Key Points UPS surged higher after a well-received earnings release in October, and has continued to climb higher throughout the holiday season. Now trading at around $100 per share, you may be wondering whether now is the time to buy. While investor optimism about UPS has been on the rise lately, concerns about its growth prospects and the sustainability of its high dividend could renew as 2026 unfolds. 10 stocks we like better than United Parcel Service › The holiday shopping season is a busy ...

Core Viewpoint - Lululemon's brand performance is better than initially feared, despite facing competitive pressures and slowing growth [1][3] Group 1: Financial Performance - Lululemon's revenue for Q2 of fiscal 2025 grew by 7% year over year, reaching $2.5 billion, but management's guidance suggests a growth rate of only 2% to 4% for the full year [6] - The stock is currently trading at a valuation of less than 12 times earnings, which is considered a low entry point if future performance improves [3][5] - The company's inventory levels are rising, which poses a risk to profitability if sales do not improve [8][10] Group 2: Market Position and Competition - Lululemon is experiencing competitive pressures, with rival brand Vuori reporting over 20% growth in 2024, while Lululemon's net revenue growth was only 10% during the same period [7] - In its largest market, the Americas, net revenues increased by only 1% year over year, with comparable sales declining by 4% [8] Group 3: Customer Loyalty and Brand Strength - Lululemon has a strong Net Promoter Score (NPS) of 41, indicating solid customer loyalty, particularly among long-term users [11][12] - The brand's popularity is highest among customers who have used its products for five to ten years, suggesting a loyal customer base that supports profit margins [12][13] - While the company struggles to attract new customers, retaining loyal customers is viewed as a more sustainable strategy for long-term growth [13] Group 4: Profitability and Future Outlook - Lululemon's gross and operating margins remain above their five-year averages, indicating resilience in its business model [14] - Despite a significant stock sell-off of 55% in 2025, Lululemon is not in crisis and may still represent a good long-term investment opportunity [16]

Core Viewpoint - The current focus for Starbucks is on traffic numbers rather than earnings per share (EPS), with a willingness to accept some margin compression if traffic can be accelerated [2][3] Starbucks Analysis - The rollout of the Green Apron initiative is expected to impact labor costs more than traffic growth [3] - Pricing strategies are crucial, as Starbucks has increased prices without a corresponding improvement in customer experience [4] - There is a suggestion that introducing lower price points could help improve traffic numbers, despite the pressure from rising coffee prices [5] - Starbucks is exploring the possibility of selling a stake or the entire business in China, seeking the right strategic partner to improve performance in that market [6][7] Chipotle Analysis - Expectations for Chipotle's upcoming results are low, with a focus on traffic numbers similar to Starbucks [8] - The fast casual dining sector, including Chipotle, is facing pressure due to excessive pricing and increased competition from new concepts [8]

Core Viewpoint - United Parcel Service (UPS) is facing challenges that may lead to a potential cut in its dividend, despite being one of the highest-yielding stocks in the S&P 500 with a yield of 7.6% [1][2]. Financial Performance - UPS' stock price has decreased by 31.3% year-to-date and 47.7% over the past three years, contributing to the high dividend yield [2]. - The company generated only $742 million in free cash flow (FCF) in its latest quarter, which is insufficient to cover its dividend obligations [7][9]. - For the full year 2025, UPS plans to allocate $5.5 billion for dividends and has already completed $1 billion in share buybacks [6][14]. Strategic Initiatives - UPS is reducing its package delivery volumes with Amazon by 50% by June 2026, aiming to improve margins despite the expected decline in revenue [4][15]. - The company is implementing cost-cutting measures, expecting $3.5 billion in expense reductions through its network reconfiguration and Efficiency Reimagined initiatives [5]. Management and Market Conditions - UPS management has missed guidance for three consecutive years, indicating a need for better adjustment to market conditions [11][12]. - There are concerns regarding the sustainability of the dividend, as analysts forecast free cash flow of only $4.6 billion in 2025, which is below the dividend commitment [14][16]. Long-term Outlook - Despite current challenges, UPS has good long-term growth prospects by focusing on higher-margin deliveries and investing in technology [15].

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in auditing with PricewaterhouseCoopers before transitioning to day trading nearly 20 years ago [2] - Successfully navigated significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Core Viewpoint - Dow Inc. is facing significant challenges, with its stock price down approximately 50% since its spin-off in April 2019, and currently yielding 10.3%, the highest in the S&P 500 [1][17] Industry Overview - Dow operates in the commodity chemicals sector, producing a wide range of products used across various industries, including electronics, food packaging, textiles, and healthcare [4] - The company lacks pricing power due to the commoditized nature of its products, similar to the oil and gas industry, necessitating scale and operational efficiency to remain competitive [5] Economic Challenges - Recent economic conditions have led to low demand for Dow's products, driven by high borrowing costs and slowing growth in key markets, particularly Europe [6] - Increased competition from China, which is investing heavily in manufacturing, poses a threat to Dow's market share and pricing [7] Financial Performance - Dow's latest quarter showed a 3% decline in net sales despite a sixth consecutive quarter of year-over-year volume growth, indicating competitive pressures [9] - The company's operating margin has decreased significantly from pre-pandemic levels of around 8% to just 3.3% currently, with a profit margin of less than 1% [9][11] Cash Flow and Dividend Sustainability - Dow is currently free-cash-flow negative, relying on asset sales and debt to cover its dividend expenses [11][12] - The company has paused its Path2Zero project to save $1 billion, reducing enterprise spending from $3.5 billion to $2.5 billion [8] - A recent asset sale netted Dow $2.4 billion, covering dividend expenses for approximately five quarters [13][14] Future Outlook - Dow is projected to receive around $6 billion in additional cash or cost savings, which may help support its dividend in the short term [15] - The company has manageable debt levels, with only $500 million maturing in 2025, but continued low margins may necessitate a dividend cut [16] - Dow's long-term goal is for its dividend to represent 45% of operating income, which may require either margin improvements or a reduction in the dividend payout [19][20]

Group 1 - FMC Corporation is a global agricultural giant that provides innovative and sustainable crop protection solutions, with a history dating back to 1883 [1] - The company has evolved significantly over the years, entering various businesses beyond its initial focus on insecticide spraying [1] Group 2 - The analyst expresses a focus on undervalued and disliked companies or industries with strong fundamentals and good cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - The analyst emphasizes a long-term value investing approach while also engaging in deal arbitrage opportunities [1]