Spotting Winners: Verizon (NYSE:VZ) And Wireless, Cable and Satellite Stocks In Q3

By Ben Fritz

LAS VEGAS — At a development here called Area15, it looks like a Boeing 747 crashed into a warehouse above a maze full of monsters, right next to an extradimensional supermarket.

It might be the next generation of theme parks.

Entertainment companies and developers are rushing to create a high-end middle market for out-of-home entertainment — something more exciting than minigolf, but less encompassing and daunting than Walt Disney World. They are designed for a family or group of friends to spend a few hundred dollars in an afternoon, rather than several thousand over a week in Orlando, Fla.

Like traditional theme parks, they feature immersive experiences, often tied to popular movies and TV shows, alongside restaurants, bars and shops. They cost tens or hundreds of millions of dollars to build in a matter of months, compared with full-scale theme parks that take billions of dollars and several years.

"The appetite from consumers is there 100%," said Rahul Gautam, who oversees media and entertainment in the Americas for the consulting firm EY. "And the middle of the market is the most underserved today."

Area15 opened in the early 2020s and is now building out its second zone, which includes Comcast-owned Universal Horror Unleashed, the John Wick Experience and, soon, a Museum of Ice Cream. A third zone with a sports theme is in planning stages.

Netflix opened its first permanent destinations, called Netflix House, over the past two months at shopping centers near Philadelphia and in Dallas.

Entertainment companies are counting on experiences to be their biggest growth engine for the next several years, as television keeps losing eyeballs to YouTube and box-office sales remain soft.

Designers said they are tapping into people's eagerness to get off their phones and create memorable in-person experiences, along with concern about the high cost of traditional theme-park vacations.

"Movies and shopping malls are getting less popular, so there's this opportunity for new things that aren't a full-day destination at the same moment there's a growing desire for experiences out in the world with other people," said Ann Morrow Johnson, global immersive and entertainment leader at the Gensler architecture firm, which worked on Area15 and Netflix House.

Theme-park attendance in the U.S. has been flat for the past couple of years, according to the Themed Entertainment Association trade group and public company filings. Disney and Universal are investing tens of billions of dollars to expand their parks and build new ones in hopes of attracting more people and getting them to spend more.

But their big resorts in Florida and California are no longer the only ways to have fully immersive entertainment experiences built around stories and characters.

The new emerging middle has in part grown out of alternative-reality games and escape rooms that became mainstream entertainment in the 2010s. The Santa Fe, N.M.-based art collective Meow Wolf is a leader in the space and designed the Omega Mart experience that was the anchor tenant for Area15 when it opened.

Located on the edge of an industrial park several minutes from the Las Vegas Strip, Area15 was built to house numerous immersive experiences. Rather than buying one costly ticket for a full day of attractions, visitors walk past artwork from the nearby Burning Man festival and select the experiences they want to pay for .

"We think of it as an open world of different brands and food-and-beverage experiences, and then we're the thread between them," said Area15 Chief Executive Winston Fisher.

Universal Horror Unleashed, which opened in August at Area15, is a permanent version of the Halloween Horror Nights experience that Universal Studios puts on at its theme parks every October, with mazes based on "The Texas Chainsaw Massacre" and "The Exorcist." The John Wick Experience, based on the Lionsgate action franchise, lets visitors go on a mission through the movies' Continental Hotel. Area15 also has virtual and real-world games as well as immersive art, and is turning the 747-like shell into an event space.

Las Vegas, where the third Netflix House is scheduled to open in 2027, is a popular home for smaller-scale attractions because it has a large local population and draws millions of tourists.

The streaming company built hundreds of pop-up and touring experiences to promote its shows in the past, but is now delving deeper into the business with locations that feature immersive experiences based on popular Netflix series including "Wednesday" and "Squid Game." Unlike traditional theme parks that bet an attraction will be popular for decades, Netflix's are modular, meaning they can move between Netflix Houses and be replaced as demand wanes.

"Real estate is the biggest expense, so for us it's better to have a permanent space and then swap in attractions," said Netflix Chief Marketing Officer Marian Lee.

