Sansert Sangsakawrat/iStock via Getty Images The Visine Effect Get the red out. Dear Fellow Shareholders, The average investor will look fondly on 2025, with the S&P 500 Index (SP500) rising 17.9% and the Bloomberg US Aggregate Index (LBUSTRUU) up 7.3%. The herd was warm and well-nourished with visions of AI grandeur dancing in their heads and expectations of additional Fed easing. Investors reacted with relief as the impact of trade policies was less harmful to corporate earnings than originally anticip ...

Core Viewpoint - Campbell's shares have reached a 16-year low, trading at $28.58, a decline of nearly 7% since the '3D printed meat' controversy [1][2] Stock Performance - The ongoing slump has erased all gains made over the past four years, with the stock trading well below its 2022 and 2023 averages [2] Analyst Ratings and Price Targets - DA Davidson lowered Campbell's stock price target from $32 to $30 while maintaining a "Neutral" rating, citing weakness in consumer spending and competition in the food sector [5] - Deutsche Bank adjusted its price target to $31 from $33, keeping a "Hold" rating, while RBC Capital cut its target from $35 to $30 with a "Sector Perform" rating [6] - Bernstein lowered its target from $39 to $33 but maintained a "Buy" rating, believing the company's products align with consumer trends [8] - Stifel Nicolaus and Wells Fargo both lowered their price outlooks to $30, opting for a "Hold" rating [9] Market Sentiment - The average stock price target for Campbell's over the next 12 months has an upside potential of 8.47%, sitting at $31.13 [12] - Overall, the sentiment among analysts is mixed, with ten "Hold" ratings, three "Sell" ratings, and only two "Buy" ratings from Bernstein and Stephens [10]

Core Insights - Hershey reported $3.18 billion in revenue for Q3 2025, a year-over-year increase of 6.5% and a surprise of +1.79% over the Zacks Consensus Estimate of $3.13 billion [1] - The EPS for the quarter was $1.30, compared to $2.34 a year ago, with a surprise of +19.27% over the consensus estimate of $1.09 [1] Revenue Performance - North America net sales reached $2.94 billion, exceeding the estimated $2.91 billion, reflecting a +6.1% change year-over-year [4] - International net sales were $244.8 million, surpassing the estimated $218.66 million, marking a +12.1% increase compared to the previous year [4] - North America Confectionery net sales were $2.62 billion, slightly above the estimated $2.59 billion, with a +5.6% year-over-year change [4] - North America Salty Snacks net sales amounted to $321.02 million, exceeding the estimated $313.19 million, representing a +10% increase year-over-year [4] Segment Income - North America Confectionery segment income was $571.48 million, above the estimated $556.94 million [4] - Unallocated corporate expenses showed a loss of $193.13 million, better than the average estimate of $-230.9 million [4] - North America Salty Snacks segment income was $57.75 million, slightly below the estimated $58.92 million [4] Stock Performance - Hershey's shares have returned -7.2% over the past month, while the Zacks S&P 500 composite has increased by +3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Goldman Sachs has added four new stocks to its Conviction List, which are expected to have double-digit upside potential and three of which offer reliable dividends [4][5][6]. Group 1: Goldman Sachs Conviction List - The Conviction List is a curated selection of stocks that Goldman Sachs analysts believe will outperform the market, focusing on themes like artificial intelligence and sustainability [2][4]. - The four new stocks added in October are Abbott Laboratories, Air Products and Chemicals, Hershey, and Madison Square Garden Entertainment [5][6]. Group 2: Stock Details - **Abbott Laboratories**: Offers a 1.74% dividend with a target price of $157, indicating a potential 17% gain [7][8]. - **Air Products and Chemicals**: Provides a 2.63% dividend and has a target price of $335, suggesting a 23% upside [9][15]. - **Hershey**: Features a 2.82% dividend with a target price of $222, representing a potential 19% gain [16][20]. - **Madison Square Garden Entertainment**: A live entertainment company with a target price of $52, indicating a 15% upside [21][23].

