• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

• Quick Links

What does the company do?

HF Sinclair Corporation (NYSE: DINO) is an independent energy company headquartered in Dallas, Texas. Founded in 1947, it operates across five segments: Refining, Renewables, Marketing, Lubricants & Specialties, and Midstream. The company operates refineries across the western and central United States, producing gasoline, diesel, jet fuel, renewable diesel, asphalt, specialty chemicals, and lubricants. HF Sinclair also markets fuel through approximately 1,700 branded stations and licenses the Sinclair brand to additional locations. Its midstream operations provide crude oil and refined-product transportation, storage, and terminal services, while its products are sold domestically and internationally.

Why Some Investors Are Bullish

• Strong earnings growth. Second-quarter 2026 net income rose to $892 million from $208 million a year earlier. Adjusted EBITDA increased to $1.48 billion, supported by stronger refining margins and operating performance.

• Attractive valuation. DINO’s valuation remains relatively modest based on recent earnings. However, refining profits are cyclical, so investors should consider normalized earnings rather than assuming current profitability will persist.

• Growing dividend. In July 2026, HF Sinclair raised its quarterly dividend by 5% to $0.525 per share. The annualized payout is $2.10 per share, although the current yield changes with the stock price.

• Strong cash generation and shareholder returns. The company generated $1.51 billion in operating cash flow during Q2 and returned $265 million to shareholders through dividends and share repurchases. It ended June with $2.26 billion in cash and $2.77 billion in consolidated debt.

• Multiple business segments. Beyond refining, HF Sinclair operates in marketing, renewables, lubricants and midstream services. These businesses provide additional earnings sources and may help diversify its exposure to refining margins.

What Bears Are Worried About

• Cyclical earnings and commodity risk. Profitability can change significantly with refining margins, crude oil costs, fuel demand and seasonal conditions. A decline in crack spreads could reduce earnings and cash flow even if refinery operations remain strong.

• Long-term energy transition risks. Electric vehicle adoption, changing fuel consumption, environmental regulations and the transition toward lower-carbon energy could pressure conventional fuel demand over time. Renewable fuels also face changing economics and policy incentives.

• Elevated expectations and business-transition risks. DINO’s share price has risen sharply, increasing the risk of a pullback if refining margins weaken or earnings disappoint. The company also announced plans to separate its Lubricants & Specialties business, creating potential execution and restructuring risks.

Why the Quants like this stock

P/E Non-GAAP (FWD) A- 7.03
ROE Growth (FWD) A+ 123.93%
Return on Common Equity (TTM) B+ 19.41%
3M Price Performance A+ 56.95%
FY1 Up Revisions (last 90 days) 14 Up 0 Down

Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $4.93 (Beat by $0.45)
EPS Normalized Actual $5.31 (Beat by $0.82)
Revenue Actual $10.39B
Revenue Surprise Beat by $1.44B

My View

HF Sinclair offers exposure to strong refining profitability, substantial cash generation and a growing dividend. The primary risk is cyclicality: unusually strong refining earnings may not be sustainable. After the stock’s substantial advance, valuation should be assessed against normalized earnings and future refining conditions, not simply recent results.

Quick Links

See comments.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Selection for this week

• Some Pros about the stock

• Some Cons about the stock

• Why the Quants like this stock

• Active Positions

• Quick Links

The momentum stocks in the portfolio as a group dropped since last Thursday following the Risk Off trend in the market this week.

NESR (National Energy Services Reunited) becomes the first stock removed from the quant Top Stocks Portfolio. It was removed after its Momentum and EPS Revision ranking fell below the acceptable levels. A good portion of their business comes from Saudi Arabia and this affected the outlook for the stock among analysts in a negative way.

Add: DINO (HF Sinclair Corporation)

Remove: NESR (National Energy Services Reunited)

What does the company do?

HF Sinclair Corporation (NYSE: DINO) is an independent energy company headquartered in Dallas, Texas. Founded in 1947, it operates across five segments: Refining, Renewables, Marketing, Lubricants & Specialties, and Midstream. The company operates refineries across the western and central United States, producing gasoline, diesel, jet fuel, renewable diesel, asphalt, specialty chemicals, and lubricants. HF Sinclair also markets fuel through approximately 1,700 branded stations and licenses the Sinclair brand to additional locations. Its midstream operations provide crude oil and refined-product transportation, storage, and terminal services, while its products are sold domestically and internationally.

Why Some Investors Are Bullish

• Strong earnings growth. Second-quarter 2026 net income rose to $892 million from $208 million a year earlier. Adjusted EBITDA increased to $1.48 billion, supported by stronger refining margins and operating performance.

• Attractive valuation. DINO’s valuation remains relatively modest based on recent earnings. However, refining profits are cyclical, so investors should consider normalized earnings rather than assuming current profitability will persist.

• Growing dividend. In July 2026, HF Sinclair raised its quarterly dividend by 5% to $0.525 per share. The annualized payout is $2.10 per share, although the current yield changes with the stock price.

• Strong cash generation and shareholder returns. The company generated $1.51 billion in operating cash flow during Q2 and returned $265 million to shareholders through dividends and share repurchases. It ended June with $2.26 billion in cash and $2.77 billion in consolidated debt.

• Multiple business segments. Beyond refining, HF Sinclair operates in marketing, renewables, lubricants and midstream services. These businesses provide additional earnings sources and may help diversify its exposure to refining margins.

What Bears Are Worried About

• Cyclical earnings and commodity risk. Profitability can change significantly with refining margins, crude oil costs, fuel demand and seasonal conditions. A decline in crack spreads could reduce earnings and cash flow even if refinery operations remain strong.

• Long-term energy transition risks. Electric vehicle adoption, changing fuel consumption, environmental regulations and the transition toward lower-carbon energy could pressure conventional fuel demand over time. Renewable fuels also face changing economics and policy incentives.

• Elevated expectations and business-transition risks. DINO’s share price has risen sharply, increasing the risk of a pullback if refining margins weaken or earnings disappoint. The company also announced plans to separate its Lubricants & Specialties business, creating potential execution and restructuring risks.

Why the Quants like this stock

P/E Non-GAAP (FWD) A- 7.03
ROE Growth (FWD) A+ 123.93%
Return on Common Equity (TTM) B+ 19.41%
3M Price Performance A+ 56.95%
FY1 Up Revisions (last 90 days) 14 Up 0 Down

Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $4.93 (Beat by $0.45)
EPS Normalized Actual $5.31 (Beat by $0.82)
Revenue Actual $10.39B
Revenue Surprise Beat by $1.44B

My View

HF Sinclair offers exposure to strong refining profitability, substantial cash generation and a growing dividend. The primary risk is cyclicality: unusually strong refining earnings may not be sustainable. After the stock’s substantial advance, valuation should be assessed against normalized earnings and future refining conditions, not simply recent results.

Active Positions

Quick Links

See comments

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your countr.y of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

• Quick Links

What does the company do?

DiamondRock Hospitality Company is a self-managed real estate investment trust (REIT) that owns a geographically diverse portfolio of 34 premium hotels with approximately 9,400 rooms, concentrated in leisure destinations and major gateway markets. Its portfolio includes properties operating under leading global hotel brands as well as independent boutique hotels in the lifestyle segment. Founded in 2004, the company is headquartered in Bethesda, Maryland.

Why Some Investors Are Bullish

Strong Q2 2026 Results

• Adjusted funds from operations (FFO) increased 25.7% year over year to $0.44 per share, beating the $0.37 consensus estimate.

• Comparable revenue per available room (RevPAR) increased 7.0%.

• Adjusted EBITDA rose 19.2% to $107.9 million.

Improved Operating Efficiency

• Comparable hotel revenue increased 5.5%, while hotel operating expenses rose just 1.8%, excluding favorable Chicago property-tax settlements.

• Comparable hotel adjusted EBITDA margins expanded by 239 basis points after excluding the one-time tax benefit.

Higher 2026 Guidance and Dividend

• Management raised its full-year 2026 outlook to:

  • Comparable RevPAR growth of 2.5%–4.0%.

  • Adjusted EBITDA of $310 million–$320 million.

  • Adjusted FFO per share of $1.18–$1.23.

• The quarterly dividend increased 22% to $0.11 per share.

Potential Growth Into 2027

• Management expects meaningful earnings benefits as L’Auberge de Sedona continues to mature.

• L’Auberge’s 2027 group-booking pace is more than double this year’s level.

• Management expects approximately 18% growth in free cash flow per share, based on its outlook and planned capital expenditures.

Financial Flexibility and Share Repurchases

• DiamondRock ended Q2 with approximately $1.1 billion in debt, $106 million in unrestricted cash, and $400 million available under its revolving credit facility.

• The company repurchased $1.9 million of shares during Q2.

• Approximately $299.4 million remained under its $300 million share repurchase authorization.

What Bears Are Worried About

One-Time Items Boosted Reported Earnings

• Net income attributable to common stockholders increased 135.7% to $90.5 million.

• Results included a $31.6 million gain from the sale of the Courtyard New York Manhattan/Fifth Avenue.

• Favorable Chicago property-tax settlements contributed another $6.9 million, or approximately $0.03 per share.

• Excluding the tax benefit, adjusted FFO would have been approximately $0.41 per share rather than $0.44.

Growth Is Expected to Moderate

• Management expects third-quarter RevPAR to be essentially flat, with stronger growth anticipated in Q4.

• The World Cup contributed approximately 90 basis points to Q2 RevPAR growth, but its expected contribution to full-year growth is around 30 basis points.

• Investors should be cautious about assuming Q2’s 7% RevPAR growth will continue throughout the year.

Uneven Hotel Performance and Acquisition Uncertainty

• Some properties, including those in Key West, have experienced softer demand, particularly during the off-season.

• Management has evaluated acquisition opportunities but remains selective because of intense competition and property pricing.

• As a lodging REIT, DiamondRock is also exposed to economic weakness, higher borrowing costs, and changes in travel demand.

Why the Quants like this stock

P/E Non-GAAP (TTM) B+ 21.04
Price / Sales (TTM) B+ 2.27
AFFO Growth (3Y Hist. CAGR) A+ 15.81%
3M Price Performance A+ 6.50%
FY1 Up Revisions (last 90 days) 4 Up and 0 Down

Latest Quarter’s Earnings
Announce Date 7/30/2026
EPS GAAP Actual $0.44 (Beat by $0.22)
FFO Normalized Actual $0.44 (Beat by $0.07)
Revenue Actual $318.29M
Revenue Surprise Beat by $3.31M

My View

• Good – Strong operating performance, improving margins, higher guidance, a larger dividend, and financial flexibility.

