Morning News: January 2, 2023
Posted by Eddy Elfenbein on January 2nd, 2023 at 7:01 am

Lula Is Back in Brazil, Promising Prosperity Amid Global Economic Pain

Russia’s War on Ukraine Worsens Global Starvation

IMF Chief Georgieva Warns of ‘Tough Year’ for World Economy

ECB’s Nagel Says More Action Needed to Curb Price Expectations

Yen Starts Year on Front Foot as Traders Eye Dollar Cliff Edge

Why China’s Economy Faces a Perilous Road to Recovery

‘OK, Mexico, Save Me’: After China, This Is Where Globalization May Lead

Canada Is Banning Some Foreigners from Buying Property After Home Prices Surged

Soaring Costs Threaten U.S. Offshore-Wind Buildout

Shift to EVs Triggers Biggest Auto-Factory Building Boom in Decades

Startups End a Bruising 2022, Stare Down Another Challenging Year

The Year Big Tech Stocks Fell From Glory

U.S. Pours Money Into Chips, but Even Soaring Spending Has Limits

What TikTok Told Us About the Economy in 2022

Future Consumption Will Make the Prosperous Present Seem Deprived by Comparison

Dubai’s Alcohol Gambit

Can Southwest Airlines Buy Back Its Customers’ Love?

Troubles at Sam Bankman-Fried’s Alameda Began Well Before Crypto Crash

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The 2023 Buy List
Posted by Eddy Elfenbein on December 31st, 2022 at 9:06 pm

Here are the 25 stocks for the 2023 Buy List. It’s locked and sealed, and I can’t make any changes for 12 months.

For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided among 25 stocks. Below are all 25 positions with the number of shares for each and the closing price for 2022. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.

Here are the five new buys with their starting Buy Below prices:

AmerisourceBergen ($180)
Celanese ($110)
Intuit ($410)
Middleby ($140)
Polaris ($110)

The five sells are:

Church & Dwight
Reynolds Consumer Products
Ross Stores
Sherwin-Williams
Zoetis

Here are the corporate descriptions of our five new stocks:

AmerisourceBergen fosters a positive impact on the health of people and communities around the world by advancing the development and delivery of pharmaceuticals and healthcare products. As a leading global healthcare company, with a foundation in pharmaceutical distribution and solutions for manufacturers, pharmacies and providers, we create unparalleled access, efficiency and reliability for human and animal health. Our approximately 44,000 global team members power our purpose: We are united in our responsibility to create healthier futures. AmerisourceBergen is ranked #10 on the Fortune 500 with more than $200 billion in annual revenue.

Celanese Corporation is a global chemical leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Our businesses use the full breadth of Celanese’s global chemistry, technology and commercial expertise to create value for our customers, employees, shareholders and the corporation. As we partner with our customers to solve their most critical business needs, we strive to make a positive impact on our communities and the world through The Celanese Foundation. Based in Dallas, Celanese employs approximately 13,000 employees worldwide and had 2021 net sales of $8.5 billion.

Intuit is the global financial technology platform that powers prosperity for the people and communities we serve. With more than 100 million customers worldwide using TurboTax, Credit Karma, QuickBooks, and Mailchimp, we believe that everyone should have the opportunity to prosper. We never stop working to find new, innovative ways to make that possible.

The Middleby Corporation is a global leader in the foodservice industry. The company develops and manufactures a broad line of solutions used in commercial foodservice, food processing, and residential kitchens. Supporting the company’s pursuit of the most sophisticated innovation, the state-of-the-art Middleby Innovation Kitchens showcases and demonstrates the most advanced Middleby solutions. In 2022 Middleby was named a World’s Best Employer by Forbes and is a proud philanthropic partner to organizations addressing food insecurity.

