Sunday Market Prep (#1)

Highlighting some opportunities on my radar

Dear Reader,

Thank you for helping me reach over 1,000 subscribers! I appreciate your attention and time, and I try to make every post worthwhile.

I’m going to call out some potential opportunities on my radar as I prep for the week ahead. I’m thinking this could develop into a weekly post and I could move Limestone Digest to a quarterly cadence.

1. GES 0.00%↑ — Before the tariffs, Guess received a non-binding offer for $13 a share. There was also a rumor that Authentic Brands is considering a competing offer. Guess is a global company with 51% of TTM revenue in Europe, where their modest growth has been focused, largely attributable to Germany in particular. With a cost basis in low-$11’s, I am long a 4% position into this week’s earnings.

2. WEN 0.00%↑ — Is Wendy’s stock capitulating? Wendy’s now trades at an 8.2% earnings yield using the lowest street estimates. The current stock price is a 12% discount to the lowest street target price. I believe this is an attractive short-term setup and I am long a ~1.5% position.

3. ISSC 0.00%↑ — I did some research on the F-16 fighter jet, which ISSC 0.00%↑ purchased key product lines for from Honeywell last year. In short, I think it’s pretty reasonable to assume that the F-16 will remain relevant for decades to come. The F-35 is a fancy newer jet, but the F-16 remains the reliable, economic option, moated by its own network effect from having already reached a critical mass of supply chain, maintenance training/capacity, etc. Given the spectacular results of last quarter, I am long a 4%+ position with my sights on substantial long-term upside.

4. CRI 0.00%↑ — Surely it’s worth looking out for a bottom here on this dividend cut blowout? The street now forecasts Carter’s earning only $100mm per year for the foreseeable future, down from $250mm+ pre-pandemic. Management has preserved a strong balance sheet. I’ll be on the lookout for a sub-$1bb market cap as a potential buying opportunity.

Was this worthwhile? Would you like to see market commentary/notes as well next time? I encourage you to comment with any feedback.