Valuentum Exclusive Analysis for the Discerning Investor

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Apr 30, 2021

High Yielding Philip Morris Boosts Guidance
Image Shown: Philip Morris International Inc has been steadily growing its alternative tobacco product sales during the past several years and its growth outlook on this front is quite bright. RRP stands for reduced-risk products according to Philip Morris. Image Source: Philip Morris International Inc – First Quarter of 2021 IR Earnings Presentation. Philip Morris is a high-yielding income generator with a promising growth outlook. Historically, the firm hasn't allocated a significant amount of capital (or any) towards share repurchases, highlighting management’s commitment to income seeking shareholders. Though we understand that some investors may shy away from the company due to ESG-related considerations, for those that do not have such investment restrictions, we continue to like Philip Morris as an idea in the High Yield Dividend Newsletter portfolio. We view its forward-looking dividend coverage quite favorably, though we would like for management to pare down the firm’s net debt load over the long haul. Recently, shares of PM have been on a nice upward climb indicating investors continue to warm up to Philip Morris’ promising free cash flow growth outlook, supported in part by its alternate tobacco products (and what they imply regarding long-term resiliency versus traditional cigarettes).

Apr 29, 2021

Visa’s Business Is on the Rebound
Image Shown: Visa Inc remains a tremendous free cash flow generator, aided by its asset-light business model. We continue to be big fans of Visa and include the company as a top-weighted idea in our Best Ideas Newsletter portfolio. Image Source: Visa Inc – Second Quarter of Fiscal 2021 IR Earnings Presentation. On April 27, Visa reported second quarter fiscal 2021 earnings (period ended March 31, 2021) that beat both consensus top- and bottom-line estimates. Visa’s GAAP revenues and GAAP operating income were down 2% and 9% year-over-year, respectively, last fiscal quarter as its cross-border business remains subdued. On the flip side, Visa’s total payment volumes and processed transaction were up 8% and 11% year-over-year, respectively, in constant currency terms. Coronavirus (‘COVID-19’) vaccine distribution efforts should help global health authorities eventually bring the pandemic to an end, though the return of international travel and related activities to pre-pandemic levels is likely a way off. During its latest earnings report, Visa’s business showcased serious signs that a recovery was already well underway, and we continue to be huge fans of the name. We include Visa as a top-weighted idea in the simulated Best Ideas Newsletter portfolio.

Apr 23, 2021

Lockheed Martin Boosts Guidance
Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2021 IR Earnings Presentation. Lockheed Martin Corp, maker of missile systems, space offerings, radar systems, jet fighters (including the F-35), and other advanced weaponry, will play a leading role in keeping Western armed forces (and the militaries of Western allies) ahead of rising geopolitical tensions. We include the defense contractor as an idea in the Dividend Growth Newsletter portfolio, and shares of LMT yield ~2.7% as of this writing. Lockheed Martin’s dividend growth trajectory is impressive, its free cash flow generating abilities are stellar, and it has an enormous backlog which provides a high degree of visibility as it concerns its future cash flow generating abilities.

Apr 23, 2021

Dividend Increases/Decreases for the Week April 23
Let's take a look at companies that raised/lowered their dividend this week.

Apr 20, 2021

Banks Holding Up Well, Some Feel Pain from Archegos Capital Collapse
Image Shown: Bank of America Corporation has an optimistic view towards the ongoing US economic recovery. Image Source: Bank of America Corporation – First Quarter of 2021 IR Earnings Presentation. Earnings season is now underway! In this article, we cover the performance of two large US banks and the problems facing one major European bank in light of losses stemming from Archegos Capital Management blowing up. Large reserve releases last quarter--due to the US economy holding up better than expected during the coronavirus (‘COVID-19’) pandemic--played an outsized role in bolstering the financial performance of key US banks after these institutions recorded large reserve builds in 2020. Net interest margins (‘NIM’) continue to face headwinds from the low interest rate environment, though noninterest related income (such as income generated from wealth management, investing banking, and other activities) at several banks has come in strong (aided by favorable capital market conditions).