As the global leader in powersports, Polaris Inc. (NYSE: PII) pioneers product breakthroughs and enriching experiences and services that have invited people to discover the joy of being outdoors since our founding in 1954. Polaris’ high-quality product line-up includes the Polaris RANGER®, RZR® and Polaris GENERAL™ side-by-side off-road vehicles; Sportsman® all-terrain off-road vehicles; military and commercial off-road vehicles; snowmobiles; Indian Motorcycle® mid-size and heavyweight motorcycles; Slingshot® moto-roadsters; Aixam quadricycles; Goupil electric vehicles; and pontoon and deck boats, including industry-leading Bennington pontoons. Polaris enhances the riding experience with a robust portfolio of parts, garments, and accessories. Proudly headquartered in Minnesota, Polaris serves more than 100 countries across the globe.

In terms of market value, Thermo Fisher (TMO) is our biggest stock at $216 billion. Danaher (DHR) and Abbott Labs (ABT) are both near $190 billion. Thirteen of the 25 stocks have market values between $10 billion and $70 million.

Miller Industries (MLR) is our smallest stock. Stepan (SCL) is our second smallest, and it’s about eight times larger than Miller.

The 2022 Buy List
Posted by Eddy Elfenbein on December 31st, 2022 at 1:47 pm

The 2022 investing year is on the books!

This was a difficult year for Wall Street. The stock market had its worst year since the financial crisis. The S&P 500 peaked on the first trading day of the year, and it was downhill from there.

Investors were rattled by the highest inflation in 40 years and seven Fed interest-rate hikes. Many of the former popular stocks were especially punished this year. The market reached its low in October (at least, its low so far). Along the way, investors were treated to a few bear-market rallies, and each one fizzled out.

The good news is that the 2022 Buy List held up well. We were down, but not as much as the rest of the market. This was our best year relative to the overall market in 12 years. This is especially impressive when you consider that we got off to a rocky start. By April, our Buy List was trailing the market by more than 4%.

Keeping calm paid off. Let’s look over the numbers. For the year, the S&P 500 lost 19.44%. Including dividends, it was down 18.11%. Our Buy List was down 10.42%. Including dividends, we were down 9.28%.

For the 17 years of the Buy List, the S&P 500 with dividends is up 333.17%, while our Buy List is up 435.73%.

The Buy List had a “beta” this year of 0.8274.

Our best stock of the year was FICO (FICO), which gained 38.03% (before dividends). Not far behind that was SAIC (SAIC), a newcomer, which was up 32.75%. In third place was AFLAC (AFL), which has been a fixture of all 18 Buy Lists. The duck stock was up 23.21%.

Seven of our 25 stocks closed higher this year. Our worst stock this year was Trex (TREX). The deck stock lost 68.65% this year. Even if Trex had jumped 90% on the final day of trading, it still would have been our worst stock. Ironically, Trex was our best stock last year and the year before.

I should give a special “Come from Behind” award to Ross Stores (ROST). The deep-discounter plunged during the first half of the year but staged a furious rally in the second to close just barely in the black for this year. ROST finished this year 67% above its 52-week low.

Ross Stores won’t be returning in 2023, but it’s been a big winner. In 10 years, shares of ROST gained 329% for us. Sherwin-Williams (SHW) made 165% in six years, and Church & Dwight (CHD) made 60% in five years.

How did our sells from last year do? Not so well. Middleby lost 32%. Ansys was down by 40%, and Disney lost 44%. Cerner was bought by Oracle, and Check Point Software gained 8%.

I always strive to be as transparent as possible when discussing our track record. Here’s a breakdown of how our Buy List performed in 2022. For tracking purposes, I assume the Buy List is a $1 million portfolio and all 25 stocks are equally weighted at the start of the year.

Here’s the data behind the dividend-adjusted returns. I’ve listed each stock’s beginning price, ending price and dividend-adjusted starting price.

The Buy List used to yield much less than the S&P 500, but it’s been much closer in recent years.

Every Buy List Stock
Posted by Eddy Elfenbein on December 31st, 2022 at 10:22 am

Here are all 102 Buy List stocks and when they made the cut.

