Featured Tickers:ACIW,CCSI,RNG

This week, we use AAII’s A+ Investor Stock Grades to provide insight into three software stocks. With a fast-changing digital landscape within the software industry, should you consider the three stocks of ACI Worldwide Inc. (ACIW), Consensus Cloud Solutions Inc. (CCSI) and RingCentral Inc. (RNG)?

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Software Stocks Recent News

The software industry has been seeing significant reshaping and intensified competition as artificial intelligence (AI) transforms how products are built and sold. A 2026 industry outlook article from Deloitte notes that the enterprise software market continues to grow and generate strong cash flows, but investor confidence is being tested by the costs of AI. The report projects that 40% of enterprise applications will be integrated with task-specific AI agents by the end of 2026, up from less than 5% in 2025. Fueled largely by productivity gains tied to AI agents, the application software market is projected to reach $780 billion by 2030, reflecting a 13% compound annual growth rate (CAGR). However, it remains unclear whether these newer agentic offerings can sustain the roughly 70% margins that the top software-as-a-service (SaaS) providers have experienced in recent years.

As the report points out, this growth is setting up a race between AI-native challengers and established incumbents. Within the next few years, AI agent–powered solutions could represent 60% of the total addressable software market. In 2025 alone, U.S. software companies spent more acquiring AI companies than they had in the previous three years combined, signaling how aggressively companies are moving to close the gap through mergers and acquisitions. Given this fast-changing landscape within the software industry, should you invest in ACI Worldwide, Consensus Cloud and RingCentral?

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Grading Software Stocks With AAII’s A+ Stock Grades

When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.

Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three software stocks—ACI Worldwide, Consensus Cloud and RingCentral—based on their fundamentals.

AAII’s A+ Stock Grade Summary for Three Software Stocks

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What the A+ Stock Grades Reveal

ACI Worldwide Inc. (ACIW) is a global payment technology company operating in the U.S., Europe, Asia Pacific and beyond. It offers real-time payment software and solutions for banks, financial intermediaries, merchants and billers worldwide. The company operates through two segments: banks and merchants. ACI Worldwide provides a broad range of payment processing solutions, including real-time payments, fraud detection, card issuing and acquiring, and bill payment platforms, serving some of the world’s largest financial institutions and retailers. It also offers cloud-based and on-premise software solutions that enable secure, high-volume transaction processing across multiple payment channels, including mobile, online and point-of-sale environments. The company was founded in 1975 and is headquartered in Omaha, Nebraska.

The company has a Growth Grade of A, which is very strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. ACI Worldwide has a five-year annualized sales growth rate of 6.3% and has generated year-over-year sales increases in the past five consecutive years. It has also generated positive annual cash from operations in the past five consecutive years.

ACI Worldwide has a Quality Grade of A, based on a score of 97, which is very strong. A higher-quality stock possesses traits associated with upside potential and reduced downside risk. The Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, though, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The company ranks strongly in terms of return on invested capital and F-Score. Its return on invested capital is 72.9%, ranking in the 92nd percentile among all U.S.-listed stocks. Its F-Score is 7, ranking in the 81st percentile. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position based on its profitability, leverage, liquidity and operating efficiency.

Consensus Cloud Solutions Inc. (CCSI) is a digital cloud fax and information transformation company operating in the U.S., Europe and beyond. It offers secure document delivery and interoperability solutions for healthcare, government, legal and financial services markets. The company operates through its flagship eFax and jSign platforms, as well as its Clarity and Unite healthcare interoperability solutions, serving enterprise and small business customers worldwide. Consensus Cloud provides a broad range of digital fax and document management services, including cloud fax, electronic signatures, and HIPAA-compliant secure messaging for regulated industries. It also offers AI-powered solutions that convert unstructured fax data into structured, actionable information, enabling seamless integration with electronic health record systems and other enterprise platforms. The company was founded in 2021 and is headquartered in Los Angeles, California.

Consensus Cloud has a Value Grade of B, based on its Value Score of 80, which is good value. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA). For these value metrics, a lower rank is more attractive. The company has an enterprise-value-to-EBITDA ratio of 6.1%, ranking in the 15th percentile. Its shareholder yield is 5.5%, ranking in the 14th percentile.

Consensus Cloud has a Momentum Grade of A, based on its Momentum Score of 84. This means that the stock’s momentum is very strong in terms of its weighted relative strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The ranks are 89, 52, 83 and 25, sequentially from the most recent quarter, with higher ranks signaling stronger price momentum. The weighted four-quarter relative price strength is 12.0%.

Consensus Cloud has a Quality Grade of A, based on a score of 99, which is very strong. The company ranks strongly in terms of its return on invested capital and F-Score. Its return on invested capital of 81.5% ranks in the 93rd percentile, and its F-Score of 8 ranks in the 92nd percentile.

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RingCentral Inc. (RNG) is a global cloud communications and collaboration company operating in the U.S., Europe, Asia Pacific and beyond. It offers unified communications, video conferencing, contact center and messaging solutions for businesses of all sizes across a broad range of industries. The company operates through its core RingCentral MVP platform, as well as its RingCX contact center and RingCentral Video collaboration solutions, serving enterprise and small to medium-sized business customers worldwide. RingCentral provides a broad range of cloud-based communication services, including business phone systems, team messaging, video meetings and omnichannel customer engagement tools delivered through its software-as-a-service platform. It also offers AI-powered features, analytics and integrations with leading enterprise applications such as Salesforce, Microsoft Teams and Google Workspace, enabling seamless workflow automation and productivity enhancement. The company was founded in 1999 and is headquartered in Belmont, California.

The company has a Growth Grade of A, which is very strong. RingCentral has a five-year annualized sales growth rate of 16.3% and has generated year-over-year sales increases in the past five consecutive years. It has also generated positive annual cash from operations in the past five consecutive years.

RingCentral has a Momentum Grade of A, based on its Momentum Score of 93. This means that the stock’s momentum is very strong in terms of its weighted relative strength over the last four quarters. The ranks are 94, 92, 57 and 32, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 24.0%.

