Company Reports

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $200 billion in annual US healthcare distribution sales, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the US market.

Following impressive growth over the past decade, Old Dominion Freight Line is the second-largest US less-than-truckload carrier by revenue (after FedEx Freight) and the clear industry leader in terms of execution, freight selection, and service quality, which is no small factor for shippers. Even during the Great Recession, the company kept its head above water via impressive pricing discipline. While other carriers slashed rates dramatically, Old Dominion held firm, keeping core revenue per hundredweight flat.

Tractor Supply is the largest consumer farm specialty retailer in the United States, surpassing $14.5 billion in sales in fiscal 2023. The firm has differentiated itself through its products and customer demographics, which provide underlying support to its brand intangible assets and wide economic moat. At the end of 2023, the store base had grown about 24% over the prior five-year period, to more than 2,400 locations, including 81 acquired locations from Orscheln and Petsense, driving sales and EPS compound annual growth rates over the past three years of 11% and 14%, respectively. We forecast that the firm will grow to over 3,200 stores by 2033 as it populates big-box centers in the western half of the US, with Petsense accounting for about 300 units.

China YuHua Education used to be known for its complete coverage of kindergarten to university education. Following the deconsolidation of K-9 assets in 2021, YuHua moved closer to peers that only operate schools at higher education and secondary education level. However, YuHua’s secondary schools are academically focused and face higher regulatory risk compared with secondary vocational schools.

O-I Glass is one of the world's largest glass container manufacturers, with furnaces in North America, South America, and Europe. It turns molten glass into containers for beer, wine, spirits, and food, using standard and custom molds for a wide variety of customers. O-I operates roughly 70 glass plants and serves customers across the world, with the US its largest region at about 30% of sales. In the past few years, O-I has gone through a portfolio-optimization plan to increase its focus on its glass container business and prioritized regions. As part of this plan, O-I divested its tabletop glass business as well as its Australia and New Zealand operations and is using the proceeds to fund capacity expansion and modernization projects.

Scotts Miracle-Gro is the largest and most recognizable name in the US consumer lawn and gardening market. The firm sells a wide array of products used for lawncare and gardening.

CGI is a leading global IT-services firm, catering a bit more to governmental agencies than its peers, providing managed IT, consulting, and intellectual property solutions. We believe that CGI benefits from strong switching costs and intangible assets, which lead us to assign the firm a narrow economic moat rating. Despite the macroeconomic headwinds, CGI has posted steady revenue due to long-term contracts with many of its clients. We think such stability will continue with the help of CGI’s switching costs and intangible assets, which both work to create stickiness among existing customers.

Haleon is one of the largest consumer healthcare companies in the world. Over the last few years, Haleon has achieved a more rationalized operation by divesting multiple non-strategic brands, slimming down its manufacturing footprint, and dialing back the number of warehouses and distribution centers. We appreciate the company’s efforts to optimize its business and believe it is well established to enjoy long-term industry trends, including an aging population, premiumization of consumer healthcare products, and growing emerging markets, that should fuel its top line.

Mitsubishi Electric utilizes its technology related to the control of electricity to cover a broad spectrum of business fields, including factory automation, or FA, elevators/escalators, social infrastructure equipment, satellite and communication equipment, and air conditioners. Its key top-line drivers—FA systems, automobile equipment, and air conditioning systems/home appliances—together make up about 60% of revenue.

Lloyds is a pure UK banking play, with 95% of its assets based domestically. Since its massive restructuring, which started in 2011, the bank has emerged as a low-risk domestic retail and commercial bank. It has shed about GBP 190 billion in runoff assets and GBP 200 billion in risk-weighted assets and has significantly reduced its dependence on wholesale funding. Today, Lloyds operates one of the strongest retail franchises in the United Kingdom.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for about 84% of total installed capacity as of the end of 2023, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth. Over the past 10 years, DR’s wind capacity rose at an average of 9% per year, lagging industry average of 19%.

China Suntien Green Energy, or Suntien, has wind power and photovoltaic projects across China, with consolidated renewable energy installed capacity of 6.42 gigawatts, or GW, as of end-2023. About 72% of the firm’s consolidated wind power installed capacity was in Hebei (4.54 GW). Suntien also sells natural gas and owns natural gas transmission and ancillary facilities in Hebei. We believe the renewable energy and natural gas businesses are complementary to each other, which help to reduce earnings volatility and diversify operational risks. While more than 90% of Suntien’s revenue was derived from Northern China, the firm is actively looking for opportunities in other regions as well as overseas.

PetroChina is the listed arm of one of China's two integrated oil majors and the largest oil producer. With revenue and assets more heavily weighted toward the upstream activities, PetroChina is more sensitive to swings in the oil price than its peer, Sinopec. In addition, the firm’s downstream operations lag Sinopec, which has better scale and efficiency in the sector. However, PetroChina will benefit more in a rising oil price environment.

Within the last decade, Lumen has transformed its business to focus primarily on enterprises rather than consumers. The shift became even more pronounced in 2022, when Lumen sold its incumbent local exchange carrier, or ILEC, in 20 of the 36 states where it operated, ridding Lumen of nearly half its remaining consumer revenue.

Diamondback Energy was a modest-size oil and gas producer when it went public in 2012, but it has rapidly become one of the largest Permian-focused oil firms through a combination of organic growth and corporate acquisitions, most recently Endeavor Energy in 2024. The firm consistently ranks among the lowest-cost independent producers in the entire industry, supporting a maintainable margin advantage.

Following right behind industry leader Waste Management, Republic Services enjoys dominance in landfill ownership. As a fully integrated waste hauler, it leverages a vast network of collection routes and transfer stations, which bestow significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its landfills. Outside of the large public providers that make up 40% of industry revenue, size falls off quickly and the market becomes fragmented.

Pinterest is focused on carving out a piece of the global digital advertising market. While we don't expect it to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we expect it to attract a small slice of digital ad spending.

California's quest to eliminate carbon emissions from the economy by 2045 offers Edison International more growth opportunities than most utilities. However, Edison must navigate the political, regulatory, and operating challenges in California to make it payoff for investors.

Thermo Fisher didn’t just come out of the toughest two years for the global economy unscathed, the company delivered some of its best results. Being the premier life science supplier and having an unmatched portfolio of products, resources, and manufacturing capabilities have allowed the firm to meet massive demand. The pandemic reaffirmed the company's entrenched and dominant positioning with the supply chain, and the current budget-constrained environment still leaves the company in a better position than most of its peers. Thermo Fisher remains in a great position to leverage its share gains in the biopharma channel and capitalize on strong long-term demand.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.