Core Viewpoint - PepsiCo Inc. has faced significant stock pressure, with a decline of 5.89% in 2025 and 19.5% over the last 12 months, reflecting broader challenges in the consumer staples sector [1][2] Group 1: Stock Performance and Market Context - The total return for PepsiCo stock over the last three years is negative 9.1%, indicating a decline in overall stock value despite a growing dividend yield of 4.02% [4] - Rising inflation and interest rates have pressured the core consumer, contributing to the stock's weak performance [5] - The consumer staples sector, including PepsiCo, has been under pressure for several years, complicating the narrative around interest rate cuts potentially benefiting the stock [2][9] Group 2: Demand Challenges and Competitive Landscape - The adoption of GLP-1 drugs is impacting consumer demand for soft drinks and salty snacks, posing a challenge to PepsiCo's traditional strengths [3] - Consumers are increasingly opting for store brands due to lower prices, which further pressures PepsiCo's market position [6] Group 3: Earnings and Strategic Pressure - PepsiCo's earnings per share (EPS) for the first two quarters were $3.6, down 7% year over year, raising concerns among investors [7] - Elliott Investment Management has taken a $4 billion stake in PepsiCo, urging the company to improve margins and consider divesting low-margin brands [7][8] Group 4: Dividend and Valuation Insights - PepsiCo's dividend yield is currently at 3.99%, with an annual dividend of $5.69 and a payout ratio of 103.64% [9] - The stock appears reasonably valued at around 17.2x forward earnings, trading at a discount to its historical average and the consumer staples sector average [11]

Core Viewpoint - Costco's stock is currently overvalued despite its strong business performance, making Coca-Cola and PepsiCo more attractive investment options for income and value-focused investors [4][14]. Group 1: Costco - Costco operates on a membership model, providing a reliable revenue stream with a high member renewal rate of approximately 90% [2]. - The company is experiencing growth through new store openings and increased customer spending, but its stock valuation is high with P/S, P/E, and P/B ratios above five-year averages [4]. - The dividend yield for Costco is low at around 0.6%, which is disappointing for income-focused investors [5][4]. Group 2: Coca-Cola - Coca-Cola has shown strong performance with a 5% growth in organic revenues in the second quarter, appealing to consumers despite inflation concerns [6][7]. - The stock is reasonably priced with P/S, P/E, and P/B ratios at or slightly below five-year averages, and a dividend yield of 3% [8]. - Coca-Cola is considered a better value than Costco due to its strong business performance and reasonable stock valuation [8][14]. Group 3: PepsiCo - PepsiCo's stock is undervalued with P/S, P/E, and P/B ratios significantly below five-year averages, and a dividend yield of approximately 4% [10]. - The company reported a lower organic sales growth of 2.1% in the second quarter compared to Coca-Cola, indicating underperformance [11]. - PepsiCo is a diversified business with a history of dividend growth, and recent acquisitions may help it regain momentum [12][13].

Core Insights - The Hershey Company reported second-quarter 2025 results with both top and bottom lines exceeding Zacks Consensus Estimates, although the bottom line showed a year-over-year decline [1][9] - Adjusted earnings per share were $1.21, down 4.7% year over year, while consolidated net sales reached $2,614.7 million, a 26% increase from the previous year [1][2] Financial Performance - Consolidated net sales of $2,614.7 million surpassed the Zacks Consensus Estimate of $2,548 million, with organic sales rising 26.3% on a constant-currency basis [2] - Adjusted gross margin contracted to 38.1%, down 510 basis points, primarily due to increased commodity and manufacturing costs [4][9] - Selling, marketing, and administrative expenses rose 11.5% year over year, driven by higher advertising and consumer marketing spending [5] - Adjusted operating profit increased 7.1% year over year to $410.6 million, with the operating margin contracting 280 basis points to 15.7% [6] Segment Performance - North America Confectionery segment net sales were $2,085.5 million, up 32.0% year over year, with volume growth attributed to inventory cycling, Easter holiday timing, and early Halloween shipments [7] - The North America Salty Snacks segment reported net sales of $315.5 million, an 8.8% increase, with volume growth and net price realization contributing to this rise [10] - The International segment posted net sales of $213.7 million, reflecting a 4.4% increase, although income decreased by $5.2 million year over year [12] Financial Health - The company ended the quarter with cash and cash equivalents of $912.4 million and long-term debt of $5,176.4 million [13] - Management expects capital expenditure for 2025 to be in the range of $425 million to $450 million [13] Future Outlook - Management anticipates net sales to increase at least 2% in 2025, with adjusted EPS projected between $5.81 and $6, reflecting a significant decline from 2024 [14] - The effective tax rate is expected to be approximately 27%, with tariff expenses anticipated to be around $170 million to $180 million for the full year [15]

