Market Overview - The U.S. stock market experienced a slight decline on December 26, 2025, primarily due to low trading volume following the Christmas holiday, with many institutional investors absent for the year [1] - Major indexes such as the S&P 500, Dow, and Nasdaq saw small dips, ending short winning streaks observed earlier in the week [1][9] Investment Strategy - During the holiday season, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a consistent history of dividend increases often exhibit strong financial health [2] - Dividend-growth stocks provide a defensive hedge against economic uncertainty and market volatility, making them attractive during periods of low market activity [4] Dividend Growth Stocks - Stocks with a strong history of year-over-year dividend growth are considered healthier investments, offering greater potential for capital appreciation compared to simple dividend-paying stocks [3][6] - Five selected dividend-growth stocks include: - Woodward Inc. (WWD): Expected revenue growth of 11.1% for fiscal 2026, long-term earnings growth rate of 15.20%, and an annual dividend yield of 0.36% [10] - Enersys (ENS): Projected revenue growth of 4% for fiscal 2026, long-term earnings growth rate of 15%, and an annual dividend yield of 0.70% [11] - Donaldson (DCI): Anticipated revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and an annual dividend yield of 1.31% [12] - Rockwell Automation (ROK): Expected revenue growth of 5.8% for fiscal 2026, long-term earnings growth rate of 12.4%, and an annual dividend yield of 1.38% [13] - Vertiv Holdings (VRT): Projected revenue growth of 27.5% for fiscal 2025, long-term earnings growth rate of 30.2%, and an annual dividend yield of 0.15% [14] Stock Selection Criteria - Stocks selected for their strong fundamentals include criteria such as: - 5-Year Historical Dividend Growth Greater Than Zero [6] - 5-Year Historical Sales Growth Greater Than Zero [7] - 5-Year Historical EPS Growth Greater Than Zero [7] - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Price/Cash Flow Less Than Industry Median [8] - 52-Week Price Change Greater Than S&P 500 [8]

Core Insights - The global supply chain is anticipated to undergo significant changes by 2026 due to geopolitical tensions, regulatory shifts, and rising cost pressures that have disrupted international trade and increased uncertainty for businesses worldwide [1][2] Group 1: Industry Trends - Manufacturing companies are increasingly focusing on domestic manufacturing, technological advancements, and building resilient supply-chain networks as they prepare for 2026 [2] - This strategic shift is leading to heightened investments in U.S.-based facilities, productivity-enhancing technologies, and regional suppliers [2] Group 2: Key Manufacturing Stocks - Caterpillar Inc. (CAT), EnerSys (ENS), and Honeywell International Inc. (HON) are identified as potential investment opportunities due to their strong positioning for supply-chain diversification into 2026 [3][8] Group 3: Caterpillar Inc. (CAT) - Caterpillar is the largest global construction and mining equipment manufacturer, providing products and services across various sectors [4] - The company is diversifying its supply chain by building a reliable network of suppliers and reducing dependence on a limited number of suppliers [5] - Caterpillar is expanding its U.S. operations, including new facilities in the Dallas-Fort Worth area and investments in Indiana to enhance workforce skills and engine production [6] - The stock has surged 54.6% in the past year, with a Zacks Consensus Estimate for 2025 earnings revised 3.5% upward over the past 60 days [7] Group 4: EnerSys (ENS) - EnerSys specializes in manufacturing industrial batteries and is realigning its manufacturing footprint by relocating production to the U.S. to reduce tariff exposure [10][11] - The company is engaging minority and veteran-owned suppliers and implementing sustainability initiatives to enhance supply-chain resilience [11] - EnerSys has seen a 56.2% increase in shares over the past year, with a Zacks Consensus Estimate for fiscal 2026 earnings revised 5.3% upward [12] Group 5: Honeywell International Inc. (HON) - Honeywell is a diversified technology and manufacturing company with a wide range of products and services [14][15] - The company is diversifying its supply chain by reducing reliance on single suppliers and regions, and implementing dual-sourcing strategies [16] - Despite a 13.2% decline in shares over the past year, Honeywell has rebounded 5.3% in the past month, with a Zacks Consensus Estimate for 2025 earnings revised 1.4% upward [17]

