Core Insights - TE Connectivity has exceeded several of its 2025 corporate responsibility goals, demonstrating significant progress in sustainability, safety, and inclusivity [1] Sustainability Achievements - The company has surpassed its goal of sourcing 80% of its electricity from renewable sources by achieving 87% [1] - A solar energy system in Lamphun, Thailand, generates 1.2 million kWh annually, accounting for approximately 15% of the site's energy use and reducing emissions by about 520 tons per year [1] - TE has reduced water withdrawal for targeted water-stressed sites by 22%, exceeding its goal of 15% [1] - The amount of hazardous waste disposed has been reduced by 66%, surpassing the goal of 15% [1] Safety Improvements - TE Connectivity has improved worker safety, achieving a Total Reportable Incident Rate of 0.06, which is better than the goal of 0.12 [1] Future Goals - The company aims to reduce Scope 3 greenhouse gas emissions by 30% by 2032, having already achieved a 17% reduction since 2022 [1] - TE has doubled the number of zero waste to landfill sites to 56 and has diverted 93% of its waste from landfills and incinerators, approaching its goal of 98% [1]

Market Overview - The broader equity markets have remained resilient despite President Trump's tariff threats, trading in record territory, primarily driven by a tech rally [1] - Blue-chip tech firms have shown solid gains due to a positive start to the earnings season and advancements in AI monetization [1] - The Federal Reserve's decision to maintain interest rates in the range of 3.5% to 3.75% has also supported the uptrend, reflecting economic strength and stable job market conditions [1] Investment Opportunities - Investors are advised to focus on "cash cow" stocks that provide higher returns, with an emphasis on identifying stocks with high return on equity (ROE) [2] - High ROE indicates that companies are effectively reinvesting cash at a high rate of return, making them attractive investment options [3][4] - Stocks identified with high ROE include Arista Networks, Corning, Banco Bilbao Vizcaya Argentaria, The TJX Companies, and TE Connectivity, all of which have strong fundamentals and consistent earnings surprises [2][8] Screening Parameters - The primary screening parameters for identifying cash-rich stocks include cash flow greater than $1 billion and ROE exceeding the industry average [5] - Additional metrics used for screening include price/cash flow ratio lower than the industry average and return on assets (ROA) greater than the industry average [6] - A five-year EPS historical growth greater than the industry average and a Zacks Rank of 1 or 2 are also considered to ensure strong performance [7] Company Profiles - **Arista Networks**: Engaged in cloud networking solutions with a long-term earnings growth expectation of 20.1% and a trailing four-quarter earnings surprise of 10.2% [9][10] - **Corning**: Focuses on advanced glass technologies with a long-term earnings growth expectation of 18.8% and a trailing four-quarter earnings surprise of 4.4% [11] - **Banco Bilbao**: Provides a range of banking services with a long-term earnings growth expectation of 12% and a trailing four-quarter earnings surprise of 5.7% [12] - **The TJX Companies**: A leading off-price retailer with a long-term earnings growth expectation of 10.2% and a trailing four-quarter earnings surprise of 5.5% [13][14] - **TE Connectivity**: Designs connectivity solutions with a long-term earnings growth expectation of 12% and a trailing four-quarter earnings surprise of 7.5% [15][16]

Market Overview - Major U.S. stock indices experienced a significant decline on December 12, 2025, primarily driven by sell-offs in technology stocks due to concerns over an AI bubble narrative [1] - Investors reacted negatively to news from Broadcom, which indicated expected margin pressure in its AI business for the first quarter of fiscal 2026, despite exceeding fiscal fourth-quarter earnings estimates [1] Investment Strategy - In the current market environment, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a history of raising dividends typically demonstrate strong financial health, providing a defensive hedge against economic uncertainty [2] - Stocks with a strong history of year-over-year dividend growth are suggested to form a healthier portfolio with greater potential for capital appreciation compared to simple dividend-paying stocks or those with high yields [2] Selected Dividend Growth Stocks - Five dividend growth stocks have been identified as potential solid choices for investment: TE Connectivity (TEL), Enersys (ENS), Donaldson (DCI), Lam Research (LRCX), and Leidos Holdings (LDOS) [3][9] - These stocks exhibit positive sales and earnings per share (EPS) growth histories, consistent dividend increases, solid fundamentals, and favorable valuation metrics [9] Characteristics of Dividend Growth Stocks - Stocks with a strong history of dividend growth are typically associated with mature companies that are less vulnerable to market volatility, thus providing a hedge against economic or political uncertainties [4] - These stocks are characterized by superior fundamentals, including sustainable business models, long-term profitability, rising cash flows, good liquidity, strong balance sheets, and value characteristics [5] - Although these stocks may not have the highest yields, they have historically outperformed the broader stock market and other dividend-paying stocks [6] Performance Metrics - Selected stocks must meet specific criteria, including: - 5-Year Historical Dividend Growth Greater Than Zero - 5-Year Historical Sales Growth Greater Than Zero - 5-Year Historical EPS Growth Greater Than Zero - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Additional metrics include a Price/Cash Flow ratio less than the industry median and a 52-Week Price Change greater than the S&P 500 [8] Individual Stock Insights - **TE Connectivity (TEL)**: Expected fiscal 2026 revenue growth of 10.2%, long-term earnings growth rate of 12.3%, and an annual dividend yield of 1.23% [10][11] - **Enersys (ENS)**: Projected fiscal 2026 revenue growth of 4%, long-term earnings growth rate of 15%, and an annual dividend yield of 0.71% [11][12] - **Donaldson (DCI)**: Anticipated fiscal 2026 revenue growth of 3.4%, long-term earnings growth rate of 10%, and an annual dividend yield of 1.30% [12] - **Lam Research (LRCX)**: Expected fiscal 2026 revenue growth of 14.1%, long-term earnings growth rate of 20.3%, and an annual dividend yield of 0.65% [13] - **Leidos Holdings (LDOS)**: Projected fiscal 2025 revenue growth of 3.4%, long-term earnings growth rate of 11.6%, and an annual dividend yield of 0.84% [14]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated A, B, C, D, or F based on value, growth, and momentum characteristics, with higher scores indicating better performance potential [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Cash Flow [3] - The Growth Score evaluates stocks based on projected earnings and sales growth, targeting companies with strong financial health [4] - The Momentum Score identifies stocks benefiting from price trends, utilizing recent price changes and earnings estimate revisions [5] - The VGM Score combines the three Style Scores to highlight stocks with attractive value, growth potential, and positive momentum [6] Integration with Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in stock selection [7] - Historically, stocks rated 1 (Strong Buy) have achieved an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] - Stocks with lower ranks but high Style Scores may still face downward price pressure due to negative earnings forecasts [10] Company Spotlight: TE Connectivity - TE Connectivity is a global technology firm specializing in connectivity and sensor solutions across various industries, including automotive and medical [11] - Currently rated 3 (Hold) by Zacks, TE Connectivity has a VGM Score of B and a Momentum Score of B, with shares increasing by 26.7% in the past month [12] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate rising by $0.14 to $8.19 per share, indicating a positive outlook [12]