average Annual Cash Flow Growth in the past 5 years:

+10.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+1.0%

•

Average Annual Earnings Growth in the past 5 years:

+8.00%

•

Average Annual Earnings Growth for the next 5 years:

NMF

•

Average Annual Dividend Growth in the past 5 years:

+6.0%

•

Average Annual Dividend Growth next 5 years:

+1.5%

•

Average Annual Dividend Yield 3 to 5 years:

+3.1%

•

Current Dividend Yield:

+1.78%

INTC Financial Performance: •

•

EPS: o 2020:

$5.31

o 2021:

$5.47

o 2022:

$1.85

o 2023:

e$0.60

o 2024:

e$1.75

o Current PE:

---

o Forward PE:

23.33

o PEG Ratio:

---

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

o Start price/share: $25.60

End price/share: $50.50

o Starting shares: 390.62

Ending shares: 518.35

o Dividends reinvested/share:

$11.35

o Total Return: 161.77%

Average Annual Return: 10.10%

o Starting: $10,000.00

Ending investment: $26,181.09

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Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 September •

Revenue of $14.2 billion, down 8% year over year (YoY).

•

EPS attributable to Intel was $0.07; non-GAAP EPS attributable to Intel was $0.41.

•

Fourth-quarter revenue guidance of $14.6 billion to $15.6 billion, with EPS attributable to Intel of $0.23 and non-GAAP EPS attributable to Intel of $0.44.

•

Declared a quarterly dividend of $0.125 per share.

•

Intel is on track to achieve five nodes in four years and regain leadership in transistor performance and power performance by 2025.

•

Opened Fab 34 in Leixlip, Ireland, to establish a leading-edge semiconductor manufacturing value chain in Europe.

•

Shared plans to install the world’s first high-NA EUV tool.

•

Submitted major manufacturing proposals worth over $100 billion to the US Department of Commerce's CHIPS Program Office in multiple states.

•

Received a commitment from a major customer for Intel 18A and Intel 3, accelerating plans to build two new chip factories in Arizona.

•

Witnessed strong ramp of 4th Gen Intel Xeon Scalable processors, with 5th Gen Intel Xeon processors shipping to customers.

•

Launched Intel Core Ultra processors and the new Intel Core 14th Generation desktop processor family.

•

Introduced the latest OpenVINO toolkit version 2023.1, enhancing AI inferencing and deployment runtime for client and edge platforms.

•

Mobileye achieved record Q3 revenue growth and secured design wins for advanced SuperVision and Chauffeur solutions with automakers..

2Q2023 June •

Intel's stock has shown improvement recently after better-thanexpected results in the June quarter and an optimistic outlook for the current period.

•

The company posted earnings per share of $0.13, down from $0.29 in the previous year but better than anticipated.

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•

Revenues fell 15% to $12.9 billion, surpassing the target of $11.24 billion.

•

Management credited the Client Computing and Data Center units for contributing to the positive performance.

•

The company faced inventory challenges due to a slowdown in demand for personal computers post-pandemic, but inventory levels have since improved, boding well for future earnings.

•

Future sales and earnings estimates for the back half of this year and next are not as impressive as in previous years.

•

While the Intel turnaround story is promising, the current valuation does not offer a significant advantage, prompting investors to wait for clearer signs of sustained earnings recovery.

1Q2023 March •

Intel's Q1 performance brought positive signals for investors after several disappointing quarters.

•

Sales in the March quarter reached $11.7 billion, surpassing the estimated $11 billion, while the company lost $0.04 per share, better than the expected $0.15 deficit.

•

Inventory levels improved in the personal computer sector, contributing to the company's positive performance.

•

The outlook for the Data Center Group has improved, suggesting the potential for profitability in the latter half of the year and promising prospects for 2024.

•

Gross margins have been under pressure but are expected to improve in the remaining two quarters of the year.

•

Despite the threat of a mild recession later in the year, the reopening of China and leaner inventory across distribution channels are positive factors.

•

Earnings per share are anticipated to recover to around $4.00 by 2026-2028, showing improvement despite being lower than the pandemic-influenced record of $5.47 in 2021.

•

The shares offer the potential for price recovery over the next 3 to 5 years, although caution is advised due to the possibility of economic downturns and potential challenges ahead.

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4Q2022 December •

Intel faced challenges with sales and earnings below 4Q2021.

•

The company benefited from increased remote work during the pandemic, but Intel's results fell as people returned to the office.

•

Cost-cutting measures, including personnel reductions and focusing on domestic foundries, may result in significant savings by 2025.

•

Expected earnings for this year are $0.55 per share, significantly lower than 2022's $1.85, with some recovery anticipated next year.

•

The company's recent dividend reduction and restructuring actions aim to preserve cash and support future growth.

•

Although a recession is possible, economic conditions are expected to remain relatively stable, potentially benefiting Intel in 2024.

•

Though uncertainties persist, future earnings could rebound by 2026-2028, indicating cautious optimism.

INTC 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook for revenue and earnings is hard to forecast.

•

Over the next two to three years, Intel intends to conduct an IPO for its Programmable Solutions Group (PSG), which clouds an already doubtful outlook.

INTC Noteworthy Strategic Developments •

Intel recently announced its intent to separate its Programmable Solutions Group (PSG) operations into a standalone business. This will give PSG the autonomy and flexibility it needs to fully accelerate its growth and more effectively compete in the FPGA industry. The company may explore opportunities with private investors to accelerate the business’s growth, with Intel retaining a majority stake.

•

In Q3, Intel also agreed to sell a 10% stake in its IMS Nanofabrication business (IMS) to TSMC, valuing IMS at approximately $4.3 billion.

•

Expansion of silicon wafer manufacturing in Israel with $25 billion investment and $3.2B incentive package from Israel.

INTC FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=INTC

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Company SWOT Analysis: Internal Strengths •

Tech Innovation: History of pioneering tech with significant R&D investments.

•

Strong Brand: Globally recognized for high-quality, high-performance products.

•

Market Dominance: Over 75% market share in processors for pricing power.

•

Diverse Portfolio: Beyond processors, it offers network controllers, memory, and graphics.

•

Financial Strength: High revenue and profit margins support R&D, acquisitions, and shareholder rewards.

Internal Weaknesses •

PC Market Reliance: Heavy dependence on the declining PC market poses vulnerability to market shifts.

•

Manufacturing Setbacks: Persistent delays and quality issues impacting timely product launches, allowing rivals to gain ground.

•

Rising Competition: Intense rivalry between AMD and Nvidia with competitive alternatives in processors and graphics.

•

Mobile Market Limitations: Limited success in entering the mobile market, hindering growth in this expanding segment.

•

High R&D Costs: Substantial R&D investment, impacting profitability and posing challenges in price competition with lower-cost rivals.

External Opportunities •

New Market Expansion: AI, autonomous vehicles, and IoT offer promising revenue prospects.

•

Technology Development: Investments in advanced manufacturing, 5G, and quantum computing for market disruption.

•

Strategic Acquisitions: Utilizing financial strength for acquisitions and partnerships, like the recent Mobileye acquisition.

•

Emerging Market Entry: Diversifying revenue streams by expanding presence in growing emerging markets.

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External Threats •

Rapid Tech Changes: Adapting to swiftly evolving market trends and tech preferences.

•

Customer Dependency: Reliance on key customers like PC and server manufacturers affecting revenue.

•

Geopolitical Risks: Exposure to trade disputes, sanctions, and political instability in various operating countries.

•

IP Infringement: Vulnerability to intellectual property infringements, leading to legal battles and financial losses.

•

Intense Competition: Struggle against aggressive competition from companies like AMD, Nvidia, and Qualcomm in technology development.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=INTC

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Point & Figure Chart:

https://stockcharts.com/freecharts/pnf.php?c=INTC,P

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JOHNSON&JOHNSON (JNJ) QUARTERLY MAVERICK REPORT December 24, 2023 $155.46 Johnson & Johnson Business Description: •

Johnson & Johnson is a renowned multinational pharmaceutical company founded in the early 1870s by Robert Wood Johnson. Initially, the company focused on sterile surgical dressings and later expanded into household products and medical guides. Today, J&J is one of the world's largest, ranking 36th on the 2021 Fortune 500 list and being a Dow 30 member. With operations in 60 countries and sales in 175 countries, J&J's annual sales in 2023 will be close to $100 billion.

•

J&J went public in 1944 and has consistently increased its dividend since 1962. The company employs over 142,000 individuals and serves more than 1 billion people daily, boasting an AAA credit rating, making it one of only two US corporations with such a rating and more trusted than the US government.

•

J&J operates in three segments: Pharmaceutical, Consumer Health, and MedTech, encompassing well-known brands such as Aveeno, Listerine, Tylenol, and ACUVUE contact lenses. Its mission is to "blend science and ingenuity to profoundly change the trajectory of health for humanity."

JNJ Maverick Guidance: NOTE FREQUENT CHANGES •

Short-Term recommendation: 20231215: AVOID AFTER BUYING BELOW $150. Short-term is down at year-end.

•

Long-term recommendation: AVOID, MAY REVERSE TO BULLISH POSITION.

•

Having substantially reduced positions recently, we are avoiding additional purchases as the long-term trend is down and there are negative market reactions to positive earnings surprises.

•

The stock is not inexpensive based on fundamentals. Upside is average.

•

Growth across its top and bottom Lines is poor. Suggests the company should explore strategic initiatives.

•

Profitability indicators and cash flow situation both look solid but need improvement.

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JNJ Consideration for Maverick Portfolio: All five Maverick portfolios are appropriate for JNJ. #1. Conservative (Risk Profile Score=10-15): Prioritizing Capital Preservation Minimal risk for capital preservation with low expected returns. #2. Cautious Growth (Risk Profile Score=16-21): Seeking Modest Returns Accepting low-to-moderate risk for modest medium-term returns. #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains Willing to take above-average risk for substantial long-term gains. #5. Aggressive Growth (Risk Profile Score=36-45): Chasing Maximum Returns High risk for maximum potential returns, accepting sizable drawdowns. JNJ Market Guidance: •

Analyst Ratings: MarketBeat HOLD TipRanks MODERATE BUY.

•

Consensus: 14 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 7 Buy, 7 Hold, and zero Sell. Based on 14 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $177.64, with a high forecast of $215 and a low forecast of $160. The average price target represents a +14.3% change from the last close at $155.46.

•

Dividend Yield: $1.19 per share paid quarterly to yield 3.02%. Dividend growth has been established only for over 15 years.

•

Technical Sentiment (from Technical Indicators and Moving Averages): o Investing.com=

Daily (NEUTRAL)

Weekly (SELL)

o TipRanks=

Daily (NEUTRAL)

Weekly (NEUTRAL)

JNJ Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

3 of 5

•

Stock’s Price Stability:

100/100

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•

Price Growth Persistence:

75/100

•

Earnings Predictability:

85/100

•

Projected Average Annual PE:

18.0

•

Forward PE:

14.5

•

Average Annual Revenue Growth in the past 5 years:

+5.0%

•

Average Annual Revenue Growth for the next 5 years:

+1.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+7.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+3.0%

•

Average Annual Earnings Growth in the past 5 years:

+10.5%

•

Average Annual Earnings Growth for the next 5 years:

+5.0%

•

Average Annual Dividend Growth in the past 5 years:

+6.0%

•

Average Annual Dividend Growth next 5 years:

+5.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.8%

•

Current Dividend Yield:

+3.02%

Financial Performance: •

•

EPS: •

2020:

$8.03

•

2021:

$9.90

•

2022:

$10.15

•

2023:

e$10.10

•

2024:

e$10.65

•

Current PE:

29.59

•

Forward PE:

14.43

•

PEG Ratio:

5.69

PE:

10-Year AATR: •

Start date: 12/27/2013

End date:

12/26/2023

•

Start price/share: $92.35

End price/share:

$156.14

•

Starting shares: 108.28

Ending shares:

142.13

•

Dividends reinvested/share: $36.79

•

Total Return: 121.92%

Average Annual TR:

8.30%

•

Starting: $10,000.00

Ending investment:

$22,201.35

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Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Report: (October 17) •

Global sales grew 6.8%, with a positive impact from currency.

•

Pharmaceutical segment (Innovative Medicine) sales grew 5.1% YoY.

•

Excluding COVID-19 vaccine sales, segment sales grew 8.2%.

•

MedTech sales rose 10.0%, impacted by currency, Abiomed acquisition.

•

Gross margin of continuing operations flat, with gains from a favorable patient mix and lower COVID-19 supply-network-related costs.

•

Share earnings rose 8.1% to $2.66.

•

Raised 2023 sales outlook: $84.4 billion-$84.8 billion, for continuing ops.

•

Expects adjusted earnings up 12.7%-13.3% to $10.07-$10.13.

2Q2023 Report: •

Beat estimates for both top and bottom lines.

•

Global sales grew 6.3%, beating consensus estimate by $860 million.

•

MedTech segment revenues up 12.9% YoY.

•

Pharmaceuticals grew 3.1%, excl. COVID-19 vaccine sales grew 6.2%.

•

Consumer Health unit's sales grew 5.4%, impacted by currency and driven by price increases and strength in over-the-counter medicines.

•

Gross margin expanded by 80 basis points, driven by a favorable patient mix and lower COVID-19 supply-network-related costs.

•

Share earnings rose 8.1% to $2.80, exceeding consensus by $0.18.

•

Raised 2023 revenue projection to $98.8 billion-$99.8 billion, including a 500 bp currency impact.

•

Topline drivers from H1 expected to continue, with a stronger H2.

•

Guidance of adjusted earnings up 5.5%-6.5% to $10.70-$10.80.

1Q2023 Report: •

J&J beat estimates for both top-line and earnings.

•

Consumer Health division helped by retailer restocking and price hikes.

•

Pharmaceuticals gained from key drugs and recent launches.

•

MedTech performed well due to strong new product performances.

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•

Raised 2023 revenue projection to $97.9 billion-$98.9 billion, expecting a stronger second half.

•

Plans to spin off Consumer Health unit in 2023.

•

Shares ranked to outperform broader market averages, offering price stability and long-term appreciation potential.

4Q2022 Report: •

Mixed results for J&J at the end of 2022.

•

Fourth-quarter sales decreased by 4%, but EPS increased by 10% YoY.

•

Sales decline attributed to unfavorable forex rates and reduced COVID19 vaccine sales, affecting the Pharmaceutical division.

•

Challenges in Consumer Health and MedTech segments due to high inflation and Federal Reserve measures.

•

Plans to spin off Consumer Health unit in 2023.

•

Shares ranked to outperform broader market averages in the next 6-12 months, offering price stability and decent long-term appreciation potential.

JNJ Value Line 3 to 5-year Operational and Financial Outlook: •

Annual Revenue Growth Potential:

+4.0%

•

Annual Cash Flow Growth Potential: +4.0%

•

Annual Earnings Growth Potential:

+5.0%

•

Annual Dividend Growth Potential:

+5.5%

JNJ Noteworthy Strategic Developments: •

The 2Q2023 separation of Consumer Health, renamed Kenvue, completed its IPO with J&J owning 89.6%. Kenvue paid $13.2 billion to J&J from net IPO proceeds, enhancing financial flexibility.

JNJ FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=JNJ

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JNJ SWOT Analysis: Internal Strengths •

Diversified Portfolio

•

Strong Brand Recognition

•

Global Presence

•

Research and Development

•

Robust Supply Chain

•

Corporate Social Responsibility

Internal Weaknesses •

Product Recalls

•

Litigation Risks

•

Dependence on Key Products

•

Slow Growth in Some Segments

•

Currency Risks

•

Patent Expirations

External Opportunities •

Aging Population

•

Emerging Markets

•

Digital Health

•

Mergers and Acquisitions

•

Personalized Medicine

•

Sustainability

External Threats •

Increasing Competition

•

Regulatory and Legal Risks

•

Pricing Pressure

•

Intellectual Property Risks

•

Supply Chain Disruptions

•

Technological Advancements

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=JNJ

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=JNJ,P

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JP MORGAN (JPM) QUARTERLY MAVERICK REPORT December 24, 2023, $167.40 JP Morgan Business Description: JPMorgan Chase & Co. is a financial holding company offering a full range of financial and investment banking services through segments like Consumer and Community Banking, Corporate and Investment Bank, Commercial Banking, and Asset and Wealth Management. Founded in 1968, it provides investment banking, market-making, treasury and securities products, prime brokerage, asset and wealth management.. Headquartered in New York, NY. JPM Maverick Guidance: •

Short-term recommendation: 20231215: BUY, DOUBLE-TOP BREAKOUT NOV. 20.

•

Long-term recommendation: LT TREND IS UP. BUY ON WEAKNESS

•

The major banks enjoyed years of high profitability when interest rates were low during the Fed Quantitative Easing period. Rates now are high and will be “higher for longer,” per the Fed. So, while JPM is expected to enjoy many years of profitability, it will now experience headwinds.

•

With the Fed’s present Quantitative Tightening policy, the banks have not been active corporate lenders in 2023. That will change in 2H2024.

JPM Consideration for Maverick Portfolio: 1. Suitable for risk profile score of 16-21, the Moderately Conservative Investor seeks a balanced strategy. The Maverick #2 CAUTIOUS GROWTH portfolio aims for modest medium-term Total Returns. 2. Suited for risk profile score of 22-29, the Moderate Investor balances caution and ambition. The Maverick #3 MODERATE GROWTH portfolio maintains a stable yet potentially rewarding strategy, incorporating a mix of conservative and moderately aggressive Dow 30 stocks. 3. Fit for risk profile score of 30-35, the Moderately Aggressive Investor embraces higher risk for potential higher returns. The Maverick#4 DYNAMIC GROWTH portfolio features a higher allocation of high-growthoriented Dow 30 stocks, aligning with this risk-tolerant approach. Bill Cara: Cracking the Maverick Code

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JPM Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= MODERATE BUY

•

Consensus: 14 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 7 Buy, 7 Hold, and zero Sell. Based on 14 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $177.64, with a high forecast of $215 (DOWN FROM $243) and a low forecast of $160 (UP FROM $140). The average price target represents a +14.3% change from a last price of $155.46.

•

Dividend Yield: $1.19 per share paid quarterly to yield 3.04%. Dividend growth for over 15 years. (from TipRanks)

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com= Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Weekly (BUY)

Daily (BUY)

JPM Value Line Guidance: •

Company Financial Strength Rating:

A+

•

Share Price Safety:

2 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

3 of 5

•

Beta:

1.15

•

Stock’s Price Stability:

80/100

•

Price Growth Persistence:

75/100

•

Earnings Predictability:

65/100

•

Projected Average Annual PE:

9.0

•

Current PE:

18.1

•

Average Annual Loans Growth in the past 5 years:

+7.5%

•

Average Annual Loans Growth for the next 5 years:

+9.0%

•

Average Annual Earnings Growth in the past 5 years:

+14.0%

•

Average Annual Earnings Growth for the next 5 years:

+8.5%

•

Average Annual Dividend Growth in the past 5 years:

+15.0%

•

Average Annual Dividend Growth next 5 years:

+6.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+3.1%

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•

Current Dividend Yield:

+2.58%

JPM Financial Performance: •

•

EPS: o 2020:

$8.88

o 2021:

$15.36

o 2022:

$12.09

o 2023:

e$16.50

o 2024:

e$16.75

o Current PE:

9.50

o Forward PE:

10.32

o PEG Ratio:

3.17

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $58.14

End price/share:

$168.39

o Starting shares: 172.00

Ending shares:

227.42

o Dividends reinvested/share: $28.25 o Total Return: 282.95%

Average Annual TR:

14.37%

o Starting: $10,000.00

Ending investment:

$38,307.25

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 (September) •

Strong 2023 performance with Q2 profits at $3.84 per share, a nearly 40% YoY increase, excluding a $0.91-per-share gain related to First Republic Bank acquisition.

•

Higher interest rates impact results. Provision for credit losses increases to $2.9 billion.

•

US regional banking crisis in Q1 benefits large banks like JP Morgan Chase as assets move to systemically important institutions.

•

Full-year earnings target for 2023 is $15.80 per share; 2024 expectations include projected net share growth of 3% to $16.30.

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•

Strong Q2 performance with profits at $3.84 per share, a nearly 40% YoY increase, excluding a $0.91-per-share gain related to First Republic Bank acquisition.

