Market Extremes Flash Warning Signs: Deere Stock Soars While Dave & Buster’s Circles the Drain

The markets had a bad day on Tuesday. Two of the three main indices lost ground -- the S&P 500 lost 0.71% while the Nasdaq was down 1.03% -- while the Dow Jones Industrial Average managed to finish unchanged on the day. 

As a result, the NYSE had 181 securities hitting new 52-week highs compared to 48 new 52-week highs. Meanwhile, on the Nasdaq, new 52-week lows outnumbered the new 52-week highs fivefold, 317 to 65. 

The only good news about new 52-week lows is that most of the damage was done to interest-sensitive securities. On the NYSE, about 48% of the new lows were either interest-sensitive preferred shares or debenture issues, while on Nasdaq it was about 20%. 

This morning I read a good article from MarketWatch contributor Mark Hulbert. He is one of only a handful of writers that I have followed religiously over the years. He tends to bring reality to the markets. 

In Hulbert’s Aug. 24 commentary, the veteran investment journalist discussed how overvalued the stock market is, noting that eight of nine valuation indicators with strong long-term track records point to lower returns over the next 10 years.  

“The average projected return of all nine indicators is a total real return of negative 3.2% annualized over the next decade,” Hulbert stated. 

Take that in your pipe and smoke it. 

I agree with Hulbert’s sentiment. I’ve spent most of 2026 unexcited about almost all stocks, which is tough when your task is to write about the ones to buy and sell. Occupational hazard, I guess. 

Of the stocks hitting new 52-week highs and lows yesterday, I’ve honed in on four that I believe will either keep rising or falling.

New 52-Week High: Deere Should Keep Moving Higher

Deere (DE) hit a new 52-week high of $677.89 yesterday, the 25th new high in the past 12 months. Its shares are up 43% in the past year. 

Not only is the agriculture equipment maker hitting new 52-week highs, but it’s also hitting all-time highs. Since hitting a 5-year low of $283.81 in July 2022, its shares have gained 139%. I expect Deere stock to add to that in the final four months of 2026 and into 2027. 

Why? Because the world’s farmers will continue to need and want Deere’s products. 

Baird analyst Mircea Dobre upgraded DE stock on Monday to Outperform from Neutral, upping his target price to $800 from $640. 

The analyst believes the North American agricultural market will improve in 2027, leading to a return to a profitable corn market and better soybean economics. The U.S. and Canada accounted for 62% of Deere’s revenue in Q2 2026. It’s a big deal for future revenue and profit growth as farmers’ financial coffers get refilled. 

Deere’s management has said the agricultural equipment replacement cycle bottomed in 2026, giving Deere shareholders reason to be optimistic that business in its biggest market (U.S.) will improve. 

Baird estimates that improving margins could lead to $35 in earnings per share by 2028. DE stock currently trades at 38 times Wall Street’s 2026 EPS estimate of $18.13. If this long-term projection comes to fruition, even without multiple expansion, it could trade around $1,330 by the end of 2028, an annualized return around 40% over the next 28 months. 

Food for thought.  

New 52- Week High: The Chef’s Warehouse is Due for a Fall

The Chef’s Warehouse (CHEF) hit a new 52-week high of $117.65 yesterday, the 37th new high in the past 12 months. Its shares are up 79% in the past year and nearly 300% over five years. 

The company reported Q2 2026 results before the markets opened on July 29. Investors liked what they heard. CHEF’s gained 14% since then. 

The specialty food distributor and supplier to hospitality businesses grew second-quarter sales by nearly 13% to $1.17 billion, while its bottom-line adjusted net income per share was $0.78, 50% higher than a year earlier, and beat the consensus estimate by 22%.  

Higher margins and volume did the trick. Can they keep it going? The company’s guidance calls for $4.55 billion in sales in 2026 at the midpoint, up 10% from 2025. On the bottom line, the analyst EPS estimate is $2.54, according to S&P Global Market Intelligence. 

Valuation is the big concern here. CHEF trades at 46 times Wall Street’s estimate. Except for a short time in the second half of 2021, this is the stock’s highest multiple since going public in July 2011. 

Despite the nosebleed valuation, analysts like it. Of the 10 that cover it, 8 rate it a Strong Buy (4.6 out of 5), with a target price of $120.10, about $5 higher than its current share price. 

Priced to perfection, this is not a stock you want to own in a valuation-heavy market environment. It’s likely to fall back below $100 by the end of 2026.  

New 52-Week Low: Better Times Ahead for Builders Firstsource 

Builders Firstsource (BLDR) hit a new 52-week low of $62.31 yesterday, the 40th new low in the past 12 months. Its shares are down 54% in the past year. 

I remember when this stock could do no wrong. Back in August 2022, for another publication, I recommended the building materials distributor and manufacturer because it had a ridiculous free cash flow yield of 26.4%.

At the time, its shares were around $66. Over 19 months, the shares increased 325% to an all-time high of $214.70 on March 1, 2024. BLDR has given all that back in the 30 months since. 

What the heck happened? 

The housing market didn’t help. It’s been relatively dormant for most of that time. BLDR is one of 44 stocks held by the iShares U.S. Home Construction ETF. It’s down about 15% over the same period. Almost everything related to homebuilding remains stuck in neutral. 

Going back to the company’s free cash flow yield, Builders’ trailing 12-month free cash flow ended June 30 was $639 million, down from $2.83 billion in the same 12-month period in 2022. That’s a big step down. 

Based on its current enterprise value of $11.93 billion, its free cash flow yield is 5.4%—I consider anything between 4% and 8% to be fair value. At the same time, while it’s not a screaming buy, I do think that most of the damage of a poor housing market has already been built into its share price. 

I don’t think BLDR is a stock that risk-averse investors should own here, but if you’re aggressive, better to be early than late to the revival. 

New 52-Week Low: The Start of the NFL Season Can’t Help Dave & Buster's Entertainment 

Dave & Buster's Entertainment (PLAY) hit a new 52-week low of $8.36 yesterday, the 38th new low in the past 12 months. Its shares are down 65% in the past year. 

Dave & Buster’s has been a public company twice since its founding in 1982 in Dallas. 

The first time, under the majority ownership of Edison Stores, it was spun off into its own independent public company in 1995. Wellspring Capital Management took it private in 2006 for $375 million. 

It was sold for $570 million two years later to Oak Hill Capital Partners. Oak Hill took the company public in October 2014 at $16 a share. PLAY now trades at around half that. Oak Hill is long gone, having sold its last stake in early 2017 when the shares were in the $60s. 

At least somebody made money off the company. This is a business that should not be public. Its earnings are too volatile. 

Dave & Buster’s is expected to lose 89 cents a share in 2026 and 73 cents in 2027. It has a market cap of $294 million, but an enterprise value 13 times that amount because of a massive amount of debt (approximately $3.54 billion in the latest quarter), which is nearly six times its $393 million in EBITDA (earnings before interest, taxes, depreciation and amortization). 

In short, it has to invest a lot of capital, which doesn’t deliver a sufficient return. Its Altman Z-Score currently is 0.81, the lowest it’s been since 2020; and before that--never. 

I could see it trading for pennies within the next 12-18 months.