Alibaba Group Holding recently reported a 36% price increase over the last quarter, a period marked by significant events that likely influenced investor sentiment. Central to this was the company’s buyback program update, with Alibaba repurchasing 51 million shares, representing 2.2% of shares outstanding, indicating strong shareholder return initiatives. This move coincided with robust third-quarter earnings growth, where net income surged significantly, which may have bolstered investor confidence. Despite broader market turbulence due to U.S.-China trade tensions affecting tech stocks, Alibaba’s performance and strategic financial activities appeared to add positive momentum, aligning it favorably with general market gains.

The 36% price increase in Alibaba’s shares over the last quarter reflects a positive investor response to the company’s shareholder return initiatives like the repurchase of 51 million shares, representing 2.2% of shares outstanding. This shareholder-friendly move adds upward momentum to the stock, particularly if we consider last year’s total shareholder return of 64.76%, inclusive of share price and dividends. Evaluating the longer-term context, this robust performance contrasts with Alibaba’s past five-year average annual earnings decline of 16.4%, indicating a possible turning point for the company’s financial trajectory.

The update on Alibaba’s buyback program could potentially influence analysts’ revenue and earnings forecasts. As share repurchase efforts aim to reduce share count and enhance shareholder value, they can positively affect earnings per share (EPS) calculations. Furthermore, anticipated investments in AI and cloud services are expected to bolster Alibaba’s revenue and margins over the long term. However, these high investments and competitive market pressures could affect free cash flow and margin growth. Currently, Alibaba’s share price trades with a considerable discount to the consensus price target of US$162.79, suggesting room for further appreciation if the projected growth materializes.

Additionally, Alibaba’s one-year return of 64.76% significantly outpaced the US Multiline Retail industry, which returned 3.4% over the same period. This contrasting performance could emphasize Alibaba’s relative strength in the market, reinforcing positive sentiment among investors, provided the revenue and earnings growth expectations align with reality. Although Alibaba is trading below the analyst community’s consensus price target, aligning with a potential 30% upside, careful evaluation of the revenue and earnings assumptions underlying these projections is essential for a well-rounded assessment.

Wipro ADR: American Depository Receipt (ADR) shares of India’s fourth-largest IT services company witnessed a drop on the New York Stock Exchange (NYSE) after declaring its January-March quarter results for fiscal 2024-25 (Q4FY25). Wipro ADR last rose 3.19 per cent to $2.73 on the American stock exchange after the IT major forecast a weak Q1 quarter of FY26 amid global uncertainty triggered by US President Donald Trump’s tariff policies.

US-listed shares of Wipro fell five per cent at $2.71 in premarket trading after the IT major said it expects revenue in the April–June quarter to fall between 1.5 per cent and 3.5 per cent. ADR is a tool for foreign companies or organisations to trade on US stock markets, just like regular shares of US companies. In theory, an ADR is similar to a special certificate issued by a US bank.

Bank of America recently reported impressive first-quarter earnings, with net income rising to $7.4 billion and EPS increasing to $0.90. This robust financial performance likely played a role in the company’s 3% price increase last week, aligning with strong market trends that saw bank stocks lift the indexes. Despite ongoing trade tensions with China affecting some sectors, the financial sector showed resilience, with banks like Citigroup also reporting positive results. The broader market gained momentum, led by tech and bank stocks, possibly reinforcing confidence in BAC’s positive earnings surprise and enhancing its share value.

The recent robust earnings report from Bank of America, with net income reaching US$7.4 billion and EPS at US$0.90, not only contributed to a 3% rise in the share price last week but also aligns with the company’s narrative surrounding organic loan and deposit growth, as well as digital strategy advancements. Over the past five years, shareholders have experienced a total return of 84.54%, reflecting a significant performance considering the broader market conditions. However, over the past year, Bank of America has lagged behind the US Banks industry, which experienced a return of 11.7%, indicating recent challenges despite long-term gains.

The positive earnings announcement is anticipated to impact future revenue and earnings forecasts favorably, reinforcing expectations for record net interest income and revenue growth as previously stated. With earnings expected to grow to US$31.7 billion by 2028, analysts have set a consensus price target of US$50.02, suggesting approximately 30% upside from the current share price of US$35.03. Despite the current price trailing behind the target, the emphasis on digital capabilities and client solutions, alongside measured strategies in wealth management and investment banking, fortifies the analysts’ positive outlook, providing context for future growth potential.

