Hot or Not, Stock Market Edition: 12/05/2025

Happy Friday. Here’s what’s hot and what’s not today in the stock market: 

• Hot: US Foods (USFD) gets upgraded to Buy; Best Buy (BBY) catches a fresh wave after beating expectations
• Not: Alibaba (BABA) gets downgraded despite analyst optimism; Home Depot (HD) shows tepid fundamentals

P.S. For more stocks making moves, check out our Zen Ratings Upgrades & Downgrades screener.

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🔥 HOT: US Foods (USFD) may not be an exciting stock, but it’s consistent — this past Stock of the Week pick is up 7% in the past year, and a recent presentation at Morgan Stanley's Global Consumer & Retail Conference suggests management is confident in the growth trajectory. The data backs up this theory — USFD currently has a B (Buy) rating in our Zen Ratings system, an above-average rating among the 4600+ stocks we track based on our 115-factor review. Digging into the Component Grades for more insight, you'll find above-average B grades in several key areas like Financials, Growth, Safety, and Sentiment. Perhaps most impressive: USFD ranks #1 out of 10 stocks in the Food Distribution industry, which itself earns an A rating — a sign that not only is this company leading the pack, but it's leading in a sector with solid fundamentals. 

🥶 NOT: Home Depot (HD) is stuck in a home improvement slump that even a partnership with Instacart Canada and bold moves to keep prices low can't seem to fix. The stock is down 12% in the past 3 months and was just downgraded from a C (Hold) to a D (Sell) in our Zen Ratings system. The home improvement giant's woes are amplified by its Industry Grade of D — ranking dead last at #6 out of 6 stocks in the Home Improvement sector. When you're bringing up the rear in an already-struggling industry, that's a double red flag. The Component Grades tell a sobering story: Value and Safety receive Cs, while Growth and Sentiment earn disappointing Ds. Recent headlines like "Risk-Reward Not Attractive Relative To The Market" and concerns about consumers shifting to discount retailers like Walmart paint a picture of a company caught between macro headwinds and intensifying competition. While some analysts see a housing recovery on the horizon, expectations of merely "mirroring the market" suggest limited upside even in a best-case scenario. The bottom line? There are better places to park your money while Home Depot waits for the housing market to turn around.

🔥 HOT: Best Buy (BBY) is suddenly looking pretty interesting — and not just because Jim Cramer said so. The electronics retailer just got upgraded from C (Hold) to B (Buy) in our Zen Ratings system following a standout Q3 performance that beat Wall Street expectations on both revenue and earnings. While the price action hasn’t met the excitement (yet), there’s reason to believe it could, thanks to a potent combination of stronger-than-expected tech demand, raised full-year guidance, and what appears to be the early innings of a tech refresh cycle. While the Component Grades are mostly average Cs for areas like Value, Growth, and Momentum, there's one standout: Financials earn a strong B rating, reflecting the company's operational discipline and ability to generate cash even in challenging retail environments. (Here’s why Financials matter.) The stock ranks #5 out of 39 in the Retail industry, placing it in the upper tier despite the sector's C rating. With multiple recent headlines highlighting the "great quarter" and analysts buzzing about a potential tech upgrade cycle, there's momentum building here that the market is just starting to recognize. Our take? It’s definitely one to watch. 

🥶 NOT: Is e-commerce giant Alibaba (BABA) losing its luster? Despite being up 80%+ in the past year, the stock just got downgraded from C (Hold) to D (Sell) in our Zen Ratings system — a red flag that can't be ignored. Here's the head-scratcher: multiple Wall Street heavyweights including Citigroup, JP Morgan, and Barclays are maintaining bullish ratings on BABA, yet our quant-based approach is flashing warning signs. Yet despite bullish analyst commentary highlighting long-term potential in e-commerce, cloud, and AI, the data suggests these catalysts aren't translating into the kind of performance that would justify a buy. Perhaps the answer lies in the Component Grades that shape BABA's overall D (Sell) rating. While the stock earns a respectable B for Momentum, nearly everything else is concerning: a mere C for Value and Ds for Growth, Safety, and Sentiment. While some analysts see a buying opportunity in the "current setback," our 115-factor review paints a picture of fundamental weakness across multiple dimensions. For cautious investors, this lands solidly in Sell territory.

What to Do Next?

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