Chicago: 312-580-0900 | Suburban: 847-831-8831 | Family Office: 312-338-7788 | Financial Planning: 312-440-5028 | Benefits: 847-831-8831

Kuby’s Commentary

Broadly Better

Jun 3, 2024

Last Week

Following the pattern from the previous week, gains in a narrow band of mega-cap momentum stocks masked underlying weakness in the broader market on Tuesday to kick off the holiday-shortened trading week. The mood worsened on Wednesday as hawkish Fedspeak pushed interest rates higher and stock prices lower. On Thursday, weaker-than-expected results from Salesforce Inc (CRM) led to a slide in the Tech sector, while the overall market suffered from interest rate jitters in front of the PCE report that was on the calendar for Friday. The week ended on a more upbeat note, as traders breathed a sigh of relief after the PCE Price Index came in on target and showed a trend consistent with the downward trend in inflation during the past 12 months (see graph below). Despite the Friday bounce, the S&P 500 snapped its five-week winning streak after posting a 0.5% decline. The Nasdaq Composite set a record high on Tuesday but finished -1.1% for the week. Under the surface, the market was healthier, with Small and Mid Caps posting modest gains. The yield on the 10-year Treasury moved four basis points higher to 4.51%, with the dollar and gold relatively stable.

This Week

The May jobs report this week on Friday will be in focus. The update on nonfarm payrolls will be the last one before the Federal Reserve meets on June 11-12. The magnitude and timing of Fed rate cuts are widely debated amongst forecasters. A Fed Chair Jerome Powell portrait adorns the cover of Barron’s most recent edition, with the header “Why He Won’t Cut Rates This Year.” The essence of the argument is that even with 5.25%-5.5% Fed Funds rates, the economy is proving resilient. That combination puts the Fed into a corner where holding rates steady is the default option. The article also points out that the PCE increases in May and June 2023 were quite modest, which makes any year-over-year improvement difficult in the near term. It also suggests that the stock market has, and can continue, to perform well without rate cuts.

On the other hand, none of the Chicago professional sports teams are performing well. The Cubs and the Sox have combined for two wins in their last 20 games. The WNBA’s Chicago Sky, with talented rookies, is our only team that can be in the playoffs this summer.

Stocks on the Move

+73.0% Blue Bird Corp (BLBD) soared in May after posting record EBITDA for the second quarter and raising full-year guidance. Eric Kuby met with the company at the Craig-Hallum Annual Institutional Investor Conference and was pleased to hear about the robust demand for EV school buses, as well as ample opportunities for future EV solutions, such as last-mile delivery trucks.

+51.3% Rocky Brands Inc (RCKY) continues to execute ahead of expectations as the company reported a nice earnings beat at the end of April. The company has seen improvement due to cost savings initiatives and topline momentum.

+25.9% Superior Group of Cos Inc (SGC) was up in May after its first quarter earnings release indicated major operational improvements. As such, the Company raised its full-year sales and EPS guidance.

+24.8% Miller Industries Inc (MLR) is on a steady climb after posting another quarter of record revenues as the supply chain environment, particularly for chassis, has improved. Additionally, the company announced a $25M buyback program in April.

+23.7% Cantaloupe Inc (CTLP) shares rose in May as the company continues to execute its international expansion and aggressive selling of its subscription Point-of-Sale services. Eric Kuby met with the CTLP management team at the Craig-Hallum Institutional Investor conference and reiterated conviction in the name.

+21.1% Oil-Dri Corp of America Inc (ODC) was up in May on no significant company news.

+19.0% Select Water Solutions Inc (WTTR) was up in May despite a slight earnings miss at the end of April. The company continues to expand its connections via acquisition and multi-year contracts, as well as operate with enhanced profitability.

-18.6% WK Kellogg Co (KLG) gave back some of its YTD gains in May despite posting solid first quarter earnings and reiterating its guidance for FY24.

-14.7% The Eastern Company (EML) shares slumped in May, although the stock has done very well year-to-date. EML’s first quarter earnings, released on May 6, highlighted gross margin and earnings improvement, as well as a 35% increase in backlog, demonstrating increased demand for various truck assemblies.

-12.8% Quest Resources Holding Corp (QRHC) was down for the month, although its first quarter earnings release on May 9th painted a picture of enhanced client relationships (larger contracts), expanded operating margins, and other related ongoing improvements.

The stocks mentioned above may be holdings in our mutual funds. For more information, please visit

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates (“North Star”) may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one’s investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation’s Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.

Sign up to receive a weekly email with Kuby’s Commentary.

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

    Recent Kuby’s Commentaries
    Kuby’s Commentary & Quarterly Update Archives