General Mills: 4%+ Dividend Yield and Undervaluation Make It Attractive

General Mills Inc. (NYSE:GIS) is a market leader in packaged food, especially cereals, flour, dough, snacks, and pet food. The company is also an interesting dividend growth stock. The dividend yield is over 4%, the dividend safety is acceptable, and General Mills has a 6-year dividend growth streak, making it a Dividend Challenger. Even though leverage is higher than desired, the undervaluation is attractive. Hence, I view General Mills as a buy.

Overview of General Mills

General Mills, Inc. traces its history back to 1856. Today, it operates in four business segments: North American Retail, International, Pet, and North American Foodservice. The food conglomerate is a primary player in grocery stores, big box stores, convenience stores, and food service for restaurants. It owns numerous iconic brands like Cheerios, Betty Crocker, Pillsbury, Gold Medal, Cascadian Farms, Annie’s, Old El Paso, Nature Valley, Blue Buffalo, Wheaties, etc.

Total revenue was over $19,857 million in the fiscal year 2024 and $19,644 million in the last twelve months (“LTM”). The company’s fiscal year ends on the last Friday in May.

Revenue and Earnings Growth

The firm announced mixed third-quarter fiscal year 2025 results on March 19^th, 2025, beating earnings consensus but missing revenue estimates. Revenue fell 5.1% to $4,842 million from $5,099, missing forecasts by ~$111 million. Revenue declined because of lower snacking food sales and retailer inventory reduction. All segments experienced a decline or were flat except Food Service. Certain businesses gained, such as Pillsbury refrigerated dough and Totino’s, but their gains were more than offset by decreases in other product lines. Diluted adjusted earnings per share (“EPS”) of $1.00 were ahead of estimates by $0.04 on slightly higher margins. A somewhat lower diluted share count was a tailwind.

The share price declined based on the results and the FY 2025 guidance. The firm forecasts a 1.5% to 2% decline in organic sales in FY 2025. The share price has lost ~8.9% year-to-date (“YTD”) and ~13.7% in the past twelve months.

General Mills’s revenue has trended up from fiscal year 2015 to 2024, except for declines in FY 2016, 2017, and 2024. Revenue declined from 2016 to 2017 because of lower yogurt sales, inconsistent execution, and divesting the Green Giant brand. It is declined in 2024 because of economic conditions. However, General Mills is growing organically because of product extensions, packaging innovations, and incremental price increases offset by substantial inflationary trends in the past few years.

The company also conducts periodic M&A, which is a growth driver. It has bought several firms in the pet food and snack areas, including Blue Buffalo, Tyson’s Pet Treat brands, Fera Pets, TNT Crust, and Whitbridge Pet Brands, adding to the top line. I last wrote about General Mills when it acquired Tyson’s Pet Treat brands.

We expect the firm to continue strategic tuck-in acquisitions, especially pet food and snacks. However, the firm has also divested brands with little or no growth, like Green Giant, its international yogurt portfolio, Helper Meal, and Suddenly Salad. General Mills is also selling its North American yogurt business and may divest the Progresso brand. These business sales will have a negative impact on future revenue, but may benefit profitability. However, revenue has risen to $17.43 billion in FY 2015 from $19.86 billion in FY 2024.

Although the company should continue its long-term growth, revenue is expected to decline about 1.7% per year in FY 2025 and 1.1% in FY 2026 because of divestments and a slowing economy. Tariffs may also impact the International segment’s sales. That said, the company is trying to accelerate organic sales, conduct efficiency programs, and invest in its businesses. These activities should help grow revenue after accounting for divestments.

Adjusted EPS has increased from $2.86 in FY 2015 to $4.52 in FY 2024. EPS is expected to fall 7.4% to $4.19 in FY 2025, less than in 2024, and drop again to $4.11 in 2026 before reversing. General Mills’ share count is decreasing because of its stock repurchase program. We expect the firm to continue buying back shares aggressively. In fact, proceeds from the yogurt business divestment will probably be used to reduce the share count.

Looking forward, I expect this packaged food company to continue growing because of organic growth and selective M&A. General Mills has slowly repositioned itself in high-growth categories, and we expect acquisitions and divestments to increase the growth rate and profitability.

