Core Viewpoint - The article discusses the author's investment strategy, focusing on medium-term investing in growth stories and identifying catalysts for value unlocking [1]. Group 1: Investment Strategy - The author emphasizes a medium-term investment approach, targeting ideas with catalysts that can drive upside potential or short selling in the presence of downside catalysts [1]. - The author prefers investing in growth stories that are available at reasonable prices, indicating a focus on value [1]. Group 2: Sector Preferences - The author identifies as a generalist but has a strong background in analyzing the industrial, consumer, and technology sectors, where higher conviction in investments is noted [1].

Core Viewpoint - Tractor Supply's fourth-quarter results may be softer than expected due to unfavorable weather conditions, but management's optimistic outlook for 2026 supports a bullish case for the company [1][2]. Group 1: Fourth Quarter Performance - The company reported $3.7 billion in net sales for the third quarter, reflecting a 7.2% year-over-year increase, with comparable store sales rising by 3.9% [3]. - Management provided a wide range for fourth-quarter comparable store sales growth, estimating an increase between 1% and 5% [3]. - The CEO indicated that cold weather significantly influences sales, with severe winter conditions typically benefiting the company's performance [4]. Group 2: Weather Impact - The National Oceanic and Atmospheric Administration (NOAA) reported unusually warm weather in October and November, with November being the fourth-warmest on record and December ranking as the fifth-warmest in 131 years [5]. - A mild winter could lead to weaker demand for cold-weather items, potentially impacting fourth-quarter results [6]. Group 3: Future Outlook for 2026 - Management expressed confidence in 2026, expecting comparable store sales growth to exceed the weaker levels anticipated for the first half of 2025, driven by transaction count growth and positive average ticket trends [7][8]. - The company plans to open approximately 100 new stores in 2026, an increase from about 90 in 2025, which is expected to enhance growth prospects [9]. Group 4: Investor Considerations - Investors should monitor management's commentary on 2026 during the fourth-quarter results announcement, particularly regarding expectations for revenue growth and comparable store sales acceleration [10]. - Despite potential softness in fourth-quarter results, if weather is identified as the primary factor, it may not indicate poor business performance [11].

Core Insights - A massive winter storm is expected to impact a large part of the southern U.S. and the Northeast, leading to significant disruptions in consumer activity and retail sales [4][5][9] Retail Sector - Retailers, particularly grocery stores, are experiencing inventory shortages as consumers stock up ahead of the storm, with reports of empty shelves in some areas [8] - Home improvement retailers like Home Depot and Lowe's may see a pre-storm surge in sales, but will also face shutdowns during the storm, potentially balancing out their gains [6][7] - The storm is anticipated to take a significant bite out of retail sales for Q4, with potential negative surprises in earnings reports expected next month [9][15] Restaurant Sector - The restaurant industry is expected to be heavily impacted by the storm, with closures likely affecting sales and operations [5][9] Weather Impact on Business - The storm's severity, described as a "winter hurricane" due to expected ice accumulation, will lead to a substantial freeze across the affected regions, further complicating business operations [3][4] - The overall weather conditions, including a cold snap following the storm, will contribute to a challenging environment for businesses in the coming week [5][15]

