Macro review

Starting on January 1, 2024, the M1 Money Supply stood at 17,975.3 billion, and M2 at 20,751.4 billion, while the CPI was 308.42. Over the months, there was a notable shift: by August 1, 2024, the CPI had risen to 314.79, reflecting an increase in the price of goods and services. During this time, the M1 supply grew to 18,117.5 billion, and M2 reached 21,174.9 billion, suggesting expansion in the money supply amid inflationary pressures. Treasury yields also fluctuated, with the 1-month yield starting at 5.55% on January 2, 2024, dropping to 5.0% by October 7, 2024. Similarly, longer-term yields like the 10-year hovered between 3.95% and 4.03%. This combination of rising CPI and adjustments in yields highlights the evolving economic conditions over the year.

Over the same period, the S&P 500 rose by 21%, climbing from 4,742.83 points on January 2, 2024, to 5,751.13 points by October 8, 2024, signaling robust market growth amid inflationary pressures and fluctuating Treasury yields.

And the U.S. gross domestic product (GDP) is still growing.

Identified companies 2024 Q3.

AGILENT TECHNOLOGIES, INC.

Agilent Technologies, Inc. is a global leader in life sciences, diagnostics, and applied chemical markets. The company provides instruments, software, services, and consumables for laboratories worldwide, helping researchers and scientists accelerate their work in various fields, including pharmaceuticals, biotechnology, and environmental testing. As of the latest data, Agilent Technologies demonstrates robust financial performance, reflected in key metrics such as Return on Assets (ROA) and Return on Equity (ROE). The company has a Return on Assets (ROA) of 8%. Additionally, Agilent has a Return on Equity (ROE) of 25%. This reflects strong financial health and effective management strategies. In terms of valuation, Agilent Technologies has a trailing Price-to-Earnings (P/E) ratio of approximately 29. The company no longer has continuous revenue growth. Insider sell activity is present. Note: Insider sales involve transactions where company executives, directors, or significant shareholders sell their shares, which can raise concerns among investors but do not always signal negative news. Executives may sell for personal reasons like buying a house or diversifying their portfolios, and some have pre-arranged trading plans (10b5-1 plans) that allow them to sell at set times to avoid accusations of insider trading.

ACCENTURE PLC

The current status of stock position is:

Accenture is a leading global professional services company that provides consulting, technology, and outsourcing solutions. With a focus on digital, cloud, and security technologies, Accenture helps businesses transform and innovate in a rapidly evolving digital world. The company operates in three geographic markets: North America, Europe, and Growth Markets (Asia Pacific, Latin America, Africa, and the Middle East). In fiscal 2024, the Middle East and Africa units will join Europe to form the EMEA market. Focusing on five industry groups—Communications, Media & Technology, Financial Services, Health & Public Service, Products, and Resources—the company leverages over 100 innovation hubs, technology expertise, and global delivery capabilities. In 2023, revenues reached $64.1 billion, primarily from Forbes Global 2000 companies and government entities. As of August 31, 2023, the company employed 733,000 people and has partnered with its top 100 clients for over 10 years. Accenture’s high ROA of 12 % and ROE of 27 % reflect its strong financial management and efficiency in generating returns from its assets. Its trailing PE of 31 indicates the market’s confidence in Accenture’s ability to sustain growth, especially in consulting and digital transformation. Insider buys (Securities were Acquired by insiders; FORM 4).

AUTOMATIC DATA PROCESSING INC.