AFLAC and Fiserv are the only two left that have been on every year. Stryker is on for the 16th year in a row.

Morning News: December 30, 2022
Posted by Eddy Elfenbein on December 30th, 2022 at 7:04 am

Euro Brings Closure for Croatia Almost 30 Years After War

The Year the Long Stock Market Rally Ended

After $18 Trillion Rout, Global Stocks Face More Hurdles in 2023

Biden Signs Government Funding Bill, Preventing Shutdown

Retiring Fed President Challenged the Consensus Inside Central Bank

Mortgage Rates in the US Rise for First Time in Seven Weeks

Tax Credits for Electric Vehicles Are About to Get Confusing

Deal-Making Thrived in 2022, Then Hit a Road Bump

The 2022 Good Tech Awards

As Infrastructure Windfall Approaches, Transit Agencies Grapple With How to Spend It

Large Pay Gains Outpace State Minimum-Wage Boosts for Many Workers

Small Businesses Find Some Relief From Hiring Woes

It Takes an Iron Will to Create a Fitness Empire Out of Kettlebells

Hershey Sued Over Chocolate Containing Heavy Metals

Southwest’s Silver Lining: Memories of Gaffes Fade Fast

Tesla Stock Is Headed for Its Biggest-Ever Annual Decline

Bahamas Seized $3.5 Billion FTX Assets on Custody Concerns

Roman Abramovich’s Very Bad Year of Losses, Forced Sales and Moored Superyachts

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Morning News: December 29, 2022
Posted by Eddy Elfenbein on December 29th, 2022 at 7:09 am

Japan Insurers to Continue Russia Shipping Coverage

Europe Taps Tech’s Power-Hungry Data Centers to Heat Homes

After a Bumpy Year, Renewable Energy Looks Poised for Boom Times

Oil Falls as China COVID Spike Dampens Demand Outlook

Exxon Sues EU in Move to Block New Windfall Tax on Oil Companies

Euro Zone Business Lending Growth Slows Sharply in November

The Stephanomics Guide to the Global Economy in 2023

The Numbers in the News

Wall Street’s Top Stars Got Blindsided by 2022 Market Collapse

The Most Interesting Success and Failure of 2022

What ‘Get Into a Fistfight’ and Bosses’ Other New Year’s Resolutions Mean for You

As Silicon Valley Retrenches, a Tech Talent Shift Accelerates

Inflation Takes Biggest Bite From Middle-Income Households

Consumers Change Food-Delivery Habits

Tesla’s Worst-Ever Year Brings $17 Billion Windfall for Shorts

Southwest’s Woes No Longer ‘Weather-Driven,’ Transportation Secretary Says

How Southwest Airlines Melted Down

18% of Families Pile on Debt to Finance Trip to Disney, Study Shows

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Morning News: December 28, 2022
Posted by Eddy Elfenbein on December 28th, 2022 at 7:05 am

China’s $1.3 Trillion Housing Crackdown Leaves Few Winners

Hong Kong Ends Last Covid Curbs in Bid to Revive Finance Hub

Hong Kong November Home Prices Ease to More than 5-Year Low

Five Scenarios That Threaten More Strife for Global Markets

The Bull-and-Bear Case for 2023

Crypto Exchange Kraken to Stop Operations in Japan

Solana Tumbles Again, Bringing Crypto Token’s 2022 Plunge to 94%

Sam Bankman-Fried’s Power Was Contingent on Belief

How the World’s Biggest Wealth Gainer Added $40 Billion in 2022

Treasury Department Outlines Rules for New Corporate Taxes

Holiday-Related Debt Soars 24% to an Eight-Year-High of $1,549

Google Employees Brace for a Cost-Cutting Drive as Anxiety Mounts

With New EVs Arriving, Brand Loyalty Goes Out the Window

The World Just Doesn’t Have Enough Planes as Travel Roars Back

Southwest’s Debacle, Which Stranded Thousands, to Be Felt for Days

AMC CEO Adam Aron, who Earns $19 Million, Asks for Salary Freeze in 2023 as Shares Plunge

Mickey’s Copyright Adventure: Early Disney Creation Will Soon Be Public Property

Misleading Ads Fueled Rapid Growth of Online Mental Health Companies

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CWS Market Review – December 27, 2022
Posted by Eddy Elfenbein on December 27th, 2022 at 7:24 pm

Ladies and Gentlemen,

Drumroll please.