•

Higher interest rates contribute to positive results; provision for credit losses increases to $2.9 billion, up 55% YoY excluding First Republic impact.

•

Full-year earnings target for 2023 is $15.80 per share, representing a 30% increase from 2022.

•

Expected slower growth in 2024 with a 3% net share increase to $16.30 per share.

•

Acquisition of First Republic Bank's assets enhances presence among high-net-worth clients and aligns with 'wealth strategy.'

1Q2023 (March) •

Strong Q1 performance with earnings at $4.10 per share, up 56% YoY.

•

Driven by nearly 50% surge in net interest income due to higher interest rates.

•

Provision for credit losses increases by approximately 56%, reflecting cautious economic outlook.

•

Full-year earnings per share expected around $15.70, representing a 30% increase from 2022.

•

2024 EPS projected at $15.50 if business conditions remain favorable.

•

Business prospects for 2026-2028 are promising, supported by the bank's status as the largest in the US, total assets of $3.7 trillion, and strategic initiatives.

4Q2022 (December 2022) •

2022 fourth-quarter profits at $3.57 per share, a 7% YoY increase.

•

Improvement attributed to Consumer & Community Banking division and higher revenues in Banking & Wealth Management, Card Services & Auto segments, and Commercial Banking operation.

•

Full-year earnings per share for 2022 at $12.09, reflecting a 21% decrease from 2021.

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•

Some uncertainty in the new year, but diversification and rising interest rates provide optimism for an 8% earnings increase to $13.00 per share.

•

Strong corporate finances with substantial cash, manageable longterm debt, and strong capitalization.

JPM 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates substantial headwinds.

•

Capital appreciation potential in the 2025-2027 timeframe is expected to be less impressive as in the past ten years when interest rates were low during the Fed Quantitative Easing period. But the Fed pivot in 2024 would improve the outlook.

JPM Noteworthy Strategic Developments: •

Acquisition of First Republic Bank enhances 'wealth strategy' and increases penetration among high-net-worth clients.

•

Will sell the new Bitcoin ETF despite continuous rants from CEO Jamie Dimon.

JPM FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=JPM

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JPM SWOT Analysis Internal Strengths •

Renowned Brand: JP Morgan is a well-known and respected brand, ranking 24th on the Fortune 500 list. Its long history and recognition contribute to a strong customer base.

•

Global Presence: Operating in more than 60 countries, JP Morgan has a significant global presence, which helps expand its customer base and generate higher revenue.

•

Strong Financial Position: Ranked as the 5th largest bank in the world by assets worth $3.7 billion in 2021, JP Morgan's robust financial position allows for smooth operations and attracts other businesses to collaborate.

•

Excellent Services: The bank offers a wide range of services, including banking, credit cards, asset management, mutual funds, loans, and expertise in consumer banking, investment banking, commercial banking, and asset management.

•

Market Stronghold: JP Morgan holds a strong position in the market with a good reputation, a well-established brand name, and a solid financial foundation, facilitating business expansion.

•

Wide Existence: Operating in over 100 countries with a large workforce of over 200,000 employees provides stability and strength to the company.

•

CSR Activities: The company is committed to Corporate Social Responsibility (CSR) initiatives, investing significantly in global charity and business ventures to make a positive impact.

Internal Weaknesses •

High Operational Cost: JP Morgan's extensive global operations, with over 60 countries, lead to high operational costs. A significant portion of expenses is allocated to employee salaries, as the bank employs over 271,000 people.

•

High Reliance on North America: While JP Morgan operates worldwide, it heavily relies on North America for revenue generation, with this region responsible for 53% of the bank's total revenue.

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•

Controversies: The bank has been involved in various controversies and lawsuits, which can negatively impact its reputation and customer base. Recent examples include fines for employee use of non-compliant platforms and accusations of gender discrimination.

•

Stiff Competition: Intense competition from other financial service providers has limited market share growth.

•

Limited Success in Diversification: Despite its global presence, JP Morgan has had limited success in diversifying beyond its core markets.

•

Management Issues: Past incidents of regulatory penalties, such as the UK FSA's fine, raise concerns about management and compliance.

•

Technical Failures: Technical issues, like the online banking system security flaw in 2018, can affect customer trust and satisfaction.

External Opportunities: •

Increase International Presence: Expanding operations to more countries can help generate additional revenue and grow the customer base.

•

Reduce Reliance on North America: Diversifying revenue sources beyond North America, focusing on regions like Europe and the Middle East.

•

Growth in the Global Credit Card Market: Capitalizing on the expanding credit card market, which is growing at 2.9%, by offering diverse financial and credit services.

•

Expansion of Services: Diversifying services in various countries allows JP Morgan to capture more market share and enhance financial stability.

•

New Services for Mass Customers: Offering new services and diversifying the portfolio to attract a broader customer base.

•

Global Investments: Investing in projects worldwide to diversify revenue sources.

•

Commercial Banking, Acquisitions, and Joint Ventures: Exploring opportunities in commercial banking, acquisitions, and joint ventures to expand the business globally.

External Threats:

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•

Global Recession: Anticipated global recession due to post-pandemic issues and geopolitical conflicts can lead to a decline in customers' living standards, withdrawals from the bank, and reduced demand for financial services.

•

Regulatory Changes: Evolving and increasingly stringent regulatory requirements can increase compliance costs and limit operational freedom.

•

Tough Competition: Intense competition in the saturated US banking industry, with numerous competitors, including major banks like Bank of America, Citigroup, and Wells Fargo, requires constant innovation to maintain market presence.

•

Mortgage Market Instability: An unstable mortgage market poses the risk of financial losses.

•

Presence of Global Competitors: Other leading global banks and financial institutions can impact JP Morgan's business.

•

Changing Government Policies: Frequent changes in government policies can affect the company's operations.

•

New Competitors: Emerging companies entering the market create additional competition for JP Morgan.

•

Financial Crises: Potential financial crises necessitate thorough financial assessments and provisions to mitigate future uncertainties.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=JPM

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=jpm,P

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COCA-COLA (KO) QUARTERLY MAVERICK REPORT December 24, 2023 $58.32 Coca-Cola Business Description: •

The Coca-Cola Co. engages in the manufacturing and marketing of non-alcoholic beverages. It operates in Europe, the Middle East and Africa, Latin America, North America, Asia Pacific through Global Ventures and Bottling Investments. The company was founded by Asa Griggs Candler on May 8, 1886, and is headquartered in Atlanta, GA.

KO Maverick Guidance: •

Short-term recommendation: CONTINUE TO AVOID BUT ST CYCLE IS EXTENDED ON DOWNSIDE, W LOW POLE REVERSAL OCT 30

•

Long-term recommendation: NEUTRAL. The Long-Term Trend has been down for the entire 2023, but its stock is still richly priced, and careful monitoring of its top-line growth is advised..

KO Consideration for Maverick Portfolio: •

Coca-Cola (KO) is part of the #2 CAUTIOUS GROWTH Portfolio. It particularly appeals to moderately conservative investors. While the stock has faced challenges amid market dynamics, it remains an attractive option for investors seeking stability and income through dividends. The company’s commitment to price stability and a strong dividend yield make it an appealing choice for those looking to weather market turbulence. However, investors focusing on long-term capital appreciation in the consumer spending space may want to explore alternative investment options like Nike (NKE).

•

Coca-Cola (KO) is a Warren Buffett favorite with a high return on equity, high dividend yields, and 61 years of dividend increases.

•

World-leading recognized brand and global distribution drives a competitive edge, consistent earnings, and cash flow.

KO Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat MODERATE BUY TipRanks MODERATE BUY.

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•

Consensus: 17 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 12 Buy, 5 Hold, and zero Sell. Based on 17 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $63.88, with a high forecast of $69 and a low forecast of $60. The average price target represents a +9.5% change from the recent close at $58.32.

•

Dividend Yield: $0.46 per share paid quarterly to yield 3.17%. Dividend growth has been established only for over 15 years.

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG SELL)

Weekly (STRONG BUY)

o TipRanks=

Daily (NEUTRAL)

Weekly (BUY)

KO Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

2 of 5

•

Stock’s Price Stability:

100/100

•

Price Growth Persistence:

45/100

•

Earnings Predictability:

100/100

•

Projected Average Annual PE:

21.0

•

Current PE:

23.8

•

Average Annual Revenue Growth in the past 5 years:

-1.5%

•

Average Annual Revenue Growth for the next 5 years:

+6.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+2.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+7.5%

•

Average Annual Earnings Growth in the past 5 years:

+3.0%

•

Average Annual Earnings Growth for the next 5 years:

+7.5%

•

Average Annual Dividend Growth in the past 5 years:

+4.0%

•

Average Annual Dividend Growth next 5 years:

+6.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+3.3%

•

Current Dividend Yield:

+3.13%

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Financial Performance: •

•

EPS: •

2020:

$1.95

•

2021:

$2.32

•

2022:

$2.48

•

2023:

e$2.63

•

2024:

e$2.80

•

Current PE:

23.80

•

Forward PE:

21.10

•

PEG Ratio:

3.95

PE:

10-Year AATR: •

Start date: 12/27/2013

End date:

12/26/2023

•

Start price/share: $40.66

End price/share:

$58.56

•

Starting shares: 245.94

Ending shares:

337.77

•

Dividends reinvested/share: $15.50

•

Total Return: 97.80%

Average Annual TR:

7.06%

•

Starting: $10,000.00

Ending investment:

$19,785.80

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Report (November 1) •

3Q2023 net sales increased 5% YoY.

•

Income from operations in 3Q2023: $216 million, up 14% ($26 million) from 3Q2022.

•

Income from operations in 1Q-3Q 2023: $656 million, up 40% ($188 million) from 1Q-3Q 2022.

•

Operating margin for 1Q-3Q 2023: 13.1%, up 300 basis points from 1Q-3Q 2022 (10.1%).

2Q 2023 Report: •

Q2 2023: Coca-Cola excelled with +11% YoY increase in EPS, reaching $0.78, beating estimates.

•

Strong revenue growth due to price increases, favorable product mix.

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•

North America saw +23% rise in comparable operating income despite stable unit case volume.

•

Adverse foreign exchange rates impacted results; Asia-Pacific operations declined by -4% post-adjustment.

•

Revised estimate: Full-year earnings reduction of 4%-5%, up from earlier guidance of 3%-4%.

1Q 2023 Report: •

Q1 2023: Coca-Cola's strong performance, +6% YoY earnings to $0.68 per share, beating estimates.

•

Overseas operations grew nearly +5% in revenue despite foreign currency headwinds.

•

Growth driven by 2022 price increases and solid +3% growth in unit case volumes.

•

Wider operating margin offset increased expenses, maintaining strong profits.

•

Full-year guidance was maintained with an anticipated +4%-5% earnings increase.

•

Slightly lower than the high-single-digit pace seen in 2022.

•

Profit growth acceleration expected in 2024 with mid-single-digit revenue increase.

•

Earnings projected to reach approximately $2.85 per share in 2024.

KO 3-to-5-year Value Line Annual Outlook: •

Revenue Growth Potential:

+6.5%

•

Cash Flow Growth Potential:

+7.5%

•

Earnings Growth Potential:

+7.5%

•

Dividend Growth Potential:

+6.0%

KO Noteworthy Strategic Developments The Coca-Cola Company is entering newer categories, such as alcoholic beverages and coffee. KO FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=KO Bill Cara: Cracking the Maverick Code

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KO SWOT Analysis: Internal Strengths •

•

Strong Brand: •

A highly popular brand with a unique identity.

•

Ranked 6th strongest brand globally.

•

Brand value of $57 Billion.

Extended Global Reach: •

Most-selling drinks in history.

•

500+ products sold in 200+ countries, 1.9 billion servings daily.

Brand Association and Customer Loyalty: •

Emotionally-connected brand associated with 'happiness.'

•

Strong customer loyalty, challenging to find substitutes.

Dominant Market Share: •

Largest market share among soft drink manufacturers.

•

Coke, Sprite, Diet Coke, Fanta, Limca, and Maaza drive growth.

Financial Stability: •

Earnings and cash flow cover debt service and dividends well.

Internal Weaknesses •

Aggressive Competition with Pepsi: •

•

Low Product Diversification: •

•

Controversy over health issues related to sugar intake.

•

No clear alternative or solution was provided.

Lawsuits:

Heavy reliance on third-party technology providers.

Environmentally Destructive Packaging: •

•

Facing patent infringement lawsuit affecting trust.

Dependence on Third-Party Technology: •

•

Limited product range compared to competitors like Pepsi.

Health Concerns:

• •

Pepsi's significant rivalry impacts market leadership.

Named for contributing to global warming.

Underperforming Earnings: •

Earnings growth underperformed the Beverage industry.

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External Opportunities •

•

Introduce Healthier Products: •

Opportunity to introduce healthier drinks and food items.

•

Focus on reducing added sugar in beverages.

Increase Presence in Developing Nations: •

•

Advanced Supply Chain System: •

•

Utilize financial resources for strategic acquisitions.

Partnerships for Innovation: •

•

Expand in the packaged drinking water segment.

Expand through Acquisition: •

•

Improve logistics and supply chain for cost efficiency.

Packaged Drinking Water: •

•

Expansion in emerging markets with high demand for cold drinks.

Collaborate with Constellation Brands for new product lines.

Forecasted Earnings Growth: •

Annual earnings are forecasted to grow for the next 3 years.

•

Good value based on P/E ratio and estimated fair value.

External Threats •

Water Usage Controversy: •

•

Pollution Lawsuit: •

•

Criticisms over water management and pollution allegations. Facing lawsuit for contributing to plastic pollution.

Direct and Indirect Competition: •

Facing competition from various brands indirectly.

•

Threats from Starbucks, Costa Coffee, Tropicana, Lipton, and Nescafe.

•

Economic Uncertainty: •

Negative impact on revenues due to global crisis.

•

The closure of venues affects half of the revenue.

Slower Earnings Growth: •

Forecasted earnings growth is slower than the American market.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=KO

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=KO,P

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MCDONALD’S (MCD) QUARTERLY MAVERICK REPORT December 24, 2023 $291.70 Business Description and Overview: The world’s largest fast-food chain operates, franchises, or licenses 40,275 fast-food restaurants globally. •

Majority (95%) of locations are operated by franchisees or affiliates, with the remaining managed by the company.

•

Foreign operations contributed significantly to systemwide sales (59%) and consolidated operating income (45%) in 2022.

•

150,000+ employees in McDonald’s offices and company-owned and operated restaurants. The number of McDonald's employees has more than halved in the past six years. There are 1.7 million in total, including employees of franchisees and affiliates.

MCD Maverick Guidance: •

Short-term technical buy/sell recommendation: SELL WITH LOW POLE REVERSAL NOV 6 (overbought). BEARISH BREAKDOWN WITH PRICE FALLING BELOW PREVIOUS LOW BY 3 BOXES, THEN BULLSISH STRONG DEMAND RESULTED IN DEEP RETRACEMENT. INVESTORS ARE NERVOUS. STOCK IS SHORT-TERM TOPPY.

•

Long-term portfolio recommendation: NEUTRAL, BUY ONLY ON WEAKNESS

•

Maverick Investors can anticipate steady long-term price gains, dividends, and share buybacks from this top-quality company.

MCD Consideration for Maverick Portfolio: •

MCD is appropriate for all risk profiles. The stock fits into all portfolios, from Maverick CONSERVATIVE to Maverick AGGRESSIVE GROWTH.

MCD Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY

TipRanks= STRONG BUY

•

Consensus: 29 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 23 Buy, 6 Hold, and zero Sell.

•

Based on 27 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $314.71, with a high forecast of

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$383 and a low forecast of $285. The average price target represents a +7.9% change from a recent price of $291.70. •

Dividend Yield: $1.67 per share paid quarterly to yield 2.14%. Dividend growth for over 15 years.

•

Technical Analysis (from Technical Indicators and Moving Averages): o Investing.com = Daily: STRONG BUY

Weekly: STRONG BUY

o TipRanks =

Weekly: BUY

Daily: STRONG BUY

MCD Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

3 of 5

•

Stock’s Price Stability:

100/100

•

Price Growth Persistence:

95/100

•

Earnings Predictability:

80/100

•

Projected Average Annual PE:

25.5

•

Forward PE:

23.3

•

Average Annual Sales Growth in the past 5 years:

+0.5%

•

Average Annual Sales Growth for the next 5 years:

+6.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+7.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+9.0%

•

Average Annual Earnings Growth in the past 5 years:

+8.0%

•

Average Annual Earnings Growth for the next 5 years:

+10.50%

•

Average Annual Dividend Growth in the past 5 years:

+8.0%

•

Average Annual Dividend Growth next 5 years:

+8.5%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+2.2%

•

Current Dividend Yield:

+2.2%

MCD Financial Performance •

EPS: o 2021:

$9.28

o 2022:

$10.10

o 2023:

e$11.75

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•

o 2024:

e$12.50

o Current PE:

25.5

o Forward PE:

23.1

o PEG Ratio:

2.61

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $96.91

End price/share:

$292.86

o Starting shares: 103.19

Ending shares:

134.39

o Dividends reinvested/share: $45.26 o Total Return: 293.58%

Average Annual TR:

14.68%

o Starting: $10,000.00

Ending investment:

$39,358.62

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Quarterly Report (September) (Released Oct. 30) McDonald's 3Q2023 Earnings Report Highlights: •

Global Systemwide sales increased by +11%.

•

Global comparable sales grew by +9% across all segments.

•

Digital Systemwide sales in the top six markets amounted to nearly $9 billion, representing over 40% of their Systemwide sales.

•

Global comparable sales increased by +8.8%.

•

The US segment increased by +8.1%.

•

The International Operated Markets segment increased by +8.3%.

•

The International Developmental Licensed Markets segment increased by +10.5%.

•

Consolidated revenues increased by +14%.

•

Diluted earnings per share was $3.17, reflecting an 18% increase.

Key Performance Drivers: •

The US segment benefited from strong average check growth, effective marketing campaigns, and digital and delivery growth.

•

International Operated Markets driven by strong comparable sales in key markets like the U.K., Germany, and Canada.

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•

International Developmental Licensed Markets reflected strong comparable sales across all geographic regions.

Dividends and Financial Metrics: •

Declared a 10% increase in quarterly cash dividend to $1.67 per share.

•

Operating income increased by +16%.

•

Net income increased by +17%.

2Q2023 Quarterly Report (June) •

McDonald’s continues to focus on multiple strategies to increase revenues despite global economic challenges.

•

Strong year-over-year revenue gains in the first half of 2023 across domestic, foreign, and developmental licensing markets.

•

Marketing efforts, including the return of the Grimace character, contributed to positive drivers like customer traffic, pricing, store upgrades, and menu enhancements.

•

Comparable-store growth eased slightly due to inflation’s impact on consumer budgets; management warned of slower growth in the second half of 2023.

•

Menu improvements, especially in chicken offerings, store openings, delivery expansion, and digital mobile ordering adoption, are expected to support top-line growth.

•

Estimated revenue improvement of 10% to $25.5 billion in 2023, with a gain of 6% to $27.0 billion in 2024.

•

Inflation is impacting margins, particularly in Europe.

•

Positive share earnings momentum, with adjusted per-share earnings expected to advance 16% in 2023 and 6%-7% in 2024.

•

Provides steady Total Returns, with cash flow generation and debt financing aiding international expansion and market share growth.

•

Share buybacks, dividend hikes, and steady stock price appreciation reward investors.

1Q2023 Quarterly Report (March) •

Revenues are increasing as COVID-19 cases decline, especially in China, which has reopened as an important market.

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•

Global comparable-store sales are projected to rise in the low-doubledigits in 2023, driven by volume, selective price hikes, and an enhanced menu.

•

Careful expansion of store count and support for franchisees, along with digital ordering and delivery, contributing to top-line growth.

•

The strong US dollar previously restrained franchise revenue growth, but the impact is expected to lessen.

•

Estimated consolidated revenue increase of 5%-6% to $24.5 billion in 2023, with a further gain of 6% to $26.0 billion in 2024.

•

Management-led initiatives, including international expansion, improved service and ambiance, and process standardization, helped offset elevated expenses.

•

Expected share earnings growth from $10.10 in 2022 to $11.25 in 2023 and $12.00 in 2024.

•

Positive share price trend, historically reliable rising Total Returns, solid financial strength, and limited risk profile.

