This week covers a global consulting leader down 49% year to date at 9x forward earnings that just closed a $4.18 billion cybersecurity acquisition, and a CRM software giant at its cheapest multiple in over a decade.
Read on before any of these three closes the distance.
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Software
Salesforce’s Record Losing Streak Leaves a 39% Gap to Wall Street’s Target
Salesforce Inc. (NYSE: CRM) trades around $149, against a $244.58 average price target, putting the stock about 39% below Wall Street’s mark after a record losing streak turned AI anxiety into a full valuation reset. Shares are down roughly 43% this year as investors question whether AI agents will weaken the old SaaS model.
The fear is not random. If companies can use AI tools to build workflows with fewer paid software seats, Salesforce has to prove its platform still deserves the same kind of pricing power. The pressure is showing up even though the business continues to generate serious cash.
First-quarter free cash flow reached $6.6 billion, and the company returned $27.5 billion to shareholders through buybacks and dividends. For you, the setup is whether the market has priced Salesforce as if AI is already breaking the model before the numbers actually show that.
Agentforce Now Has to Answer the AI Doubt
Software investors are not just worried about one quarter. They are questioning the pricing model behind enterprise apps. Salesforce now has to demonstrate that Agentforce can defend the platform rather than cannibalize it.
$6.6 Billion in Free Cash Flow Keeps the Case Alive
A stock can deserve a lower multiple when the growth story is called into question. A 39% gap relative to the average target looks harder to ignore when the company is still generating billions in free cash flow, even as the market prices in more serious AI-related damage.
Consumer Staples
McCormick Heads Into Thursday’s Margin Test With a $61.31 Fair Value Case
McCormick & Company Inc. (NYSE: MKC) trades around $46.86, against a fair value estimate of $61.31, putting the stock about 24% below that mark before Thursday’s Q2 report. The share price remains near depressed levels because the market still wants proof that margins can hold up.
The setup is not built on a broken business. First-quarter net sales rose 16.7%, adjusted EPS increased to $0.66 from $0.60, adjusted operating income climbed 19%, and the company reaffirmed its 2026 outlook. The problem is that packaged-food investors still care more about margins, commodity costs, and consumer pressure than brand stability.
At this price, McCormick looks like a defensive food name valued as if the earnings test already needs to be perfect.
Thursday’s Report Has to Prove Pricing Still Works
McCormick has already demonstrated pricing power and cost savings, but the next report needs to prove those gains can be sustained. Commodity pressure is still part of the outlook, so margin progress matters more than a simple sales beat.
A $61.31 Fair Value Estimate Keeps the Case Open
A stock sitting almost 40% below its 52-week high does not qualify as weak on its own. The discount matters because cash generation, brand reach, and steady demand leave room for the market to rethink the damage if Thursday’s numbers hold up.
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Travel & Leisure
Carnival is Sailing Into Uncertain Waters as Shareholders Look for Icebergs
Carnival Corporation & plc (NYSE: CCL) trades around $30.73 before Tuesday’s Q2 earnings call, with the stock carrying a forward PE of near 14x. The multiple is not distressed, but it still sits below the broader hospitality comparison, even after cruise demand has held up better than many expected.
The earnings setup is straightforward. Wall Street is looking for about $0.34 in EPS and roughly $6.69 billion in revenue. A beat would matter because Carnival has already rallied from weaker levels, and the market now needs evidence that pricing, occupancy, and onboard spending can continue to support the recovery.
At this price, you are not buying a forgotten stock. You are buying a travel recovery name where debt, fuel costs, and demand fears still keep the multiple from fully catching up.
Tuesday’s Report Has to Prove Demand Is Still Holding
Cruise stocks can look cheap until costs move the wrong way. Carnival needs to show that bookings remain strong enough to absorb fuel pressure and protect margin progress.
A Lower Multiple Keeps the Re-Rating Case Open
A near-14x forward multiple leaves room for relief if Tuesday’s numbers confirm the recovery. The stock does not need a perfect report, but it does need enough demand strength to keep the multiple discount from closing the wrong way.
Actionable Picks This Week
KB Home (NYSE: KBH) reports tonight after the close with estimates that got cut 43% over the past 90 days, which means the bar heading into this print is about as low as it gets for a major homebuilder.