The current status of stock position is:

Automatic Data Processing Inc. (ADP): ADP is a comprehensive provider of human resources management software and services. It offers payroll, tax, benefits administration, and HR outsourcing solutions to businesses worldwide, helping companies streamline operations and ensure regulatory compliance. Highlights from the year ended June 30, 2024 include: revenue growth of 7% to $19,202.6 million; 6% organic constant currency, earnings before income taxes margin expansion of 70 bps, and adjusted EBIT margin expansion of 70 bps, diluted and adjusted diluted earnings per share (“EPS”) growth of 11% and 12%, to $9.10 and $9.18, respectively, and cash returned via shareholder friendly actions of $3.4B, including $2.2B of dividends and $1.2B of share repurchases. Automatic Data Processing Inc.: ADP’s ROA of 6% and striking ROE of 93% signify its ability to efficiently generate shareholder returns, particularly notable for a company in the payroll and HR software space. The PE ratio of 31 also highlights positive market sentiment. Insider activity more on sell side.

CACI INTERNATIONAL INC (DE)

The current status of stock position is:

CACI International Inc.: CACI is a defense contractor specializing in information technology and intelligence services for the U.S. government. The company provides solutions in cybersecurity, surveillance, data analytics, and defense operations, supporting national security and military missions. The key initiatives of CACI include driving organic revenue growth, maintaining strong profitability and cash flow, enhancing capabilities through strategic investments and acquisitions, building a world-class workforce to support a growing backlog, and maintaining a commitment to both customers and the communities they serve. CACI International Inc.: CACI has a modest ROA of 6% and ROE of 12%, indicating steady returns in the defense and intelligence contracting industry. A PE ratio of 27 suggests that the market views the company as stable with room for potential growth. Insider trading on sell side.

DARDEN RESTAURANTS INC

The current status of stock position is:

Darden is one of the largest full-service restaurant operators in the United States. It owns and operates well-known brands such as Olive Garden, LongHorn Steakhouse, and The Capital Grille, offering diverse dining experiences across a broad spectrum of cuisines. Darden Restaurants Inc.: With a ROA of 7% and a strong ROE of 49%, Darden Restaurants shows robust financial performance, driven by its popular restaurant brands. Its lower PE ratio of 18 compared to the tech sector reflects the market’s more conservative growth expectations for the restaurant industry. Insider trading on sell side.

FABRINET

The current status of stock position is:

Fabrinet is a provider of advanced optical packaging and precision manufacturing services. It specializes in producing complex optical, electro-mechanical, and electronic devices, serving industries like telecommunications, medical, and aerospace. Fabrinet’s revenues increased by $383.0 million, or 16.9%, to $2,645.2 million for fiscal year 2023, compared with $2,262.2 million for fiscal year 2022. This increase was primarily due to an increase in their key customers’ demand for fiscal year 2023. Revenues from optical communications products represented 75.9% of their revenues for fiscal year 2023, compared with 78.8% for fiscal year 2022. Fabrinet’s ROA of 8% and ROE of 18% suggest it is managing its resources effectively within the optical manufacturing sector. A PE ratio of 30 indicates investor confidence in its continued growth potential. Insider sales activity.

JACK HENRY & ASSOCIATES INC

The current status of stock position is:

Jack Henry is a provider of technology solutions and payment processing services for the financial industry. The company supports banks, credit unions, and other financial institutions with software systems for managing transactions, customer accounts, and compliance. On August 31, 2022, the Company acquired all of the equity interest in Payrailz. Excluded Payrailz related revenue and operating expenses that are mentioned in the discussion below are for the first two months only of fiscal year ended June 30, 2024, since the first two months of fiscal year ended June 30, 2023, do not include Payrailz. In fiscal 2024, total revenue increased 6.6% or $137,841, compared to fiscal 2023. Reducing total revenue for deconversion revenue of $16,554 in the current fiscal year and $31,775 in the prior fiscal year, and for Payrailz related revenue of $1,945 in the current fiscal year, results in a 7.4% increase, or $151,117. This increase was primarily driven by growth in data processing and hosting within cloud revenue as new clients were added and volumes expanded, card processing revenue from expanded fraud detection and prevention services and the addition of new/add-on services, digital (including Banno) revenue as active monthly users and volumes increased, payment processing revenue from expanding volumes and new client revenue, and growth in remote capture and ACH revenue. Jack Henry’s strong ROA of 11% and ROE of 22% reflect its solid financial foundation, particularly in financial services technology. With a high PE ratio of 34, the market views this company as a high-growth prospect in the fintech industry. Insider sales activity.

