Core Insights - The investment strategy focuses on turnarounds in the natural resource industries, with a typical holding period of 2-4 years, emphasizing value for downside protection and upside potential [1][3] - The portfolio has achieved a compounded annual growth rate of 38% over the last 7 years, indicating strong performance in the sector [1] Investment Focus - The investment group targets companies with quality characteristics that are trading at depressed valuations, allowing for participation in the upside of natural resource investing while mitigating extreme drawdowns [3] - Current focus on natural resource industries is driven by monetary and fiscal policies, underinvestment, and attractive valuations [3]

Company Overview - Baxter International manufactures essential medical products such as surgical sealants and hospital beds, which are crucial for the healthcare industry [2] - The aging baby boomer generation is expected to increase demand for healthcare, thereby boosting demand for Baxter's products [2] Recent Performance - Baxter has faced inconsistent revenue and has reported losses, leading to a significant stock decline of approximately 75% over the past five years [5] - The company recently cut its dividend from $0.17 per share per quarter to a token penny, reflecting its current financial struggles [1][5] Investment Considerations - Despite recent challenges, Baxter's products are deemed necessary, suggesting the company may navigate through its current difficulties [5] - The company maintains a manageable level of debt, covering its interest costs two times over, which provides some financial stability [5] - The stock's valuation appears attractive, with price-to-sales and price-to-book ratios below their five-year averages, indicating it may be undervalued [6] Future Outlook - There is potential for turnaround investors to find value in Baxter, as the demand for its products is expected to grow in the long term [7] - However, recovery may take time and could be uneven, particularly given the recent dividend cut which may deter income-focused investors [7]

Core Thesis - Advance Auto Parts, Inc. (AAP) is viewed as a compelling turnaround investment under the leadership of CEO Shane O'Kelly, who joined in September 2023, with significant strategic actions taken to strengthen the business [3][4][7] Company Overview - AAP provides automotive aftermarket parts in the U.S. and internationally, operating 4,292 stores and 842 independent Carquest locations [3] - The company's share was trading at $49.59 as of January 28th, with trailing and forward P/E ratios of 174.78 and 19.34 respectively [1] Strategic Actions - Recent actions include the sale of Worldpac for $1.5 billion, closing 500 underperforming stores, and rationalizing the distribution network, which have simplified operations and improved delivery times [3][4] - The company aims for a 2027 operating margin target of 7%, which is above market expectations, supported by supply chain expertise and a strong executive team [4] Market Positioning - AAP holds the top or second-highest market share in 75% of its operational footprint, indicating enhanced market positioning [5] - The balance sheet is robust, with over $3 billion in cash and minimal net debt, allowing for potential future capital returns once investment-grade credit status is regained [5] Financial Metrics - AAP trades at a 6.1x EV/EBITDA multiple on 2026 consensus estimates, significantly lower than the peer average of 16.3x [6] - Applying a conservative 10x multiple to 2026 EBITDA suggests a price target of $105.81 per share, with 2027 targets indicating $149.04, representing a potential upside of 166% [6] Historical Context - AAP's stock price has appreciated by 18.18% since previous bullish coverage in December 2024, which also highlighted the company's turnaround and operational improvements [7]

Group 1 - The company primarily invests in turnarounds within the natural resource industries, with a typical holding period of 2-4 years, focusing on value for downside protection and upside participation [1] - The portfolio has achieved a compounded annual growth rate of 36% over the last 7 years, indicating strong performance [1] - Yellow Cake (YLLXF) is identified as a passive investment company that owns uranium, listed in the UK with an OTC listing in the US, focusing on companies with quality characteristics trading at depressed valuations [2] Group 2 - The investment strategy emphasizes participation in the upside of natural resource investing while mitigating extreme drawdowns, which are common in this sector [2] - The analyst has a beneficial long position in YLLXF, indicating confidence in the company's potential [2]

Group 1 - The company primarily invests in turnarounds within the natural resource industries, with a typical holding period of 2-4 years, focusing on value for downside protection and upside participation [1][2] - The portfolio has achieved a compounded annual growth rate of 36% over the last 7 years, indicating strong performance in the investment strategy [1] - Yellow Cake (YLLXF) is identified as a passive investment company that owns uranium, listed in the UK with an OTC listing in the United States, focusing on quality characteristics and depressed valuations [2] Group 2 - The investment strategy emphasizes participation in the upside of natural resource investing while mitigating extreme drawdowns, which are common in this sector [2] - The current focus on natural resource industries is driven by favorable monetary and fiscal policies, underinvestment, and attractive valuations [2]

Core Viewpoint - United Parcel Service (UPS) is undergoing a turnaround effort, showing early signs of improvement, making it an attractive investment opportunity despite its current challenges [1][8]. Group 1: Market Sentiment - UPS is currently viewed negatively by investors, with shares down over 50% from their peak in early 2022 due to a return to normal demand after the pandemic [2][10]. - The company has established a robust infrastructure for package delivery, which is difficult to replicate, indicating long-term value despite current market pessimism [4][5]. Group 2: Valuation Metrics - UPS's price-to-sales ratio is approximately 0.9x, significantly lower than its five-year average of 1.4x, suggesting the stock is undervalued [6]. - The price-to-earnings ratio is just under 15x, compared to a longer-term average of around 18x, further indicating a potential buying opportunity [6]. - The price-to-book value ratio stands at 5.1x, well below its five-year average of 8.5x, reinforcing the notion of attractive pricing [6][7]. Group 3: Operational Improvements - UPS management has recognized inefficiencies and is implementing a comprehensive overhaul, including exiting unprofitable business lines and investing in technology [10][11]. - Early results show positive trends, with revenue per piece in the U.S. market increasing by 5.5% in Q2 2025 and 9.8% in Q3 2025, indicating that management's efforts are beginning to yield results [11][12].

Core Viewpoint - UPS's stock price experienced significant fluctuations during and after the pandemic, raising questions about its future performance and potential recovery [1][4]. Group 1: Stock Performance - UPS's stock rose during the pandemic due to increased demand for e-commerce delivery services but has since fallen back to pre-pandemic levels [1][4]. - The stock's journey reflects a full cycle from bull to bear, with a notable price advance in 2020 and 2021 followed by a crash in 2022 [2][4]. Group 2: Business Adjustments - In response to changing market conditions post-pandemic, UPS has initiated a business overhaul, including downsizing and adopting more technology [5][6]. - The company has also faced increased costs due to a new union contract while strategically reducing its low-margin business with Amazon, its largest customer [5][7]. Group 3: Financial Outlook - The near-term outlook for UPS is expected to be challenging due to the costs associated with restructuring, although these changes may yield long-term benefits [6][8]. - The focus on more profitable business segments may lead to improved margins but could also result in reduced overall revenue [7][8]. Group 4: Investment Considerations - UPS presents a high-yield turnaround opportunity with a 7.5% dividend yield, but the high payout ratio of over 90% raises concerns for dividend investors [9]. - The company is likely to attract aggressive investors who are willing to adopt a long-term perspective rather than those seeking short-term gains [9].

Group 1 - Alamos Gold is identified as a high-quality mid-cap gold mining company primarily operating in Canada, with some production in Mexico's Mulatos District [1] - The company focuses on value investments in the natural resource sector, which provides downside protection while allowing for significant upside potential [2] - Over the past six years, the portfolio associated with the company has achieved a compounded annual growth rate of 29% [2]