John Bajkowski
is the president of AAII.
U.S. equities extended their advance in October, with the S&P 500 index reaching multiple new highs as stronger-than-expected corporate earnings drove market momentum. The S&P 500 gained 2.3% for the month, yet the rally remained narrow: The Magnificent Seven technology stocks, now 35.7% of the index’s market value, contributed 81.2% of the S&P 500’s total return. Without the Magnificent Seven, the index’s 2.3% total return would have been just 0.4%. Despite the S&P 500’s new highs, breadth weakened, as only 204 stocks advanced and 296 declined, with just six of the 11 S&P sectors posting gains. The weakness in market breath extended to the S&P MidCap 400 index and the S&P SmallCap 600 index, which were both down for the month.
Vanguard 500 Index fund 
(VFINX) advanced 2.3% in October, while the AAII Model Shadow Stock Portfolio declined 0.5%. Among small-cap benchmarks, Vanguard Small Cap Index fund (NAESX) gained 0.3%, while DFA U.S. Micro Cap I fund (DFSCX) declined 1.0%.
Year to date, small-cap stocks continue to lag larger companies. The S&P SmallCap 600 is up 3.3%, compared to a 5.3% gain for the S&P MidCap 400 and a 17.5% gain for the S&P 500. The Model Shadow Stock Portfolio is up 13.3% year to date.
Since its inception in 1993, the AAII Model Shadow Stock Portfolio has achieved a compound annual return of 13.2%, compared to 10.7% for Vanguard 500 Index and 9.9% for Vanguard Small Cap Index over the same period.
Within the S&P 500, there were 204 advancing issues, versus 296 declining issues—a 0.69 ratio, which has been dropping steadily since August. Six of the 11 S&P sectors posted gains in October, compared to eight in September. The information technology sector (+6.2%) was the leader again this month along with health care (+3.6%) and consumer discretionary sector (+2.4%). Materials (–5.0%) was the weakest sector for the second consecutive month. On a year-to-date total-return basis, all 11 large-cap sectors remain positive. The information technology sector is now the leader with a 29.9% gain, while the consumer staples sector is the weakest, up just 1.5%.
In the S&P MidCap 400, just three of the 11 sectors advanced in October. There were 141 advancing issues and 259 declining issues—a 0.54 ratio, down from 0.66 last month. The spread between the best-performing sector (information technology, +5.7%) and worst-performing sector (consumer staples, –5.8%) was 11.5 percentage points. Communication services remains the top-performing mid-cap sector year to date with a 26.8% total return, while consumer discretionary is the weakest sector, down 8.1%. Communication services has also led sector performance over the last year, up 27.0%, while materials (–9.9%) trails all sectors.
In the S&P SmallCap 600, five of the 11 sectors gained in October. Once again, the information technology sector (+9.2%) was the clear leader during the month, while the consumer discretionary sector (–8.0%) was the weakest. Year to date, information technology led as the strongest sector within the small-cap index (+21.9%), whereas consumer staples remains the weakest sector, down 17.7%. Breadth remained negative, but stabilized, with 222 advancing issues and 379 declining issues—a 0.59 ratio, up from 0.53 last month.
(VPG) rose after B. Riley Securities raised its price target, reflecting improved confidence in margin recovery, order trends and exposure to precision measurement demand across industrial and semiconductor markets.(GILT) advanced following a strong earnings report featuring nearly 60% year-over-year revenue growth, expanded profitability, raised guidance and sizable new contracts for its SkyEdge IV platform.(LAKE) benefited from improving sentiment amid stabilizing demand for protective apparel across industrial and emergency response customers.(GASS) gained modestly without any meaningful company news.(AMPY) fell amid soft oil prices and uncertainty around the company’s asset divestiture strategy. On October 29, Amplify Energy announced the sale of its East Texas assets for $127.5 million as part of a portfolio simplification and debt reduction plan. Shares rebounded strongly in early November after investors digested the impact of the divestiture.(CMT) declined ahead of its early November earnings release as investors anticipated weaker demand across commercial vehicle and industrial end markets.(EBF) drifted lower despite no company-specific news during the month, reflecting broader weakness in small-cap stocks.(ESCA) reported third-quarter 2025 results on October 30, showing essentially flat year-over-year sales. Lackluster demand trends weighed on investor sentiment.
Twenty-five companies passed the initial Shadow Stock screen on November 12, down from 27 last month. Of the qualifying companies, 10 are currently held in the Model Shadow Stock Portfolio, compared to 11 in the prior month. NCS Multistage returned to the list, while Amplify Energy and Rocky Brands Inc. (RCKY) fell off the initial qualifying list.
The Model Shadow Stock Portfolio targets micro-cap stocks trading at a price-to-book-value (P/B) ratio below 0.90. Stocks are not removed until their price-to-book ratio exceeds 2.70 (three times the initial limit). Once again, Gilat Satellite had the highest price-to-book ratio among portfolio holdings at 2.42 as of November 12, 2025.