4Q2022 Quarterly Report (December) •

2022 Revenues: Dipped below the prior year due to negative foreign currency translation, a strong US dollar, and cautious pricing strategies amidst rising inflation.

•

2022 Challenges: COVID-19 shutdowns in China and conservative European spending also impacted top-line performance.

•

2023 Outlook: Optimism for growth under the "Accelerating the Arches" strategy, focusing on store count expansion, operational efficiency, digital services, and delivery.

•

Revenue Growth Projection: Anticipate 3%-4% growth to $24.0 billion in 2023 and a stronger 6% advance to $25.5 billion in 2024.

•

Earnings Strength: Expect strengthening of earnings, displaying momentum in sales, international markets, and comparable store receipts.

•

Operating Leverage: Operating efficiency enhancements are expected to provide leverage against inflationary pressures.

•

Profitability Factors: Wage and ingredients inflation, along with currency exchange, may restrain profitability, but service and process enhancements are seen as offsets.

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•

Earnings Projection: Share earnings, adjusted for special items, are forecasted to increase 5%-6% to $10.65 in 2023 and another 8%-9% to $11.55 in 2024.

•

Stock Performance: McDonald's is recognized for delivering positive Total Returns, steady price gains, generous dividends, and share buybacks.

MCD 3-to-5-year Operational and Financial Outlook: •

McDonald's remains confident in its future and the strategic direction of its business.

•

The 3-to-5-year outlook indicates continued strong growth in revenue and earnings.

•

Marketing efforts, including the return of the Grimace character, positively impacted customer traffic, pricing, store upgrades, and menu enhancements.

•

Menu improvements, particularly in chicken offerings, store openings, delivery expansion, and digital mobile ordering adoption, are expected to support top-line growth.

MCD Noteworthy Strategic Developments: •

Spun off non-core Chipotle Mexican Grill (2006) and Boston Market (2007) to focus on the iconic McDonald’s brand.

•

• •

MCD to launch its first CosMc's restaurant in Bolingbrook, Illinois, as part of a limited test inspired by 1980s-90s character CosMc, aligning with McDonald's recent nostalgic marketing campaigns. McDonald's plans to open 10 CosMc's locations by the end of 2024 to compete with Starbucks and Dunkin'. Aims to open nearly 10,000 new stores globally by 2027, 900 in US.

MCD FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=DIS

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MCD SWOT Analysis: Internal Strategic Factors: Strengths: Brand Recognition: o Globally recognized with iconic golden arches logo. o Effective “I’m Loving It” branding and marketing efforts. Global Presence: o Over 38,000 locations in 100+ countries, facilitating a broad customer base and economies of scale. Strong Franchise System: o Utilizes a successful franchise model for rapid expansion. o A well-established franchise system ensures consistency and quality while minimizing risks and costs. Financial Strength and Real Estate Empire: o Multi-billion dollar real estate offers a strong financial foundation. Efficient Operations: o Known for highly efficient operations with streamlined processes. o Systems in place enable quick and consistent service, minimizing wait times and enhancing the customer experience. Technological Innovation: o New products like McCafé coffee drinks, all-day breakfast, and McCrispy Sandwiches. o Uses revolutionary technology to enhance products and services. Culinary Appeal: o Renowned for tasty offerings, especially French fries. o Its fast foods are considered better in taste than competitors. Strategic Acquisition for Personalized Marketing: o Acquisition of 'Dynamic Yield' for personalized marketing. o Progressing towards tailored customer experiences. Bill Cara: Cracking the Maverick Code

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Weaknesses: Health Concerns: o Criticism for nutritional value and links to health issues. o Efforts to introduce healthier options, but concerns persist. Negative Public Perception: o Criticism for labor practices, including low wages. o Negative public image leading to protests and calls for boycotts. Dependence on Franchisees: o High dependence on franchisees for revenue and growth. o Challenges in ensuring consistent quality across all locations. Limited Menu Appeal: o Perceived limitation in menu variety compared to competitors. o The breakfast menu has lost its charm over the years. o Reliance on signature items may impact customer preferences. Environmental Impact: o Criticism for environmental practices, including single-use plastics. o Concerns raised about the contribution to deforestation through sourcing beef and palm oil. The Franchise business model: o It may show a greater impact with the passing of time. o Employee job dissatisfaction: o Over 200 thousand employees are largely dissatisfied. It may affect their efficiency and further affect the food chain's service. External Strategic Factors: Opportunities: International Expansion: o Untapped markets in Asia and Africa present opportunities. o Emerging demand for fast food in these regions. Bill Cara: Cracking the Maverick Code

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Health and Wellness Trends: o Opportunity to introduce healthier menu options. o Leverage the supply chain for sustainable and environmentally friendly choices. Digital Technology: o Heavy investment in digital tech, including mobile ordering. o Potential for further innovation and data leverage for menu and marketing enhancement. Delivery and Convenience: o Expand delivery offerings through third-party services. o Explore partnerships with popular delivery platforms. Partnership and Collaborations: o Collaborate with other brands for innovative menu offerings. o Differentiate the company and appeal to new customer segments. Affordable Menu Strategies: o The "$1, $2, $3" menu launch and "2 for $5 Mix and match deal" attracts budget-conscious customers. Asian Market Expansion: o Opportunity for expansion by tailoring menus to local likings. Brand Image Rebuilding: o Work on rebuilding the brand image to counteract negative publicity. Delivery Partnership: o Initiated a partnership with UberEats to serve customers who cannot visit a location. Threats: Environmental, Regulatory, and Legal Challenges: o Faces challenges related to labor, food safety, and environmental regulations. Bill Cara: Cracking the Maverick Code

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o Immense pressure to improve practices to minimize waste production, creating a negative impression. Risky Technological Investments: o McDonald's risky investments in technological initiatives may severely affect future growth. Resistance to Change: o Being considered old-school may impact the business, especially in adapting to changing food habits. o Cultural threats while operating in different countries. Competition: o Intense competition in the fast-food industry. o Competitors from various chains and emerging trends like healthier options. Changing Consumer Preferences: o Risk of the menu becoming less appealing. o Adaptation to health and environmental trends is crucial. Economic Factors: o Impact from inflation, consumer spending changes, and currency fluctuations. o Economic downturns in key markets pose risks. Supply Chain Disruptions: o Dependency on a complex supply chain. o Disruptions like natural disasters can impact ingredient availability and costs. o Immense pressure to improve practices to minimize waste production, creating a negative impression. MCD FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=MCD

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=MCD

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=MCD,P

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3M CO. (MMM) QUARTERLY MAVERICK REPORT December 24, 2023: $106.33 3M Business Description: 3M is a global innovation initiator, boasting an extensive portfolio of over 60,000 products across renowned brands. Operates 5 business segments: • Industrial: Make tapes, abrasives, adhesives, and filtration systems for automotive, electronics, appliances, paper, packaging, food, and construction markets. • Safety and Graphics: Offers Personal Protective Equipment (PPE), commercial graphics, cleaning products, electrical solutions, roofing materials, and traffic safety systems. • Health Care: Provides medical supplies, skin health products, dental items, health information systems, and drug delivery systems. • Electronics and Energy: Serves electronic devices, electrical products, power generation, telecom, and infrastructure protection markets. • Consumer: Offers products for home improvement, office supplies, home care, and health care with Post-it, Scotch, Filtrete, Nexcare, and Command. MMM Maverick Guidance: • • • •

•

Short-term: 20231215: REVERSAL TO BUY, W ASCENDING TRIPLE-TOP BREAKOUT NOV 13, CATAPAULT BREAKOUT NOV 14 Long-term: LONG-TERM TREND IS NEGATIVE SINCE 4Q2021 but is REVERSING. BUY only for income. 3M offers a robust dividend yield (6.61%) but an extremely low 10year Total Return, making it attractive only to income-oriented investors presently. In the short run, there are too many internal company weaknesses and external threats to the 3M Company to warrant our current interest.

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MMM Consideration for Maverick Portfolio: • •

Over the long run, MMM is a candidate for the Maverick #2 CAUTIOUS GROWTH and #3 MODERATE GROWTH portfolios. At times, 3M may suit Mavericks with a risk profile score of 16-29. The Moderately Conservative Investor aims for a balanced approach, achieving modest medium-term Total Returns. The Maverick #2 CAUTIOUS GROWTH and #3 MODERATE GROWTH portfolios balance caution, ambition, and stability, offering a mix of Dow 30 stocks.

MMM Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= REDUCE

TipRanks= HOLD

•

Consensus: 9 Wall Street analysts have offered 12-month price targets in the last 3 months. There are zero Buy, 10 Hold, and 1 Sell.

•

Based on 9 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $107.33, with a high forecast of $120 and a low forecast of $83. The average price target represents a +0.9% change from the last price of $106.33.

•

Dividend Yield: $1.50 per share paid quarterly to yield 5.64%. Dividend growth for over 15 years.

•

Technical Analysis (Technical Indicators and Moving Averages): o Investing.com = Daily: STRONG BUY

Weekly: BUY

o TipRanks =

Weekly: NEUTRAL

Daily: STRONG BUY

MMM Value Line Guidance: •

Company Financial Strength Rating:

•

Share Price Safety:

3 of 5

•

Market Timing:

•

Technical Rank:

•

Stock’s Price Stability:

90/100

•

Price Growth Persistence:

35/100

•

Earnings Predictability:

25/100

•

Projected Average Annual PE:

14.0

•

Current PE:

---

•

Average Annual Sales Growth in the past 5 years:

+3.0%

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•

Average Annual Sales Growth for the next 5 years:

+2.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+3.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+3.5%

•

Average Annual Earnings Growth in the past 5 years:

+3.0%

•

Average Annual Earnings Growth for the next 5 years:

+4.5%

•

Average Annual Dividend Growth in the past 5 years:

+6.0%

•

Average Annual Dividend Growth next 5 years:

+2.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+3.9%

•

Current Dividend Yield:

+2.2%

MMM Financial Performance •

•

EPS: o 2020:

$8.73

o 2021:

$10.12

o 2022:

$10.18

o 2023:

ed$3.00

o 2024:

e$9.00

o Current PE:

---

o Forward PE:

10.5

o PEG Ratio:

---

PE:

10-Year AATR: •

Start date: 12/27/2013

•

$108.11 99.62

•

Start price/share: $139.35 End price/share: Starting shares: 71.76 Ending shares: Dividends reinvested/share: $51.62 Total Return: 7.70% Average Annual TR:

•

Starting: $10,000.00

$10,765.35

• •

End date:

Ending investment:

12/26/2023

0.74%

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Report (October 24) •

GAAP loss per share: $3.74; operating margin: -31.9%, reflecting Combat Arms settlement charge of $4.2 billion.

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• • • • • • •

Adjusted EPS: $2.68, including restructuring charges of $68 million; on track with forecasted 2023 charges and benefits. Adjusted EPS up 3% YoY. Adjusted operating income margin: 23.2%, expanded 1.6 percentage points YoY, impacted by 0.8 points from restructuring charges. Sales: $8.3 billion, down 3.6% YoY; organic sales decline: 3.7% YoY. Adjusted sales: $8.0 billion, down 3.0% YoY; adjusted organic sales decline: 3.1% YoY. Operating cash flow: $1.9 billion, up 25% YoY; adjusted free cash flow: $1.9 billion, up 39% YoY. Returned $828 million to shareholders via dividends.

2Q2023 Report: •

•

3M Company reported a significant loss in the second quarter of 2023, primarily due to legal costs related to the PFAS contamination class action lawsuit. This resulted in a charge of $14.19 per share. Additional losses of $0.24 per share were incurred due to other litigation expenses and special items, leading to an 11% decline in adjusted earnings compared to the previous year. Revenues declined by 4% during the quarter.

1Q2023 Report • • •

3M Company had a challenging start in the first quarter of 2023, with a 22% decrease in earnings per share and a 9% drop in sales. Organic sales (excluding divestitures and foreign currency effects) slipped about 5% year-over-year. Difficult market trends, inflation, lower consumer demand, rising raw materials and operating costs, and high legal expenses impacted the company’s performance during the quarter.

4Q2022 Report •

3M Company faced challenges in 4Q2022, with falling demand in consumer-dependent electronics and retail markets.

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• •

Declining discretionary spending and inventory destocking affected the company’s customers. Dollar strength and foreign exchange impacts contributed to a yearover-year sales decline.

MMM 3-to-5-year Value Line Operational and Financial Outlook: • • •

Revenue Growth Potential: +2.5% Cash Flow Growth Potential: +3.5% Earnings Growth Potential: +4.5%

•

Although 3M anticipates returning to profitability in the second half of 2023, it will likely close the year with a 3%-5% decrease in

• •

•

top-line revenues. The company expects improvements in 2024, with revenues rebounding by 3%-5%, but results may lag behind 2022. Plans are underway to spin off the healthcare unit, which accounted for approximately 25% of the company’s revenues in the previous year. 3M is focused on cost-cutting, simplifying its business, and enhancing supply-chain management to drive efficiencies, improve customer service, and boost profits over the long term.

MMM Noteworthy Strategic Developments: •

•

The pending spinoff of the healthcare unit is in progress and expected to close in late 2023 or early 2024, subject to necessary conditions and approvals. The company plans to wind down its PFAS ‘forever chemicals’ production before 2026. However, potential legal fees, damages, and cleanup efforts remain a major concern until they can be settled and quantified. Other restructuring efforts are aimed at improving the company’s long-term performance.

MMM FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=MMM

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MMM SWOT Analysis: Internal Strengths •

Diverse Product Portfolio: 3M offers over 60,000 products spanning various industries, reducing reliance on any single market and economic fluctuations.

•

Innovation Excellence: 3M is known for innovation, with a substantial share of recent revenue from new products.

•

Strong Branding: 3M’s trusted brands like Post-it and Scotch drive customer loyalty.

•

Global Reach: Operating in 70+ countries and selling in 200+ enables access to diverse markets.

•

Sustainability Commitment: 3M focuses on reducing costs and enhancing reputation.

•

Efficient Distribution Network: 3M’s extensive network ensures efficient product delivery.

•

Skilled Workforce: Employee development enhances innovation and operational efficiency.

Internal Weaknesses •

Legal & Regulatory Risks: Ongoing lawsuits and regulatory challenges pose financial and reputational risks.

•

Supplier Dependency: Relying on various suppliers for raw materials exposes the company to supply chain disruptions.

•

Competitive Markets: 3M faces fierce competition, affecting market share and margins.

•

Economic Sensitivity: Economic downturns can negatively impact revenues despite diversification.

•

Product Failures/Recalls: Any failure or recall can have significant financial and reputational consequences due to its extensive product range.

•

Global Market Risks: International exposure exposes 3M to economic, currency, and geopolitical uncertainties.

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External Opportunities •

Emerging Market Growth: 3M can leverage rising middle classes in emerging markets like China, India, and Brazil for product expansion.

•

Healthcare Expansion: 3M can capitalize on the global healthcare trend for advanced medical solutions.

•

Sustainable Product Demand: 3M, with its sustainability focus, can meet the increasing demand for eco-friendly products.

•

Tech Innovation: 3M’s R&D strength positions it for innovation in electronics, AI, and other fields.

•

E-commerce/Digital Growth: 3M can expand its online presence in response to the growing digital marketplace.

•

Acquisitions/Partnerships: Strategic deals can provide market access, new technologies, and expertise.

•

Safety Equipment Demand: High demand for personal protective equipment presents growth potential.

External Threats •

Intense Competition: 3M faces strong competition, risking market share and profitability.

•

Regulatory/Legal Challenges: Changes in laws and past lawsuits can impact operations and reputation.

•

Economic Uncertainty: Global economic instability can negatively affect 3M’s business.

•

Supply Chain Disruptions: Political, natural, or trade disruptions can impact the supply chain.

•

Currency Fluctuations: Exchange rate fluctuations can affect 3M’s financial results.

•

Public Health Crises: Health crises like COVID-19 can disrupt 3M’s operations and supply chain.

•

Innovation/Technology Changes: Rapid tech changes can make products obsolete, risking market share.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=MMM

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=MMM,P

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MERCK (MRK) QUARTERLY MAVERICK REPORT December 24, 2023, $107.70 Merck Business Overview: Merck is a key provider of prescription medicines, vaccines, biological therapies, animal health, and consumer care products. Founded in 1891. Headquartered in Kenilworth, New Jersey •

Operational Segments: The company operates through three segments: Pharmaceutical, Animal Health, and Other.

•

Pharmaceutical Segment: Involves human health pharmaceutical and vaccine products.

•

Animal Health Segment: Focuses on the discovery, development, manufacturing, and marketing of animal health products for various species.

•

Other Segment: Sales for non-reportable healthcare services.

MRK Maverick Guidance: •

Short-term recommendation: 20231215: SELL/AVOID TO JANUARY, NARROW GAP SUPPORT TO RESISTANCE.

•

Long-term recommendation: NEUTRAL. MONTHLY TREND AND CYCLE INDICATORS ARE BEARISH, SO CAUTIOUS BUYS ON EXTREME WEAKNESS BECAUSE INVESTOR SENTIMENT IS STARTING TO TURN POSITIVE

•

Earnings have missed the past nine quarters: o 3Q2023 (Oct 26) reported EPS of $2.13 ($1.86 GAAP) vs forecast of 1.95 and $1.85 for the same quarter the prior year o 4Q2023 (to be reported 31Jan24) is forecasted at $0.98 vs. $1.62 for the same quarter the prior year

•

Earnings pullbacks are due to reduced sales of COVID-19 products, which is probably over, and e2024 earnings should be robust.

MRK Consideration for Maverick Portfolio: •

Appropriate for risk profile score of 16-21. The Moderately Conservative Investor aims for a balanced approach that combines growth and stability. The Maverick #2 CAUTIOUS GROWTH portfolio is designed to achieve modest medium-term Total Returns.

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•

Appropriate for risk profile score of 22-29. The Moderate Investor seeks to balance caution and ambition, aiming for reasonable growth while managing risk. The Maverick #3 MODERATE GROWTH portfolio is designed to maintain a stable yet possibly rewarding financial strategy with a mix of conservative and moderately aggressive Dow 30 stocks.

•

MRK Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY, TipRanks= STRONG BUY

•

Consensus: 15 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 13 Buy, 2 Hold, and zero Sell. (from TipRanks) Based on 15 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $126.14, with a high forecast of $135 and a low forecast of $115. The average price target represents a +17.1% change from $107.70. (from TipRanks)

•

Dividend Yield: $0.77/share (up from $0.73) paid quarterly to yield 2.74%. Dividend growth for 15+ years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (NEUTRAL)

o TipRanks=

Daily (STRONG BUY)

Weekly (STRONG BUY)

MRK Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

2 of 5

•

Stock’s Price Stability:

100/100

•

Price Growth Persistence:

55/100

•

Earnings Predictability:

65/100

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•

Average Annual PE:

14.0

•

Current PE:

59.9

•

Forward PE:

12.7

•

Average Annual Sales Growth in the past 5 years:

+7.0%

•

Average Annual Sales Growth for the next 5 years:

+5.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+6.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+7.5%

•

Average Annual Earnings Growth in the past 5 years:

+11.5%

•

Average Annual Earnings Growth for the next 5 years:

+8.5%

•

Average Annual Dividend Growth in the past 5 years:

+7.0%

•

Average Annual Dividend Growth next 5 years:

+8.0%

•

Average Annual Dividend Yield 3 to 5 years:

+2.8%

•

Current Dividend Yield:

+2.81%

MRK Financial Performance •

•

EPS: o 2020:

$5.94

o 2021:

$6.02

o 2022:

$7.48

o 2023:

e$1.40

o 2024:

e$8.60

o Current PE:

59.9

o Forward PE:

12.7

o PEG Ratio:

5.77

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $47.51

End price/share:

$107.63

o Starting shares: 210.48

Ending shares:

286.44

o Dividends reinvested/share: $21.78 o Total Return: 208.30%

Average Annual TR:

11.91%

o Starting: $10,000.00

Ending investment:

$30,819.31

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Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Quarterly September: •

Q3 2023 revenue: $15.96 billion, a 6.7% increase year-over-year.

•

EPS: $2.13, up from $1.85 in the same period last year.

•

Full-year revenue outlook raised to $59.7 billion to $60.2 billion.