Recent Challenges and Risks

General Mills’s primary risk is an economic downturn that could negatively impact its customers. Many consumers are sensitive to inflation and price increases, especially in food. They tend to trade branded products for lower-cost generics to reduce spending on food staples. Also, the current administration may ban certain food additives and dyes, increasing cost pressures and lowering margins.

In terms of competition, General Mills is a market leader. However, its main competitors are equally large, with overlap in some businesses. Also, the barrier to entry is not high, and companies come out with new products routinely.

For now, we expect tariffs to have minimal impact on General Mills because most of its sales are in the United States. International sales are only about 13% of the total, with some produced in other countries.

Competitive Advantages

General Mills’s competitive advantage is in its marketing, advertising, manufacturing, and distribution scale. It is the market leader in pet food, cereal, breakfast and snack bars, dough, baking mixes, and other categories. This probably gives the company a narrow moat.

Dividend Analysis

General Mills’s decreasing share price has caused the dividend yield to climb from its 2023 low. It is greater than its 5-year average of 3.26%. The forward yield is about 4.14%, even after the recent market bounce back. This implies an undervalued equity.

General Mills is a Dividend Challenger with a 6-year streak of increases. In the past 5-years, the growth rate has been approximately 3.96%. It was similar in the past decade at about 3.99% because it was held constant after the Blue Buffalo acquisition. The moderate payout ratio of ~53% indicates more future dividend increases. We do not expect the growth rate to change much because of debt and interest payments. The firm gave investors a 9.3% quarterly increase in 2024.

The dividend is supported by acceptable safety. The forward payout ratio is moderate at 53%, based on an estimated consensus FY 2025 EPS of $4.19. This value is below my requirement of 65% or better. The ratio may increase over the next few years because of incremental dividend increases compared to flat or slightly declining EPS growth. The firm’s free cash flow (“FCF”) has declined since 2020, which was boosted because of the pandemic. It was $3,215 million in FY 2020 and fell to $2,529 million in FY 2024. That said, the FCF covered the dividend requirement of about $1,363 million. Assuming $2,500 million of FCF and $1,350 million in dividends this year because of a lower share count gives a dividend-to-FCF ratio of ~54%, well below our desired value of 70% or better.

General Mills’s balance sheet is leveraged. It carries $407 million of short-term and $1,941 million of current long-term debt. Long-term debt is $11,840 million. It holds about $521 million in cash, equivalents, and investments. As a result, the leverage ratio is 3.12X, and interest coverage is only 7.0X. General Mills also receives a BBB/Baa2 lower-medium investment grade credit rating.

Although leverage may be on the high side, investors should be assured about the safety of General Mills’s dividends. I expect payments to continue increasing in the low-single digits.

Valuation

General Mills’s current share price and anticipated EPS in 2025 have caused the valuation to decrease. It is currently at ~13.85X, well below its 5-year and 10-year ranges.

Consensus estimates for adjusted diluted earnings are $4.19 per share in fiscal 2025, $0.33 less than in 2024. We will use 17X as a reasonable, fair-value multiple in the middle of its usual range, accounting for current economic uncertainty, ad hoc tariff policies, and possible inflation. As a result, our fair value estimate is $71.23. The present share price is ~$58.76, indicating that General Mills is undervalued.

Applying a sensitivity calculation using P/E ratios between 16X and 18X, we obtain a fair value range from $67.04 to $75.42. Hence, the stock price is approximately 78% to 88% of the fair value estimate.

Estimated Current Valuation Based On P/E Ratio

Source: dividendpower.org Calculations

How does this calculation compare to other valuation models? Portfolio Insight’s blended fair value model, combining the P/E ratio and dividend yield, estimates a fair value of $73.23 per share. The two-model average is ~$72.23, indicating that General Mills is undervalued at the current price.

However, Wall Street analysts are only slightly bullish, with a price target of $62.87, 6.58% higher than the current value but less than our two-model average. Analysts are generally neutral in their ratings, with two strong buys, three buys, sixteen holds, zero sells, and one strong sell. However, the Seeking Alpha Quant system rating is a hold because of unfavorable growth, momentum, and revisions. However, valuation and profitability are favorable.