Earnings estimate revisions indicate how analysts view a firm’s short-term profits. RingCentral has an Earnings Estimate Revisions Grade of B, which is positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months. RingCentral reported a positive earnings surprise of 4.0% for second-quarter 2026, and in the prior quarter reported a positive earnings surprise of 2.7%. Over the last month, the consensus earnings estimate for third-quarter 2026 has increased from $1.249 to $1.278 per share based on one upward revision and two downward revisions. Over the last month, the consensus earnings estimate for full-year 2026 has increased from $4.937 to $5.071 per share based on one upward revision.

RingCentral has a Quality Grade of A, based on a score of 99, which is very strong. The company ranks strongly in terms of its gross income to assets and buyback yield. Its gross income to assets of 134.4% ranks in the 99th percentile, and its buyback yield of 7.3% ranks in the 94th percentile.

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This month’s First Cut identifies the S&P Composite 1500 index stocks that have the highest price change during the first half of this year compared to their peers. We present the top 10 stocks for each of the three component indexes that constitute the S&P Composite 1500, allowing you to see if leadership varies by company size.

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Charles Rotblut leads a class in AAII’s new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.

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Neutral sentiment among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey. Meanwhile, optimism and pessimism decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 2.3 percentage points to 34.7%. Bullish sentiment is below its historical average of 37.5% for the fourth consecutive week.

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Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 2.4 percentage points to 27.4%. Neutral sentiment is below its historical average of 31.0% for the 23rd consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 0.1 percentage points to 37.9%. Bearish sentiment is above its historical average of 31.5% for the 27th consecutive week.

The bull-bear spread (bullish minus bearish sentiment) decreased 2.3 percentage points to –3.2%. The bull-bear spread is below its historical average of 6.5% for the fourth consecutive week.

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This week’s special question asked AAII members whether they think other investors are too bullish or too bearish right now.

Here is how they responded:

• They are too bullish: 47.6%

• Their sentiment toward the market is about right: 22.7%

• They are too bearish: 19.5%

• Not sure/no opinion: 10.3%

This week’s Sentiment Survey results:

Bullish: 34.7%, down 2.3 points
Neutral: 27.4%, up 2.4 points
Bearish: 37.9%, down 0.1 points

Historical averages:

Bullish: 37.5%
Neutral: 31.0%
Bearish: 31.5%

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The top three ways consumers have used AI are to compare prices (24%), to find coupons or discounts (22%) and to get suggestions for increasing income or saving money (21%). I can vouch for using AI to compare prices. I recently used ChatGPT to help me get a better price on a Garmin running watch. The result was $25 in savings.

The JD Power survey follows a Lloyds Banking Group survey that found that 56% of adults in the U.K. used AI in the last 12 months to assist them with managing money. More than half of those individuals sought information on “budgeting, savings planning or general financial education.” Additionally, over one-third of those AI users (37%) reported that they “engage with AI for investment research and recommendations.”

Is AI reliable enough to use for managing your portfolio? The answer is “it depends.” What information you ask it for and how you write queries (aka prompts) matters greatly. So does your ability to confirm whether the answer it provides is correct.

Demographics and Prompts Influence AI’s Suggestions

A study conducted earlier this year by researchers at the Massachusetts Institute of Technology (MIT) and Stanford University asked a demographically representative sample of adults to write free-text prompts to a large language model (LLM) financial adviser. Each person was asked to describe their finances, then ask the AI chatbot how much to spend and how to invest between stocks and safer options.

These prompts were then organized into 12 buckets defined by employment status, age and income. Prompts from each bucket were randomly selected and used to create simulated life paths. The researchers simulated 1,000 individuals. Each person started at age 22 with no wealth, retired at age 65 and died at age 90. ChatGPT version GPT-5.2 was used.

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The chatbot recommended saving more during one’s working life and drawing down savings in retirement. This is consistent with well-established financial practices. The AI-generated allocations called for an average 65% weighting in stocks that decreases with age. The one exception was for young adults with little wealth; the AI chatbot suggested that they build an emergency fund first.

About 30% of suggested savings rates were multiples of 10%, and 34% of suggested dollar amounts were multiples of $5,000, demonstrating a bias toward simple, round numbers. The 4% rule was proposed as the basis for withdrawal strategies in 85% of the chatbot’s recommendations. This rule calls for withdrawing 4% of your portfolio balance at retirement, then increasing that dollar amount each year for inflation. The study’s authors noted that academic prompts led to more flexibility in determining how much to withdraw.

The prompts used mattered. Modeled wealth at age 60 was lower for women, study participants who had low levels of financial literacy and those who had not previously used AI for financial advice. According to the study’s authors, the AI chatbot suggested lower stock allocations for female investors and those with lower financial literacy. The chatbot’s simulations also resulted in lower savings for participants without the relevant AI experience. All outcomes assume that investors will follow the AI’s advice and act accordingly—a big assumption.

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Where AI Can Help Investors

AI chatbots are good at summarizing long documents into bullet points. This can be useful if you want to analyze a company’s regulatory filings, investor presentations or other lengthy documents.

I’ve found AI to work well with spreadsheets. It can quickly convert a formatted PDF table into an Excel file. You can use it to create spreadsheet models to do your own analysis or forecasting. However, you will have to go through the spreadsheet to ensure that all calculations are done properly, especially if data is being pulled in from different cells. The more information and feedback you give the chatbot, the better the outcome.

You can also use AI to search for information, whether on a specific investment, economic data or financial research. In doing so, be sure to instruct the chatbot to only look at reliable sources and then do your own research to confirm that its output is correct.

As far as your allocation is concerned, AI can suggest a portfolio mix, but view its suggestions as a starting point instead of personalized advice. The allocation that ChatGPT gave me this morning is more conservative than what I use for my retirement savings. AI chatbots have shown themselves to be reward-seeking and therefore can be prone to giving you answers they think you want to hear instead of answers you don’t want to hear.

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• AAII Sentiment Survey

Neutral sentiment among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey. Meanwhile, optimism and pessimism decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 2.3 percentage points to 34.7%. Bullish sentiment is below its historical average of 37.5% for the fourth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 2.4 percentage points to 27.4%. Neutral sentiment is below its historical average of 31.0% for the 23rd consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 0.1 percentage points to 37.9%. Bearish sentiment is above its historical average of 31.5% for the 27th consecutive week.

