Research Roundup: April 03, 2025

Names in the News: AAL & MAR

First, we look at American Airlines Group Inc. (AAL, rated ‘Overweight’). The firm was recently upgraded to ‘Overweight’ in the PRV framework, led by strong Quality and supported by relatively cheap Valuations since the recent sell-off. We also look at Marriott International, Inc. (MAR, rated ‘Overweight’). The firm was downgraded to ‘Overweight’ this week amidst a backdrop of very high Valuations.

Industry Snapshot: Global Household Durables

PRV Fundamentals remain pressured at the aggregate level, with the industry destroying incremental value and economic profitability barely remaining positive. Large cap firms in the industry look relatively attractive within the PRV framework, with strong levels of Risk-Adjusted Profitability. Embedded growth expectations are at historically elevated levels as the market prices in a recovery in PRV Fundamentals as they potentially approach closer to a bottom. We view the industry as offering stock-picking opportunities.

Industry Snapshot: Global Technology Hardware, Storage, & Peripherals

PRV Fundamentals saw a significant improvement through 2024, with all three underlying PRV drivers moving favourably. Incremental PRV growth inflected positively in June last year, driven by strong top-line growth and favourable expansion in the EBITDA Margin. Embedded growth expectations remain at very high levels compared to history, which makes us somewhat cautious at this stage, despite relatively strong levels of Profitability.

Russell 1000 Value Index: Dissecting Value

A few times each year, we re-visit the Russell 1000 Growth and Value Indexes to identify names that do not look like high growth or cheap value. The report contains two screens: expensive names in the index and cheap names underweight in the index.

Russell 1000 Growth Index: Dissecting Growth

In this report, we use the Profitability Trend (P2) factor to identify low-growth names in the index and high-growth names that were not in the index. Our last Russell 1000 growth report was done in July 2024, the month after the summer rebalance. This report contains two screens: low-growth names in the index and high-growth names that are underweight in the index.

The weekly research reports allow investors to parse through thousands of companies globally with comparable accounting adjustments to drive informed investment decision-making on a systematic basis. Each week we produce 5-7 timely and actionable reports to highlight key themes, trends, and opportunities from the framework.