Universal plans to swap out occasionally the mazes in Horror Unleashed, which will open a second location in Chicago in 2027.

North of Dallas, meanwhile, the company is opening a new type of theme park in the months ahead: one just for young children and small enough to experience in a single day, with rides based on "Shrek" and "Minions."

"We want younger children to build a love for our properties and then as they get older, go to our big resorts," said Page Thompson, Universal's president of new ventures.

Write to Ben Fritz at ben.fritz@wsj.com

By Patience Haggin and Peter Grant | Photographs by Jake Dockins for WSJ

DALLAS — This city is a hotbed for commercial property. The metro area's population is booming and financial-services firms are flocking here, earning the area the sobriquet "Y'all Street."

Yet at its heart is one of the country's worst-hit central business districts: Downtown Dallas.

Companies are abandoning this neighborhood and its aging office towers. They are heading to the Uptown district or the thriving suburbs, often over concerns about crime and homelessness. Left behind are defaulted loans, foreclosures and deeply discounted property sales.

Real-estate investors purchased $51.7 million worth of office property in downtown Dallas in the first three quarters of this year, compared with $1.8 billion in Dallas's suburban markets, according to data firm MSCI.

Dallas's downtown has the second-highest office vacancy rate of any in the nation, behind Seattle. Downtown Dallas, the central business district, was at 27.2% at the end of the third quarter, according to real-estate data firm CoStar. In Dallas's Preston Center district, 7 miles away, the office vacancy rate was only 5.9%.

Now some of the last pillars supporting downtown are on shakier ground. Cincinnati-based Fifth Third Bancorp recently agreed to acquire Comerica, one of downtown Dallas's largest financial tenants. Fifth Third hasn't said whether it will close the 320-employee office in downtown Comerica Bank Tower. Brokers and other real-estate professionals say office-space consolidation is common in the wake of such mergers. The company said it is evaluating its real-estate portfolio, but remains committed to keeping a strong presence in Dallas.

Dallas City Manager Kimberly Bizor Tolbert said she is focused on keeping AT&T in its downtown headquarters. She said AT&T has indicated in meetings that it is thinking about leaving. AT&T's headquarters has about 6,000 employees, according to company filings. AT&T declined to comment on its plans, saying discussion of its potential departure was "based on rumors and speculation."

AT&T's lease expires at the end of 2031. It is considering a few suburban campuses, including the former headquarters of Electronic Data Systems in Plano, according to people familiar with the matter. It also has had discussions with the owner of a sprawling Plano complex with pickleball courts, a golf simulator and a gaming arcade, said people with knowledge of those conversations.

A hole at the core

Many of the forces weighing on downtown Dallas — from remote work to homelessness — are afflicting other urban core neighborhoods. Businesses and investors have fled the downtown districts of St. Louis, San Diego and Portland, Ore., for the relative tranquility of neighboring suburbs.

Downtown Dallas's deterioration shows how uneven the office recovery has become — even in a prime Sunbelt region widely seen as an economic winner.

Part of Dallas's problem is that the city never developed around a single, dense central business district in the way older Northeastern cities did. Instead, its growth followed highways and corporate campuses to produce a metro area with multiple business hubs, like Las Colinas, Preston Center, Frisco, Plano and Legacy West.

The pattern accelerated in the 1990s and 2000s with the growth of Dallas's Uptown district, just to the north, which attracted many finance, law and technology businesses.

Dallas entered the postpandemic era with more competitive suburban nodes than most U.S. cities. They offer modern buildings closer to where employees live, abundant parking and amenities like gyms and outdoor spaces.

Downtown, by contrast, was left with an older building stock, making it far more vulnerable when office demand fractured.

The Dallas region offers a relatively affordable cost of living and a low-tax, business-friendly environment that appeals to financial firms. Nasdaq, which has an office in Irving, Texas, announced earlier this year that it would expand in the region. A Texas branch of the New York Stock Exchange is planning an office north of downtown.

Goldman Sachs is building an 800,000 square foot campus in the Victory Park area northwest of downtown, which will accommodate more than 5,000 workers. The firm hasn't said whether it plans to close its existing downtown office, which already anchors its largest U.S. workforce outside New York.