LANCASTER COLONY CORP

The current status of stock position is:

Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for retail and foodservice channels. The company’s financial results are divided into two segments: Retail and Foodservice. Direct costs are assigned to the relevant segment, while indirect costs are allocated using a consistent methodology, excluding corporate expenses and significant transactions. Over 95% of products are sold in the U.S., with minimal foreign operations or export sales. Lancaster Colony’s growth potential is driven by its strong market positions, product innovation, broad customer base, and culinary expertise. It has long-standing relationships with Foodservice customers, leadership in product development, and a history of successful business acquisitions. The company aims to grow by introducing new products, expanding distribution, leveraging Retail brands, and acquiring complementary businesses. Recent investments include capacity expansions at Marzetti facilities in Kentucky and Ohio, improvements at a frozen pasta facility in Iowa, and the completion of an enterprise resource planning system, Project Ascent, in August 2023. Consolidated net sales for the year ended June 30, 2024 increased 2.7% to a new record of $1,871.8 million from the prior-year record total of $1,822.5 million, reflecting higher net sales for both the Retail and Foodservice segments driven primarily by volume gains. Deflationary pricing was a headwind to Foodservice segment sales growth. Sales in the prior year were unfavorably impacted by an estimated $25 million in net sales attributed to advance ordering that occurred near the end of fiscal 2022 ahead of our ERP go-live that commenced on July 1, 2022. Breaking down the 2.7% increase in consolidated net sales, approximately 1.8% is attributed to volume/mix impacts, approximately 1.4% is attributed to the ERP go-live sales shift and the remaining offset is net pricing. Consolidated sales volumes, measured in pounds shipped, increased 3.7% in 2024. Excluding the impact of last year’s shift in sales due to our ERP go-live, consolidated sales volumes increased 2.1%. Lancaster Colony Corp has a ROA of 12% and ROE of 18% showcase Lancaster Colony’s ability to effectively generate returns in the food production sector. Its PE ratio of 31 suggests that investors are expecting steady future growth. Insider sales activity.

STRIDE, INC.

The current status of stock position is:

Please see UPDATE.

UPDATE October 17, 2024 : on October 16 Fuzzy Panda Research (“Fuzzy Panda”) presented allegations on misleading investors about the source of its soaring revenues and not mentioning that they came from COVID funds. These funds expired on Sept. 30.
Stride (formerly K12 Inc.) is a leading provider of online education programs. The company offers K-12 learning solutions, including virtual schools, online courses, and personalized education programs, helping students and schools with flexible learning options. The company’s revenues for the year ended June 30, 2024, were $2,040.1 million, reflecting an increase of $202.7 million, or 11.0%, from $1,837.4 million for the year ended June 30, 2023. General Education revenues increased by $157.8 million, or 13.9%, year over year. This increase in General Education revenues was primarily driven by an 8.3% rise in enrollments and changes in the school mix (distribution of enrollments by school). Career Learning revenues grew by $44.9 million, or 6.4%, mainly due to a 10.3% increase in enrollments and school mix adjustments. Stride’s ROA of 8% and ROE of 19% are modest but stable, reflecting solid performance in the education services sector. A relatively low PE of 17 suggests that the market may view it as undervalued compared to other companies on this list. Insider activity on the sell side.

MICROSOFT CORP.