Core Viewpoint - EnerSys (ENS) is well-positioned to capitalize on robust business across diverse end markets and strategic acquisitions, with shareholder-friendly initiatives enhancing its appeal [1] Business Strength - EnerSys is experiencing growth in its Specialty segment, particularly in aerospace and defense, with a 16% year-over-year revenue increase in Q2 of fiscal 2026 [5] - The Energy Systems segment benefits from the expansion of U.S. communications networks driven by AI data demand, alongside increased industrial customer demand [5] - Global megatrends such as 5G expansion, rural broadband development, energy grid modernization, electrification, automation, and decarbonization are favorable for ENS [5] Solid Product Offerings - The company boasts a strong product portfolio and ongoing innovation, including lithium and fast-charge solutions, with maintenance-free product sales rising 14% year-over-year in Q2 of fiscal 2025 [6] - EnerSys has reinforced its leadership in NexSys Thin Plate Pure Lead (TPPL) products and launched a New Ventures product line for energy storage and management [6] Expansion Initiatives - EnerSys enhanced its product portfolio through acquisitions, notably acquiring Bren-Tronics, Inc. for $208 million in July 2024, which bolstered its position in the military and defense market and expanded its lithium offerings [7] - Acquisitions contributed a 1% increase in sales for ENS in Q2 of fiscal 2026 [7] Rewards to Shareholders - The company is committed to returning value to shareholders, having paid $18.9 million in dividends and repurchased $217.8 million in shares in the first half of fiscal 2026 [8] - EnerSys increased its quarterly dividend by 9% to 26.25 cents per share in August 2025 [8]

Market Overview - Major U.S. stock indices experienced a significant decline on December 12, 2025, primarily driven by sell-offs in technology stocks due to concerns over an AI bubble narrative [1] - Investors reacted negatively to news from Broadcom, which indicated expected margin pressure in its AI business for the first quarter of fiscal 2026, despite exceeding fiscal fourth-quarter earnings estimates [1] Investment Strategy - In the current market environment, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a history of raising dividends typically demonstrate strong financial health, providing a defensive hedge against economic uncertainty [2] - Stocks with a strong history of year-over-year dividend growth are suggested to form a healthier portfolio with greater potential for capital appreciation compared to simple dividend-paying stocks or those with high yields [2] Selected Dividend Growth Stocks - Five dividend growth stocks have been identified as potential solid choices for investment: TE Connectivity (TEL), Enersys (ENS), Donaldson (DCI), Lam Research (LRCX), and Leidos Holdings (LDOS) [3][9] - These stocks exhibit positive sales and earnings per share (EPS) growth histories, consistent dividend increases, solid fundamentals, and favorable valuation metrics [9] Characteristics of Dividend Growth Stocks - Stocks with a strong history of dividend growth are typically associated with mature companies that are less vulnerable to market volatility, thus providing a hedge against economic or political uncertainties [4] - These stocks are characterized by superior fundamentals, including sustainable business models, long-term profitability, rising cash flows, good liquidity, strong balance sheets, and value characteristics [5] - Although these stocks may not have the highest yields, they have historically outperformed the broader stock market and other dividend-paying stocks [6] Performance Metrics - Selected stocks must meet specific criteria, including: - 5-Year Historical Dividend Growth Greater Than Zero - 5-Year Historical Sales Growth Greater Than Zero - 5-Year Historical EPS Growth Greater Than Zero - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Additional metrics include a Price/Cash Flow ratio less than the industry median and a 52-Week Price Change greater than the S&P 500 [8] Individual Stock Insights - **TE Connectivity (TEL)**: Expected fiscal 2026 revenue growth of 10.2%, long-term earnings growth rate of 12.3%, and an annual dividend yield of 1.23% [10][11] - **Enersys (ENS)**: Projected fiscal 2026 revenue growth of 4%, long-term earnings growth rate of 15%, and an annual dividend yield of 0.71% [11][12] - **Donaldson (DCI)**: Anticipated fiscal 2026 revenue growth of 3.4%, long-term earnings growth rate of 10%, and an annual dividend yield of 1.30% [12] - **Lam Research (LRCX)**: Expected fiscal 2026 revenue growth of 14.1%, long-term earnings growth rate of 20.3%, and an annual dividend yield of 0.65% [13] - **Leidos Holdings (LDOS)**: Projected fiscal 2025 revenue growth of 3.4%, long-term earnings growth rate of 11.6%, and an annual dividend yield of 0.84% [14]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: EnerSys (ENS) - EnerSys currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [2][3] - The stock has shown significant price appreciation, with a 36.4% increase over the past quarter and a 53.46% rise over the last year, compared to the S&P 500's 5.77% and 13.9% respectively [6] Price Performance - Over the past week, ENS shares increased by 3.6%, while the Zacks Manufacturing - Electronics industry rose by 4.22% [5] - The monthly price change for ENS is 13.33%, outperforming the industry's 1.58% [5] Trading Volume - The average 20-day trading volume for ENS is 513,163 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, three earnings estimates for ENS have been revised upwards, raising the consensus estimate from $9.76 to $10.28 [9] - For the next fiscal year, three estimates have also moved higher, with no downward revisions [9] Conclusion - Considering the positive price trends, earnings revisions, and overall momentum, EnerSys is positioned as a solid momentum pick with a Momentum Score of B and a Zacks Rank of 2 (Buy) [11]