The city fights back

The pull of suburban markets has forced Dallas officials to fight on multiple fronts to keep the city's biggest names from leaving downtown.

Saks Global, which acquired the Neiman Marcus department store chain last year, has considered closing its 111-year old location on Dallas' Main Street.

The company has said the overwhelming majority of Dallas Neiman Marcus customers prefer to shop at the store in NorthPark Center, an upscale mall about 7 miles from downtown. Saks is planning a $100 million renovation of that location.

Saks has agreed to keep the downtown store open into next year and consider ways "to potentially reimagine" the nine-story space, the company said. The new incarnation may create event space for art and fashion shows — and leave a lot less space for classic retail.

One potential challenge for keeping companies downtown is crime and homelessness. Tolbert said AT&T has expressed concerns about public safety.

This year AT&T's headquarters campus, which includes an open plaza, has had incidents of assault, trespassing and a brandished knife and gun, according to police reports.

The city has increased its downtown police presence and homelessness services. Downtown Dallas Inc., a nonprofit that supports the area's economic development, provides additional security guards. Downtown violent crime for the first 11 months of 2025 declined 12% from the prior-year period, police figures show.

"We as a city have decided we're going to be very aggressive about not letting things get out of control," said Jennifer Scripps, chief executive officer of Downtown Dallas Inc.

Not all of the news is bad for downtown. Landlords have tried to reshape the district as a more livable neighborhood, rather than a pure office zone. It is the nation's third leading downtown for office-to-residential conversions, according to a report this year by real-estate services firm CBRE. It also is poised for a lift from a $3.7 billion convention center redevelopment, slated to be completed by 2029.

Downtown's future also depends heavily on what happens with Dallas's professional basketball and hockey teams, the Mavericks and the Stars. Both play at the aging American Airlines Center north of downtown and have signaled they want new arenas.

Mavericks CEO Rick Welts said he is considering sites on the downtown's southern edge for a new 50-acre entertainment complex, weighing public safety and other factors.

"This type of project would be a game changer for downtown Dallas," Welts said.

Write to Patience Haggin at patience.haggin@wsj.com and Peter Grant at peter.grant@wsj.com

By Jack Hough

"We're incautiously optimistic — buy hot garbage," advised none of the big investment firms a year ago in their 2025 outlooks. Pity. The S&P 500 index, despite a springtime tariff wobble, has so far returned a splashy 18%. And since the beginning of March, speculative, low-quality stocks have beaten high-quality ones by 50 percentage points, UBS finds. It predicts 10% more upside for the U.S. market in 2026, but says that investors should now bet on high quality: "The sharp rally in low quality appears unsustainable amid elevated uncertainty and extreme crowding."

Quality sounds intuitively appealing to any shopper, from car-lot tire kickers to produce-aisle melon sniffers. For investors, high-quality companies bring to mind financial resilience — just the thing today to offset concerns over runaway artificial-intelligence spending, or a recent rash of flaky business models, like companies that raise cash to hoard crypto. If UBS is right that quality stocks are statistically due for a bounce, all the better.

There are only two problems. First, there is no widespread agreement on how to define quality stocks, so funds with "quality" in the name can vary widely in their approach. Second, the most popular of these funds currently hold pricey shares. For example, the iShares MSCI USA Quality Factor exchange-traded fund, ticker QUAL, trades at 26 times estimated 2025 earnings.

Investors who use a better approach can find quality stocks trading at discounts of 40% or more to the market. Some ETFs and seven stock picks in a moment.

The broad stock market isn't cheap. The S&P 500 goes for 25 times earnings, versus just under 18 times earnings, on average, over the past two decades. So, it's understandable if the iShares quality ETF, QUAL, goes for a little more, but it's a bigger turnoff that it does so after having underperformed since its launch in 2013. Also, its top holdings include many of the same giants that dominate the S&P 500, like Apple, Microsoft, Nvidia, and Meta Platforms. If the purpose of buying a quality fund is to diversify against a core S&P 500 position, that might not be ideal.