Final Thoughts

General Mills is a market leader that grows organically and by M&A. It is a large, packaged food company with a presence in many grocery store aisles and extremely well-known brands. The firm is also a market leader in multiple market segments. The combination gives it attractive characteristics despite near-term headwinds caused by inflation, tariffs, and competition. The firm’s acceptable dividend safety and streak, focus on high-growth consumer staples, and portfolio of brands are attractive. A downside is debt and leverage. However, this stock is suitable for many dividend growth portfolios, especially considering the dividend yield and valuation. I view General Mills as a buy.

Pfizer recently announced the cessation of Danuglipron’s development, an event that coincided with a 3% decline in its share price over the past week. This move was primarily due to safety concerns in clinical studies. Despite achieving key pharmacokinetic goals, the discovery of a potential drug-induced liver injury prompted Pfizer to reassess its strategy. This decision adds weight to the company’s stock performance, contrasting with broader market trends, where major indexes experienced upward movement amidst tariff-related developments and positive gains in tech sectors. Pfizer’s decision highlights the importance of rigorous safety evaluations in pharmaceutical developments.

The cessation of Danuglipron’s development could significantly influence Pfizer’s revenue and earnings forecasts moving forward. By prioritizing rigorous safety measures, Pfizer may face setbacks in accelerating R&D productivity and the associated revenue streams. This shift may lead to a more conservative approach in pipeline-driven growth expectations and could delay anticipated financial impacts from new products, potentially further pressuring revenue forecasts already impacted by legislative changes. The development halt aligns with observed market volatility around Pfizer shares, shedding light on investor concerns regarding the company’s future earning capabilities amidst evolving challenges in the pharmaceutical sector.

Over the past year, Pfizer’s total return, including dividends, was a 10.14% decline, signaling underperformance relative to both the broader market and the US Pharmaceuticals industry, which experienced negative returns of 8.6%. During this period, the company’s earnings showed considerable growth from a very low base, yet they have not matched market expectations overall. Notably, analysts have set a fair value price target of US$26.02, suggesting upside potential compared to the current share price of US$22.49. However, this assumes improvements in profit margins and financial performance that are not without risk given current operational challenges and headwinds from pricing reforms in Medicare.

US stocks edged higher on Monday as investors focused on tech’s temporary reprieve from President Trump’s tariffs.

The S&P 500 (^GSPC) trimmed bigger gains to rise a healthy 0.8%. The tech-heavy Nasdaq (^IXIC) also closed off its session high, up 0.6%. The Dow Jones Industrial Average (^DJI) was up around 0.7%, or more than 300 points.

Trump and his top advisers have sowed confusion in recent days on the future of its tariffs on China and on specific sectors. Megacap tech companies like Nvidia (NVDA) and Apple (AAPL) scored a significant victory over the weekend when it was revealed that the US had excluded smartphones, computers, and other consumer electronics from tariffs.

But on Sunday, US Commerce Secretary Howard Lutnick said that those electronics would soon be covered under levies that he said would be separate from those imposed on specific countries.

Trump himself added to the muddied message when he said in a lengthy Sunday post on social media that there was “no exception” for those products.

“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” he said.

But the initial reprieve broadly lifted the mood: Apple (AAPL) shares gained more than 2% during Monday’s session, as its smartphones, computers, and other electronic devices were set to benefit. Meanwhile, US automakers Ford (F) and GM (GM) stocks rose as Trump hinted he may also consider a carve out for upcoming auto tariffs.

Yet Wall Street remains braced for another week of potential tariff-fueled ups and downs. The major indexes had their best week since at least 2023 last week, though it came in anything but conventional fashion.

Traditional “safe-haven” assets have come in particular focus in recent days, as longer-term Treasury yields have surged while the US dollar has weakened against foreign currencies. Yields on the 10-year Treasury (^TNX) fell below 4.36% Monday, while the US dollar (DX=F) fell.

Meanwhile, investors will continue to hear from companies this week on the early impact of the tariffs. Shares of Goldman Sachs (GS) gained after the bank’s profits jumped last quarter.

US stock futures jumped Sunday evening, as Wall Street took in a weekend full of diverging messages from President Trump’s administration on its tariff policy.

Futures tied to the S&P 500 (ES=F) rose 0.8%, while those on the tech-heavy Nasdaq (NQ=F) jumped 1.3%. Dow Jones Industrial Average futures (YM=F) were up 0.4%.