The current status of stock position is:

Microsoft is a global technology giant known for its software products like Windows, Office, and Azure. It also offers cloud computing, AI, and productivity services, alongside gaming through its Xbox platform, serving consumers, businesses, and governments worldwide. The company generates revenue by offering a wide range of cloud-based solutions, content, and other services to individuals and businesses; licensing and supporting a variety of software products; delivering relevant online advertising to a global audience; and designing and selling devices. The most significant expenses are related to employee compensation; supporting and investing in cloud-based services, including datacenter operations; designing, manufacturing, marketing, and selling other products and services; and income taxes. Highlights from fiscal year 2024 compared with fiscal year 2023. Microsoft Cloud revenue increased by 23% to $137.4 billion. Office Commercial products and cloud services revenue grew by 14%, driven by a 16% increase in Office 365 Commercial growth. Office Consumer products and cloud services revenue increased by 4%, with Microsoft 365 Consumer subscribers growing to 82.5 million. LinkedIn revenue grew by 9%. Dynamics products and cloud services revenue rose by 19%, driven by a 24% increase in Dynamics 365 growth. Server products and cloud services revenue increased by 22%, driven by 30% growth in Azure and other cloud services. Windows revenue increased by 8%, with Windows original equipment manufacturer licensing (“Windows OEM”) revenue growing by 7% and Windows Commercial products and cloud services revenue increasing by 11%. Devices revenue decreased by 15%. Xbox content and services revenue rose by 50%, driven by a 44-point net impact from the Activision Blizzard Inc. (“Activision Blizzard”) acquisition. The net impact reflects the shift of Activision Blizzard content from third-party to first-party. Search and news advertising revenue, excluding traffic acquisition costs, grew by 12%. On October 13, 2023, the company completed its acquisition of Activision Blizzard for a total purchase price of $75.4 billion, consisting primarily of cash. The financial results of Activision Blizzard have been included in the company’s consolidated financial statements since the acquisition date. Activision Blizzard is reported as part of the More Personal Computing segment. Microsoft, with a high ROA of 15% and ROE of 37%, continues to be a leader in the tech industry, reflecting its strong profitability and growth potential. Its trailing PE of 35 indicates very high investor expectations for sustained innovation and growth in the software and cloud space. Insider activity on sell side.

PAYCHEX INC.

The current status of stock position is:

Paychex provides payroll, human resources, and benefits outsourcing services for small to mid-sized businesses. Its solutions help companies manage payroll, insurance, and retirement services, allowing for efficient workforce management. Operating income: Fiscal 2024 operating income was $2.2 billion, an increase of 7% compared to fiscal 2023, as a result of revenue growth outpacing expense increases as previously discussed. Adjusted operating income of $2.2 billion, which excludes the impact of one-time costs, reflects an increase of 9%. Operating margin and adjusted operating margin. Other income, net increased $28.8 million to $43.9 million in fiscal 2024 as a result of higher average investment balances and average interest rates earned on our corporate investments. Paychex boasts a strong ROA of 12% and an impressive ROE of 46%, signifying efficiency in generating returns within the payroll services industry. Its PE ratio of 29 reflects a positive outlook from investors. Insider activity on sell side.

PROCTER & GAMBLE Co.

The current status of stock position is:

Procter & Gamble is a global consumer goods company known for its wide range of products in personal care, hygiene, and household care. Its well-known brands include Tide, Pampers, Gillette, and Head & Shoulders, making P&G a leader in daily-use products. Net sales increased 2% to $82.0 billion, driven by mid-single-digit growth in Health Care and low single-digit growth in Fabric & Home Care, Baby, Feminine & Family Care, and Beauty, partially offset by a low single-digit decline in Grooming. Organic sales, excluding acquisitions, divestitures, and foreign exchange, grew 7%, with high single-digit increases in Health Care and Fabric & Home Care and mid-single-digit growth in Baby, Feminine & Family Care, Beauty, and Grooming. Operating income rose 2%, or $321 million, to $18.1 billion due to higher net sales, though there was a slight decrease in operating margin. Net earnings decreased by $55 million to $14.7 billion, largely impacted by a higher tax rate and a $1.4 billion reduction due to foreign exchange. Net earnings attributable to Procter & Gamble fell by $89 million, or 1%, to $14.7 billion. Despite this, diluted EPS grew 2% to $5.90, benefiting from a reduction in shares outstanding. Cash flow from operating activities was $16.8 billion, with adjusted free cash flow at $14.0 billion and an adjusted free cash flow productivity of 95%. P&G’s ROA of 11% and ROE of 31% highlight its efficiency in consumer goods. A PE ratio of 28 indicates a stable but positive growth outlook in this sector, driven by its market-leading brands. Insider acquisitions.