•

Next quarter EPS guidance lowered to $1.33 to $1.38 due to a $5.5 billion charge related to collaboration with Daiichi Sankyo.

•

Revenue exceeded consensus estimates by 3.80%.

•

Significant EPS surprise of 9.79%.

•

Keytruda sales in the US showed a year-over-year increase of 13.9%.

•

RotaTeq sales decreased by 39.1% compared to the same quarter last year.

•

Other segments, such as Animal Health and Pneumovax, saw moderate YoY revenue changes.

2Q2023 Quarter June: •

Merck is expected to experience a pullback in profitability due to slowing top-line growth.

•

Decline in COVID-19-related sales, particularly Lagevrio.

•

One-time charge of $10.2 billion tied to Prometheus Biosciences acquisition.

•

Projected earnings fall by 60% in 2023.

•

Expectation of regaining traction in 2024, especially with Keytruda's strong performance.

•

Possible continued M&A activity.

1Q2023 Quarter March: •

Merck started FY2023 on a positive note with better-than-expected first-quarter results.

•

Strong growth in Keytruda and Gardasil franchises offset declining Lagevrio sales.

•

Raised 2023 adjusted earnings estimate to $7.00 a share.

•

Leadership increased full-year forecasts.

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•

Keytruda and Gardasil performed well, and Bridion extended its patent.

•

Addition of Prometheus Biosciences expected to boost Merck's immunology presence.

•

Anticipated M&A activity to strengthen the portfolio.

•

The stock holds an Average (3) rank for Timeliness, with strong defensive characteristics and a 2.7% dividend yield.

4Q2022 Quarter December: •

Merck closed 2022 positively with strong earnings and sales performance.

•

Lagevrio and Keytruda were significant growth drivers.

•

Expectation of cooling in 2023 due to waning Lagevrio demand.

•

Positive outlook for 2024 with Keytruda's market share gains and other oncology assets.

•

Strong defensive characteristics and a 2.8% dividend yield appeal to conservative investors.

MRK 3-to-5-year Operational and Financial Outlook: •

Merck is forecast to grow 3-year earnings and revenue by 33.7% and 5%.

•

VL 12/29 Report: “Our 2023 earnings target has been lowered to $1.40 a share (previously $3.00) to reflect a $5.5 billion pre-tax charge incurred from the company’s collaboration agreement with Daiichi Sankyo. Leadership also forecasted a greater impact from foreign exchange headwinds and a higher tax rate due to its slew of recent business development deals in 2023. These factors prompted it to cut its full-year earnings outlook to $1.33- $1.38 a share (previously $2.95-$3.05)… We look for earnings to rebound to $8.60 a share in 2024.”

MRK Noteworthy Strategic Developments:

MRK FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=MRK

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MRK SWOT Analysis: Internal Strengths: •

Exceptional customer experience strategy with personalization and innovation.

•

Sustainable margins and high customer retention.

•

Strong talent recruitment and focus on digital transformation.

Internal Weaknesses: •

High operating costs and overdependence on dominant products.

•

Vulnerability to powerful channel partners and slow adaptation to change.

•

Slow decision-making and limited market penetration in new regions.

External Opportunities: •

Leverage digital tech, government spending, and 5G expansion.

•

Reconfigure the business model and use analytics for an advantage.

•

Collaborate with new partners, adopt manufacturing automation, and capitalize on changing consumer behavior.

External Threats: •

Declining consumer confidence and shorter product life cycles.

•

European instability and trade wars.

•

An aging population and economic stagnation with rising wages.

•

Regulatory challenges and cybersecurity threats.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=MRK

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=MRK,P

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MICROSOFT (MSFT) QUARTERLY MAVERICK REPORT December 24, 2023, $374.58 Microsoft Business Description: Microsoft is a technology company involved in software, services, devices, and solutions. Founded in 1975 by Paul Allen and Bill Gates and is headquartered in Redmond, Washington. It operates through three main segments: •

Productivity and Business Processes: Includes Office products, Microsoft Teams, Microsoft 365, LinkedIn, and Dynamics business solutions.

•

Intelligent Cloud: Encompasses Azure, Server products, and cloud services, as well as Enterprise Services.

•

More Personal Computing: Involves Windows, Devices like Surface and gaming, and Search and news advertising.

MSFT Maverick Guidance: •

Short-term technical buy/sell recommendation: BUY but with valuation concerns.

•

Long-term portfolio recommendation: BUY AT A REASONABLE PRICE

•

Many investors believe Microsoft is the superior Dow 30 company.

•

10-year Average Annual Total Return: +28.1% (#1 in Dow 30)

MSFT Consideration for Maverick Portfolio: •

MSFT is appropriate for all risk profiles. The stock fits into all portfolios, from Maverick CONSERVATIVE portfolio to Maverick AGGRESSIVE GROWTH

MSFT Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY

TipRanks = STRONG BUY

•

Consensus: 37 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 36 Buy, 1 Hold, and zero Sell.

•

Based on 37 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $422.91, with a high forecast of ^00 (UP FROM $475) and a low forecast of $375. The average price target represents a +12.9% change from a recent price of $374.58.

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•

Dividend Yield: $0.75 per share paid quarterly to yield 0.75%. Dividend growth for 15+ years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com=

Daily (NEUTRAL)

Weekly (STRONG BUY)

o TipRanks=

Daily (STRONG BUY)

Weekly (BUY)

MSFT Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

3 of 5

•

Beta:

0.90

•

Stock’s Price Stability:

95/100

•

Price Growth Persistence:

100/100

•

Earnings Predictability:

95/100

•

Future Average Annual PE:

23.5

•

Current PE:

36.0

•

Average Annual Revenue Growth in the past 5 years:

+13.5%

•

Average Annual Revenue Growth for the next 5 years:

+9.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+20.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+10.0%

•

Average Annual Earnings Growth in the past 5 years:

+22.0%

•

Average Annual Earnings Growth for the next 5 years:

+11.5%

•

Average Annual Dividend Growth in the past 5 years:

+10.0%

•

Average Annual Dividend Growth next 5 years:

+9.0%

•

Average Annual Dividend Yield 3 to 5 years:

+1.0%

MSFT Financial Performance: •

EPS: o 2020:

$5.76

o 2021:

$8.05

o 2022:

$9.21

o 2023:

$9.81

o 2024:

e$11.00

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•

PE: o Current PE:

36.0

o Forward PE:

28.7

o PEG Ratio:

2.33

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $37.29

End price/share:

$374.66

o Starting shares: 268.17

Ending shares:

318.44

o Dividends reinvested/share: $18.83 o Total Return: 1,093.06%

AVERAGE ANNUAL TR:

28.13%

o Starting:

Ending investment:

$119,344.72

$10,000.00

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 1Q2024 FY2024 (Reported Oct. 24) Highlights from the first quarter of fiscal year 2024 compared with the first quarter of fiscal year 2023 included: •

Microsoft Cloud revenue increased +24% to $31.8 billion.

•

Office Commercial products and cloud services revenue increased by +15%, driven by Office 365 Commercial growth of +18%.

•

Office Consumer products and cloud services revenue increased +3%, and Microsoft 365 Consumer subscribers grew to 76.7 million.

•

LinkedIn revenue increased by +8%.

•

Dynamics products and cloud services revenue increased +22%, driven by Dynamics 365 growth of 28%.

•

Server products and cloud services revenue increased +21%, driven by Azure and other cloud services growth of 29%.

•

Windows revenue increased by +5%, with Windows original equipment manufacturer licensing (“Windows OEM”) revenue growth of +4% and Windows Commercial products and cloud services revenue up by 8%.

•

Devices revenue decreased -22%.

•

Xbox content and services revenue increased +13%.

•

Search and news advertising revenue, excluding traffic acquisition costs, increased +10%.

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June 2023 Q4 FY 2023 •

Microsoft reported strong results for Q4 FY 2023, with an approximately +8% YoY increase in revenue to $56.2 billion.

•

The full-year revenue increased by 7%, and net income over the 12 months rose by +20% to $20.1 billion.

•

The Intelligent Cloud segment, driven by Azure and cloud services, grew by about +20%, accounting for about 43% of total revenue.

•

Other segments, Productivity and Business Processes (33% of total revenue) and More Personal Computing (25% of total revenue) saw +10% higher and -3% lower growth, respectively.

•

Full-year earnings grew to $9.81 per share from $9.21 the prior year.

•

Revenue from LinkedIn rose by +5% during the quarter.

March 2023 Q3 FY 2023 •

Microsoft reported strong results for Q3 FY 2023, with a 7% YoY increase in revenue to $52.9 billion.

•

Net income rose 9% to $18.3 billion during the same period.

•

The Intelligent Cloud segment, driven by Azure and cloud services, grew by 27%, accounting for approximately 42% of total revenue.

•

Other segments, Productivity and Business Processes (33% of total revenue) and More Personal Computing (25% of total revenue) saw 10% higher and 9% lower growth, respectively.

•

Earnings per share increased to $2.45 from $2.22 the prior year.

•

Microsoft laid off 10,000 employees (5% of the workforce) in fiscal Q3.

•

The company's expansion plans include the planned acquisition of video game maker Activision, although the FTC has filed a lawsuit challenging the $69 billion deal.

•

Microsoft's partnership with OpenAI (ChatGPT) can impact search engines and is expected to be incorporated into Microsoft's products.

•

Slowing demand for personal computers is a challenge, and revenue from Windows OEM and Devices is expected to decline.

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December 2022 Q2 FY 2023 •

Microsoft reported mixed results for Q2 FY 2023, with a 2% YoY increase in revenue to $52.7 billion.

•

Net income decreased by 12% to $20.4 billion during the same period.

•

The Intelligent Cloud segment, driven by Azure and cloud services, grew by 18% and accounted for approximately 40% of total revenue.

•

Other segments, Productivity and Business Processes (32% of total revenue) and More Personal Computing (27% of total revenue) saw 7% higher and 19% lower growth, respectively.

•

Earnings per share slid to $2.20, down from $2.48 in the previous year, partly due to unfavorable foreign exchange impacts.

•

Microsoft announced plans to lay off around 10,000 employees before April 2023, representing approximately 5% of its workforce.

•

Despite regulatory challenges, expansion plans include the proposed $69 billion acquisition of video game maker Activision.

•

Challenges such as slowing demand for personal computers and a weaker advertising market impact earnings.

MSFT 3-to-5-year Value Line Operational and Financial Outlook: •

Strong continued growth in revenue and earnings is expected.

•

The company's long-run outlook is optimistic, focusing on capitalizing on opportunities in areas like automation.

MSFT Noteworthy Strategic Developments: •

Microsoft is expanding its reach in Artificial Intelligence (AI) and making Meta's AI language model, Llama2, available on Azure.

•

The company's US$68.7 billion acquisition of Activision was approved by regulators concerned about the deal's potential impact on cloud gaming competition.

MSFT FinViz Snapshot: https://finviz.com/screener.ashx?v=341&f=idx_dji&o=roi&t=MSFT

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MSFT SWOT Analysis: Internal Strengths •

Brand Loyalty: Microsoft's long-standing position as a leading OS and software provider has established strong brand loyalty among users. With more than 90% market share in PC OS, many people are familiar with and continue to use Microsoft products. Even open-source OS options struggle to compete due to this loyalty.

•

Brand Reputation: Microsoft's brand is recognized as one of the most valuable in the world, with a value of $57.8 billion. It is ranked 7th by Forbes; its reputation contributes to increased sales and market share.

•

Easy-to-Use Software: Microsoft's Windows OS and Office software are popular not only because of the company's market dominance and strong distribution channels but also because of their quality and user-friendliness.

•

Strong Distribution Channels: Microsoft collaborates with major computer hardware producers and retailers, ensuring that computers come with preinstalled Windows software. Strategic investments in companies like Dell and Nokia further solidify these relationships.

•

Robust Financial Performance: Microsoft's financial performance is impressive, with a +15% revenue growth from FY 2020 to 2021. The company also holds over $130 billion in cash and cash equivalents, which can be used for acquisitions and substantial investments in research and development.

Internal Weaknesses •

Poor acquisitions and investments. Few of Microsoft’s acquisitions were successful and brought revenues, products, and new skills and competencies to the company. Massive, LinkExchange, WebTV, and Danger are just a few examples of multimillion-dollar acquisitions made by Microsoft that soon shut down or were divested.

•

Dependence on hardware manufacturers. Microsoft is a giant software corporation that does not produce its hardware and depends on computer hardware manufacturers to develop Windows OS products. If cheap and popular alternative OS would appear, hardware manufacturers may choose the alternative, and Microsoft could do little to change the situation.

•

Criticism over security flaws. Windows OS, the main Microsoft product, has been heavily criticized for being weak against various virus attacks. Compared to other OS, Windows is the least protected against such attacks.

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•

Mature PC markets. Only recently has Microsoft entered the mobile technology sector, and it still heavily depends on its OS and software sales for standalone and laptop computers. The market for these products has matured, and Microsoft will find it harder to grow revenues in these sectors.

•

Slow to innovate. Microsoft has huge R&D resources and a great position to enter new markets with innovative products, but it constantly fails. It had an opportunity to be the first player in online advertising but missed the opportunity. Its entrance to mobile OS was too late, while Google and Apple captured the market share.

External Opportunities •

Poor Acquisitions and Investments: Microsoft has a history of unsuccessful acquisitions that didn't bring the company the expected revenues, products, or skills. Examples like Massive, LinkExchange, WebTV, and Danger highlight this issue.

•

Dependence on Hardware Manufacturers: Microsoft, primarily a software company, relies on computer hardware manufacturers to develop Windows OS products. If a cheaper and more popular alternative OS emerges, hardware manufacturers might switch, posing a significant challenge for Microsoft.

•

Criticism Over Security Flaws: Windows OS, Microsoft's flagship product, has faced criticism for its vulnerability to virus attacks. It's considered less secure than other operating systems, affecting its reputation.

•

Mature PC Markets: Microsoft has traditionally depended on OS and software sales for personal and laptop computers. These markets have matured, making it more challenging for the company to achieve significant revenue growth in these sectors.

External Threats •

Intense Competition in Software Products: Microsoft faces fierce competition in the software market, especially for operating systems in both PC and mobile segments. Competitors like Google and Apple have already established strong positions.

•

Open-Source Projects: The rise of successful open-source projects, such as Linux OS and Open-Source Office, provides free alternatives to Microsoft's paid products, potentially eroding its market share.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=MSFT

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=MSFT,P

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NIKE (NKE) QUARTERLY MAVERICK REPORT December 24, 2023, $108.04 Nike Business Description: NIKE is a global company specializing in footwear, apparel, equipment, and accessories, distributed through retail accounts, NIKE-owned stores, online sales, and independent distributors. Six categories include running, basketball, the Jordan brand, football, training, and sportswear, with a separate product line for kids. The company employs about 79,100, including part-time workers. NKE Maverick Guidance: •

Short-term recommendation: From a BUY, with Triple-Top Breakout Nov. 3 to a Dec. 22 High Pole Warning, we now recommend a pause in buying. After reporting on Dec. 22, the price plunged from 122.5 to 108.

•

Long-term recommendation: NEGATIVE LT TREND SINCE START OF 2022.

•

BUY ON SHORT-TERM PULLBACKS to 95-102 as Forward PE is still too high.

•

Nike’s world-leading position in the footwear and accessories market, growth in North America and Europe, and emerging demand in China indicate a positive outlook, although probably a slower one in 2024.

NKE Consideration for Maverick Portfolios: 1. Maverick #2 CAUTIOUS GROWTH: For risk profiles 16-21, seeking balanced growth and stability for modest medium-term returns. 2. Maverick #3 MODERATE GROWTH: Suited for risk profiles 22-29, balancing ambition with caution using a mix of conservative and moderately aggressive Dow 30 stocks. 3. Maverick #4 DYNAMIC GROWTH: Tailored for risk profiles 30-35, embracing higher risk for potential higher returns with a focus on highgrowth-oriented Dow 30 stocks. NKE Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= MODERATE BUY

•

Consensus: 31 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 20 Buy, 10 Hold, and 1 Sell.

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Based on 31 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $123.82, with a high forecast of $150 and a low forecast of $90. The average price target represents a +14.6% change from a recent price of $108.04. •

Dividend Yield: $0.37 per share paid quarterly to yield 1.17%. Dividend growth for 11 years.

•

Technical Sentiment (from Technical Indicators and Moving Averages): o Investing.com = Daily (STRONG BUY) and Weekly (BUY) o TipRanks = Daily (BUY) and Weekly (NEUTRAL)

NKE Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

1 of 5

•

Technical Rank:

4 of 5

•

Stock’s Price Stability:

65/100

•

Price Growth Persistence:

80/100

•

Earnings Predictability:

60/100

•

Average Annual PE:

20.0

•

Forward PE:

29.0

•

Average Annual Sales Growth in the past 5 years:

+8.0%

•

Average Annual Sales Growth for the next 5 years:

+8.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+7.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+16.0%

•

Average Annual Earnings Growth in the past 5 years:

+8.5%

•

Average Annual Earnings Growth for the next 5 years:

+17.0%

•

Average Annual Dividend Growth in the past 5 years:

+11.5%

•

Average Annual Dividend Growth next 5 years:

+12.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+1.4%

•

Current Dividend Yield:

+1.17%

NKE Financial Performance •

EPS: o 2020:

$1.85

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•

o 2021:

$3.56

o 2022:

$3.75

o 2023:

$3.23

o 2024:

e$3.75

o Current PE:

36.6

o Forward PE:

27.2

o PEG Ratio:

2.53

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $39.08

End price/share:

$108.02

o Starting shares: 255.89

Ending shares:

285.54

o Dividends reinvested/share: $8.99 o Total Return: 208.44%

Average Annual TR:

11.92%

o Starting: $10,000.00

Ending investment:

$30,846.86

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 2Q FY2024 (Dec. 22 report for the quarter ending November 2023) •

Revenues increased 1% to $13.4 billion compared to the prior-year quarter but decreased -1% on a currency neutral basis.

•

Cost-Cutting Measures: Nike plans to cut costs by $2 billion over the next three years, anticipating restructuring charges of $400-450 million in the current quarter. The company aims to simplify product assortment, increase automation, and streamline the organization.

•

Financial Impact: Nike’s stock fell about 12% in Dec. 22 premarket trading following the announcement. Year-to-date, Nike shares were up 4.7%, lagging behind S&P 500 gains. The company lowered its full-year revenue growth outlook to approximately 1%.

•

Market Response: Retailer Foot Locker, heavily reliant on Nike products, fell about 8% in extended trading. Nike’s fiscal second quarter showed strong earnings but fell short of sales estimates for the second consecutive quarter.

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•

Gross Margin and Inventory: Nike’s gross margin increased by 1.7 percentage points to 44.6%, exceeding estimates. The company’s inventories fell 14% to $8 billion during the quarter.

•

China’s Impact: Sales in China fell short of analyst expectations at $1.86 billion. Despite this, China’s retail sales climbed 10.1% in November, the fastest pace since May, driven by car sales and restaurants.

•

Outlook and Commentary: Nike’s CEO, John Donahoe, remained upbeat about Black Friday week sales, outpacing the industry with close to 10% growth. Despite the cost-cutting focus, Nike emphasized strategic pricing actions and lower ocean freight rates as factors contributing to gross margin improvement.

•

Future Investments: Nike plans to reinvest savings from cost-cutting initiatives into future growth, innovation, and long-term profitability.

•

Analyst Expectations and Performance: Nike beat earnings expectations with $1.03 per share compared to the expected 85 cents. However, revenue slightly missed estimates at $13.39 billion, compared to the expected $13.43 billion.

•

Global Market Performance: Sales in Europe, the Middle East, and Africa fell short of estimates, while revenue surpassed expectations in North America, Asia-Pacific, and Latin America.

1Q FY2024 (Oct. 14 report for the quarter ending August 2023) •

Q1 2024 revenues reached $12.9 billion, up 2% compared to the previous year.

•

NIKE Direct revenues were $5.4 billion, growing 6% year-over-year, with growth in all regions.

•

NIKE Brand Digital sales increased 2%.

•

Wholesale revenues were $7.0 billion, flat compared to the previous year on a reported basis and up 1% on a currency-neutral basis.

•

Gross margin decreased slightly to 44.2%.

•

Diluted earnings per share for the quarter was $0.94, up 1%.