Core Insights - Tractor Supply Company (TSCO) is expected to report an increase in both revenue and earnings for Q4 2025, with revenue estimated at $4.04 billion, reflecting a 7% year-over-year growth [1][9] - The earnings per share (EPS) is projected to be 47 cents, indicating a 6.8% rise compared to the previous year [2][9] Revenue and Earnings Expectations - The Zacks Consensus Estimate for revenues is set at $4.04 billion, which represents a 7% increase from the same quarter last year [1][9] - The EPS estimate remains unchanged at 47 cents, showing a 6.8% increase from the year-ago period [2][9] Factors Influencing Q4 Results - TSCO is entering Q4 with strong momentum in its core consumable, usable, and edible (C.U.E.) categories, which are crucial for the business [3] - Customer engagement is robust, with positive transaction trends supported by loyalty-driven repeat purchases and stable rural consumer demand [3] - Demand for everyday needs-based categories such as livestock and animal care is expected to drive comparable sales growth [3] Weather Impact - The company's performance in Q4 is anticipated to be significantly influenced by winter weather patterns, which typically increase demand for heating products and winter workwear [4] - TSCO is prepared to capitalize on favorable weather conditions with inventory depth and targeted merchandising strategies [4] Omnichannel and Loyalty Investments - Ongoing investments in Final Mile delivery, direct sales, and omnichannel fulfillment are expected to enhance top-line performance [5] - Digital sales trends are projected to improve, with store-based fulfillment being a key differentiator [5] - Loyalty programs and community events are likely to drive customer traffic and reinforce loyalty during the holiday season [5] Margin Pressures - Despite strong demand, TSCO is expected to face margin pressures due to tariff-related costs and higher transportation expenses [6] - SG&A expenses are projected to rise by 8.2% year-over-year, with the SG&A expense rate increasing by 40 basis points to 24% [7][9] - Management is focused on maintaining disciplined pricing and cost controls while balancing long-term growth initiatives [6] Valuation and Stock Performance - TSCO stock trades at a forward price-to-earnings ratio of 22.80X, which is above the industry average of 18.90X but below its five-year high of 27.91X [11] - Over the past three months, TSCO shares have decreased by 3.5%, contrasting with the industry's growth of 7.6% [12]

Core Insights - Tractor Supply Company (TSCO) was initially perceived as an unattractive investment due to its normal retail characteristics, stretched valuation, and low growth potential [1] Company Analysis - The analysis indicates that TSCO may not stand out as a compelling investment opportunity within the retail sector [1] - The company is characterized as a "normal" retailer, lacking unique appeal [1] Valuation and Growth - The valuation of TSCO is described as stretched, suggesting that the stock may be overvalued relative to its growth prospects [1] - The growth potential of TSCO is considered low, which may deter value investors looking for significant returns [1]

Core Viewpoint - Tesco's share price has entered a correction phase, declining by 11% from its peak in November last year, indicating a significant pullback in its stock performance [1] Company Summary - The share price of Tesco was trading at 425p on Wednesday, down from an all-time high of 481p [1]

Core Viewpoint - Tractor Supply Inc. (NASDAQ:TSCO) is currently priced at $51.08, reflecting a slight increase of 0.14% in the current market session, but has experienced a decline of 0.14% over the past month and 10.32% over the past year, raising questions about its valuation despite current performance [1]. Group 1: P/E Ratio Analysis - The P/E ratio is a critical metric that compares the current share price to the company's earnings per share (EPS), helping long-term investors assess performance against historical data and industry benchmarks [3]. - Tractor Supply has a P/E ratio of 24.64, which is higher than the Specialty Retail industry's aggregate P/E ratio of 23.88, suggesting that the company may be expected to perform better than its peers, although it may also indicate potential overvaluation [4]. - While a lower P/E can suggest undervaluation, it may also imply that shareholders do not anticipate future growth, indicating the need for a comprehensive analysis that includes industry trends and business cycles [6].

Core Insights - Wedgewood Partners anticipates stronger market volatility in the coming years and has moderated its enthusiasm for investments [1] - The Wedgewood Composite returned -1.8% in Q4 2025, underperforming compared to the S&P 500's 2.7% and other indices [1] - The firm's focus on high-quality stocks has historically been successful since 1992, but faced challenges in 2025 due to poor stock selection and underweighting in AI stocks [1] Company Performance - Tractor Supply Company (NASDAQ:TSCO) stock closed at $51.01 on January 16, 2026, with a one-month return of -1.37% and a 52-week loss of 4.94% [2] - The company reported +7% growth in sales and +6% growth in operating income, benefiting from long-term investments in stores and distribution [3] - Approximately 80% of Tractor Supply's sales come from customers enrolled in its loyalty program, indicating a strong customer base [3] Investment Outlook - Wedgewood Partners acknowledges the potential of Tractor Supply Company but believes certain AI stocks offer greater upside potential with less downside risk [4] - The number of hedge funds holding Tractor Supply Company increased from 41 to 46 in the last quarter, indicating growing interest [4] - Expectations for accelerating earnings growth in 2026 are based on the company's investments in last-mile delivery and normalization of customer spending patterns [3]