• Bad – One-time earnings benefits, moderating hotel demand, uneven property performance, and uncertainty surrounding future acquisitions.

• What to Watch: RevPAR trends, recurring cash flow, acquisition discipline, and the company’s ability to meet its higher 2026 guidance.

Quick Links

See Comments.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Quant Alpha’s II – Up over 72% since June 2025

• Quant 30 – Up over 78% since June 2025

• Legacy – Up over 320% since April 2023

• Changes to the Quant Portfolios

• Education – Third-Quarter Earnings Season: What the Big Banks Will Tell Us About the Economy

• Quant Dividend and Growth 25 Model Portfolio – final 5 members added

• Quick Links

USA Stock market week ending 10/09/26

• SPY (S&P 500): +1.2% — Large-cap stocks advanced solidly, leading the major indexes for the week.

• ^IXIC (Nasdaq Composite): +0.6% — Technology-heavy stocks posted a modest gain.

• DIA (Dow Jones Industrial Average): +0.1% — Blue-chip stocks were nearly unchanged for the week.

• IWM (Russell 2000): -1.0% — Small-cap stocks weakened, underperforming their large-cap counterparts.

• SPMO (S&P 500 Momentum ETF): -1.4% — Momentum stocks declined despite the broader market’s gains, signaling weakness among recent market leaders.

Market Drivers this Week (10/12/26 – 10/16/26)

• Monday, 10/12 — Columbus Day. U.S. stock markets remain open, but bond markets are closed.

• Tuesday, 10/13 — The NFIB Small Business Optimism Index is due at 6:00 a.m. ET, while JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo report third-quarter earnings.

• Wednesday, 10/14 — The Consumer Price Index and Real Earnings reports arrive at 8:30 a.m. ET, followed by the Fed’s Beige Book at 2:00 p.m. Bank of America and Morgan Stanley also report earnings.

• Thursday, 10/15 — September PPI, September retail sales, weekly jobless claims and the Philadelphia Fed Manufacturing Index are scheduled for 8:30 a.m. ET.

The CNN Fear & Greed Index

The CNN Fear & Greed Index showed a notable improvement in investor sentiment during the latest week, rising to 45 (Neutral) on October 9, up from 31 (Fear) on October 2. This marks a shift away from the persistent fear that dominated September and early October, when readings ranged from 29 to 42, following Greed readings of 64 and 65 in early and mid-August. Sentiment gradually deteriorated through late August and September before rebounding over the past week, suggesting that investor anxiety may be easing. However, the index remains well below its August highs, indicating that confidence has not fully recovered.

• 10/9/26 – 45 Neutral

• 10/2/26 – 31 Fear

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

The Quant Model Portfolios had an off week with the SPMO (S&P 500 Momentum ETF) sliding -1.4%. The Portfolios remain full of highly ranked stocks in the Quant universe and when Risk On becomes dominant again, I expect the Portfolios will lead the way up.

Read more

• Quant Alpha’s II – Up over 72% since June 2025

• Quant 30 – Up over 78% since June 2025

• Quant Alpha’s – Legacy – Up over 320% since April 2023

• Education – Midterm Elections and the Stock Market: What History Shows

• New Quant Dividend and Growth 25 Model Portfolio final 5 added

• Quick Links

USA Stock market week ending 10/09/26

• SPY (S&P 500): +1.2% — Large-cap stocks advanced solidly, leading the major indexes for the week.

• ^IXIC (Nasdaq Composite): +0.6% — Technology-heavy stocks posted a modest gain.

• DIA (Dow Jones Industrial Average): +0.1% — Blue-chip stocks were nearly unchanged for the week.

• IWM (Russell 2000): -1.0% — Small-cap stocks weakened, underperforming their large-cap counterparts.

• SPMO (S&P 500 Momentum ETF): -1.4% — Momentum stocks declined despite the broader market’s gains, signaling weakness among recent market leaders.

Market Drivers this Week (10/12/26 – 10/16/26)

• Monday, 10/12 — Columbus Day. U.S. stock markets remain open, but bond markets are closed.

• Tuesday, 10/13 — The NFIB Small Business Optimism Index is due at 6:00 a.m. ET, while JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo report third-quarter earnings.

• Wednesday, 10/14 — The Consumer Price Index and Real Earnings reports arrive at 8:30 a.m. ET, followed by the Fed’s Beige Book at 2:00 p.m. Bank of America and Morgan Stanley also report earnings.

• Thursday, 10/15 — September PPI, September retail sales, weekly jobless claims and the Philadelphia Fed Manufacturing Index are scheduled for 8:30 a.m. ET.

The CNN Fear & Greed Index

The CNN Fear & Greed Index showed a notable improvement in investor sentiment during the latest week, rising to 45 (Neutral) on October 9, up from 31 (Fear) on October 2. This marks a shift away from the persistent fear that dominated September and early October, when readings ranged from 29 to 42, following Greed readings of 64 and 65 in early and mid-August. Sentiment gradually deteriorated through late August and September before rebounding over the past week, suggesting that investor anxiety may be easing. However, the index remains well below its August highs, indicating that confidence has not fully recovered.

• 10/9/26 – 45 Neutral

• 10/2/26 – 31 Fear

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

The Quant Model Portfolios had an off week with the SPMO (S&P 500 Momentum ETF) sliding -1.4%. The Portfolios remain full of highly ranked stocks in the Quant universe and when Risk On becomes dominant again, I expect the Portfolios will lead the way up.

Note: You are reading the free subscriber newsletter. Paid subscribers enjoy instant access to weekly Model Portfolio updates upon release. Free subscribers get access to Portfolio updates after a four week or more delay. Want timely access to the new Adds/Removes?

Model Portfolio Quant Alpha’s II

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to significantly outperform its benchmark, 72% versus 19%. It has 30 members.

Model Portfolio Quant 30

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to beat its benchmark by a wide margin, 78% to 19%. It has 30 members in it.

Model Portfolio Dividend and Growth 25

This week’s new update is being released to the paid subscribers. The Portfolio is up +1.09% and the benchmark was up +0.68%. The 21 thru 25 members are being released to Paid Subscribers today.

Model Portfolio Quant Top Stocks

The portfolio is +1.92% with the benchmark +1.84%.

A Thursday morning post will update the Adds and Removals for this Portfolio.

Added Thursday: VLO (Valero Energy)

Model Portfolio Quant Alpha’s – Legacy

The portfolio is up over +320% since it began in 2023. It has 17 stocks in it. Powell industries is now a 9 bagger. Celestica is now a 14 bagger

Performance to 10-09-2026

Midterm Elections and the Stock Market: What History Shows

Historical data suggests that U.S. stocks have generally performed well following midterm elections, regardless of which party gains or loses control.

Strong Post-Midterm Performance

Since 1950, the S&P 500 has risen in all 19 twelve-month periods following midterm elections—an unusually consistent historical record that spans recessions, wars, oil shocks and financial crises. Looking further back to 1938, the index has gained in roughly 95% of the 12-month periods following midterm elections, while the S&P 500 has historically averaged about a 6.3% gain during the first three months following a midterm election.

Divided Government Has Often Been Market-Friendly

Markets have sometimes viewed divided government favorably because political gridlock can make sweeping tax increases, regulatory changes and major spending initiatives more difficult to implement. Historically, the S&P 500 has often produced stronger median returns under certain forms of divided government, although research on the relationship between political control and stock returns is mixed. In fact, some academic studies have found that unified governments have produced higher excess stock returns than divided governments, challenging the simple idea that “gridlock is always good for stocks.”

Not All Political Outcomes Perform the Same

The historical record also suggests that the specific combination of political control matters. For example, periods featuring a Republican president and full Democratic control of Congress have historically produced somewhat weaker short-term S&P 500 returns than the broader post-midterm average. However, these differences are relatively small compared with the many other factors influencing stock prices.

The Bigger Drivers Are Usually Economic

Investors should be cautious about attributing market performance directly to election results. Inflation, Federal Reserve policy, interest rates, economic growth, energy prices and recession risks have historically played a much larger role in determining market performance than which party controls Congress or the White House.

Bottom Line for Investors

The historical message is encouraging: the stock market has generally performed well during the year following midterm elections, including periods when government became divided. However, the data represents historical correlation—not a dependable forecasting tool. Investors should focus less on predicting the political outcome and more on the economic and market conditions that ultimately drive corporate earnings and stock valuations.

Quick Links

See comments.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

• Quick Links

What does the company do?

Valero Energy Corporation is a San Antonio-based producer, marketer, and seller of petroleum-based and lower-carbon transportation fuels and petrochemical products. It operates through three segments—Refining, Renewable Diesel, and Ethanol—and markets products under brands including Valero, Diamond Shamrock, Shamrock, Ultramar, and Texaco. Founded in 1980, Valero operates across the U.S., Canada, the U.K., Ireland, and parts of Latin America.

Why Some Investors Are Bullish

Record second-quarter earnings.
Valero reported record Q2 2026 net income of $3.7 billion, or $12.62 per share, compared with $714 million, or $2.28 per share, a year earlier. Adjusted EPS was $12.54 versus the $10.11 consensus estimate, a $2.43 beat.

All three operating segments delivered significant improvement.
Refining operating income surged to $4.47 billion from $1.27 billion, renewable diesel swung to $717 million from a $79 million loss, and ethanol operating income increased to $318 million from $54 million. The improvement was driven by stronger gasoline and diesel margins, higher renewable-diesel product prices, and favorable ethanol economics, including clean-fuel production credits.

Refining fundamentals remained favorable heading into Q3.
Management cited low global refined-product inventories, limited excess refining capacity, resilient transportation-fuel demand and continued disruptions affecting Middle Eastern and Russian refining capacity. Management said refining margins and capture rates were stronger early in Q3, providing a constructive near-term backdrop.

Strong liquidity and shareholder returns.
Valero ended June with $7.9 billion of cash and about $12.7 billion of total liquidity, while net debt-to-capitalization was approximately 11%. The company returned $2.6 billion to shareholders during Q2 and declared a quarterly dividend of $1.20 per share.