Company Performance - EnerSys (ENS) shares have increased by 17.6% over the past month and reached a new 52-week high of $146.17, with a year-to-date gain of 56.6% compared to 5.3% for the Zacks Industrial Products sector and 3% for the Zacks Manufacturing - Electronics industry [1] - The company has consistently beaten earnings estimates, reporting EPS of $2.56 against a consensus estimate of $2.36 in its last earnings report [2] Earnings Projections - For the current fiscal year, EnerSys is expected to post earnings of $10.28 per share on revenues of $3.76 billion, reflecting a 1.28% change in EPS and a 3.96% change in revenues [3] - For the next fiscal year, earnings are projected to be $12.41 per share on revenues of $3.88 billion, indicating a year-over-year change of 20.72% in EPS and 3.03% in revenues [3] Valuation Metrics - EnerSys has a Value Score of B, a Growth Score of B, and a Momentum Score of C, resulting in a VGM Score of A [6] - The stock trades at 14.1X current fiscal year EPS estimates, below the peer industry average of 24.8X, and at 11.2X trailing cash flow compared to the peer group's average of 20.7X [7] - The PEG ratio stands at 0.94, indicating that while the stock is not in the top echelon from a value perspective, it remains attractive [7] Zacks Rank - EnerSys holds a Zacks Rank of 2 (Buy) due to rising earnings estimates, aligning with the recommendation for investors to select stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B [8] Industry Context - The Manufacturing - Electronics industry is positioned in the top 16% of all industries, suggesting favorable conditions for both EnerSys and its peers [11]

Core Insights - In times of market volatility, investors are increasingly turning to value investing as a strategy to capitalize on discounted stock prices when others are selling [1][3] Value Investment Strategy - Value investing allows investors to purchase stocks at lower prices during market uncertainty, presenting opportunities for long-term gains [1] - The strategy can lead to "value traps" if not properly understood, where stocks underperform due to persistent issues rather than temporary setbacks [3] Importance of PEG Ratio - The PEG ratio, defined as (Price/Earnings)/Earnings Growth Rate, is a crucial metric for value investors, with a lower PEG ratio indicating better value [5] - The PEG ratio helps identify intrinsic stock value, although it has limitations, such as not accounting for changing growth rates over time [5] Screening Criteria for Value Stocks - Effective screening for value stocks includes criteria such as a PEG ratio less than the industry median, a P/E ratio below the industry median, and a Zacks Rank of 1 or 2 [6] - Additional criteria include a market capitalization greater than $1 billion, an average 20-day trading volume exceeding 50,000, and upward revisions in earnings estimates by more than 5% [6] Selected Value Stocks - The Allstate Corporation (ALL), Telefonica, S.A. (TEF), Enersys (ENS), and Commercial Metals Co. (CMC) are highlighted as low-PEG value stocks that meet strict screening criteria [7] - Each of these companies demonstrates a combination of discounted valuation, solid growth metrics, and strong Style Scores, along with rising earnings estimates [7] Company Profiles - **Allstate Corporation (ALL)**: The third-largest property-casualty insurer in the U.S. with a five-year expected growth rate of 18.9% and a Zacks Rank of 1 [9][10] - **Telefonica, S.A. (TEF)**: A major telecommunications provider in Europe and Latin America, with a five-year expected growth rate of 28.1% and a Zacks Rank of 2 [10][11] - **Enersys (ENS)**: Engaged in manufacturing industrial batteries, with a long-term historical growth rate of 16.5% and a Zacks Rank of 2 [11][12] - **Commercial Metals Co. (CMC)**: A manufacturer and recycler of steel products, boasting a five-year expected growth rate of 25.6% and a Zacks Rank of 1 [13][14]

Core Insights - Investors primarily utilize price-to-earnings (P/E) and price-to-sales (P/S) ratios for stock evaluation, while the price-to-book (P/B) ratio serves as an additional metric for identifying undervalued stocks with growth potential [1][5][10] Group 1: P/B Ratio and Its Importance - The P/B ratio is defined as the ratio of stock price to book value, calculated as market capitalization divided by book value of equity [2] - A P/B ratio of less than one indicates that a stock is trading below its book value, suggesting it may be undervalued and a good buy [5] - Conversely, a P/B ratio greater than one suggests the stock may be overvalued [5][6] Group 2: Book Value Definition - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities [3] - It is calculated by subtracting total liabilities from total assets, equating to common stockholders' equity on the balance sheet [4] Group 3: Limitations of P/B Ratio - The P/B ratio is particularly useful for industries with tangible assets, such as finance and manufacturing, but may be misleading for companies with high R&D expenses or significant debt [8] - A low P/B ratio could indicate weak asset returns or overstated assets, while a high P/B may suggest a company is a takeover target [7] Group 4: Stocks with Low P/B Ratios - StoneCo (STNE) has a low P/B ratio with a projected 3-5 year EPS growth rate of 30.3% and a Zacks Rank of 2 [9][15] - Great Lakes Dredge & Dock (GLDD) also features a low P/B ratio with a projected EPS growth rate of 12.0% and a Zacks Rank of 1 [9][16] - Keros Therapeutics (KROS) is highlighted with a projected EPS growth rate of 23.6% and a Zacks Rank of 1 [9][20] Group 5: Screening Parameters for Investment - Screening for stocks involves comparing P/B, P/S, and P/E ratios against industry medians to identify attractive investment opportunities [11][12][13] - A PEG ratio of less than 1 indicates undervaluation relative to future growth prospects [13] - Stocks should have a minimum trading price of $5 and a substantial average trading volume for liquidity [14]