The bull-bear spread (bullish minus bearish sentiment) decreased 2.3 percentage points to –3.2%. The bull-bear spread is below its historical average of 6.5% for the fourth consecutive week.

This week’s special question asked AAII members whether they think other investors are too bullish or too bearish right now.

Here is how they responded:

• They are too bullish: 47.6%

• Their sentiment toward the market is about right: 22.7%

• They are too bearish: 19.5%

• Not sure/no opinion: 10.3%

This week’s Sentiment Survey results:

Bullish: 34.7%, down 2.3 points
Neutral: 27.4%, up 2.4 points
Bearish: 37.9%, down 0.1 points

Historical averages:

Bullish: 37.5%
Neutral: 31.0%
Bearish: 31.5%

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This week, we present AAII’s strategy that explores the basics of cash flow analysis and the implementation of a price-to-free-cash-flow (P/FCF) screen. Low price-to-free-cash-flow ratios may represent neglected firms trading at attractive prices. Our screen looks for companies with a price-to-free-cash-flow ratio below the median for their industry and below their own five-year average. The AAII Price-to-Free-Cash-Flow screen has shown impressive long-term performance, with an average annual gain of 16.7% since inception in 1998, versus the S&P 500 index’s 7.5% return over the same period. Year to date, the Price-to-Free-Cash-Flow screen has returned 24.1%, compared to the S&P 500’s 9.5% return.

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Seeking Free Cash Flow Generation

Cash generation is “king” for many investors selecting stocks. Earnings, dividends and asset values may be important factors, but it is ultimately a company’s ability to generate cash that fuels the growth in these factors. Strong cash flow allows a company to increase dividends, develop new products, enter new markets, pay off liabilities, buy back shares and even become an acquisition target.

Earnings and earnings multiples dominate standard measures of firm performance and stock price valuation. However, slight accounting differences make it difficult to track earnings over time or between firms. Actual cash flow is free from many of these problems of comparability across firms and consistency over time.

Traditional Cash Flow Measures

Cash flow has traditionally been calculated by adding noncash expenses back to earnings after taxes and subtracting dividend payments. Noncash expenses such as depreciation, amortization and depletion are taxable expenses that appear on the income statement but require no cash outlays. They represent the accountant’s attempt to measure the reduction of the book value of assets as the assets are depleted. While dividends are a discretionary item, they are a real cash outlay that is not tax-deductible and is not reflected in earnings. Subtracting dividends and adding back noncash expenses to earnings provides an estimate of cash flow.

This widely used cash flow estimate has many weaknesses that arise out of the use of accrual accounting for the calculation of the income statement. Accrual accounting attempts to match expenses to revenues when the revenues can be expected to be recognized. For example, cash used to build up inventory will not be reflected as an expense on the income statement until the inventory is sold. But even then, the recognition of this inventory cost may vary from firm to firm if one company uses a last in, first out (LIFO) method to measure the cost of inventory sold while another firm uses a first in, first out (FIFO) method. Higher sales may not translate into higher cash flow if accounts receivable are allowed to grow faster than sales. Prepaid expenses such as income taxes and software development costs may not flow through the income statement when the costs are incurred. On the other hand, much like a personal checkbook, cash accounting tracks cash inflows and outflows directly when they actually occur.

Accrual accounting introduces many interpretations and estimates by management into the financial statements. Decisions regarding the capitalization of expenses, the recognition of revenue, the creation of reserves against losses and the write-off of assets are examples of just a few of the factors that may vary from firm to firm. Many of these issues are factors that relate to the “quality” of a firm’s earnings. Since the traditional cash flow estimate is tied directly to earnings with few adjustments, it represents a weak estimate of the firm’s actual cash flow.

Statement of Cash Flow

Companies have been required to provide a statement of cash flow since 1987. The purpose of the statement is to disclose information about the events that affected cash during an accounting period. The statement looks at the changes in the levels of cash directly, eliminating many of the weaknesses with the traditional estimate of cash flow.

The statement divides company uses and sources of cash into three primary segments—operating, investing and financing cash flows.

• The operating cash flow segment is designed to measure a company’s ability to generate cash from day-to-day operations as it provides goods and services to its customers. It considers factors such as cash from the collection of accounts receivable, cash incurred to produce any goods or services, payments made to suppliers, labor costs, taxes and interest payments. A positive cash flow from operations implies that a firm was able to generate enough cash from continuing operations without the need for additional funds. A negative cash flow from operations indicates that additional cash inflows were required for day-to-day operations of the firm.

• The investing segment of the cash flow statement attempts to capture the company’s investment in the long-term capital of the firm. Factors recorded in this segment can include purchases of property, plant and equipment; investment or sale of marketable securities; and investments or divestitures in unconsolidated subsidiaries. Negative cash flow from investing activities indicates that the company made additional long-term investments in its long-term assets or outside investments. Positive cash flow from investing activities indicates a divestiture or sale of the firm’s long-term assets.

• The financing segment of the cash flow statement examines how the company finances its endeavors and how it rewards its shareholders through dividend payments. Factors such as cash received from the issuance of new shares of stock or debt, payment of dividends to stockholders and the cash used to repurchase stocks to retire debt are summarized in this segment. Note that interest payments are considered part of normal operational expenses and are factored into the operating segment, not the financing segment, of the cash flow statement. The financing segment also often examines the impact of foreign currency translation.

Free Cash Flow

Ideally, a company should not only cover the costs of producing its goods and services but also produce excess cash flow for its shareholders. Cash flow from operations represents a good starting point for this type of analysis. However, beyond current production, a growing company must reinvest its cash to maintain its operations and expand. While management may neglect capital expenditures (capex) in the short term, there are fundamental, negative long-term growth implications to such neglect. Optimally, one would use the capex required to sustain the health of the company, but that is a highly subjective figure that will not appear as a line item on the financial statement. Actual capex serves as a proxy measure of this sustained investment in the company’s present and future operations.

