Valuentum Exclusive Analysis for the Discerning Investor

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Jan 28, 2022

Dividend Increases/Decreases for the Week January 28
Let's take a look at companies that raised/lowered their dividend this week.

Jan 26, 2022

Capital Spending a Key Headwind to Broader Markets in 2022
One of the biggest themes in 2022 is the amount of money companies will spend in capex (“capital expenditures”). A key reduction to net cash flow from operations to arrive at traditional free cash flow is capital expenditures, and we’re seeing some of the largest companies spend aggressively to the detriment of internal free cash flow generation. Though such spending may be necessary, in most cases, to enhance long-term revenue and earnings growth, the higher spending this year is a notable trend that we think may be posing a headwind to the broader equity markets so far in 2022.

Jan 22, 2022

Don’t Throw the Baby Out with the Bathwater
Image: Erica Nicol. Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor may be doing much worse. Our timing to exit some very speculative ideas in the Exclusive publication has been impeccable. Beware of “best-fitted” backtest data regarding sequence of return risks. Research is to help you navigate the future, not the past. We remain bullish on stocks for the long haul and grow more and more excited as our simulated newsletter portfolios continue to hold up very well. Don’t throw the baby out with the bath water. Stick with the largest, strongest growth names. We still like large cap growth and big cap tech, though we are tactical overweight in the largest energy stocks (e.g. XOM, CVX, XLE). The latest short idea in the Exclusive publication has collapsed aggressively since highlight January 9, and we remain encouraged by the resilience of ideas in the High Yield Dividend Newsletter portfolio and ESG Newsletter portfolio. Our options idea generation remains ongoing.

Jan 21, 2022

Valuentum's Brian Nelson in CFA Institute's 'Enterprising Investor'
"The DCF model is not only relevant to today’s market, it remains an absolute necessity." -- Enterprising Investor

Jan 11, 2022

Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out
Image Shown: Shares of Chevron Corporation (the green/red bars) and Exxon Mobil Corporation (the blue/yellow bars) have been on a nice upward climb over the past six months with room to run higher as investors are rotating into energy firms in a big way. Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy complex quite favorably and have been pounding the table on this issue for some time. Back on June 27, 2021, we added Chevron Corp and Exxon Mobil Corp as ideas to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios and highlighted these portfolio changes. Shares of CVX and XOM yield a juicy ~4.3% and ~5.1% as of this writing, respectively. Recently, shares of both CVX and XOM have started shifting higher, and in our view, this is just the beginning of a strong cyclical recovery. We also recently added Chevron and Exxon Mobil as ideas to the High Yield Dividend Newsletter portfolio, and highlighted two of our favorite midstream master limited partnerships (‘MLPs’) in that publication as well. Our fair value estimate for Chevron sits at $140 per share and the high end of our fair value estimate range sits at $175 per share, while CVX is trading at ~$127 as of this writing. Our fair value estimate for Exxon Mobil sits at $92 per share and the high end of our fair value estimate range sits at $122 per share, while XOM is trading at ~$71 per share as of this writing. As investors continue to rotate into energy firms, we expect that the stock prices of Chevron and Exxon Mobil will continue converging towards our estimate of their respective intrinsic values.

Jan 10, 2022

High Yielding Philips 66 Has a Solid Plan in Place to Reward Its Shareholders
Image Shown: An overview of Phillip 66’s expansive asset base. Image Source: Phillips 66 – November 2021 IR Presentation. Demand for diesel and gasoline has largely recovered from the worst of the coronavirus (‘COVID-19’) pandemic, though kerosene demand (jet fuel) has a way to go given depressed levels of international travel. The refining giant Phillips 66 took advantage of the rebound seen over the past year to pare down its debt levels on a consolidated basis. At the end of December 2020, Phillips 66 had $13.4 billion in net debt (inclusive of short-term debt) on a consolidated basis, which fell down to $12.0 billion in net debt (inclusive of short-term debt) at the end of September 2021. Going forward, Phillips 66 now wants to focus on returning cash to shareholders as communicated during a January 2022 investor conference. Shares of PSX yield a nice ~4.6% as of this writing.

Jan 5, 2022

ICYMI: Exxon Mobil’s Bright Growth Outlook
Image Source: Exxon Mobil Corporation – December 2021 IR Presentation. At the start of December 2021, Exxon Mobil Corp laid out its longer term strategy for the 2020s decade. We are going to cover that outlook, the state of the global energy complex, Exxon Mobil’s stellar and improving financial position, and what to expect going forward. Exxon Mobil is a tremendous enterprise and one of our favorite energy names out there.

Dec 26, 2021

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum's President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds.

Dec 7, 2021

Dividend Growth Stocks Soar!
Image: Every stock in the Dividend Growth Newsletter portfolio is in the green today, with a little less than an hour left in the trading session! Image Source: Seeking Alpha. What a day for dividend growth stocks!

Dec 3, 2021

Valuentum Weekly: Nothing Surprising, Well-Positioned!
Image source: Cathie Wood's flagship ETF, the ARK Innovation ETF (ARKK) has fallen more than 40% from its 52-week high. This is nothing short of a complete and utter bloodbath for such an actively-managed fund, in our view. We note this for context. We're not just talking about one or two or five stocks that are down 40% from 52-week highs, but the *entire fund.* Investors have to keep things in perspective. It's perfectly reasonable within the context of a portfolio to have a few stocks off 10%, 20%, or maybe even 50% from all-time highs. However, if your entire portfolio is down 40%+ from 52-week highs, you're doing something wrong.We're finally getting a shake out of the substantial excesses in the market. Entities such as DocuSign are down more than 40% during the trading session December 3, 2021. All-star funds such as the ARK Innovation ETF with well-known fund managers are down over 40% from all-time highs. It's a bloodbath out there if you're not positioned correctly. I can only imagine the sheer panic that's going on right now. It's laughable, but we sometimes get flak if we have one or two or five companies in a couple portfolios of 20-40 stocks that trail the index. My goodness, what must these investors then be saying to fund managers who are down 40%+ from 52-week highs, and whose funds are down 20%-30% on the year when the S&P 500 is up over 20%. It's clear that Valuentum customers demand a lot more from us than even the best, highest-profile managers out there, and we appreciate that. Thank you. A lot of the traditional IBD and Motley Fool stocks look to be stumbling as well. But we're sitting pretty at Valuentum, and here's why.