PARKER HANNIFIN CORP.

The current status of stock position is:

Parker Hannifin is a leader in motion and control technologies. The company manufactures precision-engineered solutions in hydraulics, pneumatics, electromechanics, filtration, and fluid handling, serving industries like aerospace, transportation, and healthcare. Net sales in 2024 increased from the 2023 amount due to higher sales in the Aerospace Systems Segment resulting from strength across commercial and defense markets, partially offset by lower sales in the Diversified Industrial Segment. The acquisition (the “Acquisition”) of Meggitt plc (“Meggitt”) increased sales by approximately $501 million during the current year. The effect of currency exchange rates decreased net sales in 2024 by approximately $10 million, which is attributable to the Diversified Industrial Segment, partially offset by an increase in net sales due to the effect of currency exchange rates in the Aerospace Systems Segment. The impact of divestiture activity decreased sales by approximately $62 million in 2024. Gross profit margin (calculated as net sales less cost of sales, divided by net sales) increased in 2024 primarily due to higher margins in both segments resulting from price increases, favorable product mix, moderating material and freight costs and operational efficiencies. In addition, cost of sales in 2023 included $110 million of amortization expense related to the step-up in inventory to fair value resulting from the Acquisition. Cost of sales also included business realignment and acquisition integration charges of $34 million in 2024 compared to $29 million in 2023. Selling, general and administrative expenses (“SG&A”) decreased in 2024 compared to 2023 primarily due to the absence of acquisition-related transaction costs in 2023 totaling $115 million and benefits from prior-year acquisition integration and business realignment activities. The decrease was partially offset by an increase in intangible asset amortization and share-based compensation expense, as well as an increase in general and administrative expenses resulting from the Acquisition. SG&A also included business realignment and acquisition integration charges of $55 million and $94 million in 2024 and 2023, respectively. Interest expense in 2024 decreased compared to 2023 primarily due to the repayment of debt. Other (income) expense, net included the following: Parker Hannifin’s ROA of 8% and ROE of 25% demonstrate solid financial management in the manufacturing industry. Its PE ratio of 28.82 suggests that investors have steady expectations for its future growth. Insider activity on sell side.

ResMed Inc.

ResMed is a global leader in medical equipment, specializing in devices for sleep apnea, chronic obstructive pulmonary disease (COPD), and other respiratory conditions. Its products include CPAP machines and related software, supporting patients with respiratory care needs. For the year ended June 30, 2024, net revenue increased by 11% to $4,685.3 million, compared to $4,223.0 million in the prior year. The Sleep and Respiratory Care business saw a 10% rise in net revenue to $4,101.2 million, driven by higher demand and unit sales of devices and masks, with international currencies contributing $15.2 million. In the United States, Canada, and Latin America, revenue grew by 10% to $2,722.6 million, while in Europe, Asia, and other markets, it rose by 11% to $1,378.6 million. Device sales increased by 8%, and mask sales surged by 14%, reflecting strong performance across regions. The SaaS business generated $584.1 million, a 17% increase, primarily due to the acquisition of MEDIFOX DAN, with organic SaaS growth at 9%. Gross profit rose by 13% to $2,655.3 million, and gross margin improved to 56.7%, supported by lower freight and manufacturing costs, higher selling prices, and a favorable product mix, though impacted by safety notification expenses for masks with magnets and Astral devices. ResMed shows strong performance with a ROA of 13% and ROE of 23%, highlighting its financial health in the medical equipment industry. Its high PE ratio of 34 indicates high growth expectations in the sleep and respiratory care market. Some insider activity on sell side.