The forward multiple sits well below the peer group, and the stock is trading below its 200-day moving average, both of which tell you pessimism has been doing a lot of work here. KB Home has beaten consensus in three of the last four quarters, so the track record gives the setup more structure than a pre-earnings guess.
A neutral-to-constructive comment on the back half order pace is all it needs tonight, not a blowout. The risk is that elevated mortgage rates keep the entry-level buyer on the sidelines longer than the recovery thesis requires.
Portland General Electric (NYSE: POR) just agreed to a $1.9 billion acquisition of PacifiCorp’s Washington state assets, adding roughly 140,000 customers and planting its flag in one of the most active AI data center power corridors in the country.
The stock trades near $50 against fair value estimates of $52 to $55 while paying a 4.38% annualized dividend yield, which means you are getting paid to hold a utility with a freshly expanded footprint.
The Warsh Fed holding rates while projecting possible hikes actually benefits a defensive income name with real infrastructure growth attached. The risk is a groundwater contamination lawsuit heading to trial in May 2027 that carries liability the current price may not fully reflect.
Broadridge Financial Solutions (NYSE: BR) has dropped more than 40% from its 52-week high of $271.91 while processing trillions of dollars in securities transactions annually for 75% of Fortune 500 companies, which is the kind of structural position that does not quietly disappear because the market is nervous.
The analyst consensus mean target implies 36% to 65% upside from current levels, the dividend has grown at 13% annually for a decade, and the CEO bought shares on the open market earlier this year.
EPS is forecast to grow nearly 10% annually over the next three years, with a 41% return on equity underneath it. The risk is that AI tools enable financial firms to bring more in-house, compressing the revenue base faster than the growth forecast accounts for.
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Fast Movers to Watch
Midland States Bancorp (NASDAQ: MSBI) swung from a net loss to $18.46 million in net income in Q1 2026, completed nearly $17.5 million in share repurchases, and added a new CFO, all in the same quarter, while earnings are projected to grow 42% annually.
An insider recently bought 9,400 shares for $249,000 with no selling to offset it, which is the kind of signal that tends to matter more than it looks on a small-cap name. A second confirming quarter of profitability is what turns this from a turnaround candidate into something harder to ignore.Bar Harbor Bankshares (NYSE: BHB) quietly grew both net interest income and net income year over year in Q1 2026 without generating much noise about it, which is kind of the point.
Consistent gains across both core banking metrics over multiple quarters are exactly the kind of pattern that compounds into something meaningful before anyone notices. This is a name you track through Q2 to see if the trend is durable or just one good quarter.Heritage Financial (NASDAQ: HFWA) finished its Olympic Bancorp acquisition and immediately showed up in the Q1 numbers, with net income climbing from $13.9 million to $18.9 million year over year and net interest margin expanding meaningfully in a single quarter.
Management is guiding toward further margin improvement by year-end, and the systems conversion expected in Q3 is where the full cost benefit of the deal is projected to land. The next two quarters are the ones that tell you whether this merger actually paid off.
One of value investing's most famous tools is the "P/B ratio" — price divided by book value. Ben Graham famously liked to buy stocks trading below book value. What does it mean when a stock trades at a P/B below 1?
Everything Else
Intel surged more than 10% to an all-time high after President Trump announced Apple had agreed to partner with Intel to design and manufacture chips in the United States, marking Intel’s largest external foundry win.
The Federal Reserve under Kevin Warsh held its benchmark rate steady, but nine of 18 dot plot members now project at least one rate hike by the end of 2026, sending bond yields higher and complicating the rate-cut narrative.
Digital Realty announced approximately $1.6 billion in acquisitions today, including 1,440 acres near Kansas City for hyperscale data center development and an increased stake to 77% in Teraco, Africa’s leading data center platform.
The S&P 500 closed above 7,600 for the first time and has broadly held those levels as markets now await the first quarter GDP and May PCE inflation data due later this week.
That's our coverage for today; thanks for reading! Reply to this email with feedback or any [blank] stocks you want me to check out.
Best Regards,
—Noah Zelvis
Undervalued Edge