The stock still carries a relatively low forward earnings multiple.
At roughly $424 per share, Valero trades at around 8.5x current fiscal-year consensus EPS, based on current estimates near $49 per share.

What Bears Are Worried About

Refining earnings are highly cyclical.
The Q2 results benefited from exceptionally strong refining margins, and investors should be cautious about extrapolating those conditions indefinitely. Valero’s earnings can decline sharply when fuel margins normalize, crude differentials change, or previously disrupted refining capacity returns to service.

The stock is now at record highs, raising valuation and expectations risk.
The original comparison to a $320.24 52-week high is outdated: VLO closed at $424.10 on October 7, 2026, a new 52-week high, after gaining 1.16% that day. The stock’s dramatic run means investors are now paying substantially more for the same underlying earnings stream, while the current average analyst price target remains below the share price.

Geopolitical, policy and renewable-fuels risks remain.
Valero’s unusually strong earnings are partly tied to favorable refining conditions and geopolitical supply disruptions that may not persist, while its renewable-fuels operations face policy, feedstock and regulatory uncertainty.

Why the Quants like this stock

P/E Non-GAAP (FWD) B+ 8.45
PEG Non-GAAP (FWD) A 0.3
Revenue Growth (YoY) B- 12.66%
EPS FWD Long Term Growth (3-5Y CAGR) A 28.38%
ROE Growth (FWD) A+ 45.93%
Return on Common Equity (TTM) A 29.31%
3M Price Performance A+ 59.30%
FY1 Up Revisions (last 90 days) 18 up 0 down

Latest Quarter’s Earnings
Announce Date 7/30/2026
EPS GAAP Actual $12.62 (Beat by $2.46)
EPS Normalized Actual $12.54 (Beat by $2.41)
Revenue Actual $44.48B
Revenue Surprise Beat by $6.05B

My View

Valero’s Q2 report was exceptional, with record earnings, strong performance across all three segments, substantial cash generation and a strong balance sheet. The bigger question for investors now is how much of that profitability is sustainable as refining margins normalize and the stock trades near record highs. Valero is scheduled to report Q3 2026 results before the market opens on October 22.

Quick Links

See comments.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Selection for this week

• Some Pros about the stock

• Some Cons about the stock

• Why the Quants like this stock

• Criteria for choosing

• The previous selections

• Quick Links

The momentum stocks in the portfolio as a group rose slightly since last Thursday. The Portfolio is currently up 3% compared to the corresponding equal weight index that is up 1%, over the same time period.

This will be the last time the criteria for maintaining the Portfolio is appended to the end of this newsletter. Starting next week, the criteria can be found in the link provided in Quick Links at the end of the current newsletter.

Add: VLO (Valero Energy)

What does the company do?

Valero Energy Corporation is a San Antonio-based producer, marketer, and seller of petroleum-based and lower-carbon transportation fuels and petrochemical products. It operates through three segments—Refining, Renewable Diesel, and Ethanol—and markets products under brands including Valero, Diamond Shamrock, Shamrock, Ultramar, and Texaco. Founded in 1980, Valero operates across the U.S., Canada, the U.K., Ireland, and parts of Latin America.

Why Some Investors Are Bullish

Record second-quarter earnings.
Valero reported record Q2 2026 net income of $3.7 billion, or $12.62 per share, compared with $714 million, or $2.28 per share, a year earlier. Adjusted EPS was $12.54 versus the $10.11 consensus estimate, a $2.43 beat.

All three operating segments delivered significant improvement.
Refining operating income surged to $4.47 billion from $1.27 billion, renewable diesel swung to $717 million from a $79 million loss, and ethanol operating income increased to $318 million from $54 million. The improvement was driven by stronger gasoline and diesel margins, higher renewable-diesel product prices, and favorable ethanol economics, including clean-fuel production credits.

Refining fundamentals remained favorable heading into Q3.
Management cited low global refined-product inventories, limited excess refining capacity, resilient transportation-fuel demand and continued disruptions affecting Middle Eastern and Russian refining capacity. Management said refining margins and capture rates were stronger early in Q3, providing a constructive near-term backdrop.

Strong liquidity and shareholder returns.
Valero ended June with $7.9 billion of cash and about $12.7 billion of total liquidity, while net debt-to-capitalization was approximately 11%. The company returned $2.6 billion to shareholders during Q2 and declared a quarterly dividend of $1.20 per share.

The stock still carries a relatively low forward earnings multiple.
At roughly $424 per share, Valero trades at around 8.5x current fiscal-year consensus EPS, based on current estimates near $49 per share.

What Bears Are Worried About

Refining earnings are highly cyclical.
The Q2 results benefited from exceptionally strong refining margins, and investors should be cautious about extrapolating those conditions indefinitely. Valero’s earnings can decline sharply when fuel margins normalize, crude differentials change, or previously disrupted refining capacity returns to service.

The stock is now at record highs, raising valuation and expectations risk.
The original comparison to a $320.24 52-week high is outdated: VLO closed at $424.10 on October 7, 2026, a new 52-week high, after gaining 1.16% that day. The stock’s dramatic run means investors are now paying substantially more for the same underlying earnings stream, while the current average analyst price target remains below the share price.

Geopolitical, policy and renewable-fuels risks remain.
Valero’s unusually strong earnings are partly tied to favorable refining conditions and geopolitical supply disruptions that may not persist, while its renewable-fuels operations face policy, feedstock and regulatory uncertainty.

Why the Quants like this stock

P/E Non-GAAP (FWD) B+ 8.45
PEG Non-GAAP (FWD) A 0.3
Revenue Growth (YoY) B- 12.66%
EPS FWD Long Term Growth (3-5Y CAGR) A 28.38%
ROE Growth (FWD) A+ 45.93%
Return on Common Equity (TTM) A 29.31%
3M Price Performance A+ 59.30%
FY1 Up Revisions (last 90 days) 18 up 0 down

Latest Quarter’s Earnings
Announce Date 7/30/2026
EPS GAAP Actual $12.62 (Beat by $2.46)
EPS Normalized Actual $12.54 (Beat by $2.41)
Revenue Actual $44.48B
Revenue Surprise Beat by $6.05B

My View

Valero’s Q2 report was exceptional, with record earnings, strong performance across all three segments, substantial cash generation and a strong balance sheet. The bigger question for investors now is how much of that profitability is sustainable as refining margins normalize and the stock trades near record highs. Valero is scheduled to report Q3 2026 results before the market opens on October 22.

Previous Selections:

Top Quant Stock of the Week Criteria

I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.

I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.

One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.

The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.

All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.

Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.

The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.

Once a stock has been added to the Active list, it will not be added to. No doubling down.

The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.

It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.

All stocks are added as equal weight. No rebalancing is to occur.

To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.

Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.

There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.

NEW: The divisor for the live performance calculation will be the number of stocks in the portfolio at the last month end. This is likely to vary each month.

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All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

• Quick Links

What does the company do?

Centene Corporation is a U.S. managed care company serving underinsured individuals and families as well as commercial customers. Its businesses span Medicaid, Medicare, Commercial, and Other, providing health insurance and healthcare services including Medicaid and Medicare plans, Marketplace coverage, pharmacy, behavioral health, vision, and dental services. Founded in 1984, Centene is headquartered in St. Louis, Missouri.

Why Some Investors Are Bullish

• Strong Q2 earnings and return to profitability. Centene reported Q2 adjusted diluted EPS of $2.51, compared with a loss of $0.16 per share a year earlier, while GAAP diluted EPS was $2.19. The company also reported adjusted net earnings of approximately $1.2 billion, representing a substantial improvement from the year-ago period.

• Revenue continued to grow. Second-quarter total revenue increased approximately 10% year over year to $53.6 billion, while premium and service revenue rose 4% to $44.4 billion. Growth was supported by higher premium yields, rate increases in Marketplace and Medicaid, state-directed payments, and expansion of the Medicare Prescription Drug Plan business.

• Medical-cost performance improved significantly. Centene’s consolidated health benefits ratio (HBR) improved to 89.6% from 93.0% a year earlier, indicating that a smaller percentage of premium revenue was being consumed by medical costs. The improvement reflected better Marketplace pricing and risk adjustment, higher rates and improved medical-cost management in Medicaid, and favorable developments in Medicare.

• Management significantly raised its 2026 outlook. Centene increased its 2026 adjusted EPS guidance to greater than $4.80, up from its previous outlook of greater than $3.40. Management said the increase reflected underlying business strength, although approximately $0.50 of the improvement was attributable to non-recurring items in the Medicare and Commercial businesses.

• Cash flow and balance-sheet metrics improved. Centene generated approximately $3.6 billion of operating cash flow in Q2 and $8.0 billion during the first six months of 2026. Its debt-to-capitalization ratio improved to 41.6% from 46.5% at year-end 2025, and the company repurchased $260 million of senior notes during the quarter.

What Bears Are Worried About

• Membership has declined substantially. Total at-risk membership fell to 25.9 million from 28.0 million a year earlier, a decline of roughly 2.1 million members, or 7.6%. The largest decline was in Marketplace membership, which fell from 5.86 million to 3.49 million, while Medicaid membership also declined.

• Some of the earnings improvement is not recurring. The headline EPS improvement is impressive, but investors should distinguish between underlying earnings growth and one-time benefits. Management specifically identified approximately $0.50 of non-recurring items within the factors supporting the higher 2026 outlook.

• The business still faces medical-cost and mix-related risks. Although the consolidated HBR improved substantially, medical-cost trends remain an important variable, particularly in Medicaid and Medicare. Commercial premium and service revenue declined 7% year over year, largely reflecting lower Marketplace membership, leaving Centene exposed to changes in enrollment, pricing, risk adjustment and government healthcare policy.

Why the Quants like this stock

P/E Non-GAAP (FWD) B+ 12.9
Revenue Growth (YoY) B- 12.94%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 38.21%
6M Price Performance A 79.41%
FY1 Up Revisions (last 90 days) 21 Up & 0 Down

Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $2.19 (Beat by $1.43)
EPS Normalized Actual $2.51 (Beat by $1.43)
Revenue Actual $53.58B
Revenue Surprise Beat by $6.13B

My View

Centene’s Q2 report showed meaningful operational improvement, particularly in profitability, medical-cost management, cash flow and full-year guidance. The major question for investors is whether these improvements can be sustained while the company works through significant membership declines and the changing economics of its Marketplace and government-sponsored businesses.