Free cash flow refines the measure of cash flow from operations by considering capex and dividend payments to shareholders. While you can argue that dividend payments are not required, they are expected by shareholders, and they are paid in cash, so they must be subtracted from cash flow to calculate a free cash flow figure. Free cash flow is calculated by subtracting capex and dividend payments from cash flow from operations.

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This free cash flow figure is considered to be excess cash flow that the company can use as it deems most beneficial. With strong free cash flow, debt can be retired, new products can be developed, stock can be repurchased and dividend payments can be increased.

Members are looking for your input. Can you help with this question from the Stock Screening & Analysis Community?

Have you ever looked for stocks trading at rock-bottom prices relative to their free cash flow? How do you eliminate those whose cheap price is fully deserved?

Click here and then choose the Join Community button on the right to answer this question or read their responses.

The Screening Criteria

A screen for positive and consistent free cash flow is a good starting point for the investor scanning for firms on a cash flow basis. The first screen requires a market capitalization greater than or equal to $50 million. This restriction excludes small stocks with poor trading liquidity.

The next screening factor excludes financial firms. Stock Investor Pro, AAII’s fundamental stock screening and research database, calculates free cash flow by subtracting capex and dividends from operating cash flow on the cash flow statement. Financial firms do not typically have large expenditures in brick-and-mortar property, plant and equipment. However, they make significant investments in marketable securities, which are not considered in the standard free cash flow calculation. When looking at the cash flow of a financial firm, it would be best to examine total cash flow figures from the statement of cash flows.

The screen then requires positive free cash flow for each of the last five fiscal years and the most recent 12 months. Ideally, a company would always have positive and increasing free cash flow. However, cyclical firms and companies with long development and construction cycles may have periods of slow sales, inventory buildup and strong capex that occur over the normal course of business. A firm that has a long development cycle for new products, a long ramp-up period when starting production, and an extended and expensive product construction cycle may show negative free cash flow until it starts to deliver a larger quantity of its products. These types of firms may be excluded by a requirement of positive cash flow for each year. If you are interested in screening for these types of firms, you may average the free cash flow over a period of years and require this average to be strong.

Higher free cash flows should translate into higher stock prices. The ratio of stock price to free cash flow per share is a method by which to judge value. Comparing a company’s price-to-free-cash-flow ratio to those of other companies, industry norms and historical averages provides some feel for relative value, much like the traditional price-earnings (P/E) ratio. Low price-to-free-cash-flow ratios may represent neglected firms at attractive prices. Our screen looks for companies with a price-to-free-cash-flow ratio below the median for their industry and below their own five-year average.

Conclusion

The analysis of a company’s cash flow is very revealing. The free cash flow measure highlights the effective management of overall company operations, including factors such as sales, inventory control, production and employee costs, accounts receivable management, interest payment levels, product development, and capex. Screening for firms with attractive levels of price to free cash flow provides a useful technique to highlight more mature value stocks worthy of further study. However, as with all preliminary screens, a study of the annual report and an understanding of the company, its products and its industry are required.

Stocks Passing the Price-to-Free-Cash-Flow Screen (Ranked by P/FCF Ratio)

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Keep in mind that no matter how well a stock screening methodology has performed (or how badly it has underperformed) over the long term, stock screening is only the first step in the stock selection process. You will want to do your homework to see why these companies are at their current levels. Only then will you gain insight into those that will continue to languish and those that may eventually flourish.

The stocks meeting the criteria of the approach do not represent a “recommended” or “buy” list. It is important to perform due diligence to verify the financial strength of the passing companies and to identify those stocks that match your investing tolerances and constraints before committing your investment dollars. Keep in mind that the quantitative screens AAII has developed are based upon our interpretations of published works tied to the market gurus.

Charles Rotblut leads a class in AAII’s new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.

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Charles Rotblut leads a class in AAII’s new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.

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Optimism among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey. Meanwhile, neutral sentiment and pessimism decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 1.4 percentage points to 31.0%. Bullish sentiment is below its historical average of 37.5% for the fourth time in five weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased 1.2 percentage points to 26.9%. Neutral sentiment is below its historical average of 31.5% for the 106th time in 108 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 0.2 percentage points to 42.1%. Bearish sentiment is unusually high and is above its historical average of 31.0% for the 25th consecutive week.

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The bull-bear spread (bullish minus bearish sentiment) increased 1.6 percentage points to –11.1%. The bull-bear spread is below its historical average of 6.5% for the fourth time in five weeks.

This week’s special question asked AAII members what their opinion is of new Federal Reserve chair Kevin Warsh.

Here is how they responded:

• I want to give him more time before voicing an opinion: 58.5%

• He is a good pick to head the Fed: 22.6%

• I would have preferred that someone else be the Fed chair: 13.3%

• Not sure/no opinion: 5.6%

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These products are not suitable for most individual investors. I explain why below.

Leverage ETFs Seek to Tap Into a Short-Term Mentality

Corgi Funds was the single biggest issuer during the first half of 2026. It launched 148 ETFs; 60% of them are leveraged.

Those leveraged ETFs seek to provide 2x the daily return of an underlying benchmark for a single day. Holding those ETFs beyond a single day will result in returns that differ from the performance of the underlying stock. This is because leverage amplifies the effect of volatility.

Many of them are single-stock ETFs, such as Corgi AMZN 2x Daily ETF (AMAA). Other Corgi Funds leveraged ETFs track a sector or asset class, such as Corgi All Commodities 2x Daily ETF (XCOM). This ETF tracks iPath Bloomberg Commodity Index Total Return ETN (DJP). Adding leverage to an already volatile security is a recipe for blowing a hole in your portfolio.

Corgi Funds is not the only provider launching new 2x ETFs. A total of 230 ETFs with “2x” in their name came to the market this year. There are also two 3x ETFs that launched between January and June 2026. Most have not attracted significant assets, as investors have preferred to sniff elsewhere.

Using Derivatives to Create a Stream of Income

The derivative income category ranks third in terms of how many new ETFs (44) were launched this year, behind the defined outcome category (74). The defined outcome category is primarily composed of buffer ETFs. These ETFs limit downside risk while capping upside potential.

Derivative income ETFs are more complex.