Mar 24, 2021

Two Railroad Operators to Join Forces, Creating the First Fully Integrated Canada-US-Mexico Railroad Network
Image Source: Canadian Pacific Railway Ltd, Kansas City Southern – March 2021 Acquisition Presentation. On March 21, Canadian Pacific Railway Ltd announced it was acquiring Kansas City Southern through a cash-and-stock deal worth ~$29.0 billion by enterprise value (factoring in assumed debt). The combination will create the first fully integrated Canada-US-Mexico railroad operator with ~$780 million in annualized synergies expected within three years of the deal closing. Once this two-part transaction is complete, the new entity will have a US Class 1 railroad network that spans ~20,000 miles with ~20,000 employees supporting its operations. The pro forma company will be renamed Canadian Pacific Kansas City (‘CPKC’).

Mar 18, 2021

Cigna Is An Intriguing Health Care Idea
Image Source: Cigna Corporation –2021 Investor Day Presentation. Health care giant Cigna Corporation has a stellar cash flow profile, pristine balance sheet, promising growth outlook, and remains committed to rewarding shareholders. The company initiated a quarterly dividend at the start of 2021 and intends to continue buying back a sizable amount of its stock going forward. Management recently issued favorable guidance that indicates Cigna’s growth story is expected to continue this year as the world emerges from the COVID-19 pandemic. Cigna’s telehealth ambitions are quite intriguing as well. Recent updates at Cigna have placed the health care company on our radar.

Mar 12, 2021

Oracle Beats Consensus Estimates and Raises Its Dividend By 33%
Image Source: Oracle Corporation – September 2019 Financial Analyst Meeting Presentation. On March 10, Oracle Corp reported third quarter earnings for fiscal 2021 (period ended February 28, 2021) that beat both consensus top- and bottom-line estimates. We include Oracle as an idea in the Dividend Growth Newsletter portfolio, and we are big fans of its impressive free cash flow generating abilities. The company’s Dividend Cushion ratio of 3.0 (a stellar ratio) earns Oracle an “EXCELLENT” Dividend Safety rating, and please note that these metrics incorporate our expectations that Oracle will push through meaningful payout increases over the coming fiscal years. We give Oracle an “EXCELLENT” Dividend Growth rating. In conjunction with its latest earnings report, Oracle boosted its quarterly dividend up to $0.32 per share, up 33% on a sequential basis. At the new payout level, shares of ORCL yield ~1.9% as of this writing. Management also recently increased Oracle’s share buyback authority by $20.0 billion. We continue to like exposure to Oracle in the Dividend Growth Newsletter portfolio and were impressed with the company’s latest earnings report and recent operational updates.

Mar 12, 2021

Newmont Doubles Down on the “Golden Triangle”
Image Shown: Newmont Corporation has an impressive project pipeline that will help ensure the gold miner’s production levels stay healthy over the decades to come, underpinning its promising long-term cash flow trajectory. We continue to like Newmont as an idea in our Dividend Growth Newsletter portfolio. Image Source: Newmont Corporation – March 2021 IR Presentation. We include gold miner Newmont Corp as an idea in the Dividend Growth Newsletter portfolio. Though gold prices have shifted somewhat lower over the past few months, they remain at levels where Newmont’s free cash flow growth outlook is incredibly bright. Shares of NEM yield ~3.8% on a forward-looking basis as of this writing after the company approved a large dividend increase in February 2021. In this article, we cover Newmont’s recent acquisition, which will add another long-term development opportunity to its global portfolio in a region that was already home to one of Newmont’s promising development opportunities.

Mar 5, 2021

Our Thoughts on Berkshire Hathaway’s Latest Annual Report
Image Shown: Shares of Berkshire Hathaway Inc Class B stock have been on an upward climb since June 2020 with room for additional capital appreciation upside. The top end of our fair value estimate range for BRK.B sits at $275 per share. We continue to like exposure to Berkshire Class B stock in our Best Ideas Newsletter portfolio. The top end of our fair value estimate range sits at $275 per share of BRK.B, indicating the company has room for additional capital appreciation upside as of this writing even after moving higher over the past several months. Just like any investor, Mr. Buffett will not always get it right, but we appreciate his candor when he gets something wrong. Bigger picture, the outlook for the US economy appears strong as public health authorities are utilizing COVID-19 vaccine distribution efforts to help bring an end to the crisis. Mr. Buffett, in his letter, was very upbeat about the US economy. We will end with this comment from the Oracle of Omaha: “Our unwavering conclusion: Never bet against America.”