Valuentum Exclusive Analysis for the Discerning Investor

At Valuentum, we follow hundreds of stocks, dividends, and ETFs. We serve individual investors, financial advisers, and institutions. Join Today! You'll gain immediate access to our premium product and service offering (including articles, commentary, stock reports, dividend reports, and more). You'll also receive the Best Ideas Newsletter and Dividend Growth Newsletter in your inbox every month. You can also order our ultra-premium publications, the High Yield Dividend Newsletter and the Exclusive publication, too!

Recent articles

Cisco Buys Splunk Sep 21, 2023: Image Source: Brandon Leon.

Dividend Growth Newsletter portfolio holding Cisco is all about growing its recurring revenue base these days, and its announcement that it will buy Splunk on September 21 will not only help in a big way towards that goal, but the deal will also position Cisco for tremendous opportunities in the booming market that has become artificial intelligence [AI]. That said, some investors were not fans of the purchase price – some $28 billion in cash – but we think the price is fair and strategically, there’s nothing wrong with adding to the fold an asset-light, recurring-revenue business that has the foundation to be a key long-term player in AI. We’ll be taking a close look at our valuation model on Cisco as we further digest this proposed transaction, but for now, we’re comfortable with our $53 per-share fair value estimate of the networking giant.

Details Regarding Visa’s Exchange Offer Sep 21, 2023: Image: Visa's 8-K.

Visa remains a free-cash-flow generating powerhouse, and the firm’s operating and free cash flow margins are about as good as it gets. Future potential exchange offers from Visa corresponding to its various share classes should be viewed as a minor intermediate-term inconvenience that will only provide but a modest potential headwind to the advancement of the company’s intrinsic value over time, and only in the scenario where diluted shares outstanding increase relative to expectations based on then-conversion rates for non-A class shares when converted. We continue to like Visa as a holding in the simulated Best Ideas Newsletter portfolio, and we like it and Mastercard more than their rivals such as American Express and Discover Financial that take on credit risk.

ICYMI: Questions for Valuentum’s Brian Nelson Sep 20, 2023: Valuentum's President Brian Nelson, CFA, answers your questions.

Fed Rate Decision, UAW Strike Continues, Microsoft Ups Payout Sep 19, 2023: Image Source: Mike Mozart.

If you’re thinking like us about the ongoing Fed rate-hiking cycle, you’re probably thinking that perhaps we’ll see another rate hike or two down the road, even if the Fed pauses at today’s September 20 meeting. However, whether the Fed pauses from here on out or executes a couple more hikes, it really shouldn’t matter much to long-term investors. From where we stand, the conversation about interest rates should now be shifting away from worries about elevated inflation to the future positive prospects that correspond to the work that the Fed has already done. With the market-cap weighted S&P 500 just a stone’s throw away from all-time highs, despite aggressive contractionary monetary policy, we believe the market may start to view the existing levels of “high” near-term interest rates as dry powder for the Fed to stimulate the economy in the future, if or when it’s needed. The Fed has now built up a very nice insurance policy with little damage done to the U.S. stock market, and we think equities, particularly the stylistic area of large cap growth, may continue to reward investors as such a positive view is eventually factored in. New highs may once again be in the cards, and we remain bullish on the equity markets today, despite the ominous volatility experienced the past 20+ months.

The Role of Luck in Investing and How To Think About It Sep 18, 2023: Image: EpicTop10.com.

For every Amazon that made it, there are hundreds, maybe thousands, from the dot-com era that didn't. Very few remember Pets.com or etoys.com, both of which went belly up during the dot-com meltdown. For every Tesla, there is a DeLorean Motor Co. We might have completely forgotten about DeLorean were it not for the blockbuster movie, Back To The Future, that immortalized its futuristic sports car. For every streaming enterprise like Netflix, there is a Napster that failed. Most of us probably don't even remember the original Napster, which encountered legal troubles before closing shop shortly after the dot-com bust. For every Alphabet, there's an AltaVista or Netscape. For every Apple, there is a Palm or Blackberry. Who remembers how popular the Palm Pilot and Blackberry were? How about the Motorola Razr? For every Facebook and Instagram, there is a Myspace or Friendster. As investors, we underestimate the role of luck in a company's long-term success. In February 2000, a month before the dot-com market crash, a fledgling Amazon raised $672 million in convertible notes to European investors. If the company hadn't done so, there'd likely be no Amazon today, and one of the wealthiest men in the world, Jeff Bezos, might have just been a mere footnote in stock market history. Amazon would have been insolvent in 2001-2002 just like many of its other dot-com peers.