About Our Best Ideas Newsletter
About the Best Ideas Newsletter
At Valuentum, we task ourselves with a tall order. While most investment newsletters compare themselves to a market benchmark, we go one step further. We want to deliver positive returns to you, our member, year after year, in addition to outperforming the market benchmark.
As part of an upgraded membership to Valuentum, you will receive in your inbox on the 15th of each month the monthly Best Ideas Newsletter, which reveals our best picks and pans constructed in a portfolio. This portfolio of best ideas may contain long positions as well as put and call options, strategies easily executed in your own online trading account.
In the newsletter, we provide updated performance of the portfolio (including notifications regarding additions/removals), write commentary associated with the names in the portfolio and on stocks in the news, and notify you immediately via email if our thoughts or opinions have changed on any company or position. We send you transaction alert emails, so you don't miss a beat.
Consistent with our investment methodology, the Valuentum Buying Index, our best ideas may span investing disciplines, market capitalizations and asset classes in order to maximize the return while minimizing the risk of the portfolio.
Since inception, the performance of the Best Ideas portfolio has been nothing short of fantastic, and our subscribers and clients have followed along and tracked our every move. Very few newsletters apply a time-tested (yet innovative) process, embrace transparency, and put your interests first. We can proudly say that we are among the few.
Click here to become a member and receive the next edition of the monthly Best Ideas Newsletter in your inbox and gain access to all premium commentary on our site.
Below we outline a few very brief summaries of companies that we currently hold in the Best Ideas portfolio. Please note that these are just a few examples, and the Best Ideas Newsletter showcases many more timely and undervalued opportunities with each and every monthly edition. Join Today!
At Valuentum, we often use a discounted cash-flow model as a means to back into the current share price of firms in order to ascertain whether the market is unfairly pricing their stock relative to reasonable long-term growth and profitability assumptions. In Apple's case, we believe the market is merely pricing in inflation-like expansion beginning toward the middle of this decade. Although in the land of technology, competition adapts quickly and a few years from now can be viewed as the distant future, we think the iPad-maker represents a compelling risk-reward opportunity at current levels based on our analysis. Often, evaluating a firm via a discounted cash-flow model and re-engineering its stock price can provide a better understanding of a company's investment potential on a risk-reward basis than even the most clearly written prose.
Gilead Sciences (GILD)
This hepatitis C powerhouse has been under fire as of late due to encroaching competition from AbbVie and pricing pressure from pharmacy benefit managers (PBMs) such as Express Scripts. The threats are real and not to be taken lightly. However, Gilead’s Harvoni hepatitis C therapy is not only more efficacious than AbbVie’s Viekira Pak on the basis of our interpretation of the test studies, but physicians generally may prefer the single-pill Harvoni over the four-to-six pill Viekira Pak given that the primary market for hepatitis C, the baby-boomer generation, may already be on a number of subscriptions for other ailments. Without a doubt, cure rates for both Gilead’s and AbbVie’s hep-C drugs are fantastic, but Gilead’s Harvoni has a tighter cure-rate range (94%-99%), indicating the potential for a more consistent outcome for patients versus the Viekira Pak, where the low end of cure rates are at 91% (nothing, of course, to scoff at).
Assuming a fair market multiple of 20 times this year’s earnings, to arrive at Gilead’s current share price, investors are factoring in a 50%-65% permanent reduction in run-rate profits and a structural change where pricing pressure from PBMs becomes increasingly more cutthroat over the next few years. These assumptions are too punitive, in our view, even if they might be tangible threats. At best, we think AbbVie will capture a quarter’s worth of Harvoni sales for all of 2015 (but the market is growing), and we think PBMs will eventually have to address physician pressure regarding more treatment options. At the moment, we believe the hep-C market is a rational oligopoly with Johnson & Johnson, AbbVie and Gilead all playing nicely “in the sandbox.” There is no price war. Gilead is a risky company, but a good investment is one in which the market incorrectly prices a firm’s intrinsic worth. Under a base-case scenario, which is not too different than consensus forecasts, we think Gilead’s shares are worth north of $150 each. In this light, the firm’s current share price offers investors a nice margin of safety. Under a bear-case scenario, we don’t see much downside risk from present levels, and if shares of Gilead do get cheaper, one might expect a suitor to become very interested.
It’s hard to find anything wrong with Visa’s business model. The company offers a secure, payment network that is accepted virtually everywhere in the United States. The firm makes money every time a Visa user swipes his or her debit or credit card. Aside from traditional card companies, the only competition Visa faces is cash and mobile payment solutions, which V.me will address and has yet to take a stranglehold.
Visa benefits from two fantastic competitive advantages: a network effect and costly initial investment. The network effect is incredibly strong for Visa (as more consumers use its platform, more businesses do, too). As of its last update, Visa had more than 2 billion cards outstanding accepted by retailers across the world. The number is roughly double the number of Mastercards and over 20 times the amount of American Express cards outstanding. This network effect took years, as well as billions of dollars to create—something that won’t easily be replicated.
Most importantly, the company generates incredible operating margins in the 60% range, leading to large levels of free cash flow generation. Visa continues to possess valuation upside and is one of the most shareholder-friendly companies in our coverage universe.
About Our Name
But how, you will ask, does one decide what [stocks are] "attractive"? Most analysts feel they must choose between two approaches customarily thought to be in opposition: "value" and "growth,"...We view that as fuzzy thinking...Growth is always a component of value [and] the very term "value investing" is redundant.
-- Warren Buffett, Berkshire Hathaway annual report, 1993
At Valuentum, we take Buffett's thoughts one step further. We think the best opportunities arise from a complete understanding of all investing disciplines in order to identify the most attractive stocks at any given time. Valuentum therefore analyzes each stock across a wide spectrum of philosophies, from deep value to momentum investing. And a combination of the two approaches found on each side of the spectrum (value/momentum) in a name couldn't be more representative of what our analysts do here; hence, we're called Valuentum.
Valuentum has developed a user-friendly, discounted cash-flow model that you can use to value any operating company that you wish. Click here to buy this individual-investor-friendly model now! It could be the best investment you make.
Our Best Ideas Newsletter and Dividend Growth Newsletter are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of our newsletters, reports, and other publications and accepts no liability for how readers may choose to utilize the content. Valuentum is not a registered investment advisor and does not offer brokerage or investment banking services and adheres to professional standards and abides by formal codes of ethics that put the interests of clients and subscribers ahead of their own. Valuentum, its employees, and affiliates may have long, short or derivative positions in the stock or stocks mentioned on this site.