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All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Quant Alpha’s II – Up over 75% since June 2025

• Quant 30 – Up over 79% since June 2025

• Legacy – Up over 330% since April 2023

• Changes to the main Quant Portfolios

• Top Quant Stocks – Top three Sectors, Top stock in each

• Education – Midterm Elections and the Stock Market: What History Shows

• Quant Dividend and Growth 25 Model Portfolio is launched last week.

• Quant Top Stocks Model Portfolio is made a permanent member of the line-up.

Last week, a new “Quant Dividend and Growth 25” Model Portfolio was added to the Quant lineup for Paid Subscribers. This will be a Growth and Income type of portfolio. It will have 25 stocks in it and will be reviewed and updated as needed each week.

This week, “Quant Top Stocks” will be made a permanent part of the Quant lineup. It will be tracked here each week. It’s details are available to all subscribers. A separate email is sent out each Thursday for this Portfolio.

USA Stock market week ending 10/02/26

• SPY (S&P 500 ETF): -0.2% — The S&P 500 finished the week slightly lower. ^IXIC (Nasdaq Composite): +0.5% — Technology and growth stocks helped the Nasdaq finish modestly higher.

• DIA (Dow Jones Industrial Average ETF): -1.2% — The Dow was the week’s weakest major index among those listed.

• IWM (Russell 2000 ETF): -0.2% — Small-cap stocks edged lower, matching SPY’s weekly decline.

• SPMO (Invesco S&P 500 Momentum ETF): +0.2% — Momentum stocks posted a modest weekly gain.

Market Drivers this Week (10/05/26 – 10/09/26)

• Monday, 10/5 — September ISM Services PMI and final S&P Global Services and Composite PMIs are released, providing an important update on the strength of the U.S. services economy.

• Tuesday, 10/6 — ADP weekly employment data and the August U.S. trade balance are scheduled, offering fresh readings on labor-market conditions and international trade.

• Wednesday, 10/7 — The FOMC minutes from the September 15–16 meeting are released at 2:00 PM ET, giving investors additional insight into officials’ views on inflation, employment and monetary policy ahead of the October 27–28 meeting.

• Thursday, 10/8 — Initial and continuing jobless claims and wholesale-trade data are released.

• Friday, 10/9 — Preliminary University of Michigan consumer sentiment and inflation expectations are released at 10:00 AM ET. Delta Air Lines (DAL) reports its September-quarter results before the market opens.

The CNN Fear & Greed Index

Investor sentiment has shifted noticeably toward caution over the past 10 weeks. The index reached Greed territory in early and mid-August, with readings of 64 and 65, before falling into Neutral at 54–55 later that month. By September, sentiment had moved firmly into Fear, with readings ranging from 29 to 42, and the latest reading of 31 on October 2 remains in the Fear zone. The progression from 65 in August to 31 currently represents a 34-point decline, indicating that investor sentiment has deteriorated substantially even though the stock market itself has not experienced a comparable collapse.

• 10/2/26 – 31 Fear

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

• 7/31/26 – 42 Fear

The Quant Model Portfolios had a good week. Quant Alpha’s II moved from +76% to +75%, Quant 30 increased from +73% to +79% and Quant Alpha’s – Legacy increased from +323% to +331%. The two new Quant Portfolios, Quant Dividend and Growth 25 and Quant Top Stocks started being tracked this week and both show an initial small gain.

Read more

• Quant Alpha’s II – Up over 75% since June 2025

• Quant 30 – Up over 79% since June 2025

• Quant Alpha’s – Legacy – Up over 330% since April 2023

• Education – Rising Treasury Yields Raise Market Concerns

• New Quant Dividend and Growth 25 Model Portfolio started

• Quant Top Stocks Model Portfolio becomes permanent in the lineup.

• Quick Links

Last week, a new “Quant Dividend and Growth 25” Model Portfolio was added to the Quant lineup for Paid Subscribers. This will be a Growth and Income type of portfolio. It will have 25 stocks in it and will be reviewed and updated as needed each week.

This week, “Quant Top Stocks” will be made a permanent part of the Quant lineup. It will be tracked here each week. It’s details are available to all subscribers. A separate email is sent out each Thursday for this Portfolio.

USA Stock market week ending 10/02/26

• SPY (S&P 500 ETF): -0.2% — The S&P 500 finished the week slightly lower. ^IXIC (Nasdaq Composite): +0.5% — Technology and growth stocks helped the Nasdaq finish modestly higher.

• DIA (Dow Jones Industrial Average ETF): -1.2% — The Dow was the week’s weakest major index among those listed.

• IWM (Russell 2000 ETF): -0.2% — Small-cap stocks edged lower, matching SPY’s weekly decline.

• SPMO (Invesco S&P 500 Momentum ETF): +0.2% — Momentum stocks posted a modest weekly gain.

Market Drivers this Week (10/05/26 – 10/09/26)

• Monday, 10/5 — September ISM Services PMI and final S&P Global Services and Composite PMIs are released, providing an important update on the strength of the U.S. services economy.

• Tuesday, 10/6 — ADP weekly employment data and the August U.S. trade balance are scheduled, offering fresh readings on labor-market conditions and international trade.

• Wednesday, 10/7 — The FOMC minutes from the September 15–16 meeting are released at 2:00 PM ET, giving investors additional insight into officials’ views on inflation, employment and monetary policy ahead of the October 27–28 meeting.

• Thursday, 10/8 — Initial and continuing jobless claims and wholesale-trade data are released.

• Friday, 10/9 — Preliminary University of Michigan consumer sentiment and inflation expectations are released at 10:00 AM ET. Delta Air Lines (DAL) reports its September-quarter results before the market opens.

The CNN Fear & Greed Index

Investor sentiment has shifted noticeably toward caution over the past 10 weeks. The index reached Greed territory in early and mid-August, with readings of 64 and 65, before falling into Neutral at 54–55 later that month. By September, sentiment had moved firmly into Fear, with readings ranging from 29 to 42, and the latest reading of 31 on October 2 remains in the Fear zone. The progression from 65 in August to 31 currently represents a 34-point decline, indicating that investor sentiment has deteriorated substantially even though the stock market itself has not experienced a comparable collapse.

• 10/2/26 – 31 Fear

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

• 7/31/26 – 42 Fear

The Quant Model Portfolios had a good week. Quant Alpha’s II moved from +76% to +75%, Quant 30 increased from +73% to +79% and Quant Alpha’s – Legacy increased from +323% to +331%. The two new Quant Portfolios, Quant Dividend and Growth 25 and Quant Top Stocks started being tracked this week and both show an initial small gain.

Note: You are reading the free subscriber newsletter. Paid subscribers enjoy instant access to weekly Model Portfolio updates upon release. Free subscribers get access to Portfolio updates after a four week or more delay. Want timely access to the new Adds/Removes?

Subscribe now

Model Portfolio Quant Alpha’s II

Any newly added stock is being released to Paid Subscribers today. This Portfolio continues to significantly outperform its benchmark, 75% versus 19%. It has 30 members.

Model Portfolio Quant 30

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to beat its benchmark by a wide margin, 79% to 19%. It has 30 members in it.

Model Portfolio Dividend and Growth 25

This week’s new update is being released to the paid subscribers. After the 1st week, the Portfolio is up +0.06% and the benchmark was down -0.77%. The 11 thru 20 members are being released to Paid Subscribers today.

Model Portfolio Quant Top Stocks

The portfolio is +2.95% with the benchmark +0.73%.

This Model Portfolio is converted to a permanent member of the lineup. It is now being tracked along with the other four Model Portfolios.

A Thursday morning post will update the Adds and Removals for this Portfolio.

Added Thursday: STX – Seagate Technology

Model Portfolio Quant Alpha’s – Legacy

The portfolio is up over +330% since it began in 2023. It has 17 stocks in it. Powell industries is now a 10 bagger. Celestica is now a 15 bagger

Performance to 10-02-2026

Rising Treasury Yields Raise Market Concerns

The 10-year Treasury yield has surged to levels not seen in years, but the speed of the move may be more important than the absolute level. The yield climbed above 5.17% on September 25, up sharply from below 4.8% just two weeks earlier and below 4.6% in August. Technical analyst John Roque of 22V Research has noted that previous periods of rapid increases in the 10-year yield were often followed by financial-market disruptions, although the causes and severity varied widely.

The 10-year Treasury is a key benchmark for borrowing costs across the economy, influencing everything from mortgages and corporate financing to financial-market valuations. A rapid rise in yields can put pressure on highly leveraged companies, banks and other risk assets, particularly when investors and businesses have positioned for more stable borrowing costs. Areas drawing attention include regional banks, utilities, homebuilders and highly leveraged investments, while some investors are also watching private credit and debt-funded AI infrastructure for potential vulnerabilities.

The key issue for investors is not simply that rates are high—it is how quickly they are rising and where the pressure may emerge next.

The areas of the economy most sensitive to a rapid rise in the 10-year Treasury yield are generally those that depend heavily on borrowing, refinancing, or long-duration cash flows:

• Housing & Homebuilders — Higher Treasury yields typically push mortgage rates higher, reducing affordability and potentially slowing home sales, construction and housing demand.

• Commercial Real Estate — Higher financing costs and capitalization rates can pressure property values, while refinancing maturing debt becomes more expensive. Office and highly leveraged properties can be particularly sensitive.

• Regional Banks — Banks can face pressure from higher funding costs, unrealized losses on securities and weaker loan demand. Rapid rate increases can be especially challenging if deposit costs rise quickly.

• Consumer Credit — Higher borrowing costs can squeeze households with variable-rate debt, including credit cards, auto loans and other consumer financing.

• Utilities — Utilities often carry significant debt because of their capital-intensive operations. Higher rates increase financing costs and can make their relatively high dividend yields less attractive compared with Treasury securities.

• High-valuation Growth Stocks — Companies whose expected cash flows are far in the future are particularly sensitive to higher discount rates, which can put pressure on valuation multiples.

• Debt-Funded AI Infrastructure — Large data-center and AI infrastructure projects requiring substantial debt financing could face higher costs and lower returns if Treasury yields remain elevated.

For investors, I’d put the biggest areas to watch in three buckets: housing/real estate, highly leveraged businesses and financial institutions, followed by long-duration/high-valuation stocks.

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All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

What does the company do?

