Valuentum Exclusive Analysis for the Discerning Investor

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Nov 6, 2019

Procter & Gamble Appears Overvalued
Image Shown: Shares of Procter & Gamble have been on an epic run since mid-2018, and we think shares have gotten ahead of themselves here.Consumer staples giant Procter & Gamble is a solid company that generates sizable and consistent free cash flows. However, in our view, shares of PG have gotten way ahead of themselves due to a “flight to quality” that has seen the market bid up P&G’s share price from the low $70s in April 2018 to almost $120 as of this writing. Shares of PG now yield 2.5% as of this writing and trade well above the top end of our fair value estimate range of $101 per share. Please note P&G has paid out a dividend for 129 consecutive years and the company has increased its payout over the past 63 consecutive years, earning it the coveted status of ‘Dividend Aristocrat’.

Nov 5, 2019

High Yield Dividend Newsletter Portfolio Holding Magellan Midstream Keeps Growing
Image Shown: Magellan Midstream is focusing heavily on growing its fee-based operations, with an eye towards expanding its refined products pipeline segment. Image Source: Magellan Midstream Partners L.P. – August 2019 IR Presentation. If you may wish to add the High Yield Dividend Newsletter to your membership, please click here.We continue to like Magellan Midstream as a holding in our High Yield Dividend Newsletter portfolio. The company’s investment grade credit ratings (BBB+/Baa1 as of August 2019) and preference to fund its growth trajectory with debt instead of equity (equity issuances have been very muted since 2010) allows for steady sustainable increases in the company’s per unit distribution. Magellan Midstream retains access to capital markets at attractive rates and will likely take advantage of the subdued interest rate environment by refinancing portions of its existing debt load at lower rates when able. Magellan Midstream’s quarterly distribution per unit has grown by almost three-fold since the start of 2010, and there’s room for additional payout increases over the coming years.

Nov 5, 2019

Top Best Ideas Newsletter Portfolio Holding Berkshire Hathaway Reports Solid Third Quarter Performance
Image Shown: Shares of Berkshire Hathaway Inc moved higher on Monday November 4 after reporting a decent third quarter 2019 earnings report on Saturday November 2. Berkshire Hathaway reported solid third-quarter 2019 earnings on November 2, and we continue to like Berkshire Hathaway Class B shares as a top holding in our Best Ideas Newsletter portfolio. Our fair value estimate for BRK.B stands at $229 per share with room for upside, as the top end of our fair value estimate range sits at $275 per share.

Nov 5, 2019

Our Reports on Stocks in the Media (CATV) Industry
Image Source: Mike Mozart. We've modified our coverage of reports on stocks in the Media (CATV) industry.

Nov 3, 2019

Tesla Moves Higher
Image Shown: Tesla Inc saw its share price jump up after reporting solid third quarter earnings in late-October. Tesla posted solid third-quarter performance, and we appreciate its improving profitability metrics. That being said, we still prefer other capital appreciation opportunities out there. In our view, most of Tesla’s upside has already been factored into its stock price, which currently sits near ~$313 per share. We prefer General Motors Company, and GM is a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Interested members can read more about why we like General Motors in this article here.

Nov 1, 2019

Nostalgia?
Image Source: Tim Vrtiska. As I think back over the many years we've managed the Dividend Growth Newsletter portfolio, it has been an incredibly rewarding experience to be able to help so many dividend growth investors, not only in finding big winners, but also in avoiding big losers. If you recall, many dividend growth investors were swept away by the MLP craze years ago, and we saved our membership, perhaps in impeccable fashion. Who remembers? From "getting out" of General Electric near $30 per share, to warning about ConocoPhillips' and Kinder Morgan's dividend cuts far in advance years ago, we've been focused intensely on gaining your trust each and every day. Of course we've had some huge winners, too, some of them no longer in the newsletter portfolio such as Hasbro, Procter & Gamble, Medtronic, names we may add back into the future at the "right price," near the low end of our fair value estimate range on the "way up." How can we forget some of the big winners still in the newsletter portfolios! Big tech has been on fire of late with Intel and Microsoft approaching new all-time highs. You may recall these two companies were among the first stocks to ever register a 9 or 10 on the Valuentum Buying Index in 2011/2012, and their respective Dividend Cushion ratios have been fantastic for years, accompanied by strong dividend growth. How can we forget about Apple? What a call that one has turned out to be -- shares of the iPhone maker closed at ~$256 today! Microsoft is now a mid-$140 stock! A number of years ago, we traveled the country sharing our thoughts on Microsoft, pounding the table on its undervaluation and strong dividend growth prospects, saying it epitomized what Valuentum looks for in dividend growth ideas at the time. This presentation from our September 2015 trip to the Silicon Valley AAII was one of my favorites. Download that presentation to learn how we looked at Microsoft through the lens of the Dividend Cushion ratio, "Value-Focused, Momentum-Based Dividend Growth Investing (pdf)." Please go ahead. The Dividend Cushion ratio is worth the price of any membership. I'm so very proud of the Valuentum team, its methodologies, Value Trap, and what we've been able to do for investors all these years, especially dividend growth investors. I'm so grateful for you. You found us, tuned out the noise, and hopefully have made so much money these many years. Without tearing up on any further nostalgia, download the November edition of the Dividend Growth Newsletter in this article. You've earned it. I hope you enjoy this edition greatly, and thank you so much! -- Brian Nelson, CFA

Nov 1, 2019

Our Reports on Stocks in the Retail--Apparel (Teen-30yrs, Off-Price, Outdoor) Industry
We've dropped coverage of stocks in the Retail--Apparel (Teen-30yrs, Off-Price, Outdoor) industry.

Nov 1, 2019

Dividend Increases/Decreases for the Week Ending November 1
Let's take a look at companies that raised/lowered their dividend this week.

Oct 31, 2019

General Motors’ Cost Savings Plan Still Intact
Image Shown: Shares of General Motors moved higher after its third quarter 2019 earnings report as investors looked past the UAW strike and towards the future, particularly ongoing cost structure improvements. Our fair value estimate for GM stands at $48 per share, and we continue to like the automaker in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. General Motors’ Dividend Cushion ratio of 3.5x provides for solid payout coverage at a time of trade war volatility, and its Cruise division offers plenty of long-term upside as one of the leaders in the autonomous driving space.

Oct 30, 2019

Caterpillar Misses Estimates and Revises Guidance Downwards
Image Source: Caterpillar Inc – Third quarter 2019 IR presentation. Should the global economy show signs of stabilizing, particularly as it relates to industrial activity, Caterpillar would appear relatively cheap at ~$141 per share as of the end of the October 29 trading session. Recent signs have not been promising. Exports out of South Korea, a barometer for the global economy, continue to plummet while macroeconomic readings in the EU and North America are showing signs of a major slowdown materializing as we speak (particularly in the Eurozone, but that appears to be spreading to the US economy as well). China’s economy continues to feel the heat from the US-China trade war. The low end of our fair value estimate range stands at $125 per share of CAT, meaning that under more pessimistic assumptions, Caterpillar appears fairly valued as of this writing.