I give you our 2023 Buy List.

Abbott Laboratories (ABT)
AFLAC (AFL)
AmerisourceBergen (ABC)
Broadridge Financial (BR)
Carrier Global (CARR)
Celanese (CE)
Danaher (DHR)
FactSet Research (FDS)
FICO (FICO)
Fiserv (FISV)
HEICO (HEI)
Hershey (HSY)
Intercontinental Exchange (ICE)
Intuit (INTU)
Middleby (MIDD)
Miller Industries (MLR)
Moody’s (MCO)
Otis Worldwide (OTIS)
Polaris (PII)
Science Applications International (SAIC)
Silgan (SLGN)
Stepan (SCL)
Stryker (SYK)
Thermo Fisher Scientific (TMO)
Trex (TREX)

The five new buys are:

AmerisourceBergen (ABC)
Celanese (CE)
Intuit (INTU)
Middleby (MIDD)
Polaris (PII)

The five sells are:

Church & Dwight (CHD)
Reynolds Consumer Products (REYN)
Ross Stores (ROST)
Sherwin-Williams (SHW)
Zoetis (ZTS)

This is our 18th annual Buy List. The new Buy List won’t go into effect until the start of trading on Tuesday, January 3. The 25 stocks will be equally weighted based on the closing price as of December 30.

Here’s the performance of our ETF versus the S&P 500 ETF over the last few months.

Our ETF is based on the Buy List but it’s not always a perfect match.

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

I’ve wanted to add AmerisourceBergen for some time. I came close last year but decided to cut it at the last minute. That was a mistake. The company is a major drug wholesaler. AmerisourceBergen was formed 20 years ago through the merger of Bergen Brunswig and AmeriSource. They also have units offering consulting services and veterinary supply.

Part of the reason I shied away from ABC in previous years is due to the legal liabilities surrounding ABC’s role in the opioid crisis. I won’t go into its culpability, but the outlook has cleared up to some extent.

Celanese is the world’s leading maker of acetic acid. That’s one of those things that few people even think about, but it’s used in dozens of applications. Celanese is also the world’s leading maker of vinyl acetate. That’s a key ingredient in furniture glue. They make 25% of the world’s supply.

Earlier this year, Celanese agreed to buy the Mobility and Materials division from DuPont for $11 billion in cash. The stock currently yields 2.7%.

I like Intuit a lot. They’re the folks behind TurboTax, QuickBooks, Credit Karma and Mailchimp. It’s a great business. To be frank, we’re adding it at a higher price than I’d prefer.

But today’s elevated price comes after a year in which the shares were clobbered. Intuit is down about 40% YTD. Even if we’re not getting in at a discount, at least we’re getting it a lot less than where it was. With a market value of more than $100 billion, Intuit is by far the largest of the new additions.

Middleby returns to our Buy List after a one-year hiatus. The company is a major supplier of kitchen equipment for restaurants and hotels. The stock did not have a good year in 2022 (-30%), but the business has rebounded quite well. I like this company.

Originally, Polaris made snowmobiles. They still do today, but they also make all sorts of off-road vehicles, those crazy “slingshot” cars, plus snowmobiles, power boats, pontoon boats and lots of other stuff. They also do a nice business in selling apparel. Polaris has increased its dividend every year for the last 27 years.

Coming up with the sells each year is hard, because you can’t help getting attached to some stocks. Ross Stores was on our Buy List for 10 years. It made 325% for us which is about double the gain of the S&P 500. Church & Dwight was on for five years, and Sherwin-Williams was on for six years. Most of our sells this year lowered guidance at some point in 2022.

