Activision Blizzard, Inc. (ATVI:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) Earnings, with a 20.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about the strength of their product pipeline, their ability to extend their franchises to mobile, and sustain community growth in Overwatch

TransDigm Group Incorporated (TDG:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 22.3x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management has concerns about revenue growth, the strength of the commercial aftermarket segment, and the Esterline integration progress

Summary Headlines – Inside This Month

• The recent pull-back in the market provides buying opportunities. While headlines may be causing investor concern, fundamentals remain healthy
• Profits and profitability continue to rise to all-time highs across US corporations (UAFRS-adjusted, accurate calculations)
• US firms likely to use profits to increase capital investments in 2019

Highlighted Top Ideas FCX – Freeport-McMoRan Inc., LEN – Lennar Corporation, URI – United Rentals, Inc.

Kansas City Southern (KSU:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about revenue growth, their ability to seize business opportunities, and the business environment in Mexico

Each week, the Valens Research team highlights our most interesting insights from across our tools and our analysis, including individual company, industry, and macro insights. Top Highlight: Incyte Corporation Highlights: CRUS, MTZ, WDC Other Recent Analyses: AAPL, ADBE, ALXN, APA, APH, BSX, CTSH, FCX, MSCI, NOV, SSNC, SWK, TMO, TRU

The Gap, Inc. (GPS:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 16.4x Uniform P/E. At these levels, markets are pricing in expectations for profitability to remain at current levels, but management is confident in their specialty channel profitability initiatives, customer experience, and ability to minimize spin-off costs

SS&C Technologies Holdings, Inc. (SSNC:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 19.4x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, but management is confident in their focus on core margins and new business wins

Western Digital Corporation (WDC:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 15.5x Uniform P/E, implying bearish expectations for the firm. However, management is confident in their ability to beat hard drive sales expectations and their inventory levels

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis. CVS is transforming their business and the health market, and current low market expectations do not recognize the company strategy, strong management alignment, and growing management confidence that justify upside

Each week, Valens focuses on several companies that were analyzed in the prior week, where material distortions caused by as-reported GAAP accounting need to be corrected to understand a company’s economic fundamentals. Analog Devices, Inc. (ADI), AbbVie Inc. (ABBV), Palo Alto Network, Inc. (PANW)

Highlighted Top Ideas CVS – CVS Health Corporation, LEE – Lee Enterprises, Incorporated, RAD – Rite Aid Corporation

MasTec, Inc. (MTZ:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 16.4x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and while management has concerns about EBITDA margin performance, infrastructure projects, and end market expansion costs, their confidence in their backlog, along with industry tailwinds, provide significant potential for outperformance and equity upside

Each week, the Valens Research team highlights our most interesting insights from across our tools and our analysis, including individual company, industry, and macro insights. Top Highlight: CVS Health Corporation Highlights: ITW, LRCX, THRM Other Recent Analyses: AMN, DISC.A, DVA, FSLR, GILD, GRMN, IBM, NI, PTC, SCCO, SLB, SNA

Cirrus Logic, Inc. (CRUS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.7x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, which may be unwarranted given management’s confidence about the progress of microphone shipments, the potential of product development, and gross margins, justifying outperformance going forward

Gentherm Incorporated (THRM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.3x Uniform P/E, implying bearish expectations for the firm. While management’s concerns about labor costs and automotive production suggest the potential for near-term headwinds, the firm’s leadership in its space suggest longer-term upside remains warranted

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis. Cirrus appears to be making the right calls with strong management alignment, favorable fundamentals, smart strategic decisions, and growing management optimism, pointing to equity upside

CVS Health Corporation (CVS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 16.9x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, which is unwarranted given management’s confidence in store comp sales growth, generics performance, and the potential of HealthHUB. As such, outperformance is likely justified

Highlighted Top Ideas AMD – Advanced Micro Devices, Inc., BBY – Best Buy Co., Inc., SUM – Summit Materials, Inc.