Some, like NEOS Boosted Nasdaq-100 High Income ETF (XQQI), create income by overlaying options on top of stock holdings. NEOS Boosted Nasdaq-100 High Income replicates the performance of the Nasdaq 100 index by managing a portfolio of stocks. It then boosts its exposure by buying index call options and selling index put options at generally similar strike prices. The cash generated from these options positions is then passed on to the ETF’s shareholders via monthly distributions.

Others, like FT Vest Laddered Autocallable Barrier & Income ETF (ACYN), go further by using derivatives not only to create income but also to provide downside protection. Specifically, they use synthetic autocallable contracts (“autocallables”).

Autocallables are linked to a benchmark. FT Vest Laddered Autocallable Barrier & Income lists one or more broad-based U.S. equity indexes (e.g., the S&P 500 index, the Russell 2000 index and/or the Nasdaq 100) or index ETFs as its benchmarks. The returns of the benchmarks determine whether income payments are made, if the autocallable is called prior to its maturity or if losses may be incurred at maturity. The autocallable is called when the worst-performing reference asset is at or above its initial value on a preset date. If the worst-performing reference is below a preset amount (known as the maturity barrier), a loss is realized and a new autocallable is purchased. First Trust provides a longer explanation in the ETF’s fact sheet.

GraniteShares goes a step further with its single-stock autocallable ETFs. GraniteShares Autocallable NVDA ETF (ANV), for instance, uses Nvidia Corp. (NVDA) as its reference asset.

If you have a hard time understanding how synthetic autocallable contracts work, then these ETFs are not for you. The complexities of these ETFs make them products intended to be sold, not bought.

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Some Mainstream ETFs Have Launched This Year

The dominance of the largest index ETFs has forced most new ETF sponsors to focus on niche themes and strategies to attract assets. Still, there are some exceptions for investors who prefer more traditional strategies in an ETF format.

Here are two of the larger such ETFs to have launched this year:

• Dimensional US Large Cap Core Equity Market ETF

• (DFAL) began trading in June. This low-cost ETF attempts to avoid what Dimensional Fund Advisors describes as the “potential inefficiencies of indexing.”

• Brown Advisory International Value Select ETF

• (BAIV) is an actively managed ETF that uses a fundamental approach in targeting foreign stocks. It was launched in February.

I always prefer simpler, low-cost investment options to more complex ones. When in doubt, stick with what you know.

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This week, we cover the bargain stock-picking strategy used by Charles Kirkpatrick and give you a list of stocks currently passing the AAII Kirkpatrick Bargain screen. The Kirkpatrick Bargain approach is a purely mechanical process that depends on facts instead of predictions to help investors avoid their own biases that ultimately cost them money.

Year to date as of June 30, AAII’s Kirkpatrick Bargain screen has gained 29.4%, well above the S&P 500 index’s return of 9.3% over the same period. Since inception in 1998, the strategy has gained 7.0%, compared to the S&P 500’s return of 7.5% over the same period.

Kirkpatrick Bargain Screening Strategy

Kirkpatrick’s book, “Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell” (FT Press, 2008), is the basis for the screening approach. Kirkpatrick believes that the stock market is still the best investment vehicle available, but he also thinks it is impossible to predict the market or the economy.

Kirkpatrick is president of Kirkpatrick & Co. Inc., which specializes in technical research, and he publishes a newsletter on technical analysis. Kirkpatrick is a former board member of the Chartered Market Technician (CMT) Association, former editor of the Journal of Technical Analysis and former board member of the Technical Analysis Educational Foundation, responsible for the development of courses in technical analysis at major business schools. He is also the only person to win the annual Charles H. Dow Award twice for excellence in technical research.

Market Behavior and Investor Emotions

After investing for over 45 years, Kirkpatrick came to believe that markets trade on facts, the anticipation of new facts and emotion. As he puts it, the stock market is “the sum of all information known and anticipated, interpretation of that information, and emotional reactions to that information, right or wrong.” However, he points out that individual investors are competing against institutional investors, who are more knowledgeable and better equipped to capture and analyze that information. As a result, Kirkpatrick doesn’t believe it is possible to beat the professionals at their own game. Instead, he advocates for developing a mechanical process that depends on indisputable facts to minimize the effects of emotions.

Kirkpatrick believes that investors face several “biases” that have an adverse impact on their financial success: These include impatience, the fear of being wrong, the need for perfection and a lack of discipline.

Philosophy and Style

Kirkpatrick believes that a mechanical approach to investing will help investors avoid their own biases that ultimately cost them money. He further believes that it is impossible to predict market movements. Instead, he follows the setup, trigger and action (STRACT) technique that helps him react to individual stock movements. His methodology is based on “relative” data elements—the price-to-sales (P/S) ratio and price strength. His analysis has led him to the bargain investing model. By following his approach, Kirkpatrick feels that individual investors can outperform the market by investing in individual stocks with a minimal time commitment.

Prediction Versus Reaction

Kirkpatrick reiterates his opinion several times in “Beat the Market” that it is not possible to predict markets. Instead, he feels that a more successful alternative to predicting the markets is a strategy of “reaction.”

Reaction, for Kirkpatrick, means waiting for the market to indicate what it is going to do and then (re)acting accordingly. Kirkpatrick reacts when his data—either fundamental or technical—shows a pattern that has proven successful in the past. When he sees such a pattern, his reaction follows three steps, which he terms STRACT:

• Setup

• TRigger

• ACTion

To illustrate the STRACT method, Kirkpatrick offers the following example: Say a study shows that when stocks advance to new 52-week highs, their chances of advancing an additional 10% are 70%. Any stock you are following that nears its 52-week high enters the setup stage. However, at this point, no action is taken as you wait for the trigger—in his example, the stock hitting a new 52-week high. Once the trigger is initiated, your action would be to buy the stock.

Meeting the Relatives

Kirkpatrick states that the first investing problems we face are deciding what to buy and how to do so without having to predict anything. The AAII Kirkpatrick Bargain approach uses two principle methods for selecting stocks:

• Value

• Price strength

Kirkpatrick begins his analysis by collecting data from the immediate past. Value investing requires accurate fundamental data for each stock in his investing universe. His price strength analysis requires a history of prices for each stock; it measures how a stock’s price behaves against its immediate past. If a stock is high versus its immediate past, it is said to have price strength.