Church & Dwight was particularly difficult to let go, but I think I made the right call. Perhaps I’ll add it back in the future like I’m doing with Middleby.

I decided to keep Heico, but it’s a pricey stock. It’s tempting to take profits and move on, but I’m willing to let it run for now. The recent earnings report helped convince me to keep it.

I was strongly considering adding Nike this year, but the stock shot up after its recent earnings report. Some other companies that I was considering were Trane Technologies, 3M, CDW Corporation and Dollar General.

AFLAC and Fiserv have been on all 18 Buy Lists. Also note that sometime in Q4 of 2023, Danaher will spin off its Environmental & Applied Solutions segment into its own company. The new company will be composed of Danaher’s Water Quality and Product Identification businesses. Until the company gets a name, it will be known as EAS.

That’s it. The Buy List is locked and sealed, and I can’t make any changes for an entire year. I announce our changes before they go into effect just so no one can claim that I’m playing games with our track record.

That’s all for now. The stock market will be closed on Monday, January 2. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: December 27, 2022
Posted by Eddy Elfenbein on December 27th, 2022 at 7:08 am

Putin Can’t Count on the Global Oil Market

Japan’s Nakao Sees Smoother Path for Kuroda’s Successor with BOJ Policy Shift

Chinese Public Shows Mixed Emotions About Covid Zero Ending

Amazon Packages Burn in India, Last Stop in Broken Recycling System

U.S. Finance Faces ESG Backlash, More to Come in 2023

Wall Street’s Big Banks Score $1 Trillion of Profit in a Decade

The Money Party is Over

Drug Prices Reach New High—in the Millions

Chip Inventories Swell as Consumers Buy Fewer Gadgets

‘Most Pro-Union President’ Runs Into Doubts in Labor Ranks

Retirees Are One Reason the Fed Has Given Up on a Big Worker Rebound

Laid Off Tech Workers Quickly Find New Jobs

What Would It Take to Turn More Offices Into Housing?

Getting Creative With Vacant Office Space: Storage, Gym, Film Set

Is A.I. the Future of Test Prep?

Southwest Airlines CEO Says More Cancellations Ahead as Airline Tries to Recover

Apple Japan Hit with $98 Million in Back Taxes

In the Bahamas, a Lingering Sympathy for Sam Bankman-Fried

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Morning News: December 26, 2022
Posted by Eddy Elfenbein on December 26th, 2022 at 7:04 am

Five Charts That Capture the State of Global Energy in 2022

Britain’s Soaring Energy Costs Strain Crisis Responders

Germany’s Energy Crisis Is a Cue to Chop Wood and Stock Up

Russia May Raise Crude Oil Exports if EU Ban Cuts Refining

Rising Power Prices in Europe Are Making EV Ownership More Expensive

In Nord Stream Mystery, Baltic Seabed Provides a Nearly Ideal Crime Scene

Why the Price of Plastic Is Crashing After a Record Surge

BOJ Kuroda Dismisses Near-Term Chance of Exiting Easy Policy

World Economy Is Headed for a Recession in 2023, Researcher Says

The Boundless Fatuity Informing the Simple-Minded Word ‘Recession’

Musk Warns Against Margin Debt on Risk of Market ‘Mass Panic’

Are You ‘Extremely Hardcore’ or Not? How Elon Musk Is Dividing Silicon Valley’s Elite

Reasons for Optimism in 2023

Why 2023 Will Be Like 1967’s ‘Summer of Love’ for the Stock Market

Housing Slump Set to Give Fed an Inflation-Fighting Assist

Baking Supplies Cost a Lot More This Year. So Did Flying. But That Flat-Screen TV Got Cheaper.

Restaurant Staffers Are Returning to Work After Covid Flight

When a Taylor Swift Concert Means Getting Your First Credit Card

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