To find a better approach, let's first dig into some of the metrics that funds use to separate high-quality stocks from the rest. The most common of these is called return on equity. That's a year's worth of a company's earnings divided by the net accounting value of the things it owns. In simplest terms, ROE answers the question: How much money does this company make relative to its stuff? In not-quite-as-simple terms, well...

At Virginia Tech University, there is a building formerly called Graduate Life Center at Donaldson Brown, or informally, DB. It's named for an electrical engineering alum who landed a job in 1909 selling explosives for the E.I. du Pont de Nemours Powder Company, and eventually worked his way up to treasurer. One of Brown's financial innovations, today called DuPont analysis, involves breaking ROE down into its constituent factors to tell why it is high or low. Try jotting down three fractions separated by multiplication signs: earnings/sales x sales/assets x assets/equity. Recall from grade school fraction math that you may cancel diagonally; the two "sales" disappear, as do the "assets." What's left is earnings over equity, or ROE. If it's too low, try to improve your profit margins (earnings/sales), or bring in more business using less stuff (sales/assets). Or, somewhat less ideally, maybe throw on some leverage (assets/equity).

You can see where this last factor, leverage, might unduly flatter the ROE of overborrowers. Some indexes that select for high ROEs will separately look for low leverage. QUAL does both of these things, plus it favors high earnings stability.

There are many variations in other quality funds. Invesco S&P 500 Quality ETF, or SPHQ, tracks stocks chosen for ROE, leverage, and something called the accruals ratio. It measures how much of a company's earnings come from noncash accounting adjustments. The accrual ratio is sometimes called the Sloan ratio, after an accounting professor named Richard Sloan, whose research showed that companies with cleaner earnings generally produce superior stock returns. (He is no relation to famed General Motors head Alfred P. Sloan, who, as it happens, brought in DuPont's explosives-man-turned-treasurer to help blow up inefficiencies.)

Fidelity Quality Factor ETF, or FQAL, weights three measures equally. One is return on invested capital, or ROIC, a cousin of ROE that's harsher on heavy borrowers. The others are free-cash-flow margin and free-cash-flow stability — more on free cash flow in just a moment. Virtus Terranova U.S. Quality Momentum ETF, or JOET, favors shares that are running higher. JPMorgan U.S. Quality Factor ETF, JQUA, says only that it looks for "profitability, quality of earnings, and solvency." And so on.

This is a strange business. An investor seeking Japanese stocks, or utilities, or high dividend yields, can find ETFs filled with exactly those things. But one who orders up quality stocks might be served a choice of two ETFs as far apart as mashed potatoes and marshmallows. Which method is best?

Jared Woodard, head of the Research Investment Committee at Bank of America, has studied the factors used to screen for quality stocks and finds that ones based on free cash flow produce the best results. Casual investors tend to focus on earnings and are often less familiar with free cash flow, which is ironic. Of the two measures, free cash flow is by far the simpler. Picture a mom-and-pop store with an old cigar box for a till. Customer money goes in. Store costs come out. What's left at the end of the day or week is free cash flow.

Earnings, on the other hand, are designed to tell a tidy story. If a company spends $50 billion this year to build and fill hyperscale AI data centers, it doesn't subtract that money from earnings right away. It calls it a capital investment, and deducts it from earnings little by little. Just how many years it should stretch out those deductions can be, and is now in the case of AI computing power, the subject of some debate. Think of free cash flow as earnings stripped of storytelling and excuses. When free cash flow is divided by the enterprise value of a company — the cost to buy all of a company's shares and pay off its debt while using its available cash — the resulting free cash yield can be a powerful signal of quality.

"Historically, investing in a basket of stocks that score well on this measure...has performed about 15%, 16% total returns a year since the early '90s," says BofA's Woodard. "That's about five percentage points a year better than the S&P 500, which has already by itself been a pretty good place to invest."

This is perhaps a touch controversial. Free cash yield is just a smarter relative of the price/earnings ratio. Wouldn't that make a fund that uses it a value fund rather than a quality fund? Perhaps, although free cash yield also demonstrates a company's ability to be tactical in good times and bad, making it a quality hallmark, too. It hasn't been immune to the decadelong trouncing of value stocks by growth stocks.

