CWS Market Review – December 26, 2025

Ladies and Gentlemen:

I give you our 2026 Buy List.

Abbott Laboratories (ABT)
Adobe (ADBE)
Allison Transmission (ALSN)
American Water Works (AWK)
Amphenol (APH)
Broadridge Financial (BR)
Casey’s General Stores (CASY)
Cencora (COR)
Comfort Systems USA (FIX)
FactSet Research (FDS)
FICO (FICO)
HEICO (HEI)
Henry Schein (HSIC)
IES Holdings (IESC)
Intercontinental Exchange (ICE)
Intuit (INTU)
McKesson (MCK)
Moody’s (MCO)
Mueller Industries (MLI)
ResMed (RMD)
Rollins (ROL)
Science Applications International (SAIC)
Sprouts Farmers Market (SFM)
Stryker (SYK)
Thermo Fisher Scientific (TMO)

The five new buys are:

Casey’s General Stores (CASY)
Comfort Systems USA (FIX)
McKesson (MCK)
ResMed (RMD)
Sprouts Farmers Market (SFM)

The five sells are:

Fiserv (FISV)
McGrath RentCorp (MGRC)
Miller Industries (MLR)
Otis Worldwide (OTIS)
Silgan (SLGN)

This is our 21st annual Buy List. The new Buy List won’t go into effect until the start of trading on Friday, January 2. The 25 stocks will be equally weighted based on the closing prices as of December 31.

The Five New Buys

I’ll have more to say about the new buys in upcoming issues, but I’ll share some thoughts with you here.

I was first told about Casey’s General Stores (CASY) by some friends in the Midwest, where the chain is very popular. It’s basically a gas station masquerading as a pizza shop. Or vice versa. It really doesn’t matter. The idea is simple. If you drive a car, you’ll need gas. If you’re going to go to a gas station, you might as well choose the place that has pizza as well.

Casey’s is based in Iowa, and the stores are mostly in Iowa, Missouri and downstate Illinois. The company also has an impressive presence in the other Midwestern and Plains states. There are now close to 2,000 locations in 20 states. Casey’s prefers to locate in small towns where there’s less competition. Casey’s is now the third-largest convenience-store chain in the U.S. There isn’t a Casey’s within several hundred miles of Wall Street.

The company currently has a market value of $21 billion. It’s a member of the S&P Mid-Cap 400 and Nasdaq 100. Last year, it did close to $16 billion in sales.

In November, Casey reported very good fiscal-Q2 earnings. For the three months ending on October 31, Casey made $5.53 per share, which beat expectations by 33 cents per share. The fiscal-Q3 earnings report should be out in early March. Wall Street currently expects earnings of $2.84 per share.

Casey’s isn’t a value stock, but I think its rapid growth deserves a higher earnings multiple. Right now, the shares are going for about 25 times 2027 earnings. Casey’s currently pays a dividend of 69 cents per share. The company has increased its payout for the last 26 years in a row. I’m starting Casey’s off as a buy up to $600 per share.

Comfort Systems USA (FIX) provides commercial, industrial and institutional heating, ventilation, air-conditioning (HVAC) and electrical-contracting services. The company operates through two segments: Mechanical and Electrical.

The Mechanical segment includes HVAC, plumbing, piping and controls, as well as off-site construction, monitoring and fire protection. It also installs connecting and distribution elements, such as piping and ducting.

The Electrical segment includes installation and servicing of electrical systems. It builds, installs, maintains, repairs and replaces mechanical, electrical and plumbing (MEP) systems throughout its 47 operating units, with 178 locations in 136 cities across the nation.

Much of Comfort Systems’s recent success has been due to data centers. The Technology segment makes up about 40% of FIX’s overall business. I don’t expect business to slow down any time soon. The company currently has a backlog of close to $10 billion in orders. That’s up 65% over the last year.

Comfort Systems offers engineering, design-assist and turnkey, direct-hire construction services of modular systems serving the advanced technology, power and industrial sectors. It also provides mechanical construction services to the commercial and industrial sectors. I’m starting Comfort Systems off as a buy up to $1,000 per share.

