New spinoff firms tend to move sideways in the first year or two while they build a record of earnings and other data that investors can analyze. While these two recent spinoffs have moved up lately, we see better opportunities for your new buying.

MATTHEWS INTERNATIONAL CORP. $25 is a hold. The company (New York symbol MATW; Manufacturing sector; Shares outstanding: 31.0 million; Market cap: $775.0 million; Dividend yield: 4.2%; Takeover Target Rating: Medium; www.matw.com) has two businesses: Industrial Technologies makes a variety of products such as batteries and warehouse robotics equipment; and Memorialization makes caskets and gravestones.


Activist investment firm Barrington Capital Group, which owns about 3% of Matthews’ stock, recently lost a proxy fight to install three of its representatives on the company’s board of directors.

We pay attention to activist investors, as they tend to target companies with undervalued assets that can be sold or spun off. Both of those can add significant value. However, these two activist targets have limited short-term prospects.

FedEx recently announced that it would spin off FedEx Freight as a separate company. This business is a leading provider of less-than-truckload (LTL) services, which puts freight from multiple customers onto a single vehicle.


Investors will only be liable for capital gains taxes when they sell their new shares. The company expects to complete the transaction in mid-2026.



The new FedEx Freight business will have over 30,000 vehicles that handle an average of 92,000 shipments a day. About 66% of its annual revenue of $9.4 billion comes from priority shipments (items that must be delivered quickly) and 34% from slower, lower-priced shipments. The new firm could also become an attractive takeover target.



The spinoff is part of a broader plan to improve efficiency and cut costs. That will put Fed- Ex in a better position to adapt to new tariffs as well as spur its long-term profitability.

WK KELLOGG CO. $23 is a hold. The company (New York symbol KLG; Consumer sector; Shares outstanding: 86.3 million; Market cap: $2.0 billion; Dividend yield: 4.1%; Takeover Target Rating: Highest; www.wkkellogg.com) makes breakfast cereals and related products for the North American market. Top brands include Special K, Raisin Bran, Corn Flakes, All-Bran and Froot Loops.


On October 3, 2023, iconic foodmaker Kellogg Company split into two independent firms—WK Kellogg and Kellanova. Investors received one WK Kellogg share for every four Kellogg shares they held. The former parent then changed its name to Kellanova.

Conglomerate General Electric has now completed its plan, first announced in 2021, to split into three publicly listed firms: GE Aerospace (jet engines), GE Vernova (electrical power equipment), and GE HealthCare (x-ray machines and MRI scanners).


Share prices for all three of these companies are up since the split. That’s because investors prefer pure-play firms, which are easier to compare with competing investments.



While we like the long-term prospects for all three, we prefer GE HealthCare for your new buying.

Understanding our recommendations: Power Buy—These stocks are our top choices for new buying now. We feel each currently offers the best combination of fundamentals (earnings, sales, cash flow and so on) plus external factors (industry trends and the current share price) to give it a chance of above-average gains. Buy—high-quality stocks with strong growth prospects. However, they are likely to grow at a slower rate than our Power Buys. Sell—these are stocks that no longer inspire our confidence. As Power Growth Investor focuses on maximizing profits for aggressive investors, we prefer to sell poorly performing stocks instead of holding them and waiting for a rebound. TP—Take Profits; these are more aggressive stocks that have given us a quick return and we therefore recommend investors lock in a gain by selling all or part of their holdings. That also frees up cash for new investment in our Power Buys.

Both of these firms are profitable and are well positioned to keep prospering. Trends underway as well as the strong position of each firm in its key markets will power future gains. Both of these leaders are buys.

Warner Music is now laying off an unspecified number of employees as part of a restructuring plan to cut costs. It already laid off 600 employees, or 10% of its workforce in 2024. Meanwhile, the company and global private investment firm Bain Capital are launching a joint venture for the purchase of up to $1.2 billion in music catalogues across both recorded music and music publishing.

Long-time readers know that we aim to keep you informed of important news about the stocks we cover. That means highlighting developments and plans that promise to bolster investor gains. Here are two buys that stand out this month: