Core Viewpoint - The S&P 500 Index experienced a notable decline, primarily driven by a few large tech stocks, highlighting the volatility of the market and the tendency for rapid declines compared to rises [1]. Group 1: Market Performance - On a recent trading day, approximately one-fourth of the S&P 500 Index stocks were positive, with 32 stocks rising by at least 1%, indicating potential opportunities despite overall market weakness [2]. - Many S&P 500 stocks have struggled to maintain rallies, typically seeing only 5%-7% increases before faltering [4]. Group 2: Stock Analysis - McCormick (MKC), a leading spice manufacturer, is highlighted as a stable investment despite a trailing earnings multiple of 22x and a history of losses over the past three years, suggesting that stability is valued in the current market [4]. - Edison International (EIX), a California-based electric utility, is identified as a speculative comeback candidate, trading at 10x earnings and recovering from significant fire damage in its operational area [5].

Core Insights - McCormick & Company has increased its quarterly dividend by 3 cents, or 6.7%, to 48 cents per share, marking its 102nd year of continuous dividend payments and the 40th consecutive year of quarterly dividend hikes [1][7]. Financial Performance - In the first nine months of fiscal 2025, McCormick returned $362.2 million to shareholders through dividends, with net cash from operating activities totaling $420.2 million [2]. - The company is focused on cash allocation towards growth investments, shareholder dividends, and debt reduction while maintaining a strong investment-grade rating [2]. Market Position and Growth - McCormick operates from a position of category strength, driven by volume-led growth and resilient demand for flavor across global markets [3]. - The company has achieved its fifth consecutive quarter of volume-led growth in Q3 of fiscal 2025, supported by strong performance in the Consumer segment across the Americas and EMEA [4]. Challenges and Strategies - McCormick is navigating a complex cost environment due to higher commodity prices and tariffs, which pressure margins [5]. - The company is leveraging its Comprehensive Continuous Improvement program, targeted pricing actions, and alternative sourcing strategies to offset these challenges while balancing growth investments with disciplined cost control [5]. Strategic Outlook - The latest dividend increase reflects McCormick's commitment to dependable shareholder returns and its strategy of volume-led growth [9]. - Despite challenges from rising commodity costs and tariffs, McCormick's efficiency programs and resilient cash generation reinforce management's confidence in sustaining growth [9].

Core Insights - The article discusses potential stock picks related to Thanksgiving dinner, highlighting how rising food prices may signal investment opportunities in certain companies [2][3]. Company Summaries - **Seaboard Corporation (SEB)**: Known for its Butterball turkey brand, SEB has seen its stock rise over 65% this year. Despite a high nominal price exceeding $4,000, it trades at just 9x earnings, indicating value compared to competitors [4][5][6]. - **Campbell's Company (CPB)**: CPB is recognized for its role in Thanksgiving side dishes, particularly with its Cream of Mushroom soup. The stock is down 26% in 2025 but shows signs of a potential bullish reversal, with a price target of $34.59 suggesting nearly 12% upside [7][9]. - **General Mills (GIS)**: As a key player in baking products, GIS has experienced a year-to-date decline of approximately 25%. Analysts project a price target of $55.82, indicating an 18% upside potential, with the stock trading at 10x earnings [10][11]. - **McCormick & Company (MKC)**: Historically strong in the current quarter, MKC's stock is attractively valued at 21x earnings. Analysts have set a price target of $78.22, reflecting a potential 21% upside, alongside a stable dividend yield of 2.79% [12][13]. - **Constellation Brands (STZ)**: This company, known for its wine and beer products, has seen its stock decline over 40% this year. Analysts project a price target of $186.44, suggesting over 43% upside, with a low valuation of 9.6x forward earnings [14][15].

Core Insights - McCormick & Company Inc. (MKC) achieved volume-led growth for the fifth consecutive quarter in Q3 2025, reporting a 2% organic sales growth primarily driven by increased volumes in the Consumer segment [1][8]. Group 1: Sales Performance - The company's strong performance was notably supported by mustard and hot sauce, which enhanced dollar unit share, alongside a robust Flavor Solutions business that diversified its customer base [2]. - McCormick anticipates organic sales growth in the range of 1-3% for 2025, focusing on efficiency, alternative sourcing, and disciplined revenue management to mitigate future risks [4][8]. Group 2: Operational Challenges - Despite the growth, McCormick faces pressures from the global trade landscape and macroeconomic challenges, including rising commodity prices and tariffs, prompting the company to implement efficiency strategies [3]. - The effective execution of these strategies led to an improvement in operating profit in Q3 2025, even as gross margins faced some strain [3]. Group 3: Competitive Landscape - In the first quarter of fiscal 2026, Conagra Brands Inc. reported a 5.8% drop in net sales, while Kraft Heinz Company experienced a 2.3% decline in net sales to $6.24 billion, indicating competitive pressures in the industry [5][6]. Group 4: Market Position and Valuation - MKC's shares have decreased by 15.3% year-to-date, compared to a 14% decline in the industry, and it currently holds a Zacks Rank 3 (Hold) [7]. - The company trades at a forward price-to-earnings ratio of 20.05, which is higher than the industry average of 14.59 [9]. Group 5: Earnings Estimates - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings suggests a year-over-year increase of 2.4% and 6.9%, respectively [11].