For his analysis, Kirkpatrick looks at “relative” data—data compared to other data. For example, when he is looking at value, he looks not only at the value of an individual company, but also at its value relative to the value of all other companies. He then attempts to maximize his profits by looking only at those companies with the best value.

Value

When looking at a stock’s value, Kirkpatrick uses the price-to-sales ratio, which is the ratio between a stock’s price and the last four quarters of reported sales for the company.

Kirkpatrick’s analysis involved first calculating the weekly price-to-sales ratios for every stock over the period from 1998 to 2006. He then sorted the companies by price-to-sales ratio and ranked them into percentiles, where the companies with the highest price-to-sales ratios were in the highest percentiles. Once the companies were placed in percentiles based on their valuation, he calculated the relative price performance for each percentile for the next three, six and 12 months.

Through this analysis, he discovered that there was an inverse relationship between the relative price-to-sales ratio percentile and the relative performance three and six months forward. In other words, as the price-to-sales percentile increased, the future performance decreased. For periods of 12 months, the relationship between relative valuation and price performance dissipated. Kirkpatrick took his findings to suggest that investors should not focus on periods longer than one year.

Kirkpatrick also wanted to see how his various relative values performed in both advancing and declining markets. The direction of the overall market can play an important role in the performance of individual stocks.

He used a very simple methodology to define advancing and declining markets. He begins by adding together the closing values of the S&P 500 for each of the last 12 months and creating an average by dividing the total by 12. At the end of the next month, the oldest monthly value is dropped from the total, the latest monthly close is added and, again, the average value is calculated. When the S&P 500 monthly close is above its 12-month moving average closing price, Kirkpatrick considers the market as advancing; when the monthly close is below the 12-month average closing price, the market is declining.

Returning to his price-to-sales relative analysis, the relationship between the valuation and the future price performance was only about one-third as strong during advancing markets as it was across all market conditions. However, the inverse relationship between valuation and price performance strengthened by about 25% during declining markets. This indicated to Kirkpatrick that relative valuation is a more important selection criterion during a declining market.

Members are looking for your input. Can you help with this question from the Stock Screening & Analysis Community?

What, in your opinion, are the pros and cons of deliberately excluding the very cheapest stocks—as Kirkpatrick’s bargain approach does—instead of focusing on the lowest valuations possible?

Click here and then choose the Join Community button on the right to answer this question or read their responses.

Price Strength

Kirkpatrick’s research indicates that relative price strength is the most reliable short-term stock selection technique. There are a number of ways to calculate relative price strength. Some calculations compare the percentage change in stock price over a defined period to the percentage change in a stock index, such as the S&P 500, over the same period. However, these measures do not necessarily protect you in a down market, as a stock can be falling and still have “strong” relative strength if it is not falling as rapidly as the index. Kirkpatrick is concerned about capital loss, so his relative strength calculation involves dividing the current weekly closing price by the 26-week moving average of closing prices. He adds up the week-ending closing prices for each of the last 26 weeks and divides this total by 26. For each subsequent week, the oldest price is dropped and the latest weekly close is added to calculate the moving average. He then ranks all the stocks so that those with the highest relative strength are in the highest percentile rank.

To attempt to capture the essence of Kirkpatrick’s measure, AAII calculated the ratio of the current stock price to the average of the last six monthly closing prices. The numerator fluctuates with the weekly closing price, but the denominator only changes with the end of each month.

Once again, Kirkpatrick found that there is a very strong positive relationship between relative price strength and forward price performance. As Kirkpatrick writes in his book, “Relative strength seems to breed more relative strength.” However, over time, this relationship gradually deteriorates. Eventually, moving forward 12 months, the relationship between 26-week relative strength and subsequent price performance all but evaporates.

During both advancing and declining markets, Kirkpatrick found that relative price strength should be your primary selection criterion.

Bargain Model

The AAII Kirkpatrick Bargain model uses the best triggers found in his testing of relative value and relative price strength.

Price-to-Sales Ratio

Kirkpatrick’s testing of relative price-to-sales ratio percentile rankings indicated optimal performance in percentiles greater than the 17th percentile but not higher than the 42nd percentile. Relative valuations outside this range tended to underperform the market. Therefore, for the AAII Kirkpatrick Bargain screen, companies are required to have a price-to-sales percentile rank that is greater than or equal to 17 and less than or equal to 42.

Relative Price Strength

The AAII Kirkpatrick Bargain approach selects stocks with relative price strength in the 90th percentile or higher.

Price and Market Cap

Lastly, AAII’s Kirkpatrick Bargain strategy seeks companies with a market capitalization of at least $1 billion and a share price of at least $10.

Conclusion

Kirkpatrick takes an extremely mechanical approach to selecting stocks. To him, stocks are merely symbols. He does not concern himself with what the company does. He merely allows his data analysis to dictate when to buy and sell stocks. By basing his selection process on relative variables that have tested very well over an extended period of time, Kirkpatrick believes he has found a strategy to identify bargain stocks that will perform well in both bull and bear markets and will alert you to sell in time to avoid large capital losses.

Top 25 Stocks Passing the Kirkpatrick Bargain Screen (Ranked by Relative Price Strength)

Keep in mind that no matter how well a stock screening methodology has performed (or how badly it has underperformed) over the long term, stock screening is only the first step in the stock selection process. You will want to do your homework to see why these companies are at their current levels. Only then will you gain insight into those that will continue to languish and those that may eventually flourish.

The stocks meeting the criteria of the approach do not represent a “recommended” or “buy” list. It is important to perform due diligence to verify the financial strength of the passing companies and to identify those stocks that match your investing tolerances and constraints before committing your investment dollars. Keep in mind that the quantitative screens AAII has developed are based upon our interpretations of published works tied to the market gurus

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Optimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, neutral sentiment and pessimism increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 15.3 percentage points to 29.6%. Bullish sentiment is below its historical average of 37.5% for the third time in four weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 5.8 percentage points to 28.1%. Neutral sentiment is below its historical average of 31.5% for the 105th time in 107 weeks.