Stocks are also removed from the Model Shadow Stock Portfolio when their market capitalization exceeds $1.2 billion (three times the initial $400 million limit) at the time of a quarterly review, provided a suitable replacement is available. As of November 12, 2025, Gilat Satellite also had the highest market cap in the portfolio at $859.7 million.
The next quarterly review of the AAII Model Shadow Stock Portfolio will occur around the beginning of December after most holdings have reported third-quarter 2025 results. Any changes to the model portfolio will be announced via the Model Shadow Stock Portfolio Update email. Sign up to ensure you don’t miss it!
(11/05/2025)
Alpha Pro Tech reported third-quarter 2025 earnings of $0.09 per share, up 12.5% from $0.08 per share in the prior-year quarter. Alpha Pro Tech does not have earnings coverage by S&P Global. Net sales were $14.8 million, up 3.7% year over year from $14.3 million. Income from operations was $1.1 million, up from $737,000 in the prior-year quarter. Building supply segment sales were $9.3 million, up 5.4% year over year from $8.8 million.
Core Molding Technologies, Inc. (CMT)
(11/04/2025)
Core Molding Technologies reported third-quarter 2025 earnings of $0.22 per share, down 53.8% from $0.36 per share in the prior-year quarter. Core Molding Technologies does not have earnings coverage by S&P Global. Net sales were $58.4 million, down 19.9% year over year from $73.0 million. Income from operations was $2.6 million, down from $3.6 million in the prior-year quarter. Gross margin increased to 17.4% of sales, compared to 16.9% of sales in the prior-year quarter.
Looking ahead, Core Molding Technologies expects full-year 2025 sales to decline 10% to 12% year over year. The company maintained its guidance for gross margins within the 17% to 19% range.
Covenant Logistics Group, Inc. (CVLG)
(10/22/2025)
Covenant Logistics Group reported third-quarter 2025 adjusted diluted earnings of $0.44 per share, down 20% from $0.55 per share in the prior-year quarter. Earnings were 1.0% above the S&P Global consensus estimate of $0.436 per share. Total revenue was $296.9 million, up 3.1% year over year from $287.9 million. Operating income was $7.9 million, down from $16.2 million in the prior-year quarter.
(11/04/2025)
DMC Global reported a third-quarter 2025 loss of $0.08 per share, down from earnings of $0.12 per share in the prior-year quarter. This was 420.0% lower than the S&P Global consensus estimate of $0.025 per share. Net sales were $151.5 million, down 1.0% year over year from $152.4 million. Income from operations was $610,000, down from $3.9 million in the prior-year quarter.
Looking ahead, the company expects fourth-quarter 2025 sales to be in the range of $140 million to $150 million.
(10/30/2025)
Escalade reported third-quarter 2025 diluted earnings of $0.40 per share, unchanged from the prior-year quarter. Escalade does not have earnings coverage by S&P Global. Net sales were $67.8 million, relatively unchanged year over year from $67.7 million. This was driven by increased sales in the archery, table tennis, billiards and safety categories, but offset by softer market demand in the basketball category and the strategic exit of certain categories. Operating income was $7.3 million, down 8.4% year over year from $8.0 million. Gross margin was 28.1%, up 3.3 percentage points from 24.8% in the prior-year quarter.
Friedman Industries, Incorporated (FRD)
(11/10/2025)
Friedman Industries reported diluted earnings of $0.32 per share for its fiscal second-quarter 2026 ended September 30, 2025, up from a loss of $0.10 per share in the prior-year quarter. Friedman Industries does not have earnings coverage by S&P Global. Net sales were $152.4 million, up 42.7% year over year from $106.8 million. Earnings from operations were $2.9 million, up from a loss of $224,000 in the prior-year quarter. During the quarter, the company experienced record sales volume, up 28.0% year over year.
Gilat Satellite Networks Ltd. (GILT)
(11/12/2025)
Gilat Satellite reported third-quarter 2025 adjusted earnings of $0.19 per share, up 35.7% from $0.14 per share in the prior-year quarter. Earnings were 90.0% higher than the S&P Global consensus estimate of $0.10 per share. Revenues were $117.7 million, up 57.8% year over year from $74.6 million. Operating income was $7.5 million, up 11.9% year over year from $6.7 million.
Looking ahead, the company narrowed its full-year 2025 revenue guidance from between $435 million and $455 million to between $445 million and $455 million.
Kimball Electronics, Inc. (KE)
(11/05/2025)
Kimball Electronics reported adjusted earnings of $0.49 per share for its fiscal first-quarter 2026 ended September 30, 2025, up 122.7% from $0.22 per share in the prior-year quarter. Earnings were 81.5% higher than the S&P Global consensus estimate of $0.27 per share. Net sales were $365.6 million, down 2.3% year over year from $374.3 million. Operating income was $14.5 million, up from $9.1 million in the prior-year quarter. The medical segment had the largest year-over-year sales growth at 13.0%, while the automotive segment’s sales declined 9.6% year over year.
(11/04/2025)
Mistras Group reported third-quarter 2025 adjusted earnings of $0.46 per share, up 130.0% from $0.20 per share in the prior-year quarter. Earnings were 58.6% higher than the S&P Global consensus estimate of $0.29 per share. Revenue was $195.5 million, up 7.0% year over year from $182.7 million. Income from operations was $20.4 million, up 71.9% year over year from $11.9 million.