Summary of Key Points from the Conference Call Industry Overview - The focus on AI investments has overshadowed other potential investment opportunities in various sectors, including semiconductors, power plants, and capital goods [1][2] - Companies not directly benefiting from AI are highlighted as compelling investment options, such as Freeport-McMoRan, which has indirect exposure to AI [1] Core Insights and Arguments - A screening of Buy-rated US stocks not included in AI/power/infrastructure ETFs identified 82 stocks with positive 3-month EPS revisions and trading below a market multiple of 26x, leading to a final list of 16 equities [2] - Savita Subramanian models an 8% return for the S&P over the next 12 months, emphasizing the importance of owning average stocks rather than the index [3] - Risks associated with AI investments include potential declines in middle-income white-collar jobs, which could impair consumer spending [3] - Hyperscalers investing heavily in AI technology may face de-rating if monetization does not meet expectations, as they currently trade at high multiples despite capital-intensive spending [3] Notable Companies and Their Performance - **Amcor PLC (AMCR)**: Recent acquisition of Berry Global is expected to enhance valuation, with EBITDA projected to approach $3.8 billion for F26 [11][12] - **AT&T Inc. (T)**: Strong performance metrics with 405k post-paid phone net additions, projecting a 9% EPS growth in 2026 [15][17] - **BGC Group**: Dominates the energy derivatives market, with expected growth in volumes due to increased power consumption driven by cloud and AI adoption [18][19] - **Church & Dwight (CHD)**: Positioned to benefit from consumer trade-down trends, with organic sales growth of 3.4% in Q3 [20][21] - **Dollar General (DG)**: Improved execution and a focus on lower price points are expected to boost sales, with a current valuation below the 5-year average [23][27] - **Freeport-McMoRan (FCX)**: Anticipates a restart of the Grasberg mine, with bullish forecasts for copper prices due to supply challenges [32][34] - **Henry Schein (HSIC)**: Transitioning to a higher-margin business model, with a target of 60% operating income from high-growth products by 2027 [38][39] - **Progressive Corp (PGR)**: Strong EPS revisions and expected dividend announcements are anticipated to drive growth [65][67] - **Walt Disney Co. (DIS)**: Growth drivers intact with expectations for double-digit growth in Entertainment operating income [80] Additional Important Insights - The market is currently cautious, providing room for multiple expansions as fundamentals improve across various sectors [14] - Regulatory improvements in Connecticut are expected to enhance Eversource's valuation [28][30] - Viking Holdings is positioned for premium valuation due to its unique brand and superior margins in the cruise industry [76][79] - The overall sentiment indicates a potential for significant investment opportunities outside the AI sector, as companies adapt to changing market dynamics and consumer behaviors [1][2][3]

Company Overview - McCormick & Company, Incorporated (MKC) is based in Hunt Valley, Maryland, and specializes in marketing and distributing spices, seasoning mixes, condiments, and other flavorful products to the food industry, with a market cap of $17.7 billion [1] Stock Performance - MKC shares have underperformed the broader market over the past 52 weeks, declining 12.4%, while the S&P 500 Index gained 13.1% [2] - Year-to-date, MKC's stock is down 12.8%, compared to a 15.1% return for the S&P 500 [2] - MKC has also lagged behind the First Trust Nasdaq Food & Beverage ETF, which saw an 11.6% decline over the past 52 weeks and a 6.8% drop year-to-date [3] Earnings Report - On November 11, MKC shares surged 2.2% following a strong Q3 earnings release, with total net sales increasing 2.7% year-over-year to $1.7 billion, slightly exceeding consensus estimates [4] - The adjusted EPS for the quarter was $0.85, reflecting a 2.4% improvement from the previous year and surpassing analyst expectations by 4.9% [4] - Despite pressure on gross margins due to rising costs in a dynamic global trade environment, MKC managed to drive operating profit growth through effective cost-saving initiatives [4] Future Earnings Expectations - For the current fiscal year ending in November, analysts project MKC's EPS to grow 2.4% year-over-year to $3.02 [5] - MKC's earnings surprise history is mixed, with the company exceeding consensus estimates in three of the last four quarters [5] Analyst Ratings - Among 14 analysts covering MKC, the consensus rating is a "Moderate Buy," consisting of seven "Strong Buy," one "Moderate Buy," and six "Hold" ratings [5] - The analyst sentiment has become more bullish compared to three months ago, with six analysts recommending a "Strong Buy" and one suggesting a "Strong Sell" [6] - AllianceBernstein analyst Alexia Burland Howard maintained a "Buy" rating on MKC with a price target of $91, indicating a potential upside of 38% from current levels [6]