Seagate Technology Holdings plc is a global data storage company that develops and provides a wide range of storage solutions, including internal and external hard drives, solid-state drives (SSDs), enterprise storage systems, network-attached storage (NAS) products, and specialized drives for video, surveillance, hyperscale, and cloud applications. Its products serve industries such as healthcare, media and entertainment, telecommunications, and security. Seagate primarily sells through original equipment manufacturers, distributors, and retailers. Founded in 1978, the company is headquartered in Singapore.

Why Some Investors Are Bullish

Record fiscal year and accelerating financial results.
Seagate generated a record $12.2 billion of revenue in fiscal 2026, while GAAP net income reached $3.18 billion. Non-GAAP diluted EPS was $15.58 for the year. Fourth-quarter revenue reached $3.6 billion, with non-GAAP EPS of $5.71 and non-GAAP gross margin of 52.7%.

Record margins demonstrate strong operating leverage.
Seagate’s fiscal 2026 non-GAAP gross margin reached 46.1%, with Q4 expanding to 52.7%. The company has been benefiting from improved pricing, product mix and the ramp of higher-capacity storage products, including its Mozaic HAMR technology. The combination of stronger demand and higher margins has significantly increased earnings power.

Strong free cash flow supports debt reduction and shareholder returns.
Seagate generated a record $3.1 billion of free cash flow in fiscal 2026. The company reduced debt by $1.4 billion during the year, ending the period with $3.6 billion of total debt and $1.7 billion of cash and cash equivalents. It also returned $810 million to shareholders through dividends and share repurchases.

AI is creating a structural demand driver for storage.
The rapid expansion of AI and cloud infrastructure is generating enormous amounts of data that must be stored, making high-capacity HDDs an important part of the data-center storage architecture. Seagate’s focus on mass-capacity storage gives it exposure to this long-term trend.

Wall Street expectations remain elevated.
Several analysts raised their Seagate price targets following the July earnings report. For example, Argus raised its target from $750 to $900, while Barclays raised its target from $1,000 to $1,250; other firms also increased their targets.

What Bears Are Worried About

Valuation has become demanding after an enormous rally.
Seagate’s shares have risen dramatically, and by late September 2026 the stock was trading around $900 per share, with a trailing P/E around 66x based on reported market data. The forward multiple is considerably lower, but the valuation still assumes that Seagate can sustain a significant portion of its recent earnings growth.

The stock remains highly volatile.
STX has experienced substantial price swings as investors reassess AI infrastructure spending, HDD pricing and future earnings growth. The stock reached a 52-week high of approximately $1,145 in June before pulling back below $1,000 in September. That volatility can create significant upside as well as downside for shareholders.

HDDs remain a cyclical business.
AI and cloud demand may be creating a powerful growth opportunity, but the hard-drive industry has historically been cyclical. Pricing, supply and demand, customer inventories and data-center capital spending can all change rapidly. The investment debate is therefore whether Seagate’s current AI-driven storage boom represents a durable structural growth cycle or an unusually strong phase of a still-cyclical industry.

Why the Quants like this stock

PEG Non-GAAP (FWD) A+ 0.38
Revenue Growth (FWD) A 40.27%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 67.08%
Return on Common Equity (TTM) A+ 371.53%
6M Price Performance A+ 154.49%
FY1 Up Revisions (last 90 days) 20 Up and 0 Down

Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $5.58 (Beat by $0.77)
EPS Normalized Actual $5.71 (Beat by $0.62)
Revenue Actual $3.63B
Revenue Surprise Beat by $137.68M

My View

Seagate has transformed into an important way for investors to participate in the AI-driven expansion of data storage. Fiscal 2026 produced record revenue, margins, free cash flow and debt reduction, while the company’s Mozaic technology and high-capacity HDDs are positioned for continued data-center demand.

The biggest issue for investors is valuation versus sustainability: STX has already experienced an extraordinary run, so maintaining strong earnings growth, margins and free cash flow will be increasingly important to justify the current valuation. As of late September, the stock remained well below its June high despite still-elevated analyst expectations.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Selection for this week

• Some Pros about the stock

• Some Cons about the stock

• Why the Quants like this stock

• Criteria for choosing

• The previous selections

The momentum stocks in the portfolio as a group were were up a little since last Thursday. This is the 20th stock added to the model portfolio. So far, there has not been any stocks removed for cause.

Starting next week, this model portfolio will be added to the free newsletter and the weekly performance will be tracked along with the Quant Alpha’s II, Quant 30, Quant Dividend and Growth 25 and Quant Alpha’s – Legacy portfolio’s already in the newsletter. A separate email revealing the new selection for this model portfolio will continue to issued on Thursday.

Add: STX (Seagate Technology) – Computer Hardware

What does the company do?

Seagate Technology Holdings plc is a global data storage company that develops and provides a wide range of storage solutions, including internal and external hard drives, solid-state drives (SSDs), enterprise storage systems, network-attached storage (NAS) products, and specialized drives for video, surveillance, hyperscale, and cloud applications. Its products serve industries such as healthcare, media and entertainment, telecommunications, and security. Seagate primarily sells through original equipment manufacturers, distributors, and retailers. Founded in 1978, the company is headquartered in Singapore.

Why Some Investors Are Bullish

Record fiscal year and accelerating financial results.
Seagate generated a record $12.2 billion of revenue in fiscal 2026, while GAAP net income reached $3.18 billion. Non-GAAP diluted EPS was $15.58 for the year. Fourth-quarter revenue reached $3.6 billion, with non-GAAP EPS of $5.71 and non-GAAP gross margin of 52.7%.

Record margins demonstrate strong operating leverage.
Seagate’s fiscal 2026 non-GAAP gross margin reached 46.1%, with Q4 expanding to 52.7%. The company has been benefiting from improved pricing, product mix and the ramp of higher-capacity storage products, including its Mozaic HAMR technology. The combination of stronger demand and higher margins has significantly increased earnings power.

Strong free cash flow supports debt reduction and shareholder returns.
Seagate generated a record $3.1 billion of free cash flow in fiscal 2026. The company reduced debt by $1.4 billion during the year, ending the period with $3.6 billion of total debt and $1.7 billion of cash and cash equivalents. It also returned $810 million to shareholders through dividends and share repurchases.

AI is creating a structural demand driver for storage.
The rapid expansion of AI and cloud infrastructure is generating enormous amounts of data that must be stored, making high-capacity HDDs an important part of the data-center storage architecture. Seagate’s focus on mass-capacity storage gives it exposure to this long-term trend.

Wall Street expectations remain elevated.
Several analysts raised their Seagate price targets following the July earnings report. For example, Argus raised its target from $750 to $900, while Barclays raised its target from $1,000 to $1,250; other firms also increased their targets.

What Bears Are Worried About

Valuation has become demanding after an enormous rally.
Seagate’s shares have risen dramatically, and by late September 2026 the stock was trading around $900 per share, with a trailing P/E around 66x based on reported market data. The forward multiple is considerably lower, but the valuation still assumes that Seagate can sustain a significant portion of its recent earnings growth.

The stock remains highly volatile.
STX has experienced substantial price swings as investors reassess AI infrastructure spending, HDD pricing and future earnings growth. The stock reached a 52-week high of approximately $1,145 in June before pulling back below $1,000 in September. That volatility can create significant upside as well as downside for shareholders.

HDDs remain a cyclical business.
AI and cloud demand may be creating a powerful growth opportunity, but the hard-drive industry has historically been cyclical. Pricing, supply and demand, customer inventories and data-center capital spending can all change rapidly. The investment debate is therefore whether Seagate’s current AI-driven storage boom represents a durable structural growth cycle or an unusually strong phase of a still-cyclical industry.

Why the Quants like this stock

PEG Non-GAAP (FWD) A+ 0.38
Revenue Growth (FWD) A 40.27%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 67.08%
Return on Common Equity (TTM) A+ 371.53%
6M Price Performance A+ 154.49%
FY1 Up Revisions (last 90 days) 20 Up and 0 Down

Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $5.58 (Beat by $0.77)
EPS Normalized Actual $5.71 (Beat by $0.62)
Revenue Actual $3.63B
Revenue Surprise Beat by $137.68M

My View

Seagate has transformed into an important way for investors to participate in the AI-driven expansion of data storage. Fiscal 2026 produced record revenue, margins, free cash flow and debt reduction, while the company’s Mozaic technology and high-capacity HDDs are positioned for continued data-center demand.

The biggest issue for investors is valuation versus sustainability: STX has already experienced an extraordinary run, so maintaining strong earnings growth, margins and free cash flow will be increasingly important to justify the current valuation. As of late September, the stock remained well below its June high despite still-elevated analyst expectations.

Top Quant Stock of the Week Criteria

I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.

I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.

One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.

The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.

All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.

Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.

The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.

Once a stock has been added to the Active list, it will not be added to. No doubling down.

The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.

It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.

All stocks are added as equal weight. No rebalancing is to occur.

To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.

Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.

There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.

Previous Selections:

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

What does the company do?

Flotek Industries, Inc. (NYSE: FTK) is a Houston-based technology company that provides specialty chemical and data analytics solutions to the energy industry. Its two main businesses are Chemistry Technologies, which develops chemical products designed to improve energy operations and reduce environmental impact, and Data Analytics, which provides measurement, monitoring and digital solutions to improve efficiency, decision-making and emissions management. Flotek serves oil and gas, geothermal, solar and other energy companies in the U.S. and internationally.

Why Some Investors Are Bullish

• Strong Q2 2026 results: Revenue jumped 70% to $99.4 million, while net income reached $10.0 million, or $0.26 per diluted share, versus $1.8 million and $0.05 a year earlier. Adjusted EBITDA more than doubled to $16.8 million, up 109%.

• Rapidly growing Data Analytics business: Data Analytics revenue surged 223% year over year to $19.2 million, while the segment accounted for 51% of total gross profit, compared with 26% a year earlier. This highlights the company’s ongoing transition toward higher-value data and technology services.

• 2026 guidance raised twice: Following its Q2 results, Flotek raised full-year revenue guidance to $340–$350 million and adjusted EBITDA guidance to $47–$51 million. On September 9, the company raised guidance again to $360–$370 million in revenue and $50–$54 million of adjusted EBITDA, citing continued strength in international chemistry sales.

• Significant Puerto Rico power opportunity: Flotek has a 10-year agreement supporting a proposed 400-MW Puerto Rico power project, with potential revenue of approximately $40 million annually, or about $400 million over 10 years at full deployment. Initial equipment deployment is expected in Q4 2026, with full deployment targeted for Q1 2027.

