Valuentum Exclusive Analysis for the Discerning Investor

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Recent articles

Target Stuns, Shares Jump Higher Aug 21, 2019: Image Shown: Shares of Target Corporation (TGT) leapt higher on August 21 on the back of its strong performance during the second quarter of FY2019. In particular, the retailer’s comparable same store sales growth was quite impressive given the hard comparison period, with e-commerce and same-day fulfillment leading the way.

Strong performance out of Target and other major US retailers like Walmart indicate that while headwinds are forming, the US economy remains strong for now. We've raised our fair value estimate of Target.

Home Depot, Lowe’s Largely Unfazed By Lumber Price Deflation Aug 21, 2019: Image Source: Mike Mozart.

The home improvement retailing market appears very, very healthy, and while consumers could have already taken advantage of ultra-low rates to do home repairs, additional Fed cuts certainly won’t hurt the backdrop for home improvement retailers. Home Depot and Lowe’s continue to put up solid results.

Nvidia Beats Low Expectations and Shares are Rewarded Accordingly Aug 20, 2019: Image Source: Nvidia Corporation - IR Presentation.

Nvidia beat low expectations and its share price was rewarded accordingly, keeping in mind NVDA trades well off its 2018 highs. Our fair value estimate for NVDA stands at $184 per share, meaningfully above where shares are trading at, as of this writing. We are staying away from the name given risks associated with its purchase of Mellanox, weakness in data center demand in the face of trade war concerns and the synchronized slowdown in global economic activity, and in light of Nvidia’s low VBI rating. We think there are better investment opportunities out there, but we can respect that Nvidia is showing promising signs of improvement.

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap Aug 19, 2019: Image Source: Owens-Illinois Inc -- IR Presentation.

Due to Owens-Illinois’ onerous leverage, guidance cut, and signs that the global economy is slowing down, we are staying far from the name. While shares of OI trade decently below the low end of our fair value estimate range we caution that the market is likely right on this one. Owens-Illinois is another example of a Value Trap.

No Recession At Walmart; Estee Lauder Not Cheap Aug 19, 2019: Image Source: Mike Mozart.

Walmart’s results were quite reassuring regarding the health of the economy. There are also pockets of significant strength, with prestige beauty being catapulted by a “selfie generation.”

Investors Aren’t Sold on Lear’s Ostensibly “Cheap” Valuation and Neither Are We Aug 18, 2019: Image Shown: While Lear Corporation appears attractive at first glance, its technical performance tells a different story. The market is concerned that the global synchronized downturn that has emerged will get worse, which would weigh on Lear’s expected financial trajectory. Global automotive sales are already coming under pressure, and there’s not much Lear, as a leading auto parts supplier, can do about that. We think the market might be right on this one.

While Lear appears cheap at first glance, we think this is another Value Trap.