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•

NIKE shares have declined to below $100 this year, with mixed performance in North America but improved results in China.

•

Expectations of a 16% increase in earnings per share for fiscal 2024.

•

Inventory reduced by 10% YoY shows potential for more full-price sales.

•

Positive outlook for digital sales as the year progresses, contingent on a more favorable macroeconomic environment.

4Q2023 (for the quarter ending May 2023) •

A 14% decline in earnings despite a 16% increase in YoY sales.

•

The lower earnings were attributed to promotional pricing.

•

NIKE had been dealing with bloated inventory but saw an improvement, with the year-end inventory almost flat compared to the previous year.

•

FY2024 Earnings are expected to reach all-time high $3.80 per share..

•

Wholesale relationships are being restored as consumer spending tightens and consumer preferences change.

•

NIKE's Direct channel receipts were up 15% YoY to $5.5 billion.

•

NIKE is set to deliver merchandise to Macy's and DSW in October, contributing to a sales target of just below $54 billion for fiscal 2024.

3Q2023 (for the quarter ending February 2023) •

NIKE had strong Q3 results, with sales up ~$1 billion above estimates.

•

Ongoing markdowns and discounting to clear inventory boosted sales, but margins and profitability were down year-over-year.

•

Earnings reached $0.79 per share, slightly better than expected.

•

Margins are expected to take a larger hit in the final quarter as the company clears out more inventory for a fresh start in the next FY.

•

Full-year earnings are expected to slide to $3.25 per share, even as the sales target climbs to nearly $51 billion.

The 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates continued revenue, earnings growth.

•

The company's long-run outlook is cautiously optimistic.

Noteworthy Strategic Developments: FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=NKE Bill Cara: Cracking the Maverick Code

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NKE SWOT Analysis Internal Strengths •

Strong Brand Awareness and Value: Nike is a globally recognized brand with a unique name and iconic swoosh symbol. It ranks 10th in Interbrand's global brand ranking, with a brand value of $50.2 billion.

•

Huge Customer Base: Nike has millions of loyal customers worldwide, contributing to a market capitalization of $193 billion as of April 2023.

•

Sustainability Focus: Nike aims to address environmental issues and contribute to solutions under CEO Mark Parker's leadership.

•

Iconic Relationships: Long-term partnerships, such as the one with Michael Jordan, have resulted in successful products like "Air Jordan 1 Shoes."

•

Side Brands: Nike's side brands, including Converse and Hurley, have contributed to its enduring success.

•

Low Manufacturing Costs: Nike outsources manufacturing to countries with favorable wage structures, keeping manufacturing costs low.

•

In-house Professionals: Nike's dedicated team conducts thorough research for product design.

•

Superior Marketing: Nike invests heavily in marketing, with successful social media campaigns and endorsements.

•

Black Community Support: Nike's "Don't Do It" campaign supports Black communities against racism.

•

High Market Share: Nike captures 39% of the global athletic footwear market and 13% of the athletic apparel market.

Internal Weaknesses •

Poor Labor Conditions in Foreign Countries: Nike has faced criticism for poor labor conditions, including forced labor, child labor, low wages, and unsafe working conditions.

•

Retailers Have a Stronger Hold: Nike's dependence on retailers for 65% of its product sales limits its ability to control pricing.

•

Pending Debts: Despite apparent prosperity in income statements, Nike has a growing long-term debt, raising financial concerns.

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•

Lawsuits: Nike has faced discrimination and equal pay lawsuits, impacting its image.

•

Lack of Diversification: Overreliance on sporting apparel leaves Nike vulnerable to market changes, such as the pandemic's impact on sports events.

•

Contradicting Strategies: Nike's "Move to Zero" sustainability initiative appears inconsistent with its emphasis on innovation over sustainability.

•

Dependency on North America: Despite global reach, Nike relies heavily on the US market, which exposes it to market shocks and economic downturns.

•

Sexual Harassment: Reports of sexual harassment and a toxic work environment have tarnished Nike's image.

•

Controversial Labor Practices: Historical unethical labor practices still affect Nike's reputation.

•

Worrying Financial Indicators: Nike's increasing long-term debt and declining profit margins raise concerns.

•

Unfavorable Relationship With Retailers: Nike's reliance on third-party retailers can lead to lower profit margins and issues with counterfeit products.

•

Revenue Over-dependence on Footwear: Over 60% of Nike's revenue comes from footwear, leaving it vulnerable to product-related shocks.

•

Cultivation of Luxury Brand Image: Nike's shift towards luxury brand collaborations may alienate its traditional customer base.

•

Reduced Quality Control: Outsourcing manufacturing can reduce control over product quality and lead to counterfeit products.

External Opportunities •

Emerging Markets: Nike sees opportunities in emerging markets like India, China, and Brazil.

•

Innovative Products: Nike focuses on innovation, particularly in technology and health-related products.

•

Efficient Integration: Nike aims to improve supply chain efficiency by considering the acquisition of manufacturers.

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•

Cutting Ties with Big Retailers: Nike is ending partnerships with large multi-brand retailers to enhance product positioning and customer experience.

•

Acquired Artificial Intelligence Start-up: Nike acquired Celect, a predictive analytics platform, to improve online sales and predict customer behavior.

•

Merges with the Metaverse: Nike is exploring the virtual world through acquisitions like RTFKT to market digital and physical products.

•

Exiting Wholesale Distribution: Nike is moving away from wholesale distribution in the US to increase profit margins and control the customer experience.

•

End Use of Kangaroo Leather: Nike is discontinuing using kangaroo leather in its products in favor of synthetic materials.

•

Consumer Direct Strategy: Nike is shifting towards digital business and online sales to adapt to changing consumer behavior.

•

Investing in New Markets: Nike is expanding into new markets, including women's sportswear, to diversify its product range and reduce reliance on North America.

•

Increasing Their Product Range: Nike is exploring sports technology and promoting a wider range of products.

•

Tapping Into the Future: Nike is using artificial intelligence to improve e-commerce and investing in the Metaverse.

•

Introducing Anti-counterfeiting Technology: Nike is taking steps to combat counterfeit products through collaborations and reporting platforms.

•

Investing in Sustainability: Nike incorporates sustainable materials and recycling initiatives into its products.

External Threats •

Counterfeit Products: Counterfeit products can harm Nike's reputation and revenue. They are a global problem, with some merchants and retailers selling low-quality fake Nike products at lower prices, potentially tarnishing the brand's image.

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•

Increased Competitive Pressure: While dominating the athletic industry, competition from emerging brands poses a threat. To stay competitive, Nike must invest heavily in marketing and focus on designing innovative products tailored to athletes' needs.

•

Marketing Budget Pressure: Rivals like Under Armour, Adidas, and Lululemon are increasing their marketing and advertising spending, intensifying the competition for Nike.

•

Currency Foreign Exchange Risks: Nike is affected by fluctuating foreign exchange rates as it operates globally, which can impact its revenue since it reports earnings in US dollars.

•

Patent Disputes: Nike has been involved in patent disputes, particularly with Adidas, which can have public relations consequences and legal costs.

•

Economic Uncertainty: Like any company, Nike is vulnerable to the negative effects of a global recession, which can lead to declining sales.

•

Trade Tensions: Nike depends on markets in China and the US, and trade tensions between these countries could threaten a significant portion of its sales.

•

Risk to Kangaroo Population: Nike has faced accusations of endangering the kangaroo population due to its use of kangaroo skin in products. This has prompted calls for alternative, plantbased materials.

•

Retail and Warehouse Thefts: Nike experiences theft throughout its supply chain and in US retail stores, a costly problem..

•

Patent Conflict towards Adidas Primeknit Shoes: It filed a lawsuit against Adidas, alleging patent infringement related to shoe technology. The dispute has legal and reputation implications.

•

Competition From Other Sports Brands: While Nike is a dominant player, competitors like Adidas have been growing faster and making celebrity endorsements, challenging Nike's market position.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=NKE

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=nke,P

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PROCTER & GAMBLE (PG) QUARTERLY MAVERICK REPORT December 24, 2023, $145.28 Procter & Gamble Business Description: Established in 1837, P&G is a global consumer product company with beauty, grooming, healthcare, fabric and home care, and family care segments. Notable brands include Pantene, Gillette, Crest, Tide, and Pampers. PG Maverick Guidance: •

Short-term recommendation: 20231215: SELL/AVOID, W EXTENDED ON DOWNSIDE. NEARING ACCUMULATION ZONE

•

Long-term recommendation: BUY in ACCUMULATION ZONE

•

The superior Consumer Staples company. They reported strong performance in 1QFY24 and in fiscal year 2023 across multiple quarters.

•

When evaluating the stock's high valuation, it's crucial to consider potential risks associated with a mature business model.

PG Consideration for Maverick Portfolio: •

PG is considered appropriate for Maverick portfolio from the #1 CAUTIOUS GROWTH for Conservative investors to #5 AGGRESSIVE GROWTH for investors who are open to significant risk for the potential of maximum returns.

PG Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= MODERATE BUY.

•

Consensus: 17 Wall Street analysts have offered 12-month price targets for PG in the last 3 months. There are 11 Buy, 6 Hold, and zero Sell. Based on 18 Wall Street analysts offering 12-month price targets for Procter & Gamble in the last 3 months. The average price target

• •

is $163.31 with a high forecast of $177 and a low forecast of $139. The average price target is a 12.4% change from the recent price of $145.28. Dividend Yield: $0.94 per share paid quarterly to yield 2.59%. Dividend growth for 15+ years. Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com= Daily (STRONG SELL)

Weekly (STRONG SELL)

o TipRanks=

Weekly (NEUTRAL)

Daily (SELL)

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PG Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

2 of 5

•

Beta:

0.70

•

Stock’s Price Stability:

100/100

•

Price Growth Persistence:

65/100

•

Earnings Predictability:

100/100

•

Projected Average Annual PE:

25.0

•

Forward PE:

23.7

•

Average Annual Revenue Growth in the past 5 years:

5.5%

•

Average Annual Revenue Growth for the next 5 years:

4.5%

•

Average Annual Cash Flow Growth in the past 5 years:

6.5%

•

Average Annual Cash Flow Growth for the next 5 years:

5.0%

•

Average Annual Earnings Growth in the past 5 years:

8.0%

•

Average Annual Earnings Growth for the next 5 years:

6.0%

•

Average Annual Dividend Growth in the past 5 years:

5.0%

•

Average Annual Dividend Growth for the next 5 years:

5.5%

•

Projected Average Annual Dividend Yield 3 to 5 years:

2.3%

•

Current Dividend Yield:

2.57%

PG Financial Performance •

•

EPS: o FY2020:

$5.12

o FY2021:

$5.66

o FY 2022:

$5.81

o FY 2023:

$5.90

o FY2024:

e$6.25

o Current PE:

24.4

o Forward PE:

21.0

o PEG Ratio:

3.04

PE:

10-Year AATR:

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o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $82.01

End price/share:

$145.94

o Starting shares: 121.94

Ending shares:

162.74

o Dividends reinvested/share: $30.24 o Total Return: 137.51%

Average Annual TR:

9.03%

o Starting: $10,000.00

Ending investment:

$23,744.50

Quarterly Report Summaries (including Revenue, Cash Flow, Earnings): September 2023 Q1FY24 (Reported Oct. 18) •

Net sales for the first quarter of fiscal year 2024 were $21.9 billion, indicating a 6% increase from the previous year.

•

Organic sales, excluding foreign exchange and acquisitions/divestitures impacts, grew by 7%.

•

Diluted net earnings per share rose to $1.83, marking a 17% increase.

•

Operating cash flow amounted to $4.9 billion, and net earnings were $4.6 billion for the quarter.

•

P&G allocated $3.8 billion to shareholders through dividends and stock repurchases.

•

Their guidance for fiscal 2024 includes a projected sales growth of 2-4% and organic sales growth of 4-5%.

•

They expect an adjusted diluted net earnings per share growth of 6-9%.

•

The company anticipates an effective tax rate of 21% for the fiscal year.

•

P&G plans to invest in capital spending to support its business operations.

June 2023 (Q4): •

Sales and earnings increased by 5% and 13%, respectively, year over year.

•

Organic sales (excluding currency effects and portfolio changes) advanced by 8% during the quarter.

•

Management's efforts and pricing initiatives contributed to the positive results.

•

In the coming quarters, P&G will likely face challenges like inflation, operating costs, and consumer spending cutbacks in some categories.

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•

Sales are expected to advance by around 3% the following year, and core earnings per share should increase by 5-10%.

•

P&G plans to allocate 5% of sales to its fiscal 2024 capital budget, focusing on product innovation and brand equity.

•

While the stock has recovered, its capital appreciation potential is limited in the next few years.

•

Nevertheless, it remains an appealing choice for conservative investors due to its defensive nature and attractive dividend yield.

•

March 2023 (Q3):

•

P&G reported better-than-expected results, with a 3% increase in earnings per share and a 4% rise in sales.

•

Organic sales increased by 7%, and currency-neutral profits grew by 13%.

•

The company made modest progress despite cost and operating challenges, supported by strategic improvements, price hikes, and a better product mix.

•

P&G is expected to achieve low single-digit growth in sales and profits through fiscal 2024.

•

Management's focus on productivity improvements, cost controls, and price hikes should bolster long-term prospects.

PG 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates continued growth in revenue and earnings.

•

The company's long-run outlook is optimistic.

PG Noteworthy Strategic Developments: PG FinViz Snapshot: https://finviz.com/screener.ashx?v=341&p=m&t=PG

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PG SWOT Analysis: Internal Strengths •

Diverse, strong brand portfolio (e.g., Pampers, Tide, Gillette).

•

Extensive global presence and distribution network.

•

Significant investment in research and development.

•

Effective marketing and advertising expertise.

•

Wide range of product offerings.

•

Consistent strong financial performance.

•

Commitment to sustainability and corporate responsibility.

•

Skilled, diverse workforce fostering innovation.

Internal Weaknesses •

Reliance on mature markets prone to economic slowdowns.

•

Intense competition from major consumer goods companies.

•

Risk of brand dilution with a vast brand portfolio.

•

Vulnerability to supply chain disruptions globally.

•

Limited presence in specific niche markets.

•

Exposure to regulatory and compliance risks.

•

Potential slow response to changing consumer preferences.

•

Negative impacts from cost-cutting measures on long-term competitiveness.

External Opportunities •

Reliance on mature markets' economic fluctuations.

•

Fierce competition from major rivals.

•

Brand dilution risk due to numerous brands.

•

Vulnerability to global supply chain disruptions.

•

Limited presence in niche markets.

•

Regulatory and compliance exposure.

•

Slow response to evolving consumer preferences.

•

Potential long-term competitiveness issues from cost-cutting.

External Threats: •

Fierce competition from major and local players.

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•

Risk from evolving consumer preferences.

•

Vulnerability to economic fluctuations.

•

Exposure to regulatory complexities.

•

Susceptibility to supply chain disruptions.

•

Threats from counterfeit products and brand infringement.

•

Pressure from rising raw material and labor costs.

•

Necessity for constant technological adaptation.

•

Need to meet environmental and social expectations.

•

Risk of losing key personnel's expertise.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=PG

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=PG,P

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TRAVELERS CO’S (TRV) QUARTERLY MAVERICK REPORT December 24, 2023, $185.80 Travelers Business Description: •

The Travelers Companies, Inc. is a global insurance provider offering commercial, personal property, and casualty insurance for businesses, government entities, associations, and individuals worldwide. Offerings include property and liability coverage, workers' comp, commercial automobile, general liability insurance, surety and financial liability coverage, and personal auto and homeowners insurance.

TRV Maverick Guidance: •

Short-term technical buy/sell recommendation: 20231215: CAUTIOUS BUY, W DOUBLE-TOP BREAKOUT NOV 1 AND 20

•

Long-term recommendation: BUY/NEUTRAL,

•

Fundamentals show weaknesses in growth and profitability, yet the multiples valuation suggests potential value for long-term investors.

•

The storyline encourages Mavericks to monitor the unfolding narrative closely, assessing the company's ability to improve its growth profile and contain operating costs, with potential for an enticing entry point.

•

These shares offer solid 3 to 5 years risk-adjusted Total Return potential.

•

A well-covered dividend adds to the stock's appeal.

TRV Consideration for Maverick Portfolio: •

Appropriate for risk profile score of 10-15. The Conservative Investor prioritizes capital preservation and is risk-averse. The Maverick #1 CONSERVATIVE portfolio is tailored for the Conservative Investor who prioritizes capital preservation and is risk-averse.

•

TRV Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= HOLD

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•

Consensus: 12 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 3 Buy, 9 Hold, and zero Sell. Based on 12 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $190.60, with a high forecast of $217 and a low forecast of $172. The average price target represents A +2.6% change from the recent price of $185.80.

•

Dividend Yield: $1.00 per share paid quarterly to yield 2.08%. Dividend growth for over 15 years.

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com= Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Weekly (BUY)

Daily (STRONG BUY)

TRV Value Line Guidance: •

Company Financial Strength Rating:

A+

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

5 of 5

•

Beta:

0.95

•

Stock’s Price Stability:

95/100

•

Price Growth Persistence:

65/100

•

Earnings Predictability:

65/100

•

Average Annual PE:

15.0

•

Forward PE:

10.4

•

Average Annual Premium Growth in the past 5 years:

+8.0%

•

Average Annual Premium Growth for the next 5 years:

+7.0%

•

Average Annual Invest Income Growth in the past 5 years:

+5.5%

•

Average Annual Invest Income Growth for the next 5 years: +5.5%

•

Average Annual Earnings Growth in the past 5 years:

+5.5%

•

Average Annual Earnings Growth for the next 5 years:

+7.5%

•

Average Annual Dividend Growth in the past 5 years:

+6.0%

•

Average Annual Dividend Growth next 5 years:

+4.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+1.5%

•

Current Dividend Yield:

+2.11%

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TRV Financial Performance •

•

EPS: o 2020:

$10.45

o 2021:

$13.98

o 2022:

$12.39

o 2023:

e$12.25

o 2024:

e$16.80

o Current PE:

19.73

o Forward PE:

10.43

o PEG Ratio:

1.29

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $89.85

End price/share:

$187.09

o Starting shares: 111.30

Ending shares:

140.23

o Dividends reinvested/share: $30.70 o Total Return: 162.35%

Average Annual TR:

10.12%

o Starting: $10,000.00

Ending investment:

$26,228.70

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 (September) (Reported Oct. 18) •

Travelers reported net income of $404 million, with earnings per diluted share at $1.74.

•

Core income for the quarter was $454 million, and core earnings per diluted share were $1.95.

•

Strong underlying underwriting income of $868 million pre-tax, a +43% increase.

•

Consolidated combined ratio of 101.0% and an underlying combined ratio of 90.6%, showing a 1.9-point improvement.

•

Catastrophe losses reached $850 million pre-tax, up from $512 million pre-tax in the previous year's quarter.

•

Net unfavorable prior year reserve development of $154 million pre-tax, primarily due to asbestos reserves.

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•

Record net written premiums of $10.493 billion, a +14% increase from the prior year.

•

Strong renewal premium changes in all three segments.

•

Net investment income increased by +30% pre-tax, primarily driven by strong fixed-income returns.

•

Core income decreased due to higher catastrophe losses and net unfavorable prior-year reserve development, offset by higher underlying underwriting gains and net investment income.

•

Net realized investment losses were $65 million pre-tax ($50 million after-tax), compared to $93 million pre-tax ($72 million after-tax) in the prior-year quarter.

2Q2023 (June) •

In the June quarter, Travelers faced challenges due to high catastrophe activity in the insurance market.

•

The combined ratio was 106.5%, significantly higher than the previous year's 98.3%.

•

Catastrophes (net of reinsurance) accounted for 16.1% of the combined ratio, up from 9% last year.

•

Severe storms and wildfires in the US led to high claims activity.

•

Positive factors included solid rate increases and higher net premiums earned.

•

Net investment income increased due to higher bond reinvestment rates.

•

Optimism for positive earnings comparisons starting in the September quarter as industry catastrophe levels return to normal.

•

Strong overall fundamentals make Travelers well-positioned for growth.

•

Expectations of high-single-digit earnings growth over 3 to 5 years.

•

Travelers’ size and diversification provide a competitive advantage.