McKesson (MCK) is one of the best healthcare stocks on the market, as well as being one of the world’s largest pharmaceutical distributors. In North America, McKesson delivers about one-third of all pharmaceuticals. It supplies branded, generic, specialty and OTC drugs to pharmacies and hospitals.

The company is also involved in medical supplies and equipment. It distributes medical-surgical products to physician offices, surgery centers and long-term care facilities.

McKesson is also focused on healthcare technology and services. MCK provides health IT, prescription-technology solutions, supply-chain management, oncology and specialty-care support. McKesson has a market cap of $100 billion, and its dividend has doubled over the last six years to 82 cents per share.

McKesson’s earnings growth tends to be very reliable. For 2027, Wall Street expects earnings of $43.82 per share. That means it’s going for a little less than 19 times earnings. I should mention that a few years ago, McKesson had to contend with opioid settlements, but that issue is largely behind it. McKesson is a buy up to $900 per share.

I like boring stocks, and ResMed (RMD) is a stock that puts you to sleep—literally. ResMed is the leading provider of sleep-apnea devices. This is big business. ResMed operates in over 140 countries with more than 10,000 employees.

Last year, ResMed had revenues of more than $5.1 billion. The current market cap is up to $31 billion. For the fiscal year ending in June, RMD made $9.55 per share. That’s up 23% over the year before.

ResMed is also fiscally sound. Gross margins often run close to 60%, while operating margins are just over 32%. The company also carries very little debt. RMD currently pays a dividend of 60 cents per share. The dividend has been steadily increasing for over a decade.

In therapeutic devices, ResMed holds 45% to 60% of market share. In some markets, it holds 80%. I’m rating ResMed a buy up to $270 per share.

Sprouts Farmers Market (SFM) is another company whose stock got cut down recently, and I think it’s worth a look.

Sprouts’s business idea is simple: take the look and feel of a farmer’s market and bring it indoors. Think of a big open space, but instead of waiting until the weekend, you can go to Sprouts any day of the week. Sprouts specializes in fresh and organic produce. The company currently has over 400 locations.

I’m particularly impressed by Sprouts’s loyal fan base. Sprouts tends to be less expensive than Whole Foods (owned by Amazon). Its smaller stores aren’t as crowded as Whole Foods, and Sprouts has found an overlooked part of the market: people who want good, fresh, organic produce but not at Whole Foods’s prices.

This is a good time to add SFM. The stock got clobbered earlier this year. I love it when good stocks get knocked down. In October, SFM beat earnings, but the market did not like the weak guidance.

Some of this is due to inflation worries hurting consumers. Also, the stock had done so well that there were valuation concerns. Thanks to the selloff, SFM is going for less than 14 times next year’s earnings. Sprouts is a buy up to $90 per share.

The Five Sells

Coming up with the sells each year is hard because you can’t help getting attached to some stocks. Also, as an investor, you have to admit your mistakes, which isn’t always easy, but it’s important.

This year, it’s time to sell Fiserv (FISV). This is the only stock left that’s been with us every year since the start of the Buy List. The last earnings report was terrible, however, and the company slashed guidance. It’s time to let it go.

Last year, I decided to keep McGrath RentCorp (MGRC) after its buyout deal went south. The stock hasn’t recovered.

Miller Industries (MLR) had a far more difficult year than I expected. Sales were down dramatically. That’s unfortunate, because I’d become a big fan of this little stock.

Otis Worldwide (OTIS) is a fine company but it’s not showing the level of earnings growth that I’d hoped for.

Silgan (SLGN) missed earnings for the last two quarters and three of the last five. I’ll have more to say about the portfolio changes in upcoming issues.

Thank You!

I’ll have all the details of our Buy List’s performance in 2025 in the next newsletter, which comes out on January 1.

I want to thank everyone for their support. I admit that our long-term buy-and-hold strategy can be a little boring, but it works. We’ve been doing it for 20 years.

I’m pleased to see that our ETF continues to be healthy and profitable.

I always enjoy following the market with intelligent, engaged readers like the ones here at CWS.

I want to wish you all a Merry Christmas and a happy, healthy and prosperous New Year.

Eddy

Posted by on December 26th, 2025 at 4:28 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.