Looking ahead, the company expects full-year 2025 revenue to be between $716 million and $720 million, representing essentially flat performance as efforts to exit unprofitable businesses continue.
(11/05/2025)
NACCO Industries reported third-quarter 2025 diluted earnings of $1.78 per share, down 16.8% from $2.14 per share in the prior-year quarter. NACCO Industries does not have earnings coverage by S&P Global. Revenues were $76.6 million, up 24.3% year over year from $61.7 million. Operating profit was $6.8 million, down 65.6% year over year from $19.7 million. Tons of coal delivered was 14.4 million, up from 12.0 million in the prior-year quarter.
Looking ahead, the company anticipates fourth-quarter 2025 operating profit comparable to the prior-year quarter.
Natural Gas Services Group, Inc. (NGS)
(11/10/2025)
Natural Gas Services reported third-quarter 2025 diluted earnings of $0.453 per share, up 11.5% from $0.40 per share in the prior-year quarter. Earnings were 35.3% higher than the S&P Global consensus estimate of $0.335 per share. Total revenue was $43.4 million, up 11.1% year over year from $40.7 million. Rental revenue grew, while sales and aftermarket services revenue decreased.
Looking ahead, the company raised its full-year 2025 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance to between $78 million and $81 million.
(10/28/2025)
Olympic Steel reported third-quarter 2025 diluted earnings of $0.19 per share, down 21.7% from $0.23 per share in the prior-year quarter. Earnings were 24.0% lower than the S&P Global consensus estimate of $0.25 per share. Net sales were $490.7 million, up 4.4% year over year from $470.0 million. Operating income was $7.3 million, down from $7.8 million in the prior-year quarter.
(10/28/2025)
Olympic Steel and Ryerson Holding Corp. (RYI) entered into a definitive merger agreement that will create the second-largest metals service center in North America. Olympic Steel shareholders will receive 1.7105 Ryerson Holding shares per Olympic Steel share and will own approximately 37% of the combined entity. The merger is anticipated to close in early 2026, subject to regulatory and shareholder approvals. Ryerson Holding CEO Edward Lehner will serve as CEO of the merged company, while Olympic Steel CEO Richard Marabito will become president and COO. Olympic Steel executive chairman Michael Siegal will become chairman of the board of directors.
Pangaea Logistics Solutions Ltd. (PANL)
(11/06/2025)
Pangaea Logistics Solutions reported third-quarter adjusted earnings of $0.17 per share, down 29.2% from $0.24 per share in the prior-year quarter. Earnings were 466.7% higher than the S&P Global consensus estimate of $0.03 per share. Total net revenue was $168.7 million, up 10.2% year over year from $153.1 million. Income from operations was $16.9 million, up 12.8% year over year from $15.0 million. Charter revenue saw the largest growth at 91.3%, with voyage and port revenue increasing 7.0% and 30.8%, respectively.
Park-Ohio Holdings Corp. (PKOH)
(11/05/2025)
Park-Ohio Holdings reported third-quarter 2025 adjusted earnings of $0.65 per share, down 39.3% from $1.07 per share in the prior-year quarter. Earnings were 21.7% lower than the S&P Global consensus estimate of $0.83 per share. Net sales were $398.6 million, down 4.5% year over year from $417.6 million. Operating income was $17.3 million, down 26.7% year over year from $23.6 million.
Looking ahead to full-year 2025, the company expects net sales of $1.6 billion to $1.62 billion and adjusted earnings of $2.70 to $2.90 per share.
(10/28/2025)
Rocky Brands reported third-quarter 2025 adjusted diluted earnings of $1.03 per share, up 33.8% from $0.77 per share in the prior-year quarter. Earnings were 14.4% higher than the S&P Global consensus estimate of $0.90 per share. Net sales were $122.5 million, up 7.0% year over year from $114.6 million. Income from operations was $11.7 million, up from $10.1 million in the prior-year quarter.
Smith Douglas Homes Corp. (SDHC)
(11/05/2025)
Smith Douglas Homes reported third-quarter 2025 diluted earnings of $1.435 per share, down 58.6% from $0.58 per share in the prior-year quarter. Earnings were 448.4% higher than the S&P Global consensus estimate of $0.262 per share. Home closing revenue was $262.0 million, down 5.7% year over year from $277.8 million. Home closings were 788, down 3% year over year from 812. Net new home orders were 690, up 15% year over year from 600.
Vishay Precision Group, Inc. (VPG)
(11/04/2025)
Vishay Precision Group reported third-quarter adjusted earnings of $0.26 per share, up 36.8% from $0.19 per share in the prior-year quarter. Earnings were 30.0% higher than the S&P Global consensus estimate of $0.20 per share. Net revenues were $79.7 million, up 5.3% year over year from $75.7 million. Sensors segment revenue was $31.6 million, up 12.1% year over year from $28.2 million. Weighing solutions segment revenue was $27.5 million, up 9.4% year over year from $25.2 million.
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