By Jack Hough

"This isn't bear porn," insists an online memo that is said to have recently sent the U.S. stock market lower. What follows, of course, is Larry Flynt--level stuff, financially speaking: the porniest bear porn that a bear could ever porn. Artificial intelligence will apparently render much of white-collar work obsolete, leading to mass layoffs, falling spending, widespread defaults, a stock crash, a mortgage crisis, and plunging house values.

This is a theoretical look back from 2028 -- a "scenario, not a prediction," according to the publisher, a subscription newsletter service called Citrini Research. Any investor panic the writing caused was short-lived, although if fiction can now tank stocks, I'm a little worried about what Moby-Dick means for SeaWorld's parent company, or Don Quixote for the wind energy sector.

Stock buyers should look past the doomsaying. "If you invest only for the worst-case scenario, you will never be invested," writes Keith Lerner, chief market strategist at Truist Wealth, of the Citrini upheaval. The challenge, however, is finding buys in what can look like a nothing-to-buy market. AI stocks are sliding from lofty levels, and as I discussed here last week, just about everything else has recently run up -- value, small-caps, cyclicals, staples, and more. Is it better to suddenly get a 30% discount on a high-margin software maker that looks vulnerable to Claude Code do-it-yourselfers, or pay a 30% markup for something that's struggling to grow, like an off-patent drug marketer best known for hanky-panky pills that launched when Seinfeld was still airing new episodes? Nothing personal, Viatris.

To dig up some ideas for further research, I screened the S&P 500 for stocks with recent Wall Street upgrades to Buy or some such, and in cases where shares have jumped year to date, I looked for earnings estimate revisions that help justify the gains, or a valuation that remains approachable. I viewed a lack of an AI story line as a plus, but not a requirement.

Let's start with pizza and jelly. J.P. Morgan says it's time to nibble on Domino's Pizza, citing market share gains and what it calls remarkable stability -- only 23 units out of 7,186 have closed over the past three years. The stock, at 20 times this year's earnings, is down this year despite a broader restaurant run-up. Investors might be nervous over comparisons with February through May last year, when Domino's rolled out stuffed crust, a DoorDash partnership, and a $9.99 deal for any pizza. JPM says no problem, and that expanded chicken offerings should help.

BofA Research's bullish turn on J.M. Smucker stems from the company saying recently that takeovers aren't a strategic focus. That's good, because it's $5.6 billion deal for Hostess in 2023 has already been written down by about $2 billion. BofA views the damage there as done; Hostess has shrunk from 15% of company revenue to 11%. Meanwhile, around three-quarters of Smucker's revenue comes from stuff that's fairly safe from being hit by obesity meds, like coffee, pet food, peanut butter, and overseas products. Shares are up 20% this year but still trade at around 12 times projected earnings for the next four quarters.

Southwest Airlines shares are up 23% this year, but the earnings consensus is up twice as much. Both TD Cowen and UBS recently turned sweet on the shares. TD likes that rising industrywide demand is meeting restrained supply. UBS predicts more upside to come from Southwest's new fees for bags, assigned seats, and extra legroom. Shares fetch 12 times earnings.

Landman fans know the Permian basin as the dusty surrounds of Midland, Texas, where Billy Bob Thornton's character smokes and swears his way through corporate skulduggery, drug cartel run-ins, and family fireworks, against the backdrop of a shale drilling boom. The reality, oilwise, is that output there is huge but flattening, and big operators are focused on cash flow, not growth. Attention has turned to the relatively untapped Stabroek Block, 120 miles off the coast of Guyana.

Chevron is acting prudently in the Permian, according to recent upgrader Melius Research, and its deal last year for Hess makes it a big Guyana player. It's also first in line to profit from rebuilding output in Guyana's neighbor, Venezuela. The shares are up too much for comfort, 22% this year, and at a glance, they cost too much, at 27 times earnings. But they're a more reasonable 16 times free cash flow, and earnings after this year could double in as little as three years.

Rayonier needs a new name, in case you have any ideas. Maybe DoubleWood -- a merger on Jan. 30 combined its two million acres of timberland with PotlatchDeltic's just over two million acres. The combined real estate investment trust has a half dozen sawmills and a big plywood facility, and intends to keep the dividend in line with Rayonier's recent payout, suggesting a yield of 5% or so. Raymond James, which went to Strong Buy from Outperform on the stock, sees share buyback potential. DoubleWood, or whatever name the company will announce later this quarter, also stands to make money from real estate development and deals for solar, carbon storage, and minerals. Shares trade at 14 times projected funds from operations.

One more from Raymond James: Genuine Parts. It was up 21% for the year at one point, but now it's down 5%. Earnings came in well short of estimates, and management announced a plan to separate its automotive business from its industrial one. The shake-up might have cheered investors, except that the stock's plump dividend yield and 70-year history of payout increases will get a rethink at the time of the split. The analyst who upgraded shares to Strong Buy calls the setup "constructively asymmetric," which is Wall Street for more to gain than lose, and he points to sum-of-the-parts math: Valuing the peppy industrial part at 15 times earnings, North American auto at 10 times, and overseas auto at eight times yields a $145 stock price, versus a recent $117.

Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.

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February 27, 2026 13:03 ET (18:03 GMT)

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