• Improving operating leverage: SG&A declined to approximately 8% of revenue, compared with 12% a year earlier, while adjusted EBITDA increased 109%. The combination of faster revenue growth and lower SG&A as a percentage of sales provides evidence of improving operating leverage.

What Bears Are Worried About

• Gross margins remain relatively thin: Q2 gross margin was approximately 24%, compared with 25% a year earlier. Despite strong revenue and EBITDA growth, Flotek will need continued improvement in its business mix and operating efficiency to produce substantially higher margins.

• Execution and concentration risk: The Puerto Rico project represents a potentially significant long-term opportunity, but the approximately $400 million figure is potential revenue over the 10-year contract, not current backlog or guaranteed near-term revenue. Deployment also depends on the project progressing as planned.

• Chemistry remains exposed to the energy cycle: Chemistry Technologies generated $80.2 million of Q2 revenue, far more than Data Analytics, meaning Flotek remains substantially exposed to activity in the energy industry. Data Analytics is growing rapidly, but it still represents a smaller portion of total revenue, making continued execution in the higher-growth businesses important to the investment thesis.

Why the Quants like this stock

Revenue Growth (FWD) A- 28.04%
ROE Growth (YoY) A- 138.52%
Return on Common Equity (TTM) A+ 37.80%
3M Price Performance A+ 35.03%
FY1 Up Revisions (last 90 days) 4 Up and 0 Down

Latest Quarter’s Earnings
Announce Date 8/4/2026
EPS GAAP Actual $0.26 (Beat by $0.14)
EPS Normalized Actual $0.28 (Beat by $0.17)
Revenue Actual $99.37M
Revenue Surprise Beat by $29.87M

My View

Flotek’s investment story is increasingly tied to the combination of rapid Data Analytics growth, international chemistry demand and emerging power-infrastructure opportunities. The major question for investors is whether the company can convert that rapid revenue growth into sustainably higher margins and cash flow while successfully executing its large new projects.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Quant Alpha’s II – Up over 76 since June 2025

• Quant 30 – Up over 73% since June 2025

• Legacy – Up over 320% since April 2023

• Changes to the main Quant Portfolios

• Top Quant Stocks – Top three Sectors, Top stock in each

• Education – Rising Treasury Yields Raise Market Concerns

• New Quant Dividend and Growth 25 Model Portfolio is launched on September 28, 2026.

This week, a new “Quant Dividend and Growth 25” Model Portfolio will be added to the Quant lineup. It will be for Paid subscribers. This will be a Growth and Income type of portfolio. It will have 25 stocks in it and will be reviewed and updated as needed each week in this newsletter. Each stock in the portfolio will pay a dividend and be highly ranked in both the Quant Factors and the Quant Dividend metrics. A separate email was sent last Friday with the criteria for this new Model Portfolio. A link to the criteria as at the end of this newsletter.

USA Stock market week ending 09/25/26

• SPY (S&P 500): +1.3% — The S&P 500 posted a solid gain for the week from the close of September 21 through the close of September 25.

• ^IXIC (Nasdaq Composite): +2.1% — The Nasdaq outperformed the broader market, gaining 2.1% for the week.

• DIA (Dow Jones Industrial Average): +0.3% — The Dow posted a modest weekly gain of 0.3%.

• IWM (Russell 2000): -0.7% — Small-cap stocks declined 0.7%, lagging the major large-cap indexes.

• SPMO (Invesco S&P 500 Momentum ETF): +2.7% — Momentum stocks led the major benchmarks, with SPMO gaining 2.7% for the week.

Market Drivers this Week (09/28/26 – 10/02/26)

• Tuesday, 9/29 — Labor Market:JOLTS Job Openings for August is due at 10:00 AM ET, providing another look at labor-market demand ahead of Friday’s employment report.

• Wednesday, 9/30 — Q2 GDP Third Estimate and August Personal Income & Outlays, including the PCE price index, are scheduled for 8:30 AM ET. Micron (MU) reports fiscal Q4 results after the market close, making its outlook for AI-driven memory demand a key focus for investors.

• Thursday, 10/1 — ISM Manufacturing PMI for September and weekly initial jobless claims will provide fresh readings on economic and labor-market conditions.

• Friday, 10/2 — The September Employment Situation report, including nonfarm payrolls and the unemployment rate, arrives at 8:30 AM ET and will be the week’s major economic release.

The CNN Fear & Greed Index

The CNN Fear & Greed Index remained firmly in Fear territory, ending the week of September 25 at 37, up from 29 the previous week. Sentiment has stayed cautious for several weeks, with readings of 33 on 9/11, 42 on 9/4, and 54 on 8/28, after briefly reaching 65 (Greed) on 8/14 and 64 (Greed) on 8/7. Overall, the readings show a notable shift from Greed in mid-August to persistent Fear through September, suggesting investor sentiment has cooled considerably even as the stock market remains near elevated levels.

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

• 7/31/26 – 42 Fear

The Quant Model Portfolios had a good week. Quant Alpha’s II increased from +73% to +76%, Quant 30 increased from +70% to 73% and Quant Legacy increased from +318% to +323%. The addition of the new Quant Dividend and Growth 25 portfolio for paid subscribers expands coverage to the Growth and Income area of the market.

Read more

• Quant Alpha’s II – Up over 76% since June 2025

• Quant 30 – Up over 73% since June 2025

• Legacy – Up over 320% since April 2023

• Education – What Happens to Different Sectors When the Fed Raises Rates?

• New Quant Dividend and Growth 25 Model Portfolio to be launched September 28, 2026.

This week, a new “Quant Dividend and Growth 25” Model Portfolio will be added to the Quant lineup. It will be for Paid subscribers. This will be a Growth and Income type of portfolio. It will have 25 stocks in it and will be reviewed and updated as needed each week. Each stock in the portfolio will pay a dividend and be highly ranked in both the Quant Factors and the Quant Dividend metrics. A separate email was sent last Friday with the criteria for this new Model Portfolio.

USA Stock market week ending 09/25/26

• SPY (S&P 500): +1.3% — The S&P 500 posted a solid gain for the week from the close of September 21 through the close of September 25.

• ^IXIC (Nasdaq Composite): +2.1% — The Nasdaq outperformed the broader market, gaining 2.1% for the week.

• DIA (Dow Jones Industrial Average): +0.3% — The Dow posted a modest weekly gain of 0.3%.

• IWM (Russell 2000): -0.7% — Small-cap stocks declined 0.7%, lagging the major large-cap indexes.

• SPMO (Invesco S&P 500 Momentum ETF): +2.7% — Momentum stocks led the major benchmarks, with SPMO gaining 2.7% for the week.

Market Drivers this Week (09/28/26 – 10/02/26)

• Tuesday, 9/29 — Labor Market:JOLTS Job Openings for August is due at 10:00 AM ET, providing another look at labor-market demand ahead of Friday’s employment report.

• Wednesday, 9/30 — Q2 GDP Third Estimate and August Personal Income & Outlays, including the PCE price index, are scheduled for 8:30 AM ET. Micron (MU) reports fiscal Q4 results after the market close, making its outlook for AI-driven memory demand a key focus for investors.

• Thursday, 10/1 — ISM Manufacturing PMI for September and weekly initial jobless claims will provide fresh readings on economic and labor-market conditions.

• Friday, 10/2 — The September Employment Situation report, including nonfarm payrolls and the unemployment rate, arrives at 8:30 AM ET and will be the week’s major economic release.

The CNN Fear & Greed Index

The CNN Fear & Greed Index remained firmly in Fear territory, ending the week of September 25 at 37, up from 29 the previous week. Sentiment has stayed cautious for several weeks, with readings of 33 on 9/11, 42 on 9/4, and 54 on 8/28, after briefly reaching 65 (Greed) on 8/14 and 64 (Greed) on 8/7. Overall, the readings show a notable shift from Greed in mid-August to persistent Fear through September, suggesting investor sentiment has cooled considerably even as the stock market remains near elevated levels.

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

• 7/31/26 – 42 Fear

The Quant Model Portfolios had a good week. Quant Alpha’s II increased from +73% to +76%, Quant 30 increased from +70% to 73% and Quant Legacy increased from +318% to +323%. The addition of the new Quant Dividend and Growth 25 portfolio for paid subscribers expands coverage to the Growth and Income area of the market.

Note: You are reading the free subscriber newsletter. Paid subscribers enjoy instant access to weekly Model Portfolio updates upon release. Free subscribers get access to Portfolio updates after a four week or more delay. Want timely access to the new Adds/Removes?

Subscribe now

Model Portfolio Quant Alpha’s II

Any newly added stock is being released to Paid Subscribers today. This Portfolio continues to significantly outperform its benchmark, 76% versus 19%. It has 29 members.

Model Portfolio Quant 30

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to beat its benchmark by a wide margin, 73% to 19%. It has 30 members in it.

Model Portfolio Dividend and Growth 25

Start date of September 28 for Paid Subscribers. The Quant scorecard will show the results along with the other Model Portfolios. A separate email was sent on September 25 detailing the criteria for this portfolio. A link to the criteria is below labeled “Model Portfolio Quant Dividend and Growth 25”.

Model Portfolio Quant Alpha’s – Legacy

The portfolio is up over +320% since it began in 2023. It has 17 stocks in it. Powell industries is now a 9 bagger. Celestica is now a 14 bagger

Model Portfolio Quant Top Stocks

This new Portfolio adds one new stock a week. A separate email is sent on Thursday morning detailing the selection and a shallow dive on the pros and cons of the stock and the criteria used for the Portfolio.

This Model Portfolio will be converted to a permanent member of the lineup in the coming weeks. Stay tuned for updates.

This Model Portfolio will remain in the free newsletter.

Add: AMZN (Amazon.com) – Internet Retail

Performance to 09-25-2026

What Happens to Different Sectors When the Fed Raises Rates?

A Federal Reserve tightening cycle changes the financial environment for every company, but not in the same way. Higher short-term rates can pressure valuations and borrowing costs, while some businesses may benefit from stronger pricing, higher interest income, or favorable economic conditions.

History shows there is no universal “winner” or “loser” sector during rate-hiking cycles. Performance depends heavily on the reason for the hikes, the speed of tightening, economic growth, inflation, and what investors have already priced into stocks.