Core Viewpoint - The ongoing focus on artificial intelligence (AI) transactions is leading to both optimism and concerns among investors regarding potential asset bubbles and missed opportunities in other sectors [1] Group 1: Market Trends - Strong earnings reports have alleviated concerns despite accumulating economic warning signals [1] - Analysts suggest that as Wall Street concentrates on popular sectors, contrarian strategies may reveal overlooked investment opportunities [1] - A group of analysts from Bank of America raised a question about whether excessive focus on the AI sector might cause investors to overlook other opportunities [1] Group 2: Selected Stocks - Viking Cruises (VIK) stands out in the hotel service industry due to its differentiated, all-inclusive, destination-focused products, leading to superior financial performance and over 50% market share in the river cruise sector [2] - McCormick & Company (MKC) is expected to rebound from tariff policy adjustments, potentially benefiting from a tariff exemption and being one of the few companies in the packaged food sector to achieve organic sales and volume growth [2] - Dollar General (DG) is performing well due to the trend of consumers "trading down" in response to inflation, with an increase in basket size and a successful e-commerce strategy [3]

Core Insights - McCormick & Company Inc. is focusing on the Comprehensive Continuous Improvement (CCI) program to drive earnings per share (EPS) growth in fiscal 2025, emphasizing sourcing improvements, supply chain productivity, and operational efficiency [1][5] Financial Performance - The company reported a 2% increase in adjusted operating income in the third quarter, primarily due to reduced selling, general, and administrative (SG&A) costs from CCI initiatives, although this was partially offset by increased brand marketing and technology spending [3][9] - Gross margin decreased by 120 basis points year-over-year, attributed to high commodity costs and tariff issues, but management anticipates recovery in the fourth quarter through additional mitigation measures [4][9] Future Projections - For fiscal 2025, McCormick projects adjusted EPS growth of 4% to 6% on a constant-currency basis, driven by volume gains and ongoing cost-saving initiatives [5][9] - The consensus estimate for fiscal 2025 earnings indicates a year-over-year increase of 2.4%, while the estimate for fiscal 2026 suggests a rise of 6.9% [15] Market Position - McCormick's shares have declined by 14.7% year-to-date, slightly worse than the industry decline of 14.4% [6] - The company trades at a forward price-to-earnings ratio of 20.23X, which is higher than the industry average of 14.56X [7]

Core Insights - McCormick & Company Inc. experienced a decline in adjusted gross profit margin by 120 basis points in Q3 2025 due to higher tariffs, increased commodity costs, and expenses related to capacity expansion [1][9] - The company's Comprehensive Continuous Improvement (CCI) program provided meaningful savings, leading to a 2% increase in adjusted operating income despite inflationary pressures [2][9] - McCormick reduced selling, general & administrative (SG&A) expenses by 100 basis points, primarily through employee-related cost reductions linked to the CCI program [3][9] - The company anticipates continued cost pressures through year-end, projecting flat full-year gross margins, but expects modest improvement in Q4 as savings initiatives gain traction [4][9] - McCormick's focus on cost optimization and strategic capacity investments is expected to support gradual margin recovery and long-term operational resilience [5] Financial Performance - McCormick's shares have declined by 16.1% year-to-date, compared to the industry's decline of 13.7% [6] - The forward price-to-earnings ratio for McCormick is 19.92X, which is higher than the industry average of 14.65X [7] - The Zacks Consensus Estimate for McCormick's fiscal 2025 and 2026 earnings indicates a year-over-year rise of 2.4% and 6.9%, respectively [10]

Core Insights - Oppenheimer Asset Management Inc. increased its stake in McCormick & Company by 34.0% in Q2, owning 7,605 shares valued at $577,000 after acquiring an additional 1,930 shares [2] - Other institutional investors also raised their positions, with AG2R LA Mondiale Gestion D Actifs increasing by 14.2%, Curio Wealth LLC by 39,900.0%, Sumitomo Mitsui Trust Group Inc. by 2.9%, Asset Management One Co. Ltd. by 3.4%, and Forum Financial Management LP by 13.6% [3] - Institutional ownership of McCormick & Company stands at 79.74% [3] Financial Performance - McCormick reported Q3 earnings of $0.85 EPS, exceeding estimates of $0.82, with revenue of $1.72 billion, slightly above expectations of $1.71 billion [5] - The company experienced a year-over-year revenue increase of 2.7% [5] - McCormick's net margin is 11.46% and return on equity is 14.30% [5] Dividend Information - McCormick declared a quarterly dividend of $0.45 per share, with an annualized dividend of $1.80, yielding 2.8% [6] - The dividend payout ratio is currently 62.28% [6] Stock Performance - McCormick's stock opened at $64.15, with a 52-week low of $63.15 and a high of $86.24 [4] - The company has a market capitalization of $17.22 billion, a P/E ratio of 22.20, and a P/E growth ratio of 3.74 [4] - The stock has a beta of 0.63, indicating lower volatility compared to the market [4] Insider Activity - Major shareholder Lawrence Erik Kurzius sold 50,000 shares at an average price of $65.86, totaling approximately $3.29 million, resulting in a 16.85% decrease in his position [7] Analyst Ratings - Barclays lowered its price target for McCormick from $82.00 to $72.00, maintaining an "equal weight" rating [9] - Wall Street Zen upgraded the stock from "sell" to "hold" [9] - The average target price for McCormick is currently $78.22, with four analysts rating it as a Buy and seven as Hold [9]