•

Suitable for investors with an intermediate to longer-term horizon, with potential for short- and long-term gains.

1Q2023 (March) •

Travelers reported strong results for the March quarter, with earnings from operations at $4.11 per share.

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•

While it represented a moderate decline from the previous year's exceptionally strong performance, the company had a healthy quarter.

•

Travelers is expected to increase its earnings per share over the next two years.

•

The property/casualty (P/C) insurance market has been growing for some time, and the trend is likely to continue through the next year.

•

Catastrophes have driven insurers to raise rates during policy renewals, increasing net premiums earned.

•

Net investment income has been favorable due to higher bond reinvestment rates, influenced by Federal Reserve interest rate hikes.

•

Travelers maintain conservative investments, mostly in bonds.

•

The domestic economy's health is a factor to monitor, as it impacts rate increases' effectiveness.

•

Projected high single-digit earnings growth until 2026-2028, based on a solid economic backdrop.

•

A healthy balance sheet provides financial flexibility for dividend increases and stock repurchases.

TRV 3-to-5-year Value Line Operational and Financial Outlook: •

The outlook indicates continued growth in revenue and earnings.

TRV Noteworthy Strategic Developments: On Nov. 3, the company announced it had agreed to acquire Corvus Insurance Holdings, Inc. for approximately $435 million. Founded in 2017, Corvus is an industry-leading cyber insurance managing general underwriter powered by proprietary technology. TRV FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=TRV

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TRV SWOT Analysis: Internal Strengths •

First Mover Advantage: Pioneered various insurance policies, gaining a competitive edge.

•

Strong Reach and Customer Support: 24/7 customer support and local agents ensure accessibility and support.

•

Cost Structure: A low-cost structure allows affordable insurance with superior benefits.

•

Financial Position: Strong financial position with consecutive profits and accumulated reserves.

•

High Level of Customer Satisfaction: Strong customer relationships and brand equity.

•

Loyal Customer Base: Effective claims management results in a loyal customer base.

•

Strong Ratings: Facilitates financial transactions.

•

Global Presence: One of the largest insurance companies operating internationally with 30,000 employees.

•

Performance in New Markets: Expertise in succeeding in new markets.

•

Strong Dealer Community: Dealers promote products and invest in sales team training.

•

Mergers & Acquisitions: Successful integration of complimentary firms.

•

Go To Market Strategies: Effective strategies for product launches.

•

Automation: Consistency in product quality and scalability.

•

Product Innovation: Successful development of new products.

•

Good Returns on Capital Expenditure: Successful execution of projects and generating good returns.

Internal Weaknesses: •

Research and Development: Spending less than some industry competitors affects innovation.

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•

Diversity in the Workforce: Reliance on local workers hinders the integration of external talent.

•

High Employee Turnover Rates: Training costs increase due to frequent employee turnover.

•

Low Interest: US interest rates impact the profitability of Travelers' insurance.

•

High Dependence on US Markets: Exposes the company to high business risk.

•

Limited Brand Presence in Investment Management: Lagging behind global leaders.

•

Rigid Organizational Structure: Limits expansion into new product segments.

•

Poor Product Demand Forecasting: Results in missed opportunities and high inventory.

•

Challenges from New Entrants: Loss of market share in specific categories.

•

High Attrition Rate in Workforce: Spending on employee training.

•

Inefficient Financial Planning: Underutilization of available cash.

•

Inadequate Research and Development Investment: Inability to compete with leading industry players in innovation.

•

Ineffective Marketing Strategy: Unclear positioning and unique selling proposition.

External Opportunities: •

Social Media: Utilize social media for promotion, customer interaction, and after-sales services.

•

Transport Industry: Benefit from the growth in the transport sector, leading to increased auto insurance demand.

•

Globalization: Expand operations in other countries and enter new markets due to increased globalization.

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•

Future of Insurance Industry: Predicted global life premium insurance growth and increased demand for life insurance products.

•

Future Trends: Shift towards customer-centric insurance products based on personalized services and data.

•

US Commercial Real Estate: Positive prospects in the recovering US commercial real estate industry.

•

Property and Casualty Insurance: Positive trends leading to increased revenue opportunities.

•

Stable Free Cash Flow: Invest in new technologies and product segments with stable free cash flow.

•

Online Channels: Leverage investments in online platforms to attract new customers.

•

Government Green Drive: Procure Travelers products for state and federal government contractors.

•

Differentiated Pricing Strategies: Use new technology for improved pricing and service.

•

Market Development: Dilute competitors' advantages and increase competitiveness.

•

Environmental Policies: Seize opportunities in new technology and gain market share in the new product category.

•

Taxation Policy: Adapt to new taxation policies for higher profitability.

•

Economic Uptick: Capture new customers and market share with increased customer spending after economic recovery.

External Threats: •

Technological Advancements: Competitors' technological advancements may reduce Travelers' market share.

•

Competition: Ongoing competition can lead to price pressure and potentially lower market share.

•

Controversies & Allegations: Past controversies and allegations may affect Travelers' reputation.

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•

Fluctuating Interest Rates: Unstable interest rates can impact the financial environment.

•

Exchange Rate Fluctuations: Currency exchange rate fluctuations can affect international operations.

•

Eurozone Turmoil: Eurozone turmoil makes the US insurance industry vulnerable.

•

Growing Competition: Increasing competition in insurance categories erodes market share.

•

Political and Regulatory Changes: Changes in tax laws can adversely affect the sector.

•

Currency Fluctuations: Exposure to currency fluctuations in various markets worldwide.

•

Seasonal Demand: Seasonal demand for highly profitable products may be affected by unlikely events.

•

Local Distributors' Strength: Strong local distributors offer competition with higher margins.

•

Lawsuits: Potential lawsuits in various markets due to differing laws and product standards.

•

Environmental Regulations: New environmental regulations under the Paris Agreement can impact product categories.

•

Counterfeit Products: Imitation of counterfeit and low-quality products, particularly in emerging markets.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=TRV

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=TRV,P

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UNITEDHEALTH (UNH) QUARTERLY MAVERICK REPORT December 24, 2023 $520.31 UnitedHealth Business Description: UnitedHealth Group, the largest US health insurer, is a diversified health/wellbeing company. It has 400,000 employees that offer products/services to individuals through 4 operating segments: UnitedHealthcare (network-based health care benefits), OptumHealth, OptumInsight, and OptumRx (information and technology based health services, consulting, and Pharmacy Benefits Management). UNH Maverick Guidance: •

Short-term stock buy/sell recommendation: ACCUMULATE FOLLOWING WEAKNESS AFTER HIGH-RISK BREAKOUT NOV. 30. but BULLISHNESS REVERSED DEC 15

•

Long-term stock portfolio recommendation: LT BUY, VERY CAUTIOUS, HAD BEEN EXTENDED ON DOWNSIDE AND REVERSING

•

The 10-year Total Return of 23.3% is among the Dow 30 best.

•

Demonstrates strong financial performance, with revenue growth driven by its diversified business segments. Ability to manage rising costs displays resilience. Positive outlook, solid earnings predictability.

UNH Consideration for Maverick Portfolio: There are five portfolios appropriate for UnitedHealth (UNH). Here are the five portfolios and their corresponding attributes: #1. Conservative (Risk Profile Score=10-15): Prioritizing Capital Preservation • Minimal risk for capital preservation with low expected returns. #2. Cautious Growth (Risk Profile Score=16-21): Seeking Modest Returns • Accepting low-to-moderate risk for modest medium-term returns. #3. Moderate Growth (Risk Profile Score=22-29): Aiming for High Potential • Embracing moderate risk for high long-term potential returns. #4. Dynamic Growth (Risk Profile Score=30-35): Pursuing Substantial Gains • Willing to take above-average risk for substantial long-term gains. Bill Cara: Cracking the Maverick Code

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#5. Aggressive Growth (Risk Profile Score=36-45): Chasing Maximum Returns • High risk for maximum potential returns, accepting sizable drawdowns in volatile markets. UNH Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= MODERATE BUY TipRanks= STRONG BUY

•

Consensus: 18 Wall Street analysts have offered 12-month price targets for UnitedHealth in the last 3 months. There are 16 Buy, 1 Hold, and 1 Sell. (from TipRanks) Based on 17 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $596, with a high forecast of $660 and a low forecast of $503. The average price target represents an 8.4% change from the last price of $549.77. (from TipRanks)

•

Dividend Yield: $1.88 per share paid quarterly to yield 1.36%. Dividend growth for 15+ years. (from TipRanks)

•

Technical Sentiment (from Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Daily (NEUTRAL)

Weekly (BUY)

UNH Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

2 of 5

•

Beta:

1.00

•

Stock’s Price Stability:

85/100

•

Price Growth Persistence:

100/100

•

Earnings Predictability:

95/100

•

Average Annual PE:

17.0

•

Forward PE:

19.5

•

Average Annual Revenue Growth in the past 5 years:

+12.0%

•

Average Annual Revenue Growth for the next 5 years:

+11.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+14.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+11.0%

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•

Average Annual Earnings Growth in past 5 years:

+14.5%

•

Average Annual Earnings Growth for the next 5 years:

+13.5%

•

Average Annual Dividend Growth in the past 5 years:

+5.00%

•

Average Annual Dividend Growth next 5 years:

+18.0%

•

Projected Average Annual Dividend Yield in 3 to 5 years:

+1.5%

•

Current Dividend Yield:

+1.29%

UNH Financial Performance •

•

EPS: o 2020:

$16.88

o 2021:

$19.02

o 2022:

$22.19

o 2023:

e$24.95

o 2024:

e$27.90

o Current PE:

23.6

o Forward PE:

19.5

o PEG Ratio:

1.85

PE:

10-Year AATR: • Start date: 12/27/2013 • Start price/share: $74.69 • Starting shares: 133.89 • Dividends reinvested/share: • Total Return: 710.78% • Starting: $10,000.00

End date: End price/share: Ending shares: $40.24 Average Annual TR: Ending investment:

12/262023 $520.03 155.91 23.27% $81,063.04

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 3Q2023 Report: •

Revenues: $92.4 Billion (14% YoY growth).

•

Earnings from Operations: Grew by 14%.

•

Cash Flows from Operations: $6.9 Billion.

•

Earnings Per Share: $6.24, Adjusted Earnings Per Share: $6.56.

•

Broad-based growth at Optum and UnitedHealthcare.

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•

Increase in the number of people served.

•

Broadening the scope of services offered.

•

The full-year 2023 net earnings outlook is $23.60 to $23.75 per share.

•

Adjusted net earnings outlook: $24.85 to $25.00 per share.

2Q2023 Report: •

Revenues: $92.9 billion.

•

Broad-based growth in UnitedHealthcare and Optum branches.

•

Share earnings: $6.14.

•

Raised low end of full-year earnings outlook by $0.20/share.

•

Demonstrated strong confidence in future performance.

1Q2023 Report: •

Strong performance, leading to an increased full-year earnings outlook.

•

The strategy of expanding enrollment and offering diverse services.

•

Impressive revenue growth.

•

Productivity gains mitigated the impact on the medical care ratio.

•

Raised earnings forecast for the year to $24.50 to $25.00 per share.

UNH 3-to-5-year Value Line Operational and Financial Outlook: •

Andrew Witty, CEO, emphasizes the company's position for strong, diversified growth in the coming years.

UNH Noteworthy Strategic Developments: •

Acquired Amil Participacoes (Brazil) in April and Change Healthcare in October.

UNH FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=UNH

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UNH SWOT Analysis Internal Strengths: •

Optum Business: Specialized in healthcare industry solutions, providing expertise, technology, and services.

•

Premiums: 80-85% revenue from insurance premiums, a substantial share compared to competitors.

•

Brand Reputation: UnitedHealthcare Group, with 45 years in healthcare, maintains a trusted image and customer trust.

•

Extensive Network: Partners with 1.3 million healthcare professionals, 6,500 hospitals, and facilities.

•

Social Schemes Focus: Supports global health plans, leading in health protection and wellness services.

•

Highly Skilled Workforce: Successful training programs result in a competent and driven workforce.

•

Affordable Insurance: Market leader providing low-rate insurance with superior benefits in the United States.

•

Financial Position: Strong financial position with consecutive profits and accumulated reserves.

•

Customer Satisfaction: Trusted by over a million clients, strong customer relationship management.

•

Diversified Service Portfolio: Comprehensive healthcare solutions enhance revenue streams.

Internal Weaknesses: •

Intense Competition: Operates in a highly competitive healthcare market.

•

Higher Prices: PPO plan premiums are slightly higher than average in some areas.

•

Customer Service: Challenges in providing satisfactory customer service in some areas.

•

Medicare Plans: Average Medicare star rating is 3.9.

•

Delayed Claims: Reports of delayed claims payments in many states.

•

Poor Product Marketing: Federal suspension of marketing Medicare Advantage program in 2007.

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•

R&D Lag: Adequate R&D expenditure but lags behind some industry players in innovation.

•

Workforce Diversity: Local workforce dominance challenges outsider adjustment and talent retention.

•

Regulatory Uncertainties: Faces investigations, audits, and reviews by governmental authorities.

External Opportunities: •

Healthcare Spending Growth: Overall, healthcare spending is expected to rise.

•

UNH Expansion: Opportunity to expand customer base and services.

•

Optum Investments: Continued investments in Optum franchises could unlock new growth opportunities.

•

Insurance Industry Rebound: Global life insurance premium growth is predicted to rebound.

•

Future Trends: The insurance industry is moving towards more customer-centric products.

•

Shift to Prevention: General trend toward risk prevention in insurance.

•

E-commerce Growth: Leveraging online growth with OptumRx, OptumHealth, and OptumInSight.

•

Telemedicine Expansion: Collaboration with more telemedicine providers for remote access.

•

COVID-19 Health Plans: Opportunity to curate specific health plans.

External Threats: •

Regulatory Changes: Regulatory changes could increase compliance costs and impact business operations.

•

Intense Competition: Stiff competition from other healthcare providers and insurance companies.

•

Information Breaches: As a major company with sensitive data, UNH is a target for hackers.

•

Gig Economy Impact: The entry of online-based companies into the gig economy has led to significant losses.

•

Government Changes: Changes in government bring fiscal and monetary factors, posing challenges.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=UNH

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=UNH,P

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VISA (V) QUARTERLY MAVERICK REPORT December 24, 2023, $258.43 Visa Business Description: Visa, Inc. provides digital payment services for global commerce. It offers debit and credit cards, prepaid products, commercial payment solutions, and ATMs. Founded in 1958, it's headquartered in San Francisco, CA. V Maverick Guidance: •

Short-term recommendation: 20231215: BUY, W DOUBLE-TOP BREAKOUT OCT 30 (overbought)

•

Long-term stock portfolio recommendation: BUY ON WEAKNESS

•

Top quartile 10-year AATR among the Dow 30 companies.

•

Boasts a robust financial standing marked by exceptional profitability and operational efficiency. The company exhibits strong cash flow and adheres to a prudent management style, contributing to its overall strength. However, caution is advised due to concerns about the stock's overvaluation, suggesting limited upside potential. Recent growth has decelerated, and potential cost challenges pose further considerations for Mavericks. It's crucial for Mavericks to carefully evaluate these factors before making any investment decisions.

V Consideration for Maverick Portfolio: •

Dow 30 company (ticker) is appropriate for Mavericks with a risk profile score of 22 and above. The only reason for not including Visa in the CONSERVATIVE AND CAUTIOUS GROWTH Portfolios is because the company’s internal weaknesses and external threats may be unacceptable for Mavericks with a desire for more dividend income and a low tolerance to risk, especially in a new high-interest rate environment. However, the company’s extremely high AATR performance cannot be denied.

V Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= MODERATE BUY TipRanks= STRONG BUY

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•

Consensus: 20 Wall Street analysts have offered 12-month price targets for Visa in the last 3 months. There are 16 Buy, 4 Hold, and zero Sell. Based on 20 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $281.94 with a high forecast of $305 and a low forecast of $243. The average price target represents a +9.1% change from a recent price of $258.43.

•

Dividend Yield: $0.52 per share paid quarterly to yield 0.72%. Dividend growth for 9 years.

•

Technical Sentiment (based on Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (STRONG BUY)

o TipRanks=

Daily (BUY)

Weekly (BUY)

V Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

2 of 5

•

Beta:

1.05

•

Stock’s Price Stability:

90/100

•

Price Growth Persistence:

100/100

•

Earnings Predictability:

90/100

•

Average Annual PE:

•

Forward PE:

23.0

•

Average Annual Revenue Growth in the past 5 years:

+12.0%

•

Average Annual Revenue Growth for the next 5 years:

+11.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+14.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+11.0%

•

Average Annual Earnings Growth in past 5 years:

+14.5%

•

Average Annual Earnings Growth for the next 5 years:

+13.5%

•

Average Annual Dividend Growth in the past 5 years:

+5.00%

•

Average Annual Dividend Growth for the next 5 years:

+18.0%

•

Average Annual Dividend Yield 3 to 5 years:

+13.0%

V Financial Performance Bill Cara: Cracking the Maverick Code

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•

EPS: o 2020:

$5.04

o 2021:

$5.91

o 2022:

$7.50

o 2023:

$8.77

o 2024:

e$9.50

o Current PE:

31.6

o Forward PE:

23.0

o PEG Ratio:

2.27

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $54.92

End price/share:

$259.16

o Starting shares: 182.08

Ending shares:

195.61

o Dividends reinvested/share: $10.22 o Total Return: 406.94%

Average Annual TR:

17.62%

o Starting: $10,000.00

Ending investment:

$50,699.64

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): September 2023 Q4 FY2023 Report •

GAAP net income was $4.7 billion or $2.27 per share, increasing +19% and +22%, respectively, compared to the previous year.

•

Non-GAAP net income, excluding special items and related tax impacts, was $4.8 billion or $2.33 per share, an increase of +18% and +21% YoY.

•

Net revenues in the quarter were $8.6 billion, up +11%, due to growth in payments volume, cross-border volume, and processed transactions.

•

Payments volume increased +9% on a constant-dollar basis for the three months ended September 30, 2023.

•

Cross-border volume, excluding European transactions, increased by +18% on a constant-dollar basis.

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•

Total processed transactions were 56.0 billion, a +10% increase YoY.

•

Fiscal fourth quarter service revenues were $3.9 billion, up +12% YoY.

•

Data processing revenues increased +13% to $4.3 billion, international transaction revenues grew +10% to $3.2 billion, and other revenues reached $744 million, a +35% increase over the prior year.

•

GAAP operating expenses were $3.1 billion, a +13% increase YoY.

June 2023 Q3 FY2023 Report •

Visa reports good operating results at the three-quarter point of fiscal 2023.

•

Revenues increased by +12% to reach $24.04 billion during the nine months ending June 30, 2023.

•

Non-GAAP earnings grew by +15% to $6.43 per share for the same period.

•

Full-year targets have been adjusted to $32.55 billion in revenues and $8.60 per share, representing +11% and +15% annual gains, respectively.

•

Transaction activity showed healthy growth in various regions despite Visa suspending operations in Russia in March 2022.

•

Visa's balance sheet is in excellent shape, with total debt declining -13% in the fiscal third quarter.

•

The company maintains substantial cash reserves of $15.59 billion.

•

Projections for fiscal 2024 anticipate another record-setting year for Visa, with expected revenue and earnings growth of +11% and +13%.

March 2023 Q2 FY2023 Report •

In Q2 FY2023, Visa reported strong operating results, with revenues increasing by +11% to $7.99 billion and non-GAAP earnings expanding by 17% to $2.09 per share, marking quarterly records.

•

Through the first two quarters of fiscal 2023, revenues and earnings increased by +12% and +19% to $15.92 billion and $4.27 per share, respectively.

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•

Transaction activity showed positive growth in various regions, including Europe (+13.0%), Asia/Pacific (+8.5%), and Latin America (+18.3%). But the segment covering Central Europe, the Middle East, and Africa had a volume decrease of 12.5% due to the Russia-Ukraine war.

•

Visa's financials remained solid, with total debt staying steady at $20.61 billion, a 35% debt-to-total capital ratio, and a $13.84 B cash reserve.

•

Forecasts for fiscal 2023 were adjusted upwards, with revenue and earnings estimates at $32.40 billion and $8.45 per share, respectively.

•

Projections for fiscal 2024 suggest further growth, with revenue and earnings estimates of $36 billion and $9.70 per share.

