Keep Your Eyes Peeled For Opportunities

We’re smack-dab in the middle of the most important week of third-quarter earnings reporting. Over one-third of S&P 500 companies report this week. That includes Microsoft (MSFT) and Alphabet (GOOGL), which will report after market close today.

If this earnings season is going to finally get investors even a little bit excited, this is the week.

It hasn’t been all bad news. Companies like Chevron (CVX) and Pfizer (PFE) have found new 52-week highs. But so far in October, more stocks on the NYSE have hit new 52-week lows than highs.

The CNN Fear and Greed Index was stuck all the way in extreme fear last week, a level it hasn’t seen since the beginning of April. Back then, earnings season catapulted that sentiment all the way back to greed. This time, we’re just creeping back to fear.

There’s a cooling off in the numbers we’re seeing. Companies are still reporting earnings surprises, but the magnitude is lower than we’ve seen in recent quarters. Markets are showing signs of rotation. Investors are acknowledging that the tech sector might contain risks of excessive capital spending and slowing revenue growth. And that it might be time for more defensive assets.

Some investors will rotate out of tech and into Treasuries. If you haven’t been paying attention, those yields are up to 4.5% for short-term and over 5% for the 30-year. If you’ve got some money you want to park for just a few months, this can be a great option.

But long term, you know I want my 5% plus capital gains. And I think those opportunities are on their way.

Quick Stock Screen

I don’t have a favorite stock screener, and instead bounce around between my brokerage account, self-made spreadsheets, and some sites with their own ratings system.

Most basic screens can be done right inside your brokerage account. This is usually the best place to work, because if you find an opportunity, you can easily click buy. And most brokers let you set up a watch list—again, making it easy to pull the trigger when you get a buy signal.

I try not to get overly complicated with my screens. I would rather have a larger number of results to look through. Right now, I’ve been using just three parameters:

1. Dividend Yield > 4.5% because I want to at least compete with short-term Treasuries.

2. Hit a new 52-week low sometime in October because I want to get a bargain price.

3. Stocks on major US exchanges because this weeds out most low-volume stocks and OTC.

Those three handed me a list of 161 stocks, which I then sorted by sector because that’s what makes the most sense to me. Again, I like more rather than fewer results. You could easily add a payout ratio parameter to weed out anything paying over 100% of earnings. Or you could add your favorite valuation metric such as price/earnings or price/book. This would be a more accurate screen for a “bargain” than just a new low price.

So, What Did I Find?

Here are a few companies that I’m keeping an eye on right now.

First up, Hess Midstream (HESM). Shares of HESM slid over 16% earlier this month when Chevron announced it would transfer its ownership stake in Hess Midstream back to the company in exchange for $200 million in cash. Chevron acquired this ownership interest as part of its acquisition of Hess Corp. (HES). The deal saves Chevron a lot of money in midstream costs, which come out of HESM’s revenue.

This is going to be a hit to HESM’s 2027 numbers. Its EBITDA guidance for the full-year 2026 is $1.22-$1.25 billion versus preliminary guidance for 2027 of just $850-$950 million. The company also plans to hold its 2027 quarterly distribution flat, which will be a big change for investors who are used to a steadily rising payout.

Could this be a great turnaround story with a 9.9% yield? I’ll be digging deeper into its earnings numbers released this Friday.

Next up, Hormel (HRL). The grocery staple giant has been stuck in a rut of sinking retail sales and volumes. It’s currently selling off businesses, which could improve margins over the long run but impact sales in the short run.

Plus, there’s a whole new team at the helm. We don’t know whether that’s a good thing, or if we will simply see more of the same that got the company into its latest struggles. We’re getting some glimpses of a turnaround story, but I’m not convinced just yet.

Finally, VICI Properties (VICI) is on that list as it hit a new 52-week low on October 5. REITs are getting hit across the board as money rotates away from them and into more risk-free options such as short-term Treasuries. REITs primarily make money on the spread between their borrowing costs and their lease revenues.

Most commercial leases are for periods of several years, if not decades. In today’s higher-rate environment, it means they will have to generate new leases at higher lease rates to maintain their spreads. VICI is still one of my favorite REITs, and I’ve been adding to my position on dips, especially now that its current yield is over 7.5%.

I’ve got my cash ready, and I hope you do too. I think this last quarter is going to hand us more new buying opportunities than I’ve seen all year. So, keep your eyes peeled.