<< Get to Know Newsletter Editor Brian Nelson, CFA
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 subscriber, year after year, in addition to outperforming the market benchmark.
As part of your upgraded subscription to Valuentum, you will receive in your inbox our monthly Best Ideas Newsletter, which reveals our best picks and pans constructed in a portfolio. This portfolio of best ideas contains long positions as well as put and call options, strategies easily executed in your own online trading account.
We update our portfolio at least monthly (additions/removals and performance), 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.
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, our performance 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 subscribe now and receive the next edition of our monthly Best Ideas Newsletter in your inbox and gain access to all equity and dividend reports and premium commentary/articles on our site.
Below we outline a few very brief summaries of companies that we currently hold in our Best Ideas portfolio. Please note that these are just a few examples, and our Best Ideas Newsletter showcases many more timely and undervalued opportunities with each and every monthly edition. Join Today!
Search Stock Reports -- use search box in header for commentary
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.
Precision Castparts (PCP)
Metal-bender Precision Castparts has long been a favorite of ours. The firm makes the structural castings (metal blocks) and the rotating airfoils (blades) that form aircraft jet engines. Though a structural casting has a relatively longer useful life, a jet engine's airfoil components frequently need to be replaced upon maintenance (think razor, razor-blade model). Precision's components are also critical to flight safety, so it retains a high degree of pricing power with its long-time customers, which can't afford the risk of switching to unproven rivals.
We think the growth rate of aircraft deliveries (and jet engines) during the next five years will be truly remarkable. Both Airbus and Boeing are ramping up production of their workhorse A320 and 737 programs, respectively, to thwart potential cancellations as competition heats up from global rivals in the narrowbody market. Boeing recently increased the monthly production rate of its 777 and plans to accelerate deliveries of its revolutionary, mostly-composite 787 Dreamliner. Rival Airbus has increased rates on its A330 platform and continues to target a higher production pace for its A380 double-decker in the years ahead. And once the growth of large commercial aircraft deliveries begins to slow in 2014-2015, we'll be at the beginning of yet another new product cycle with Airbus' long-awaited A350, which is scheduled to enter into service in 2013 (though a 2014 target is more likely). Needless to say, investors should expect a boom in commercial aerospace deliveries during the next half-decade -- at levels we haven't witnessed in the past 20 years.
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. 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 of its last update, Visa had nearly 1.9 billion cards outstanding accepted by retailers across the word. That’s more than 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.
Though the Durbin Amendment capped debit card rates, Visa’s major financial institution partners like JP Morgan Chase, Bank of America, and PNC have done an excellent job of incentivizing the movement of credit card spending back to credit cards via rewards and cash-back programs. And we think fears of outsize regulation remain mostly unfounded.
Most importantly, the company generates incredible operating margins in the 60% range, leading to large levels of free cash flow generation. The firm repurchased its stock in large quantities when shares were considerably undervalued, and it has since increased its dividend. 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.