Financials: A Benefit That Is More Complicated Than It Looks

Banks can benefit from higher rates because yields on loans and other interest-earning assets can increase. But the Federal Reserve’s research shows that the impact on net interest margins (NIMs) is not automatically positive; deposit costs, loan competition, the yield curve, and funding mix all matter.

In fact, during several historical tightening cycles, aggregate bank NIMs were flat or declined modestly as funding costs rose and yield curves flattened.

Energy and Materials: More About Inflation and Demand

Energy and materials can benefit when rate hikes occur alongside strong commodity demand and elevated inflation. But these sectors are driven primarily by commodity prices, supply conditions and global economic activity, so their performance cannot be attributed to Fed policy alone.

The 2022 tightening cycle is a useful example of why this matters: the energy sector benefited from unusually strong commodity prices even as higher rates pressured many other parts of the equity market.

Quality Technology: Not All Tech Is the Same

Higher interest rates generally place greater pressure on stocks whose valuations depend heavily on earnings far in the future. But profitable technology companies with strong cash flow and large cash balances can be much less vulnerable than highly speculative, debt-dependent businesses.

The key distinction is valuation and balance-sheet quality, not simply whether a company is classified as “technology.”

Utilities: Higher Yields Create Competition

Utilities are often viewed as bond-like investments because investors value their relatively stable cash flows and dividends. When Treasury yields rise, those dividends can become less attractive relative to newly available government bond yields.

Federal Reserve materials from the 2004–2006 period show that utilities and REITs were among the interest-rate-sensitive areas that came under pressure when long-term yields rose.

Real Estate and REITs: Higher Financing Costs Matter

Real estate is particularly sensitive to interest rates because property values and investment returns are closely tied to financing costs and capitalization rates. Higher borrowing costs can also make refinancing more expensive.

Federal Reserve analysis has documented periods when higher long-term yields pressured REITs and other interest-rate-sensitive assets.

Unprofitable Growth: Usually the Most Rate-Sensitive

Companies with little or no current earnings can be especially sensitive to higher discount rates because much of their perceived value rests on cash flows expected years in the future. When discount rates increase, those future cash flows become less valuable in today’s dollars.

That doesn’t mean every growth stock falls during a tightening cycle, but high valuations combined with weak profitability can create a particularly fragile setup.

The Most Important Variable: Why the Fed Is Raising Rates

This may be the most important point for investors.

A gradual tightening cycle during a strong expansion is very different from an aggressive series of hikes designed to suppress persistent inflation. Federal Reserve research shows tightening cycles can produce very different financial conditions depending on their pace and economic backdrop.

The Fed’s historical work also found that stock prices initially reacted negatively around the 1994 and 2004 tightening episodes but subsequently stabilized and recovered as economic conditions improved.

The Takeaway

Rather than simply asking “Which sectors perform best when rates rise?”, investors should ask four questions:

How fast are rates rising?
Why are they rising?
How strong is economic growth?
How much of the rate increase is already priced into stocks?

The historical record suggests that financials can benefit but aren’t guaranteed winners; energy can benefit when commodity conditions are favorable; quality, cash-rich companies can be more resilient; while utilities, REITs and highly speculative growth stocks tend to face greater interest-rate sensitivity. Those are tendencies, not rules.

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All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

This Model portfolio will be made up of 25 stocks that aim to provide both an increase in share price over time (growth) and regular cash payouts through dividends (income).

One of the Quantitative research platforms that I use, provides a daily list of top buys, ranked according to a proprietary Quant Score. The stocks are also ranked by Dividend specific metrics on that website

The Quant Dividend and Growth 25 is being included with the other Model Portfolio’s and will be updated in the same weekly paid newsletter on Monday mornings.

On September 28, 2026 the 1st 10 stocks will be added to the Model Portfolio. On October 5, 2026 another 10 stocks will be added. On October 12, 2026 the remaining 5 stocks will be added.

• All Countries are allowed. They must trade in the USA.

• Liquidity constraints are used to only select investable stocks.

• Must be ranked at least a Buy for many days before selected.

• The stock must pay a dividend and have a high Quant dividend ranking.

• Twenty five stocks are in the Portfolio and all will be added equal weight.

• Once a week, Adds and Removes are applied against the Portfolio. This will result in a large amount of turnover. I estimate one stock a week. Some weeks will have no changes and other weeks will have multiple changes.

• No rebalancing of stocks.

• Remove at the next update: if the stock no longer has a Buy ranking for a number of days or the dividend metrics worsen significantly.

• Remove right away – if a hard Sell signal is received. A replacement will be announced at the same time.

• Remove at the next update: if the stock is involved in a merger, fails to meet filing requirements or cuts its dividend.

• The benchmark index to be used is Vanguard High Dividend Yield Index Fund ETF (VYM).

Backtest: The Quant research platform has a similar Model Portfolio they have backtested from 2015 to 2025. They quote results over that time period as +502% for their Model Portfolio and +203% for the VYM ETF. I am using the same basic concepts that are known to their subscribers and making some changes that I feel will improve the results.

Since my criteria does not match their criteria in all aspects, the performance of this Model Portfolio will differ from theirs over time. Significant differences: 1. Weekly updates instead of once over several weeks. 2. Updates on Monday instead of later in the week. 3. A slower start to populate the portfolio to avoid scraping the bottom of the barrel at the beginning. 4. Twenty five stocks in the portfolio. 5. Proprietary changes in the Buy criteria to improve selection. 6. No rebalancing and no dividend reinvestment. 7. If a stock is removed for cause during the week, a replacement will be announced at the same time, not later. 8. No Pink Sheet stocks will be added.

Dividends will be counted for both the added stocks and the Benchmark Index. At year end, all dividends will be added to the total return for each security in the Active list and the Benchmark. The dividends are not used to buy additional shares. When stocks are moved to the Closed list, the dividends will be brought up to date for that stock at that time.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

What does the company do?

Amazon.com (AMZN) operates a global e-commerce, cloud computing, advertising, and subscription business through three main segments: North America, International, and Amazon Web Services (AWS). The company sells a wide range of products through online and physical stores, including merchandise from third-party sellers, and offers devices such as Kindle, Fire TV, Echo, Ring, Blink, and eero. Amazon also provides digital content and publishing platforms for authors, musicians, filmmakers, developers, and other creators. AWS provides cloud services including computing, storage, databases, analytics, artificial intelligence, and machine learning, while advertising and Amazon Prime provide additional major revenue streams. Founded in 1994 and headquartered in Seattle, Washington.

Why Some Investors Are Bullish

• AWS growth has accelerated significantly — Amazon Web Services revenue increased 37% year over year to $42.2 billion in Q2 2026, its fastest growth in 18 quarters. AWS operating income rose 64% to $16.6 billion, highlighting the profitability of Amazon’s cloud and AI infrastructure business.

• AI is creating a major new growth opportunity — Demand for AI infrastructure is driving substantial investment across AWS, including Amazon’s Trainium and Graviton chips. Amazon has also reported a substantial AWS backlog, providing visibility into future cloud revenue.

• Advertising and higher-margin businesses remain important growth drivers — Amazon’s advertising operation continues to expand alongside AWS, while its custom-chip business has also been growing rapidly. These businesses can help diversify Amazon beyond its traditionally lower-margin retail operations.

• Strong long-term investment in AI infrastructure — Amazon now expects approximately $220 billion of capital expenditures in 2026, primarily reflecting investment in AI and cloud infrastructure. While the spending is substantial, management expects these investments to support long-term growth and returns on invested capital.

• Multiple potential growth engines — Amazon combines e-commerce, AWS, advertising, Prime, AI infrastructure, custom chips, robotics and other emerging businesses. Recent market commentary has also remained constructive.

What Bears Are Worried About

• Massive capital spending creates execution risk — Amazon’s roughly $220 billion 2026 capex plan represents an enormous commitment to AI and cloud infrastructure. The investment could generate substantial future returns, but investors will be watching closely to see whether the additional spending produces sufficient revenue and profit growth.

• Free cash flow is under pressure from AI investment — Amazon generated $139.5 billion of operating cash flow in 2025, but trailing free cash flow fell to $11.2 billion as spending on property and equipment increased sharply. The company’s AI buildout could therefore keep reported free cash flow under pressure even as operating earnings grow.

• Regulatory and legal risks remain significant — Amazon continues to face regulatory scrutiny. In August 2026, the FTC and 18 states filed a new case alleging Amazon used anticompetitive practices involving its advertising business, while a separate FTC matter involving Prime resulted in a $2.5 billion settlement and ongoing consumer payments.

Why the Quants like this stock

PEG Non-GAAP (FWD) B 0.93
Revenue Growth (FWD) A- +14.11%
EPS FWD Long Term Growth (3-5Y CAGR) A- +20.78%
ROE Growth (YoY) B+ 23.37%
Return on Common Equity (TTM) A- +30.56%
3M Price Performance A- +6.48%
FY1 Up Revisions (last 90 days) 48 Up 0 Down

Latest Quarter’s Earnings
Announce Date 7/30/2026
EPS GAAP Actual $5.75 (Beat by $3.92)
EPS Normalized Actual $5.75 (Beat by $3.93)
Revenue Actual $200.61B
Revenue Surprise Beat by $3.99B

My View

Amazon’s investment story increasingly revolves around AWS, AI infrastructure, advertising and custom silicon, rather than e-commerce alone. The key issue for investors is whether the company’s enormous AI capital expenditures ultimately translate into sufficiently strong revenue, earnings and free-cash-flow growth. With AWS accelerating but capital spending reaching extraordinary levels, execution and return on invested capital will be important metrics to watch over the next several quarters.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Selection for this week

• Some Pros about the stock

• Some Cons about the stock

• Why the Quants like this stock

• Criteria for choosing

• The previous selections

The momentum stocks in the portfolio as a group were up since last Thursday. This makes the 19th stock to be added to the portfolio since it began on 5/20/26. I plan to convert this portfolio to a permanent one on my website in the near future. Stay tuned for details in the coming weeks.

Add: AMZN (Amazon.com) – Internet Retail

What does the company do?

