Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, to achieve exceptional returns, although identifying such stocks can be challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system simplifies the identification of promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - AAR (AIR) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank, indicating strong growth potential [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive as it signals strong future prospects [3] - AAR has a historical EPS growth rate of 26.7%, with projected EPS growth of 24% this year, surpassing the industry average of 20.8% [4] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, allowing them to expand without relying on external funding [5] - AAR's year-over-year cash flow growth stands at 23.7%, exceeding the industry average of 18.6% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 10.7%, compared to the industry average of 8.3% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements, making them a valuable metric for assessing stock potential [7] - AAR's current-year earnings estimates have been revised upward, with the Zacks Consensus Estimate increasing by 4.7% over the past month [8] Group 5: Conclusion - AAR's combination of upward earnings estimate revisions and a Growth Score of A positions it as a potential outperformer and a solid choice for growth investors, reflected in its Zacks Rank of 2 [10]

Performance - Night Watch Investment Management LP achieved a net appreciation of 4.28% in Q3 2025, with a year-to-date performance of 25.88% [2][3] Portfolio - The portfolio as of September 30, 2025, is diversified across various themes, with the largest allocation in Europe at 25.7% and significant positions in Aerospace (12.3%) and Semiconductors/Tech (12.1%) [4] - The portfolio consists of 24 positions, with 17 having insider ownership and 21 identified with catalysts for potential rerating [4][6] Strategy Update - The US stock market showed a strong recovery in Q3, particularly in small caps, due to weaker-than-expected jobs data, which may lead to interest rate cuts by the Federal Reserve [9] - Increased government involvement in corporate America, including nationalization of Intel and export taxes on Nvidia, is viewed negatively, impacting corporate profit margins and business confidence [10] - The firm is cautious about the US economy and is shifting focus to international opportunities, particularly in Europe and Asia [11][12] Position Updates - A new position in Brookdale Senior Living was reinitiated, driven by anticipated demand from the aging baby boomer population [15] - Two positions in technology benefiting from AI-related spending were initiated, specifically in Western Digital Corp, which has become a pure play on hard disk drives [16] - Integral KK, a Japanese private equity manager, was added to the portfolio, showing significant growth in assets under management and potential for future profitability [20][21] Conclusion - The firm is adopting a more cautious stance on US stocks due to economic deterioration and speculation in the market, while maintaining a disciplined investment process [26] - There is a focus on sourcing new investment ideas outside the US, with plans for an investment trip to Hong Kong [27]

Core Viewpoint - AAR (AIR) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. AAR's Earnings Outlook - The upgrade for AAR reflects an improvement in the company's underlying business, with rising earnings estimates expected to drive the stock price higher [4]. - For the fiscal year ending May 2026, AAR is projected to earn $4.69 per share, with a 2.7% increase in the Zacks Consensus Estimate over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - AAR's upgrade places it in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Core Concept - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify high valuations [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: AIR Stock Analysis - AIR (AAR) has shown a four-week price change of 8.4%, indicating growing investor interest [4] - Over the past 12 weeks, AIR's stock price has increased by 44.2%, with a beta of 1.44, suggesting it moves 44% more than the market [5] - AIR has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - AIR is trading at a Price-to-Sales ratio of 0.99, suggesting it is undervalued at 99 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides AIR, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Zacks offers over 45 Premium Screens tailored to different investing styles, aiding in identifying potential winning stocks [9]