Core Viewpoint - Tractor Supply Company (NASDAQ: TSCO) has had its price target lowered to $57 from $61 by UBS, which maintains a Neutral rating, indicating muted expectations for the upcoming fourth-quarter earnings release [1] Group 1: Earnings Expectations - UBS does not expect the fourth-quarter earnings release to materially shift the investment debate, noting that sell-side estimates imply a 3.1% comparable sales increase, while buy-side expectations are closer to 1% [1] - The key focus for the upcoming earnings report is expected to be management's outlook for the year ahead, with UBS anticipating a wide guidance range similar to last year, likely spanning 1% to 4% for initial comparable sales expectations [2] Group 2: Future Guidance and Growth - The company previously indicated that 2026 would represent a period of profit-and-loss normalization, which UBS interprets as improving comparable sales growth and continued gross margin expansion [3] - However, UBS notes that investors are likely to wait for evidence that this scenario is achievable before re-rating the stock [3]

Core Insights - The investment outlook for 2025 is cautious, anticipating greater stock market volatility compared to previous years, with a focus on waiting for better pricing opportunities for both new and existing positions [3][57] - The Wedgewood Composite Net performance for 2024 was +4.3%, while the S&P 500 Index and Russell 1000 Growth Index saw gains of +17.9% and +18.6% respectively, indicating underperformance relative to broader indices [6][57] - The year 2025 was marked by significant challenges, with poor stock selection leading to underperformance, particularly in AI and technology-related holdings, despite strong contributions from companies like Alphabet and Taiwan Semiconductor Manufacturing [57][60] Performance Overview - The Wedgewood Composite Net returns for various periods are as follows: Q4 -1.8%, YTD +4.3%, 1-Year +4.3%, 3-Year +20.3%, and 5-Year +11.4% [6] - The S&P 500 Index and Russell 1000 Growth Index outperformed the Wedgewood Composite in 2024, with respective returns of +17.9% and +18.6% [6] Top Contributors - Alphabet (GOOGL) was a top contributor in Q4, with an average weight of 9.28% and a contribution to return of +2.38%, driven by a 15% growth in search revenues [11][14] - Taiwan Semiconductor Manufacturing (TSM) also performed well, contributing +4.45% to returns in 2025, supported by strong demand in high-performance computing [11][15] - Apple (AAPL) saw a +13% growth in adjusted earnings per share, contributing +0.42% to returns in 2025, driven by a robust services business [11][16] Bottom Contributors - Meta Platforms (META) was a significant detractor, despite a +26% revenue growth, with a contribution to return of -0.85% due to increased spending on AI initiatives [11][19] - PayPal (PYPL) also detracted from performance, with a contribution of -1.99% attributed to slowing transaction volumes and increased expenses [11][21] - UnitedHealth (UNH) and Motorola Solutions (MSI) were other notable detractors, with contributions of -2.90% and -0.75% respectively [11][22] Company Specific Insights - Amazon (AMZN) has been repositioning under new management, focusing on managing capacity and costs, with an expectation of double-digit growth driven by e-commerce and IaaS [25][30] - Chubb (CB) was initiated as a new position, recognized for its strong underwriting capabilities and focus on specialty insurance markets, which supports steady premium growth and profitability [31][34][38] - The investment portfolio of Chubb has been growing, with total assets increasing from $66 billion in 2015 to an estimated $166 billion by Q3 2025, reflecting a CAGR of 9.9% [50]