December 2022 Q1 FY2023 Report •

Ryan McInerney became CEO on Feb. 1st, succeeding Alfred F. Kelly, Jr.

•

Growth was anticipated in the first quarter of fiscal 2023, with revenue and earnings estimates at $7.7 billion and $2.01 per share, representing annual increases of +8% and +11%.

•

Transaction volumes fully recovered from pandemic lows in fiscal 2022, with notable increases in Europe, Asia/Pacific, Latin America, the US, and Canada, despite a elsewhere due to Russia-Ukraine war.

•

Anticipated full-year fiscal 2023 forecasts included revenue and earnings growth of +9%-10% and +10%-11%, reaching $32 billion and $8.30 per share, respectively.

V 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates continued strong growth in revenue and earnings. The company's long-run outlook is positive, focusing on capitalizing on opportunities in areas like automation and digital currencies.

V Noteworthy Strategic Developments: V FinViz Snapshot: https://finviz.com/screener.ashx?v=341&f=idx_dji&t=V&o=roi

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V SWOT Analysis: Internal Strengths •

Largest Market Share: Visa holds the largest market share in the United States and operates globally.

•

Innovative Products: The company consistently develops innovative products to adapt to changing customer needs.

•

Secured Dossier Centers: Visa's dossier centers are highly secure and capable of handling numerous transactions and fraud detection parameters.

•

Endorsements: Visa sponsors various global events and initiatives, including the Olympics, Paralympics, FIFA, and more.

•

Currency Of Progress: Visa supports digital currency education and progress, including stablecoins like USDC.

Internal Weaknesses •

Risk & Hazards: Visa faces significant exposure to risk and fraud, with occasional transaction system weaknesses leading to payment issues and customer trust concerns.

•

Integration Challenges: Visa struggles to integrate firms with diverse capabilities effectively and may have difficulty adapting to changing company needs.

•

Product Range Disagreements: Differences in Visa's product range may lead to competition from companies with better product offerings, potentially causing a loss of customers.

•

Research and Development: Despite investing in research and development, Visa faces challenges in keeping up with innovative competitors in the financial industry.

•

High Dependency Rate: Visa relies heavily on contractual relationships with large clients and maintains a worldwide client base.

External Opportunities: •

Technology Upgrade: Visa's adoption of new technology allows for competitive pricing strategies and enhanced customer service, attracting new customers and maintaining existing ones.

•

E-currency: The global use of digital currency benefits Visa, enabling easy international money transfers and transactions and enhancing customer convenience.

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•

Digital Transformation: Digitalization, including online payments, scan payments, and UPI transfers, has simplified transactions, benefiting Visa and other online businesses.

•

New Industry Entry: Visa's expansion into new markets is facilitated by government concessions, allowing the company to implement high-tech standards and engage in free trade agreements.

•

Low Inflation Rate: Reduced inflation rates provide market stability and lower interest rates for Visa's customers, promoting easier purchasing and reduced demand uncertainty.

External Threats: •

Global Transactions: Visa operates worldwide, exposing it to currency fluctuations due to varying currencies and volatile political climates in many markets.

•

Less Experienced Workforce: Visa's shortage of experienced workforce in global markets poses a future threat to the company.

•

Competitive Environment: Visa faces intense competition in the financial market, competing against major rivals like Mastercard and established digital payment companies like PayPal. To thrive, Visa must establish a strong, unique selling proposition (USP).

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=V

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=V,P

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VERIZON (VZ) QUARTERLY MAVERICK REPORT December 24, 2023, $37.49 Verizon Business Description: Verizon Communications, Inc. is a holding company offering various communication, information, and entertainment services. It operates through two primary segments: Verizon Consumer Group, catering to consumerfocused communication services, and Verizon Business Group, which provides a variety of communication, data, security, and networking solutions for businesses. •

Verizon is the largest telecommunications company in the United States, with significant revenue totaling $134 billion in the trailing twelve months.

•

The company was created by the merger of Bell Atlantic and GTE in June of 2000 and is headquartered in New York, NY. The forerunner was established in 1983.

VZ Maverick Guidance: •

Short-term technical buy/sell recommendation: 20231215: BUY, DOUBLETOP BREAKOUT OCT 30

•

Long-term portfolio recommendation: LONG-TERM ACCUMULATION ZONE (RSI 7 UNDER 30) REACHED. LT TREND IS NOW UP.

•

BUY ON WEAKNESS FOR LOW LT RISK AND HIGH DIVIDEND YIELD

•

Dividend yield: 7.6%, but continuously declining earnings and cash flow may lead to dividend cuts (after 17 years of growing dividends)

VZ Consideration for Maverick Portfolio: •

VZ Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings: MarketBeat= MODERATE BUY TipRanks= MODERATE BUY

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•

Consensus: 12 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 5 Buy, 6 Hold, and 1 Sell. Based on 12 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $39.41, with a high forecast of $45 and a low forecast of $31. The average price target represents a +5.1% change from a recent price of $37.49.

•

Dividend Yield: $0.67 per share paid quarterly to yield 7.01%. Dividend growth for 13 years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com=

Daily (NEUTRAL)

Weekly (STRONG BUY)

o TipRanks=

Daily (BUY)

Weekly (NEUTRAL)

VZ Value Line Guidance: •

Company Financial Strength Rating:

A+

•

Share Price Safety:

3 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

4 of 5

•

Beta:

0.70

•

Stock’s Price Stability:

90/100

•

Price Growth Persistence:

20/100

•

Earnings Predictability:

100/100

•

Average Annual PE:

13.0

•

Forward PE:

8.1

•

Average Annual Sales Growth in the past 5 years:

+0.5%

•

Average Annual Sales Growth for the next 5 years:

+2.5%

•

Average Annual Cash Flow Growth in the past 5 years:

+3.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+NIL

•

Average Annual Earnings Growth in the past 5 years:

+6.0%

•

Average Annual Earnings Growth for the next 5 years:

+1.5%

•

Average Annual Dividend Growth in the past 5 years:

+2.0%

•

Average Annual Dividend Growth for the next 5 years:

+2.5%

•

Projected Annual Dividend Yield 3 to 5 years:

+2.5%

•

Current Dividend Yield:

+6.8%

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VZ Financial Performance: •

•

EPS: o 2020:

$4.90

o 2021:

$5.39

o 2022:

$5.18

o FY2023:

e$4.80

o FY2024:

e$4.90

o Current PE:

7.54

o Forward PE:

8.06

o PEG Ratio:

14.2

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $49.17

End price/share:

$37.48

o Starting shares: 203.38

Ending shares:

329.87

o Dividends reinvested/share: $23.94 o Total Return: 23.64%

Average Annual TR:

2.14%

o Starting: $10,000.00

Ending investment:

$12,359.01

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): Third Quarter (3Q2023): •

Revealed positive momentum with improved profitability and growth in wireless service revenue. Despite a decrease in consolidated operating revenue, Verizon saw a notable increase in total broadband subscribers and strong free cash flow. It also achieved growth in wireless service revenue and significant net additions in various segments.

Second Quarter (2Q2023): •

Verizon experienced a slight decline in revenue, with particular challenges in the business wireline services segment. However, the company reported strong demand for fixed wireless and Fios products.

First Quarter (1Q2023): •

Witnessed a decline in both consolidated operating revenue and net income. However, the company saw increased cash flow from

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operations and free cash flow. The wireless segment experienced growth in total wireless service revenue, while the consumer segment reported declining wireless equipment revenue. 2022 Fourth Quarter (4Q2022): Faced pressure on the bottom line, with earnings falling short of estimates. While there was top-line growth driven by wireless service revenue, this was offset by declines in the wireline business and the impact of merger and acquisition activity. The number of wireless retail postpaid customers experienced a decline. VZ 3-to-5-year Value Line Operational and Financial Outlook: •

Despite fluctuations in recent quarter operations and a rapid decline in the stock price, management remains focused on its strategic initiatives, including deploying its C Band 5G network.

•

The company expects continued growth and strong cash flow. It has also increased its dividend for the 17th consecutive year, highlighting its commitment to shareholder value.

•

However, challenges in certain segments, competitive pressures, and capital expenditure reductions indicate a need for careful monitoring of the company's performance in the coming quarters.

VZ Noteworthy Strategic Developments:

VZ FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=VZ

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VZ SWOT Analysis: Internal Strengths: •

Market Dominance: Largest US wireless carrier, influencing industry policies.

•

Global Operations: Presence in 150 locations with a robust global network.

•

Strong Financial Position: Ranked among the most profitable US companies, supporting growth.

•

Highly Innovative: Technological advancements in 4G LTE, 5G networks, VoIP, and Fios.

•

Valuable Brand: Globally recognized, ranked 19th for brand value by Forbes in 2019.

•

Effective Marketing Strategy: Creative campaigns and customercentric promotions differentiate VZ.

•

Strategic Acquisitions: Expansion through acquisitions like AOL, Alltel, Yahoo, and BlueJeans.

Internal Weaknesses: •

Overdependence on the US Market: Vulnerability to domestic market issues affecting performance.

•

Negative Publicity: Data breaches impacting customer trust and brand image.

•

Extra Data Charges: Dissatisfaction due to additional charges for data usage.

•

Breach of Trust: Selling customer location data erodes trust and damages relationships.

•

Lack of Diversification: Limited diversification beyond telecom increases vulnerability.

External Opportunities: •

Exploit Videoconferencing: Capitalize on BlueJeans acquisition for remote work technology.

•

Global Expansion: Expand wireless services globally to tap into wider markets.

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•

Expand through Acquisition: Consider acquiring smaller carriers to bolster market share.

•

Diversify Portfolio: Explore 5G technology applications in augmented reality, smart cities, and autonomous vehicles.

External Threats: •

Intense Competition: Fierce rivalry with Verizon, AT&T, and T-Mobile, particularly from T-Mobile.

•

Stringent Regulations: Operating under strict regulatory oversight, potential increases may impact operations.

•

Hacking and Data Leaks: Vulnerability to cyberattacks poses a threat to reputation and finances.

•

Looming Recession: Global recession risk from pandemic fallout, challenging profitability and growth.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=VZ

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Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=VZ,P

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WALGREENSBOOTS (WBA) QUARTERLY MAVERICK REPORT December 24, 2023: $26.22 WalgreensBoots Business Description: Walgreens Boots Alliance, Inc. is the world's premier drug distributor, anchored by its network of drugstores in North America and Europe. As of 8/31/22, it operated 13,343 stores across the globe, including 8,889 locations in 50 states, Puerto Rico, and the US Virgin Islands. In 2022, pharmacy contributed 74% of sales; Other general merchandise, 26%. Stores average $9.9 million in annual sales. Has approximately 325,000 employees. Acquired 2,186 Rite Aid stores in September 2017. Officers and directors own 17.5% of the stock. WBA Maverick Guidance: •

Short-term stock buy/sell recommendation: 20231215: AVOID, BUT NOTE W BEARISH SIGNAL REVERSAL DEC 11

•

Long-term stock buy/sell recommendation: AVOID

•

Summary of beliefs and opinions o An almost 8% dividend yield does not compensate for diminished operating and financial outlook and a negative 10-year average annual Total Return of -6.7% (though Dec. 6). o Rapidly declining fundamentals (revenue, cash flow, earnings, and dividend growth) reflect poor and rapidly changing management. o There are potential employee strikes on the near horizon. o Despite the turnaround potential, there are too many pressing issues to consider Walgreens Boots Alliance a suitable investment for Mavericks. o The 2024 earnings are unpredictable. o The stock price has fallen substantially in 2H2023. o Analysts have turned distinctly negative on the company. o The company is a candidate for removal from the Dow 30 index.

WBA Consideration for Maverick Portfolio: WBA is not appropriate for any Maverick portfolio because the finances and operations are too unpredictable. Bill Cara: Cracking the Maverick Code

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WBA Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= HOLD

TipRanks= HOLD.

•

Consensus: 9 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 2 Buy, 6 Hold, and 1 Sell. Based on 9 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $25.88, with a high forecast of $37 and a low forecast of $28. The average price target represents a 1.3% change from a recent price of $26.22.

•

Dividend Yield: $0.48 per share paid quarterly to yield 7.56%. Dividend growth for 15 years.

•

Technical Sentiment (Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (NEUTRAL)

o TipRanks=

Daily (BUY)

Weekly (NEUTRAL)

WBA Value Line Guidance: •

Company Financial Strength Rating:

B++

•

Share Price Safety:

4 of 5

•

Market Timing:

3 of 5

•

Technical Rank:

4 of 5

•

Stock’s Price Stability:

75/100

•

Price Growth Persistence:

10/100

•

Earnings Predictability:

80/100

•

Average Annual PE:

•

Forward PE:

7.1

•

Average Annual Sales Growth in the past 5 years:

+8.0%

•

Average Annual Sales Growth for the next 5 years:

+3.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+3.0%

•

Average Annual Cash Flow Growth for the next 5 years:

+2.0%

•

Average Annual Earnings Growth in the past 5 years:

+1.5%

•

Average Annual Earnings Growth for the next 5 years:

+1.0%

•

Average Annual Dividend Growth in the past 5 years:

+5.5%

•

Average Annual Dividend Growth next 5 years:

+2.0%

•

Projected Annual Dividend Yield 3 to 5 years:

+4.0%

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WBA Financial Performance: o EPS: ▪

2020:

$4.74

▪

2021:

$4.91

▪

2022:

$5.04

▪

2023:

e$4.00

▪

2024:

e$3.75 (possibly up to $4.15)

▪

Current PE:

---

▪

Forward PE:

6.26

▪

PEG Ratio:

---

o PE:

o 10-Year AATR: ▪

Start date: 12/27/2013

End date:

12/26/2023

▪

Start price/share: $57.43

End price/share:

$26.61

▪

Starting shares: 174.13

Ending shares:

241.09

▪

Dividends reinvested/share: $16.78

▪

Total Return: -35.85%

AATR:

-4.34%

▪

Starting: $10,000.00

Ending investment:

$6,415.80

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): 4Q2023 (FY Ending August) Highlights: •

Earnings: The adjusted earnings for this quarter were slightly below expectations, and the company's leadership cut its 2023 earnings outlook, reflecting the challenges faced throughout the year.

•

Revenue: The fiscal year 2023 saw a 9% growth in reported revenue, primarily driven by its US retail pharmacy and international segments.

•

Cash Flow: Efforts were made to lower capital expenditures by approximately $600 million, and the company aimed to reduce costs by at least $1 billion in fiscal 2024, indicating a proactive cash flow management approach.

3Q2023 (May) Quarterly Report Highlights:

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•

Earnings: The company had to revise its earnings outlook for fiscal 2023 to a lower range, indicating ongoing challenges in maintaining profit margins.

•

Revenue: Despite a significant revenue rise, the growth in share earnings didn't align with the increase. Operating margins were under pressure due to multiple factors, including declining COVID-related demand and a weaker respiratory season.

•

Cash Flow: The company managed to pay down debt with proceeds from selling its shares in ABC and remaining shares in Option Care Health, indicating a stable cash flow management strategy.

2Q2023 (February) Quarterly Report Highlights: •

Revenue: In the February 2nd quarter, revenue growth was challenged due to lower contributions from COVID-19 vaccinations, testing, and various expansion efforts in the Healthcare arm. Despite these challenges, US Pharmacy operations saw year-over-year comparable script growth of 3.5%, exceeding guidance.

•

Cash Flow: The cash flow was affected by the decline in certain revenue streams, yet relief was seen on the wage front as pharmacist shortages eased, indicating improved cash management.

•

Earnings: Earnings were expected to return to growth in the back half of fiscal 2023, with a projected mid-20 percent increase in the latter part of the year. However, full-year earnings were projected to decline in the double-digit range due to weaker results early in the year.

WBA 3-to-5-year Value Line Operational and Financial Outlook: •

The 3-to-5-year outlook indicates continued growth in revenue and earnings, albeit reduced.

•

The company's long-run outlook is cautiously optimistic.

WBA Noteworthy Strategic Developments:

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•

The company's focus on more cost-cutting measures and AI initiatives to improve supply chain efficiency suggests a proactive approach to enhancing operational efficiency and resilience in a changing market landscape.

•

The appointment of Tim Wentworth as the new CEO reflects the company's intentions to reset its growth strategy and navigate through the challenging market conditions, particularly the impact of post-COVID-19 on lower sales and consumer spending and the widespread discontent of employees.

•

The potential nationwide walkouts and protests by pharmacy staff across their system underscore the persistent challenges retail pharmacy staff face and the demand for improved working conditions.

VZ FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=VZ

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WBA SWOT Analysis: Internal Strengths •

47 years of dividend increases.

•

Strong brand recognition and customer loyalty.

•

A wide product range catering to diverse customer needs.

•

Successful exclusive brands offering unique and high-quality products.

•

Robust pharmacy services fostering strong customer relationships.

•

Strong omnichannel presence and digital solutions improving customer experience.

•

Strong local community presence, enhancing customer relationships.

Internal Weaknesses •

Intense competition impacts market share and profitability.

•

Store closures and job cuts affect company morale and reputation.

•

Slow digital transformation hindering online market capture.

•

Perceived as more expensive compared to some competitors.

•

Aging store infrastructure affecting customer experience.

•

Vulnerable to weak economic conditions and recessions.

•

Vulnerability to supply chain disruptions affecting product availability.

External Opportunities •

E-commerce expansion for a larger online market share.

•

International expansion to diversify revenue streams.

•

Personalization and customization to strengthen customer loyalty.

•

Potential partnerships and acquisitions for enhanced product offerings.

•

Continuous innovation in exclusive product lines to stay competitive.

External Threats •

Intense competition impacting sales and market position.

•

Changing consumer preferences affecting sales strategies.

•

Economic fluctuations impacting consumer spending patterns.

•

Regulatory changes require additional compliance efforts.

•

Digital disruption challenging traditional retail models.

•

The threat of counterfeit products impacting brand reputation.

•

Susceptibility to supply chain disruptions affecting product availability.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=WBA

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281

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=WBA,P

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WALMART (WMT) QUARTERLY MAVERICK REPORT December 24, 2023 $156.65 Walmart Business Overview: Walmart Inc. is an omnichannel retailer serving customers via stores, online, and through their mobile devices. Approximately 240 million customers and members visit approximately 10,500 stores and numerous eCommerce websites in 19 countries weekly. With fiscal year 2023 revenue of $611 billion, Walmart employs approximately 2.1 million associates worldwide. WMT Maverick Guidance: •

Short-term recommendation: 20231215: NEUTRAL, W DOUBLE-BOTTOM BREAKDOWN DEC 11 (but now oversold)

•

Long-term recommendation: NEUTRAL. BUY ON EXTREME WEAKNESS.

•

Previously, we had rated the stock a MODERATE BUY, reducing it from BUY after the Point & Figure chart Warning early in October.

•

Financials reflect solid performance, highlighting operating efficiency and profitability strengths over many years. Yet, there are concerns about long-term growth potential and stock valuation.

WMT Consideration for Maverick Portfolios: There are four portfolios appropriate for Walmart (WMT): •

Maverick #1. CONSERVATIVE: For risk profile 10-15, seeking minimal risk for capital preservation with expected low returns.

•

Maverick #2 CAUTIOUS GROWTH: For risk profiles 16-21, seeking balanced growth and stability for modest medium-term returns.

•

Maverick #3 MODERATE GROWTH: Suited for risk profiles 22-29, balancing ambition with caution using a mix of conservative and moderately aggressive Dow 30 stocks.

•

Maverick #4 DYNAMIC GROWTH: Tailored for risk profiles 30-35, embracing higher risk for potential higher returns with a focus on highgrowth-oriented Dow 30 stocks.

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WMT Market Guidance: NOTE FREQUENT CHANGES •

Analyst Ratings:

MarketBeat= MODERATE BUY TipRanks= STRONG BUY

•

Consensus: 30 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 25 Buy, 5 Hold, and zero Sell. Based on 30 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $180.79, with a high forecast of $210 and a low forecast of $163. The average price target represents a +15.4% change from a recent price of $156.65.

•

Dividend Yield: $0.57 per share paid quarterly to yield 1.47%. Dividend growth for 15+ years.