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Bearish sentiment, expectations that stock prices will fall over the next six months, increased 9.5 percentage points to 42.3%. Bearish sentiment is unusually high and is above its historical average of 31.0% for the 24th consecutive week.

The bull-bear spread (bullish minus bearish sentiment) decreased 24.8 percentage points to –12.8%. The bull-bear spread is unusually low and is below its historical average of 6.5% for the third time in four weeks.

This week’s special question asked AAII members how they think inflation in the second half of 2026 will compare to inflation in the first half of the year.

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Here is how they responded:

• The rate of inflation will be similar to that of the first half of the year: 41.1%

• The rate of inflation will be higher: 31.4%

• The rate of inflation will slow: 23.2%

• Not sure/no opinion: 3.8%

This week’s Sentiment Survey results:

Bullish: 29.6%, down 15.3 points
Neutral: 28.1%, up 5.8 points
Bearish: 42.3%, up 9.5 points

Historical averages:

Bullish: 37.5%
Neutral: 31.5%
Bearish: 31.0%

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As a reminder, the charts of interest highlight charts and tables I’ve come across that haven’t made their way into other AAII commentaries.

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More Large-Cap Companies Are Beating the S&P 500

A shift has occurred in the markets: Leadership within the S&P 500 has broadened. Callie Cox of Ritholtz Wealth Management calculated that 47.3% of the stocks within the S&P 500 are beating the index’s performance year to date. This is the largest percentage since the bear market of 2022.

Driving broader leadership has been a shift of investor enthusiasm away from the Magnificent Seven technology giants and into other stocks. Semiconductor and technology hardware stocks have contributed, but so have oil, healthcare services and other stocks.

A Streak We Hope Continues

The S&P 500 stumbled in first-quarter 2026 by falling nearly 5%, before jumping roughly 15% in second-quarter 2026. The sample size of such occurrences is small, but it does suggest that odds for the second half of the year could be in the bull’s favor.

Here is what Jeffrey Hirsch of Stock Trader’s Almanac posted on LinkedIn: “Following a negative Q1, the S&P 500’s track record for the rest of the year is mixed. But when the market rebounds by more than 10% in the second quarter, the historical picture changes dramatically … In the six prior occurrences since 1950—1968, 1980, 2003, 2009, 2020 and 2025—the S&P 500 finished higher in Q3, Q4, the second half and the full year. That’s a perfect 6-for-6 record.”

This Is a Big Year for Stock and Bond Issuances

As of last week, corporations have sold $344.7 billion worth of stock this year, according to The Wall Street Journal. This figure includes big initial public offerings (IPOs) like Space Exploration Technologies Corp. (SPCX), more commonly known as SpaceX, as well as secondary offerings from companies like Alphabet Inc. (GOOGL).

SIFMA Research tabulated $1.52 trillion of corporate debt being issued during the first half of 2026. Spending on data centers by companies like Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) contributed to this large increase.

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30-Year Bonds Yields Are Trading Above 5%

The 30-year Treasury bond yields have traded above 5% for most of July, as this chart from Yahoo Finance shows. This is the longest such streak since 2007. Rising government debt is playing a role, but so is the large number of corporate debt issuances.

Source: Yahoo Finance.

Yields on the benchmark 10-year bond—which determine rates for mortgages, among other loans—have been a bit more stable, though they are starting to rise again. Here’s another chart from Yahoo Finance.

Source: Yahoo Finance.

Build That Data Center Somewhere Else

I’ve been seeing posts on my Nextdoor news feed asking for help in opposing the construction of a data center in a village near mine. Nextdoor is a neighborhood-oriented social media platform.

Results of a Redfin survey released yesterday found that more than half (53%) of U.S. residents oppose the construction of an AI data center in their neighborhood. This level of opposition is higher than it is for any other type of building.

More on AAII.com

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  AAII Sentiment Survey

Optimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, neutral sentiment and pessimism increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 15.3 percentage points to 29.6%. Bullish sentiment is below its historical average of 37.5% for the third time in four weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 5.8 percentage points to 28.1%. Neutral sentiment is below its historical average of 31.5% for the 105th time in 107 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 9.5 percentage points to 42.3%. Bearish sentiment is unusually high and is above its historical average of 31.0% for the 24th consecutive week.

The bull-bear spread (bullish minus bearish sentiment) decreased 24.8 percentage points to –12.8%. The bull-bear spread is unusually low and is below its historical average of 6.5% for the third time in four weeks.

This week’s special question asked AAII members how they think inflation in the second half of 2026 will compare to inflation in the first half of the year.

Here is how they responded:

• The rate of inflation will be similar to that of the first half of the year: 41.1%

• The rate of inflation will be higher: 31.4%

• The rate of inflation will slow: 23.2%

• Not sure/no opinion: 3.8%

This week’s Sentiment Survey results:

Bullish: 29.6%, down 15.3 points
Neutral: 28.1%, up 5.8 points
Bearish: 42.3%, up 9.5 points

Historical averages:

Bullish: 37.5%
Neutral: 31.5%
Bearish: 31.0%

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Featured Tickers:APA,MPC,MPLX,TTE,VLO

This week, we use AAII’s A+ Investor Stock Grades to provide insight into three oil and gas stocks. With exponential demand for digital modernization and renewable integration in the energy sector, should you consider the three stocks of APA Corp. (APA), Marathon Petroleum Corp. (MPC) and Valero Energy Corp. (VLO)?

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Oil and Gas Stocks Recent News

Global oil demand is on track to fall this year for the first time since the pandemic, even as U.S. drivers keep filling up their gas tanks. According to U.S. News and World Report, a new International Energy Agency (IEA) report expects a decline of roughly one million barrels of oil per day in 2026, driven by higher prices and supply disruptions that have hit different regions unevenly. Global demand averaged just under 98 million barrels of oil per day in May 2026, down more than five million barrels from May 2025. Asia has absorbed much of the pullback, with China’s usage falling 9%.