One fund that leans heavily on free cash yield, the Pacer U.S. Cash Cows 100 ETF, just turned 10 years old and has lagged behind the market since inception. It's at least appropriately cheap, at 15 times earnings. And its underlying index has an impressive record when viewed over 30 years. Woodard gives top marks to a newer fund, the VictoryShares Free Cash Flow ETF, ticker VFLO, which launched two years ago and is running a few points ahead of the S&P 500. It screens first for free cash yield, and second for sales and earnings growth. The portfolio goes for 14 times earnings, and expenses are 0.39% a year.

Investors can also screen for their own quality stocks using a mix of approaches. We did so recently using free cash yield, while keeping an eye out for healthy ROEs and recent analyst upgrades.

Unsurprisingly, some of the names turn up in both the QUAL and VFLO quality ETFs, like Merck. It has the world's best-selling drug, called Keytruda, which helps the immune system attack cancer cells, and launched more than a decade ago. That means the company faces key patent expirations starting in 2028. But Wells Fargo Securities upgraded the stock to Overweight in November based on a bright growth outlook into the 2030s. Merck has directed its considerable free cash flow toward recent acquisitions to offset future Keytruda declines, and its development pipeline will yield a string of key trial readouts over the next 18 months.

Last Christmas, Brent crude went for $73 a barrel. Now, it's about $10 cheaper. Yet Chevron stock has managed to produce a small gain this year. UBS calls the company the best-in-class upstream player, or producer, following a legal battle with Exxon Mobil and takeover of Hess that brought vast reserves in Guyana. At a $70 average Brent price, UBS estimates that free cash flow could grow by 10% annually over the next five years.

Expedia Group scores well on free cash generation and growth, and poorly on popularity, with barely a third of analysts who cover the stock recommending a purchase. The company is small relative to Priceline owner Booking Holdings, especially in hotels, which are much more lucrative than flights and rental cars. But Expedia, under new management since last year, solidly beat quarterly bookings estimates in early November, sending its stock 18% higher in a day.

Deckers Outdoor is best known as the maker of Ugg boots, even though sales there are likely to be overtaken in the coming year by the company's Hoka brand of pillowy running shoes. The stock has slipped on a banana peel this year, losing half of its value. Growth rates for Hoka have slowed from 50%-plus a few years ago, to 20%-plus over the past two years, and now, to low-teens percentages. In mid-November, investment bank Stifel upgraded the stock to Buy from Hold, citing management meetings that boosted confidence in Decker's long-term ability to increase Hoka sales at low-double digit percentages, and Ugg at low to mid-single digit ones.

Longtime dog AT&T turned things around by getting out of show business and satellite dishes, and focusing its free cash on paying down debt, shoring up its dividend, and rolling out more fiber broadband to compete with cable. The stock has beaten the market over the past two years. A selloff since September on competitive concerns in wireless offers bargain hunters another look. KeyBanc Capital Markets upgraded the stock to Overweight from Sector Weight in November, calling wireless challenges overblown, and AT&T a leader in convergence, or the bundling of fiber broadband and wireless service, which tends to help with both profit margins and customer turnover. The dividend yield is 4.6%.

General Motors stock is doing something highly uncharacteristic: beating the stock market. Investors have made 135% over the past two years. Electric-vehicle demand has skidded, and tax perks have been scrapped. By keeping its EV bets modest, GM has avoided taking a massive loss like its rival Ford Motor recently did. Morgan Stanley upgraded GM stock to Overweight from Equal Weight in December, citing increased focus on lucrative fuel-burning vehicles. Shares go for eight times projected 2025 earnings, and earnings are expected to grow by 15% a year over the next two years.

Omnicom Group stock has underperformed the U.S. market by 50 points over the past two years on concerns over advertising demand and the rising industry presence of Amazon.com and other digital giants. In November, Omnicom bought Interpublic Group, creating the world's largest holding company of ad agencies. Expect layoffs, reduced real estate, and other cost-cutting. By 2027, UBS predicts $1 billion in yearly savings, higher profit margins, and $2 billion in stock buybacks, leading to earnings per share of $11.35, up from just over $8 last year. Shares traded recently at seven times the higher figure — a tempting pitch from an industry known for them.