Core Insights - Hershey reported $2.61 billion in revenue for the quarter ended June 2025, a year-over-year increase of 26% [1] - The EPS for the same period was $1.21, compared to $1.27 a year ago, indicating a slight decline [1] - The revenue exceeded the Zacks Consensus Estimate of $2.55 billion by 2.62%, while the EPS surprised by 19.8% against the consensus estimate of $1.01 [1] Revenue Performance - North America net sales reached $2.4 billion, surpassing the five-analyst average estimate of $2.32 billion, with a year-over-year change of 28.4% [4] - International net sales were $213.73 million, slightly below the estimated $227.95 million, but still reflecting a 4.4% increase year-over-year [4] - North America Confectionery net sales were $2.09 billion, exceeding the average estimate of $2.02 billion, with a year-over-year change of 32% [4] - North America Salty Snacks net sales were $315.52 million, above the average estimate of $306.06 million, showing an 8.8% year-over-year increase [4] Segment Income - North America Confectionery segment income was $503.93 million, compared to the average estimate of $470.57 million [4] - Unallocated corporate expenses showed a loss of $179.65 million, better than the estimated loss of $220.51 million [4] - North America Salty Snacks segment income was $66.48 million, exceeding the average estimate of $55.67 million [4] Stock Performance - Hershey shares returned +5.9% over the past month, outperforming the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

分组1: Realty Income - Realty Income is a real estate investment trust (REIT) that owns single-tenant net lease properties, with approximately 75% of its rents coming from the retail sector and the remainder from industrial assets and unique properties like casinos [3][4] - The REIT has a diverse tenant base of nearly 1,600 different tenants, which mitigates risks associated with individual retailers [4] - Realty Income has a strong track record, having increased its dividend annually for 30 consecutive years, and currently offers an attractive dividend yield of 5.6% [5] 分组2: Hormel Foods - Hormel Foods is a food manufacturer with a wide selection of packaged food brands, focusing on protein, and is recognized as a Dividend King with over 50 consecutive annual dividend increases [8][10] - The company currently offers a historically high dividend yield of around 3.8%, despite facing challenges such as rising costs and avian flu [9][10] - Hormel has a significant nonprofit shareholder, the Hormel Foundation, which influences its long-term business decisions to sustain dividend growth [11][12] 分组3: Hershey - Hershey is known for its iconic confection brands and a small portfolio of salty snack brands, with a solid dividend history, although its dividend growth is not consistent annually [8] - The company offers a dividend yield of approximately 3.2% and is currently facing headwinds due to rising cocoa prices [9][10] - The Hershey Trust, a major nonprofit shareholder, plays a crucial role in guiding Hershey's decisions to ensure long-term dividend growth [11][12] 分组4: Investment Strategy - The consumer goods sector offers various investment opportunities, with Realty Income serving as a stable foundational investment, while Hormel and Hershey present more aggressive options despite their current challenges [13][14] - The combination of Realty Income's stability with the potential recovery of Hormel and Hershey makes for an attractive investment strategy [13][14]

Core Strategy - FEMSA is focused on its Forward Strategy, emphasizing long-term value creation of its core businesses and maximizing shareholder value through prudent financial management [1] Share Repurchase Agreement - The company has entered into an accelerated share repurchase (ASR) agreement to buy back $250 million of its American Depositary Shares (ADS) [2] - The ASR agreement will initially deliver 483,559 ADSs on May 20, 2025, with the total number of repurchased shares based on the daily volume-weighted average price during the agreement term [3] Capital Return Strategy - FEMSA plans to return capital to shareholders as a crucial aspect of its overall strategy, following successful divestments related to FEMSA Forward and considering expected capital needs [4] Market Performance - FEMSA's shares have gained 1.8% over the past year, contrasting with a 1.2% decline in the industry, despite facing a soft consumer environment and rising operating expenses [5] Business Segments and Growth Opportunities - The company is progressing on its FEMSA Forward Strategy to drive value in its core businesses, including Retail, Coca-Cola FEMSA, and Digital@FEMSA, while exploring potential divestments [6] - FEMSA's Proximity and Health retail businesses present significant long-term growth opportunities, with plans to accelerate earnings growth through organic expansion [7]