Market Overview - Major U.S. indices rose before Thanksgiving, with the Dow Jones Industrial Average gaining 314.67 points to close at 47,427.12, the S&P 500 increasing by 46.73 points to settle at 6,812.61, and the Nasdaq Composite outperforming with a gain of 0.82% to finish at 23,214.69 [1] Federal Reserve Policy Impact - Market momentum was driven by shifting expectations regarding Federal Reserve policy, with growing confidence that interest rate cuts may occur as soon as next month, fostering optimism [2] - Easing concerns about an overvalued artificial intelligence sector contributed to improved market sentiment [2] Value Stocks Opportunity - Value stocks are seen as appealing due to the potential benefits of lower borrowing costs for companies with stable earnings and discounted valuations [2] - The Price to Cash Flow (P/CF) ratio is highlighted as an effective valuation metric for evaluating value stocks, indicating better value when lower [3][4] Financial Health Indicators - P/CF stands out because it reflects a company's financial health by adding back non-cash charges to net income, making it a more reliable measure than earnings, which can be subject to manipulation [4][5] - Positive cash flow indicates increased liquid assets, allowing companies to manage debt, expenses, and reinvestment, while negative cash flow suggests declining liquidity [6] Value Investing Strategy - A comprehensive investment strategy should include multiple metrics such as price-to-book, price-to-earnings, and price-to-sales ratios, along with a favorable Zacks Rank and Value Score to avoid value traps [7] - Parameters for selecting true-value stocks include a P/CF ratio less than or equal to the industry median, a minimum stock price of $5, and an average 20-day trading volume greater than 100,000 [8] Highlighted Value Stocks - Four value stocks with low P/CF ratios were identified: Great Lakes Dredge & Dock Corporation (GLDD), StoneCo Ltd. (STNE), PG&E Corporation (PCG), and EnerSys (ENS), all showing year-over-year sales and EPS growth projections [9] - Each of these stocks holds a Value Score of A or B and ranks in the top two Zacks Ranks, indicating strong potential [9] Company-Specific Insights - Great Lakes Dredge & Dock (GLDD) has a trailing four-quarter earnings surprise of 65.5% and is projected to see sales and EPS growth of 11.6% and 31%, respectively [12][13] - StoneCo (STNE) has a trailing earnings surprise of 9.1% and is expected to grow sales and EPS by 12.7% and 27.4%, respectively, with shares having rallied 68% in the past year [13][14] - PG&E Corporation (PCG) has a trailing earnings surprise of 0.5% and is projected for sales and EPS growth of 6.7% and 10.3%, respectively, although shares have declined 26% in the past year [14][15] - EnerSys (ENS) has a trailing earnings surprise of 4.9% and is expected to see sales and EPS growth of 4% and 1.3%, respectively, with shares surging 47.8% in the past year [15][16]

Company Overview - EnerSys is part of the Industrial Products group, which consists of 186 companies and is currently ranked 10 in the Zacks Sector Rank [2] - EnerSys has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimate revisions [3] Performance Metrics - The Zacks Consensus Estimate for EnerSys' full-year earnings has increased by 5.3% over the past quarter, reflecting improved analyst sentiment [4] - EnerSys has gained approximately 52.7% year-to-date, significantly outperforming the average gain of 5.7% for the Industrial Products sector [4] Industry Comparison - EnerSys belongs to the Manufacturing - Electronics industry, which includes 15 companies and is currently ranked 28 in the Zacks Industry Rank; this industry has gained an average of 3.3% this year [6] - In contrast, Mitsui & Co., another outperforming stock in the Industrial Products sector, is part of the Metal Products - Distribution industry, which has seen a 12% increase this year and is ranked 5 [6] Investment Outlook - Investors interested in Industrial Products stocks should monitor EnerSys and Mitsui & Co. for their continued strong performance [7]