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

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By George Glover

UiPath stock was rallying ahead of the open Wednesday, with the automation software company set to join the S&P MidCap 400 index at the start of 2026.

Shares jumped 8.2% to $17.26 ahead of the opening bell. Futures tracking the benchmark S&P 500 index were 0.1% lower.

UiPath will join the S&P MidCap 400 index before trading starts on Jan. 2, S&P Dow Jones Indices said after Tuesday's close. UiPath is replacing Synovus Financial, which is being acquired by Pinnacle Financial Partners in a deal that is expected to complete soon.

Investors have become more confident this year that UiPath will emerge as one of the winners from the artificial-intelligence boom. Shares are up 26% in 2025, and have surged 17% over the past month alone thanks to strong third-quarter earnings and revenue that eased previous concerns about government spending cuts and AI competition.

S&P Dow Jones Indices also said on Tuesday that CNBC and Golf Channel owner Versant Media will join the S&P SmallCap 600 before trading starts on Jan. 6, the day after Versant is expected to complete its spinoff from Comcast.

Inclusion in an index tends to boost a stock, because exchange-traded and mutual funds that track said index are required by their charters to buy shares.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Jacob Sonenshine

A host of stocks just took hits because of what is known as tax-loss harvesting. Now, some of them are likely to bounce back — presenting an opportunity for a quick trade.

Tax-loss harvesting is when investors sell underperforming assets to reduce their portfolio's overall tax bill. The taxes are on realized gains, so selling an asset that is already down reduces the portfolio's overall realized gain and thus increases the value of the portfolio.

Usually, portfolio managers implement this tax strategy by selling before the end of December. The key for traders: Once the selling is over, these stocks become more likely to bounce. Since the selling isn't on the back of worsening fundamentals from these companies, some of them could easily become undervalued, which encourages dip-buyers to come in — sending the prices of these names back up.

That's why Evercore strategist Julian Emanuel screened for stocks that have fallen victim to tax-loss harvesting and look primed to pop.

He looked for stocks that are in the U.S. equity market's 25th percentile of performance for the year, and were trading in their 25th percentile of their own average price for the year, as of Monday morning. They also have to be in the bottom three quintiles of Evercore's valuation criteria, essentially meaning they have to trade at low enough forward price/earnings multiples. All companies on the screen had to have a $5 billion market capitalization to avoid very small names that are difficult to trade.

Of the stocks on the list, we chose the ones that are down for the fourth quarter. Those are more likely to have seen tax-loss selling.

A dozen of them are UnitedHealth Group, Comcast, Kraft-Heinz, HP Inc., Motorola Solutions, Strategy, General Mills, CDW, Gartner, Godaddy, DocuSign, and Carrier Global.

Carrier is an HVAC manufacturer whose stock we recommended in March. The stock is down 22% this year, which includes a 12% drop in the fourth quarter thus far.

One of the key concerns has been that the residential portion of the HVAC business, which is a major chunk of the company's total sales, has disappointed. If the housing market improves, which lower interest rates will help with, the stock could easily recover.

Plus, a smaller portion of Carrier's business is selling the products to companies that are building data centers, an area that's growing quickly. This can help grow profits.

Combine the potential earnings growth with the fact that Carrier trades at a lower P/E multiple versus peers Johnson Controls, Trane Technologies, and Lennox International, and the stock could easily rebound.

One way to reap the upside potential in Carrier stock — or the other fallen shares in Emanuel's screen — is to buy it outright.

Another is to buy call options on these names, which increases the potential returns. That doesn't mean buying calls is a sure shot at great returns. Traders must pay a "premium," essentially the price to own a call option, which means the potential payout of the call has to be large, not just a slim profit. But traders who believe the price of a stock could skyrocket should pay the premium to own the call — and the payout of the option would be large.

Whether one wants to buy some of these stocks outright or buy the calls, Emanuel's list is a good one to pick from.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.