The U.S. News and World Report article points out that the U.S. is the major exception to this global slowdown. Despite average gasoline prices climbing more than 50% since prices began rising and, on average, topping $4.50 per gallon in May, gasoline consumption among American motorists increased in the second quarter of 2026. Part of the explanation may be structural: Gasoline spending has made up a shrinking share of household income in the U.S. over time, cushioning the impact of higher prices; plus, a continuation of the shift back to in-office work has kept commuting-related demand elevated. Given this divergence between falling global demand and resilient U.S. consumption, should you consider oil and gas stocks like APA Corp., Marathon Petroleum and Valero Energy?

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Grading Oil and Gas Stocks With AAII’s A+ Stock Grades

When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.

Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three oil and gas stocks—APA Corp., Marathon Petroleum and Valero Energy—based on their fundamentals.

AAII’s A+ Stock Grade Summary for Three Oil and Gas Stocks

What the A+ Stock Grades Reveal

APA Corp. (APA) is a global oil and gas exploration and production company operating in the U.S., Egypt, the U.K. and beyond. It offers crude oil, natural gas and natural gas liquids exploration, development and production services across its diversified portfolio of assets. The company operates through its primary subsidiaries, including Apache Corp. in the U.S. and Egypt, and its North Sea operations in the U.K. APA Corp. produces a broad range of hydrocarbon products across its onshore and offshore assets, including operations in the Permian Basin, the Western Desert of Egypt and the North Sea. It also holds an interest in Suriname through an exploration joint venture with TotalEnergies SE (TTE), representing a significant long-term growth opportunity in an emerging deepwater basin. The company was founded in 1954 and is headquartered in Houston, Texas.

The company has a Value Grade of A, based on its Value Score of 92, which is deep value. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA).

A lower rank on valuation metrics is more attractive. Among all U.S.-listed stocks, APA Corp. ranks in the 13th percentile for its shareholder yield and in the 11th percentile for its price-earnings ratio. The company has a shareholder yield of 5.5% and a price-earnings ratio of 8.3.

APA Corp. has a Momentum Grade of A, based on its Momentum Score of 82. This means that the stock’s momentum has been very strong in terms of its weighted relative price strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The ranks are 41, 94, 71 and 79, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 9.3%.

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The A+ Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the valid remaining measures. To be assigned a Quality Score, though, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

APA Corp. has a Quality Grade of A, based on a score of 98, which is very strong. The company ranks strongly in terms of its return on assets and F-Score. Its return on assets is 8.4%, which ranks in the 83rd percentile. Its F-Score is 8, which ranks in the 93rd percentile. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position based on its profitability, leverage, liquidity and operating efficiency. APA Corp.’s buyback yield of 2.7% ranks in the 84th percentile.

Marathon Petroleum Corp. (MPC) is a leading petroleum refining, marketing and transportation company operating primarily in the U.S. It offers refined petroleum products, midstream services and retail fuel solutions for wholesale, commercial and consumer markets. The company operates through two segments: refining & marketing and midstream. Marathon Petroleum refines a broad range of petroleum products, including gasoline, distillates, asphalt, propane and heavy fuel oil, operating one of the largest refining systems in the U.S. It also operates midstream assets through its majority interest in MPLX LP (MPLX), providing crude oil and natural gas gathering, processing, fractionation and transportation services across its pipeline and storage network. The company was founded in 2011 and is headquartered in Findlay, Ohio.

Marathon Petroleum has a Momentum Grade of A, based on its Momentum Score of 90. This means that the stock’s momentum is very strong in terms of its weighted relative price strength over the last four quarters. The ranks are 93, 86, 38 and 59, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 17.4%.

Earnings estimate revisions indicate how analysts view a firm’s short-term prospects. Marathon Petroleum has an Earnings Estimate Revisions Grade of A, based on a score of 93, which is very positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months.

Marathon Petroleum reported a positive earnings surprise of 120.6% for the first quarter of 2026 and a positive surprise of 50.1% in the previous quarter. Over the last month, the consensus earnings estimate for the second quarter of 2026 has improved from $11.820 to $13.691 per share. The consensus earnings estimate for full-year 2026 has improved from $29.774 to $36.523 per share over the same period.

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Valero Energy Corp. (VLO) is a leading international petroleum refining and ethanol production company operating in the U.S., Canada, the U.K. and beyond. It offers refined petroleum products, renewable fuels and ethanol for wholesale, commercial and retail markets. The company operates through three segments: refining, renewable diesel and ethanol. Valero Energy produces a broad range of refined products, including gasoline, distillates, jet fuel, asphalt, lubricants and petrochemicals, operating one of the largest independent refining systems in the world. It also produces renewable diesel and ethanol through its Diamond Green Diesel joint venture and network of ethanol plants, positioning itself at the forefront of the low-carbon fuels transition. The company was founded in 1980 and is headquartered in San Antonio, Texas.

Valero Energy has a Momentum Grade of A, based on its Momentum Score of 91. This means that the stock’s momentum is very strong in terms of its weighted relative price strength over the last four quarters. The ranks are 91, 86, 77 and 64, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 18.4%.

The company has an Earnings Estimate Revisions Grade of A, based on a score of 90, which is very positive. The company reported a positive earnings surprise of 33.5% for the first quarter of 2026. Over the last month, the consensus earnings estimate for the second quarter of 2026 has increased from $10.060 to $10.111 per share. The consensus earnings estimate for full-year 2026 has improved from $29.656 to $33.461 per share over the same period.

Valero Energy has a Quality Grade of A, based on a score of 87, which is very strong. The company ranks strongly in terms of its buyback yield and F-Score, which rank in the 91st and 83rd percentiles, respectively. Its buyback yield is 5.1%, and its F-Score is 7 out of 9. Its return on assets is 6.9%, ranking in the 79th percentile.

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• Why using technical charts alongside AI tools can be a powerful combination

• What Yahoo Finance and TradingView offer, including charting features, costs and usability

• How to craft effective prompts to use with chatbots for explanations and chart analysis

Many investors focus on using metrics and signals that best fit their investi…

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• Explains price-to-sales (P/S) ratio origins and relevance for valuing growth companies with limited profits

• Describes the AAII Price-to-Sales screen criteria, focusing on valuation, growth, financial strength and relative price performance

• Demonstrates how to interpret results, comparing industry benchmarks and using screens as starting points

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