Trump and his top advisers sowed confusion this weekend on the future of its tariffs on China and on specific sectors. Megacap tech companies like Nvidia (NVDA) and Apple (AAPL) scored a significant — if temporary — victory Saturday, when it was revealed that the US had excluded smartphones, computers, and other consumer electronics from tariffs.

Then on Sunday, US Commerce Secretary Howard Lutnick said that those electronics would soon be covered under levies that he said would be separate from those imposed on specific countries.

Trump himself added to the muddied message when he said in a lengthy Sunday post on social media that there was “no exception” for those products.

“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” he said.

The developments have Wall Street braced for another week of tariff-fueled ups and downs. The major indexes had their best week since at least 2023 last week, though it came in anything but conventional fashion. A historic surge upward on Wednesday — after Trump hiked tariffs on China to 145% but paused most other “reciprocal” duties — was the highlight of a week full of extraordinary volatility.

Traditional “safe-haven” assets have come in particular focus in recent days, as longer-term Treasury yields have surged while the US dollar has weakened against foreign currencies.

Meanwhile, investors this week will continue to hear from companies on the early impact of the tariffs. Big banks are set to be the focus on the early part of the week, with Goldman Sachs (GS) reporting Monday and Bank of America (BAC) and Citi (C) coming Tuesday.

We recently published a list of the 11 Cheap NYSE Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where  Vistra Corp. (NYSE:VST) stands against other cheap NYSE stocks.

On March 26, Jack Caffrey of JPMorgan Asset Management provided an analysis of market trends in a discussion on CNBC’s ‘Squawk Box’. He emphasized diversified portfolios built around different exposures during periods of volatility. Caffrey believes in the importance of ‘time in the market’ over ‘timing the market’. He highlighted the difficulty in predicting when fear or euphoria will dominate, as some of the best market days follow extreme pessimism. Caffrey also discussed the October sell-offs in 2022 and 2023, where many strategists expected further market tests at levels like 3200 or 3300 on the S&P 500. However, instead of panic selling, the market experienced rebounds in 2023 and 2024. He observed that implied volatility reached the high 20s during recent corrections, but did not indicate widespread panic.

We recently published a list of 12 Best Tech Stocks to Buy For Long-Term Investment. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other tech stocks to buy for long-term investment.

On April 1, Chris Verrone, chief market strategist at Strategas Research Partners, appeared on CNBC’s ‘Closing Bell’ to talk about his outlook on the tech sector. Verrone believes that most of the current market’s negative sentiment has already been factored into recent stock prices. He highlighted that even after the market’s decline, the VIX, and the currency and bond volatility are lower than they were during the mid-March stress period. Plus, fewer stocks are hitting new lows. He thinks that market lows are formed during periods of bad news, and the market will rally from its current level with an anticipated range of 5,900 to 5,950.

We recently published a list of the 13 NASDAQ Stocks with the Highest Upside Potential. In this article, we are going to take a look at where Microsoft Corp. (NASDAQ:MSFT) stands against other NASDAQ stocks with high upside potential.

On April 7, Dan Ives of Wedbush Securities joined CNBC’s ‘Squawk on the Street’ to discuss how the current tariff environment could impact tech supply chains. Musk’s actions and Trump’s tariffs have contributed to broad economic uncertainty, which Ives also referred to as the economic Armageddon for US tech in an earlier conversation. He expressed concern about the structural supply chain challenges posed by recent tariffs and geopolitical tensions. Ives highlighted that the US tech sector has historically maintained an edge over China but this could be wiped out if manufacturing were relocated to the US. The logistical hurdles of building manufacturing plants in the US are not negligible and it would take 4 to 5 years to establish facilities capable of sustaining production levels comparable to those in Asia.

He also acknowledged that he hasn’t downgraded major stocks like the ones in MAG7 but remains cautious. If these previously highlighted issues persist for months, Ives anticipates drastic cuts in earnings. This uncertainty surrounding tariffs could lead to lower demand for emerging technologies like AI and cybersecurity. He explained that this situation could severely impact the US tech companies and lead to broader cuts across the tech sector — potentially up to 25% in earnings. He also criticized Elon Musk’s political involvement, which he believes has caused permanent damage to his brand and customer base. He estimated a 20% demand destruction in Europe and 10% in the US.

Our Methodology

We used the Finviz stock screener to select the 13 stocks with the highest analysts’ upside potential (at least 35%) as of April 8. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).