•

Technical Sentiment (from Technical Indicators and Moving Averages): o Investing.com=

Daily (STRONG BUY)

Weekly (NEUTRAL)

o TipRanks=

Daily (BUY)

Weekly (BUY)

WMT Value Line Guidance: •

Company Financial Strength Rating:

A++

•

Share Price Safety:

1 of 5

•

Market Timing:

2 of 5

•

Technical Rank:

2 of 5

•

Stock’s Price Stability:

100/100

•

Price Growth Persistence:

70/100

•

Earnings Predictability:

100/100

•

Average Annual PE:

25.0

•

Forward PE:

22.1

•

Average Annual Sales Growth in the past 5 years:

+5.5%

•

Average Annual Sales Growth for the next 5 years:

+5.0%

•

Average Annual Cash Flow Growth in the past 5 years:

+5.5%

•

Average Annual Cash Flow Growth for the next 5 years:

+5.0%

•

Average Annual Earnings Growth in the past 5 years:

+6.5%

•

Average Annual Earnings Growth for the next 5 years:

+6.5%

•

Average Annual Dividend Growth in the past 5 years:

+5.5%

•

Average Annual Dividend Growth next 5 years:

+2.0%

•

Projected Annual Dividend Yield 3 to 5 years:

+5.5%

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WMT Financial Performance: •

•

EPS: o 2020:

$5.55

o 2021:

$6.46

o 2022:

$6.29

o 2023:

e$6.50

o 2024:

e$7.15

o Current:

25.1

o Forward:

21.4

o PEG Ratio:

3.28

PE:

10-Year AATR: o Start date: 12/27/2013

End date:

12/26/2023

o Start price/share: $78.47

End price/share:

$156.41

o Starting shares: 127.44

Ending shares:

157.65

o Dividends reinvested/share: $21.00 o Total Return: 146.58%

Average Annual TR:

9.44%

o Starting: $10,000.00

Ending investment:

$24,652.91

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings): Quarter ending October 2023: •

Walmart Inc. reports strong Q3 results with a 5.2% growth in consolidated revenue, reaching $160.8 billion.

•

The omnichannel model contributes to strong comp sales, including a 4.9% increase for Walmart US

•

Net sales guidance for FY24 is raised to 5.0% to 5.5%, along with adjusted EPS guidance of $6.40 to $6.48.

•

Q3 highlights include consolidated gross margin rate up 32bps, operating expenses as a percentage of net sales down 182bps and consolidated operating income up $3.5 billion.

•

Global advertising business grows around 20%, with Walmart US comp sales up 4.9% and eCommerce up 24%.

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•

Adjusted EPS of $1.53 excludes the effects of $1.36 from net losses on equity and other investments.

•

The balance sheet shows cash and cash equivalents of $12.2 billion, total debt of $55.4 billion, operating cash flow of $19.0 billion, and free cash flow of $4.3 billion.

•

Walmart US sees growth in transaction count, eCommerce up 24%, and Walmart Connect advertising sales growing 26%.

•

Walmart International experiences growth in net sales led by Walmex and China, with eCommerce sales declining 3% and advertising up 4%.

•

Sam’s Club US reports solid comp sales, growth in eCommerce of 16%, and a 27% increase in advertising business.

•

Guidance for fiscal year 2024 includes a non-GAAP outlook, assuming stable consumer conditions and continued pressure from the global mix of products and formats.

•

The guidance is based on disclosed FY23 figures: Net sales: $605.9 billion, adjusted operating income: $24.6 billion, and adjusted EPS: $6.29.

Quarter ending July 2023: •

Walmart's July-quarter adjusted earnings per share exceeded expectations, showcasing a +4% year-over-year growth.

•

Despite challenging economic conditions, domestic same-store sales increased by +6.4%, driven by strong grocery and health & wellness performance.

•

General merchandise sales experienced a slight improvement from the previous quarter, and gross margins grew by +50 basis points, aided by strategic price increases and higher ad revenues from vendors on Walmart.com and the Walmart app.

Quarter ending April 2023: •

In the April quarter, Walmart shifted customer spending from discretionary general merchandise to grocery and health and wellness due to persistent inflation.

•

The company faced challenges with elevated prices, leading customers to opt for private labels over national brands, particularly in dry grocery.

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•

Trying to close the gap with Amazon through its Walmart Connect eCommerce platform, which recorded substantial revenue growth.

Quarter ending January 2023: •

Walmart focused on gaining market share in general merchandise categories, prioritizing private labels, and streamlining its supply chain during the investor day in January.

•

The company is investing significantly in automation, expecting reduced average unit costs and improved distribution efficiencies soon.

•

Walmart aims to bridge the gap between sales and operating income growth by focusing on cost-saving initiatives and improving the profitability of its e-commerce operations.

WMT 3-to-5-year Outlook (Revenue, Cash Flow, Earnings): •

Walmart anticipates continued growth in its online advertising revenue and e-commerce business.

•

Cost-saving measures, especially automation, are expected to reduce unit costs and improve distribution efficiency by fiscal 2025.

•

The company aims to improve the profitability of its e-commerce operations and bridge the gap between sales and operating income growth over the coming years.

WMT FinViz Snapshot: https://finviz.com/screener.ashx?v=341&t=WMT

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Company SWOT Analysis: Internal Strengths •

Economies of scale. Efficient operations.

•

A strong brand

•

A diversified business model

•

Financial strength.

Internal Weaknesses •

Limited international growth due to cultural disparities, regulatory obstacles, and local competition.

•

Dependence on Low Prices, which constrains profit margins.

•

Intense rivalry with online giant Amazon.

External Opportunities •

E-commerce: Walmart can still grow its e-commerce market by investing in online platforms, delivery logistics, and digital marketing

•

International Expansion: Leveraging its economies of scale and supply chain expertise, it could expand into new markets and compete with local retailers

•

Health and Wellness: Expanding its health-related offerings, Walmart could build its pharmacy business, offer organic and natural products, and explore digital health services

•

Innovation: To stay competitive, Walmart can develop its technologies, including AI and data analytics, and explore innovative retail formats like popup stores and mobile shopping

External Threats •

Intense Competition: Competition from traditional (Target, Costco) and online (Amazon) retail, driving the need for competitive pricing and innovation.

•

Changing Consumer Behavior: Evolving consumer preferences, particularly among younger shoppers, who favor online shopping and quicker deliveries, challenge Walmart's traditional stores.

•

Economic Downturns: Walmart is susceptible to economic downturns, impacting sales and profitability due to reduced discretionary spending.

•

Cybersecurity Threats: As a data-collecting entity, Walmart is at risk of cybersecurity threats, causing reputation damage and legal liabilities.

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Short-term Price Chart: https://stockcharts.com/h-sc/ui?s=WMT

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289

Point & Figure Chart: https://stockcharts.com/freecharts/pnf.php?c=WMT,P

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Dow 30 Maverick Long-term Guidance --End of 4th Quarter Apple Inc. (AAPL): Long-term trend is up; Accumulate at cycle lows Apple Inc. is a model of remarkable profitability and a robust return on equity within the technology sector. However, a deeper analysis reveals concerns such as limited growth potential, an elevated valuation, and a delicate capital structure. For Apple to maintain the confidence of long-term investors, its ability to innovate and drive sustained revenue growth becomes imperative. Mavericks must diligently monitor top-line growth to discern whether recent challenges represent a transitory decline or a persistent trend.

Bill Cara: Cracking the Maverick Code

December 2023

291

Amgen Inc. (AMGN): Long-term trend is up; Long tail up ST concern Amgen grapples with challenges in growth and valuation, juxtaposed against strengths in profitability and a healthy cash flow. Mavericks are urged to monitor top-line growth for sustained improvements closely.

Bill Cara: Cracking the Maverick Code

December 2023

292

American Express (AXP): Long-term trend is up; American Express exhibits a mixed profile, maintaining solid profitability and financial health while facing growth concerns and a potentially limiting stock valuation. Mavericks are advised to closely monitor the company's efforts to address its growth challenges and sustain its long-term financial performance.

Bill Cara: Cracking the Maverick Code

December 2023

293

Boeing (BA): Long-term trend is up, but the cycle is extended. Boeing's financial performance displays both positive and concerning aspects. While there are signs of improvement in cash flow and certain growth metrics, challenges in profitability and high valuation multiples warrant extreme caution. Mavericks should closely monitor Boeing’s initiatives to enhance operational efficiency and address financial leverage. With progress, the stock might be added to Maverick portfolios in 2024.

Bill Cara: Cracking the Maverick Code

December 2023

294

Caterpillar Inc. (CAT): Long-term trend is up; Caterpillar demonstrates robust growth, value, and profitability. While the stock is reasonably priced, the prudent investor acknowledges a limited margin for error. The company's strong financial indicators provide flexibility for future growth initiatives or returns to shareholders.

Bill Cara: Cracking the Maverick Code

December 2023

295

Salesforce.com Inc. (CRM): Long-term trend is up; Salesforce exhibits consistent growth and strong operational efficiency. However, the current valuation raises concerns, necessitating a focus on improving profit margins and optimizing the capital structure. Mavericks should monitor future growth trajectories and reassess entry points based on valuation metrics.

Bill Cara: Cracking the Maverick Code

December 2023

296

Cisco Systems (CSCO): Long-term trend is up; Cisco Systems displays solid financial performance, profitability, and cash flow. Despite concerns about long-term growth, the company's efficient operations and attractive valuation make it a compelling investment option.

Bill Cara: Cracking the Maverick Code

December 2023

297

Chevron Corporation (CVX): Long-term trend turned down in 1Q2023. Chevron's financial performance is robust, featuring strength in value and reasonable growth. However, political challenges affecting its growth potential, as seen by recent declines in earnings and operating income, require attention. Despite these questions, the stock is attractively priced, especially concerning earnings and book value. Profitability grades suggest room for improvement, particularly in asset and capital utilization. While the cash flow situation is fairly healthy, there's also a need for improvement in cash flow growth. The recent poor performance may be attributed to external political factors, prompting Mavericks to remain vigilant for signs of a broader downturn or short-term challenges. Mavericks who believe in Climate Change may wish to replace this stock in their portfolio.

Bill Cara: Cracking the Maverick Code

December 2023

298

Disney Company (DIS): Long-term trend just turned up; Disney exhibits solid growth and profitability, with a focus on efficient operations. However, the stock is deemed fairly priced and overvalued based on its long-term average P/E ratio. The company's profitability is acceptable, but careful monitoring is advised due to a decline in EPS over the past five years. Strong cash flow and reasonable debt levels provide flexibility for future investments, but attention is needed to avoid potential issues if business conditions deteriorate. A cautious approach is recommended for Mavericks who are considering Disney for their portfolio.

Bill Cara: Cracking the Maverick Code

December 2023

299

Dow Inc. (DOW): Long-term trend is down, but rising; Dow encounters growth, profitability, and cash flow challenges, influencing its overall investment appeal. Mavericks should carefully track the company's efforts to address these challenges and enhance its financial metrics. Operating Cash Flow has declined by 29.5% in the last 12 months, debt accounts for 45.4% of total capital (a slight increase from the previous year), and capital expenditures, while reduced by 7.6%, remain significant compared to free cash flow.

Bill Cara: Cracking the Maverick Code

December 2023

300

Goldman Sachs (GS): Long-term trend is turning up; Goldman Sachs faces challenges in growth, profitability, and cash flow. Mavericks should carefully assess the company's strategic initiatives and monitor its financial health closely.

Bill Cara: Cracking the Maverick Code

December 2023

301

Home Depot (HD): Long-term trend just turned up; While Home Depot faces challenges in recent growth and valuation metrics, its profitability and cash flow indicators remain strong. Mavericks should monitor revenue growth and operating margins to discern whether recent weaknesses are part of a broader downturn or short-term fluctuations. The stock's rich valuation raises concerns about potential downside risk, emphasizing the importance of careful consideration before making investment decisions.

Bill Cara: Cracking the Maverick Code

December 2023

302

Honeywell International. (HON): Trend is Neutral Honeywell International demonstrates strength in profitability and financial stability. While its growth potential is low, prudent management and strong earnings indicate resilience. However, the stock's current valuation suggests caution, and Mavericks should closely monitor top-line growth for signs of sustained deceleration. The company's focus on returning cash to shareholders and maintaining a balanced capital structure contributes to its stability.

Bill Cara: Cracking the Maverick Code

December 2023

303

IBM Corp (IBM): Long-term trend is up; IBM demonstrates strong profitability and improved financial performance. However, there is a need to focus on long-term market growth and address concerns related to stock valuation. The company's strategic management and recent positive results indicate a potential turnaround, but continued efforts are required for sustained growth and shareholder value.

Bill Cara: Cracking the Maverick Code

December 2023

304

Intel Corp (INTC): Long-term trend is up; Intel, despite an earnings surprise, faces challenges in sustaining profitability and growth. The stock's valuation appears high, considering negative earnings. Mavericks should carefully assess the company's ability to address long-term concerns and generate sustainable profits.

Bill Cara: Cracking the Maverick Code

December 2023

305

Johnson & Johnson (JNJ): Long-term trend is down; Johnson & Johnson faces challenges in its recent growth record, especially in the short term. While maintaining profitability, the company's stock reactions to positive earnings surprises suggest investor concern. The long-term growth trend reversal warrants attention. Valuation indicates attractiveness, but caution is needed due to high multiples relative to tangible book value and cash flow. The company's profitability indicators are solid but offer room for improvement, and the cash flow situation, while healthy, also has areas for enhancement. The report suggests a need for strategic initiatives to address the growth concerns and optimize profitability.

Bill Cara: Cracking the Maverick Code

December 2023

306

JPMorgan Chase (JPM): Long-term trend is up; JPMorgan Chase & Co. presents a compelling investment opportunity with strong growth, solid profitability, and a healthy financial position. However, Mavericks should carefully consider the valuation and monitor interest expenses to ensure sustained profitability.

Bill Cara: Cracking the Maverick Code

December 2023

307

Coca-Cola Company (KO): Long-term trend is down, but extended The Coca-Cola Company shows moderate growth, strong profitability, and a fair cash flow position. Slow but steady is the Warren Buffett way. However, careful quarterly monitoring of the company’s top-line growth is advised. The stock, while in an extended long-term bear trend since 4Q2022, and soon to reverse, is still richly priced. The focus on sustaining dividends and steady financials is a solid foundation for improved sentiment.

Bill Cara: Cracking the Maverick Code

December 2023

308

McDonald's (MCD): Long-term trend has recently turned down. McDonald's demonstrates strong growth and profitability, yet Mavericks should carefully consider the high valuation multiples and the company's leverage. Long-term value investors may find the stock price attractive, but caution is advised regarding the downside risk associated with the high valuation.

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December 2023

309

3M Company (MMM): Long-term trend is Neutral; 3M faces challenges in terms of growth and valuation, necessitating strategic actions to enhance shareholder value. Despite profitability concerns and negative returns on equity, the company exhibits positive cash flow and operational resilience. Mavericks should closely monitor the company's efforts to improve growth and address leverage issues for sustained long-term success.

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Merck & Co (MRK): Long-term trend turned down in 2H2023 Merck & Co., Inc. faces growth, profitability, and valuation challenges in 2024. Mavericks should carefully assess the company's strategic initiatives and monitor its ability to improve key financial metrics. The stock's current valuation suggests limited upside with significant downside risk.

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Microsoft (MSFT): Long-term trend is up Microsoft demonstrates solid financial performance, with robust growth, profitability, and strong cash flow. However, its valuation appears rich, suggesting Mavericks should carefully assess the upside potential relative to the downside risk. The company's focus on profitable growth and efficient capital management positions it well for future success. Mavericks should monitor key growth indicators and monitor valuation metrics for informed decision-making.

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NIKE, Inc. (NKE): Long-term trend is down; NIKE demonstrates strong profitability and cash flow, but concerns arise from its valuation and recent focus on top-line growth. Mavericks should monitor revenue growth, operating margins, and overall business performance to assess the company's future trajectory.

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Procter & Gamble (PG): Long-term trend has been down since 1H2022 Procter & Gamble's long-term growth rates indicate a mature and stable business, prompting concerns about future growth prospects. The stock valuation appears elevated, allowing little room for error if growth falters. The company's commitment to returning cash to shareholders through dividends may constrain its capacity for strategic investments. Mavericks should closely monitor top-line growth to discern whether the recent deceleration is a temporary decline or a prolonged trend. While acknowledging the company's strong profitability and cash flow management, be vigilant for signs of sustained growth challenges.

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December 2023

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Travelers Companies (TRV): Long-term trend is down since 1H2023 Travelers Companies shows weaknesses in growth and profitability, yet the multiples valuation suggests potential value for long-term investors. The storyline encourages Mavericks to monitor the unfolding narrative closely, assessing the company's ability to improve its growth profile and contain operating costs, with the potential for an enticing entry point.

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December 2023

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UnitedHealth Group (UNH): Long-term trend is down for 12 months UnitedHealth's narrative reflects steady growth, strong profitability, and acceptable value. Yet, the stock appears overvalued, with slight declines in cash flow indicators. Prudent investment in capital expenditures suggests a management focus on future growth. Mavericks are advised to watch for improvements in valuation and sustained profitability, offering potential long-term upside. The narrative, though nuanced, is a story of manageable debt and the potential for strategic initiatives.

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December 2023

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Visa, Inc. (V): Long-term trend is up Visa, Inc. boasts a robust financial standing marked by exceptional profitability and operational efficiency. The company exhibits strong cash flow and adheres to a prudent management style, contributing to its overall strength. However, caution is advised due to concerns about the stock's overvaluation, suggesting limited upside potential. Recent growth has decelerated, and potential cost challenges pose further considerations for Mavericks. It's crucial for Mavericks to carefully evaluate these factors before making any investment decisions.

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December 2023

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Verizon (VZ): Long-term trend turned up in 4Q2023 Verizon's narrative confronts revenue and net income growth obstacles, prompting long-term concerns. Valuation presents a mixed picture— overvalued by P/E ratio but attractive when considering book value and cash flow. Solid profitability with potential for improvement, while mediocre cash flow and financial strength may limit reinvestment in new growth opportunities. Mavericks are urged to carefully weigh these factors when evaluating Verizon as an investment option.

Bill Cara: Cracking the Maverick Code

December 2023

318

Walgreens Boots Alliance (WBA): Long-term trend is constantly down The narrative of Walgreens Boots Alliance evolves with challenges in maintaining profitability and generating positive returns. A weak growth record over many years reflects the need for careful management of costs and investments. A steady dividend payout attracts shareholders, yet strategic initiatives are needed to address the long-term performance issues. For now, let’s call this one the runt of the litter.

Bill Cara: Cracking the Maverick Code

December 2023

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Walmart (WMT): Long-term trend is constantly up Walmart's narrative reflects solid financial performance, highlighting operating efficiency and profitability strengths over many years. Yet, there are concerns about long-term growth potential and stock valuation. Mavericks should evaluate Walmart’s risk factors and consider the competitive landscape (e.g., Amazon.com) before making lifelong investment decisions.

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Choosing the Right Portfolio Management Platform --Koyfin Apart from your electronic broker, selecting the right portfolio management tool is pivotal, and Koyfin stands out as a comprehensive and cost-effective option for Maverick Investors. It caters to our needs with features like trend analysis, financial tools, and customizable dashboards. While advanced features come with a cost, the basic free package is ample for Dow 30-only portfolios. Comparing Koyfin to Bloomberg, Koyfin's Pro plan is significantly more affordable at just $70 per month than Bloomberg's $2,000. Koyfin offers robust data coverage and intuitive analytical tools despite the lower price. But, for Mavericks with basic needs, it's entirely free. As a testament to my belief in Koyfin, I've signed an affiliate agreement. For sophisticated users interested in a Koyfin Pro license, I can offer a 10% discount on new licenses. Additionally, I'll receive a 20% revenue share on each conversion for paying customers within the first 12 months using a unique URL. This is the only service I endorse after 20 years of independence on billcara.com. Explore the Koyfin story. View the premium plans for the more sophisticated investors. Changes to Future Editions of the Cracking the Maverick Code Quarterly •

The content will continue to be edited for the clarity beginning investors require.

•

More focus will be on the Growth Rates of Earnings and Free Cash Flow, which are crucial in assessing corporate growth and potential share price increases.

•

A more concise SWOT analysis will focus more on whether my points are relevant and material to potential investing or trading decisions.

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Bill Cara: Cracking the Maverick Code

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