Amazon.com (AMZN) operates a global e-commerce, cloud computing, advertising, and subscription business through three main segments: North America, International, and Amazon Web Services (AWS). The company sells a wide range of products through online and physical stores, including merchandise from third-party sellers, and offers devices such as Kindle, Fire TV, Echo, Ring, Blink, and eero. Amazon also provides digital content and publishing platforms for authors, musicians, filmmakers, developers, and other creators. AWS provides cloud services including computing, storage, databases, analytics, artificial intelligence, and machine learning, while advertising and Amazon Prime provide additional major revenue streams. Founded in 1994 and headquartered in Seattle, Washington.

Why Some Investors Are Bullish

• AWS growth has accelerated significantly — Amazon Web Services revenue increased 37% year over year to $42.2 billion in Q2 2026, its fastest growth in 18 quarters. AWS operating income rose 64% to $16.6 billion, highlighting the profitability of Amazon’s cloud and AI infrastructure business.

• AI is creating a major new growth opportunity — Demand for AI infrastructure is driving substantial investment across AWS, including Amazon’s Trainium and Graviton chips. Amazon has also reported a substantial AWS backlog, providing visibility into future cloud revenue.

• Advertising and higher-margin businesses remain important growth drivers — Amazon’s advertising operation continues to expand alongside AWS, while its custom-chip business has also been growing rapidly. These businesses can help diversify Amazon beyond its traditionally lower-margin retail operations.

• Strong long-term investment in AI infrastructure — Amazon now expects approximately $220 billion of capital expenditures in 2026, primarily reflecting investment in AI and cloud infrastructure. While the spending is substantial, management expects these investments to support long-term growth and returns on invested capital.

• Multiple potential growth engines — Amazon combines e-commerce, AWS, advertising, Prime, AI infrastructure, custom chips, robotics and other emerging businesses. Recent market commentary has also remained constructive.

What Bears Are Worried About

• Massive capital spending creates execution risk — Amazon’s roughly $220 billion 2026 capex plan represents an enormous commitment to AI and cloud infrastructure. The investment could generate substantial future returns, but investors will be watching closely to see whether the additional spending produces sufficient revenue and profit growth.

• Free cash flow is under pressure from AI investment — Amazon generated $139.5 billion of operating cash flow in 2025, but trailing free cash flow fell to $11.2 billion as spending on property and equipment increased sharply. The company’s AI buildout could therefore keep reported free cash flow under pressure even as operating earnings grow.

• Regulatory and legal risks remain significant — Amazon continues to face regulatory scrutiny. In August 2026, the FTC and 18 states filed a new case alleging Amazon used anticompetitive practices involving its advertising business, while a separate FTC matter involving Prime resulted in a $2.5 billion settlement and ongoing consumer payments.

Why the Quants like this stock

PEG Non-GAAP (FWD) B 0.93
Revenue Growth (FWD) A- +14.11%
EPS FWD Long Term Growth (3-5Y CAGR) A- +20.78%
ROE Growth (YoY) B+ 23.37%
Return on Common Equity (TTM) A- +30.56%
3M Price Performance A- +6.48%
FY1 Up Revisions (last 90 days) 48 Up 0 Down

Latest Quarter’s Earnings
Announce Date 7/30/2026
EPS GAAP Actual $5.75 (Beat by $3.92)
EPS Normalized Actual $5.75 (Beat by $3.93)
Revenue Actual $200.61B
Revenue Surprise Beat by $3.99B

My View

Amazon’s investment story increasingly revolves around AWS, AI infrastructure, advertising and custom silicon, rather than e-commerce alone. The key issue for investors is whether the company’s enormous AI capital expenditures ultimately translate into sufficiently strong revenue, earnings and free-cash-flow growth. With AWS accelerating but capital spending reaching extraordinary levels, execution and return on invested capital will be important metrics to watch over the next several quarters.

Top Quant Stock of the Week Criteria

I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.

I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.

One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.

The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.

All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.

Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.

The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.

Once a stock has been added to the Active list, it will not be added to. No doubling down.

The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.

It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.

All stocks are added as equal weight. No rebalancing is to occur.

To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.

Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.

There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.

Previous Selections:

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• What does the company do?

• Why Some Investors Are Bullish

• What Bears Are Worried About

• Why the Quants like this stock

• My View

What does the company do?

Micron Technology develops and manufactures memory and storage semiconductor products worldwide. Its portfolio includes DRAM, NAND, high-bandwidth memory (HBM), solid-state drives, and other memory solutions used in data centers, PCs, smartphones, networking, automotive, and industrial applications. Micron sells its products under the Micron and Crucial brands and serves customers through direct sales, distributors, retailers, and other partners. Founded in 1978 and headquartered in Boise, Idaho, Micron is a major supplier of memory technology for the growing AI and data-center markets.

Why Some Investors Are Bullish

• Record Q3 results — Micron reported $41.46 billion in revenue, compared with $9.30 billion a year earlier. GAAP EPS was $24.67, while non-GAAP EPS reached a record $25.11. GAAP gross margin surged to 84.6%, versus 37.7% a year earlier.

• AI is driving exceptional demand — Micron said HBM4 had entered high-volume shipments for its lead customer’s platform, while qualification samples had been shipped to additional customers. The company also highlighted strong demand across its data-center memory and storage businesses as AI workloads require substantially more memory.

• Q4 guidance points to another record quarter — Micron expects fiscal Q4 revenue of approximately $50 billion ± $1 billion, with non-GAAP EPS of $31.00 ± $1.00 and gross margin of approximately 86%. If achieved, that would represent another substantial sequential increase from Q3.

• Cash generation and the balance sheet have strengthened significantly — Micron generated a record $25.4 billion of operating cash flow and $18.3 billion of free cash flow in Q3. It ended the quarter with $30.2 billion of cash and investments, $5.7 billion of debt and $24.4 billion of net cash.

• Multi-year customer agreements could improve visibility — Micron said it has entered into strategic customer agreements that it expects to enhance the durability and predictability of its financial performance. At the same time, the company is investing heavily in additional technology and manufacturing capacity to meet expected demand.

What Bears Are Worried About

• Expectations are extremely high heading into September 30 — After an extraordinary increase in revenue, earnings and margins, investors are likely to focus heavily on whether Micron can meet or exceed its already aggressive Q4 outlook. Any indication that demand, pricing or margins are beginning to moderate could have a significant effect on the shares.

• Memory remains a cyclical business — Micron’s current 84%+ gross margins are extraordinary compared with its historical results. Memory pricing and profitability can change rapidly when supply and demand move out of balance, so today’s exceptional margins should not automatically be viewed as a permanent baseline.

• Capacity expansion carries execution risk — Micron is investing at record levels to expand technology and manufacturing capacity while trying to keep pace with AI-related demand. If industry demand ultimately grows more slowly than expected, the resulting increase in supply could put pressure on pricing and margins. Management itself has emphasized the need for substantial investment to address customer demand.

Why the Quants like this stock

P/E Non-GAAP (FWD) A- 13.83
PEG Non-GAAP (FWD) A+ 0.08
Revenue Growth (FWD) A+ 113.85%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 176.11%
ROE Growth (FWD) A+ 260.71%
Return on Common Equity (TTM) A+ 66.64%
1Y Price Performance A+ 501.46%
FY1 Up Revisions (last 90 days) 32 Up and 1 Down

Latest Quarter’s Earnings
Announce Date 6/24/2026
EPS GAAP Actual $24.67 (Beat by $3.65)
EPS Normalized Actual $25.11 (Beat by $4.42)
Revenue Actual $41.46B
Revenue Surprise Beat by $5.64B

My View

Micron enters its September 30 earnings report with extraordinary momentum: record revenue, record cash generation, very high margins, strong AI-related demand and an exceptionally strong balance sheet. The bigger question for investors is no longer simply whether Micron is benefiting from the AI memory boom, but how long the current combination of pricing, demand and margins can remain at these unusually high levels.

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.

• Quant Alpha’s II – Up over 73 since June 2025

• Quant 30 – Up over 70% since June 2025

• Legacy – Up over 310% since April 2023

• Changes to the main Quant Portfolios

• Top Quant Stocks – Top three Sectors, Top stock in each + Bonus scan: 6 smart Growth and Income stocks for a High-Yield market – by a top Quant Analyst

• Education – What Happens to Different Sectors When the Fed Raises Rates?

• New Quant Dividend and Growth 25 Model Portfolio to be launched on September 28, 2026.

On September 28 a new “Quant Dividend and Growth 25” Model Portfolio will be added to the Quant lineup. It will be for Paid subscribers. This will be a Growth and Income type of portfolio. It will have 25 stocks in it and will be reviewed and updated as needed each week. Each stock in the portfolio will pay a dividend and be highly ranked in both the Quant Factors and the Quant Dividend metrics.

USA Stock market week ending 09/18/26

• SPY -0.1% — The S&P 500 finished the week essentially flat, slipping 0.1%.

• DIA -1.7% — The Dow posted the weakest performance among the major indexes, declining 1.7%.

• ^IXIC +0.7% — The Nasdaq Composite gained 0.7%, outperforming the broader market.

• IWM -1.5% — The Russell 2000 fell 1.5%, reflecting weakness among small-cap stocks.

• SPMO +0.6% — The Invesco S&P 500 Momentum ETF gained 0.6%, showing modest strength among momentum stocks.

Market Drivers this Week (09/21/26 – 09/25/26)

• Tuesday 9/22: The Richmond Fed Manufacturing Index provides a regional read on factory activity. Fed officials are also scheduled to speak, keeping monetary policy and the rate outlook in focus.

• Wednesday 9/23: September flash S&P Global PMIs for manufacturing, services and the overall economy provide an early look at economic momentum. Treasury-market activity and additional Fed commentary could also influence yields and stocks.

• Thursday 9/24: Investors turn to weekly jobless claims and other economic data, while corporate earnings and Treasury-market moves remain important for market direction.

The CNN Fear & Greed Index continued to signal increasing investor caution, falling to 29 (Fear) on 9/18/26, down from 33 (Fear) on 9/11 and 42 (Fear) on 9/4. Overall, the data shows a clear shift from Greed in mid-August to Fear by mid-September, indicating a significant deterioration in market sentiment over the six-week period.

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

• 8/14/26 – 65 Greed

• 8/7/26 – 64 Greed

• 7/31/26 – 42 Fear

• 7/24/26 – 39 Fear

The Quant Model Portfolios had a largely flat week with Quant Alpha’s II up 73% and Quant 30 up 70% from their start date last year. Quant Alpha’s legacy is up 318% from its start date in 2023.

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