Valuentum Exclusive Analysis for the Discerning Investor

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Nov 6, 2020

Garbage Hauler Republic Services Doesn’t Disappoint in Third Quarter
Image: Republic Services. We love companies with strong future expected free cash flow generation, especially ones that have strong net cash positions. Republic Services doesn’t have the strongest balance sheet, with a rather large net debt position emanating from rolling up a number of independent garbage haulers in the past, including Allied Waste, but it’s not something we’re worried about, given its strong and predictable free cash flow, contractual revenue visibility in its collection operations, and pricing power at its disposal facilities. We’re reiterating the high end of our fair value estimate range of $96 per share.

Nov 5, 2020

Follow Up on Our Call on Ameresco
Image Shown: Since we highlighted Ameresco Inc back in August, shares of AMRC have continued to surge higher. We caution that recent trading activity has been quite volatile, due primarily to the ongoing election count process in the US. Back in August 2020, we published a note on Ameresco, which provides a comprehensive slate of energy services for its clients. Ameresco appears uniquely well-positioned to capitalize on rising demand from enterprises, government agencies, and other entities to appear “green” without breaking the bank. Given that the company’s core offerings involve reducing its customers' long-term operating costs (particularly O&M expenses) and improving its clients' cost structure, it appears Ameresco’s offerings should be quite appealing to a large range of customers. We will continue keeping an eye on Ameresco going forward.

Oct 29, 2020

News Brief: We Like Large Cap Growth, Big Cap Tech, and the NASDAQ
Image: Since 2010, a large cap growth ETF has outperformed the S&P 500 by nearly 150 percentage points (15,000 basis points). Since 2010, a large cap growth ETF has outperformed a small cap value ETF by over 275 percentage points, or 27,500 basis points (image not shown). We expect continued outperformance from companies within the large cap growth bucket. The markets have been see-sawing the past couple weeks as the global economy continues to recover and much of the world awaits the outcome of the 2020 US Presidential election. We think the equity markets have largely factored in the forecasted epidemiology curve with respect to COVID-19, including infection spikes across the world, so recent market volatility has largely been driven more by political/election risk than anything else. To nobody’s surprise, we expect continued volatility heading into and during election week, but we’re also maintaining our above market fair value estimate on the S&P 500 of 3,530-3,920 (the S&P 500 stands at about 3,300 at the moment). Once election week passes, we expect one of the best Santa Claus rallies in years as consumer sentiment improves. As a result of COVID-19, e-commerce proliferation will be more evident during the holiday season this year than ever before. Our newsletter portfolios remain well-positioned, and we continue to like the areas of large cap growth, big cap tech, and the NASDAQ. Our favorite names are those with strong net cash positions and solid expected future free cash flows with competitively advantaged business models that are tied to secular growth tailwinds in industries where many players can win. We’ve continued to point to Facebook, Alphabet, and PayPal as a few of our favorite longs in this environment.

Sep 26, 2020

Update on Johnson & Johnson
Image Shown: An overview of Johnson & Johnson’s expectations for fiscal 2021 provided during its second quarter of fiscal 2020 earnings report. We continue to like shares of Johnson & Johnson as a top-weighted holding in our Dividend Growth Newsletter portfolio. Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 Earnings IR Presentation. Johnson & Johnson is a top-weighted holding in our Dividend Growth Newsletter portfolio, and we continue to be big fans of the healthcare and consumer staples giant. The company recently published some key updates that we wanted to draw our members’ attention towards. Before we begin, please note that Johnson & Johnson is near the front of the pack when it comes to developing a potential coronavirus (‘COVID-19’) vaccine. Should Johnson & Johnson prove successful, global health authorities would be better able to combat the severity of the COVID-19 pandemic.

Aug 31, 2020

Alibaba Mirrors the Performance of Its Western Peers
Image Shown: Alibaba Group Holding Limited posted strong results for the fiscal quarter ended June 30, 2020, mirroring the performance of its large-cap tech peers based in Western countries (particularly the US). Image Source: Alibaba Group Holding Limited – June Quarter 2020 Earnings Presentation. At a time when US-China geopolitical tensions are rising and the Trump Administration is pushing the Chinese tech firm ByteDance to divest (at least) the US-based operations of TikTok, many Chinese tech firms are still thriving. The ongoing coronavirus (‘COVID-19’) pandemic has fundamentally altered daily life for most households around the world. Social distancing practices have aggressively driven up e-commerce demand along with demand for cloud computing offerings (as more employees work from home and as households stay indoors for significantly longer periods).

Aug 27, 2020

Earnings Brief: BOX, CRM, WMT, TOL, HD/LOW
Image Source: Toll Brothers. Iron Oak at Alamo Creek, Danville, CA. Let's cover some trends that may emerge out of the COVID-19 pandemic, including accelerated e-commerce proliferation and its impact on brick-and-mortar giants, as well as an increased likelihood of suburban sprawl that may propel some names while leaving others behind.

Aug 26, 2020

L Brands Beats Low Expectations
Image Shown: Though shares of L Brands Inc are up year-to-date, they remain down significantly over the past five years as of this writing (before taking dividend considerations into account). The owner of the Victoria’s Secret, PINK, and Bath & Body Works retail brands L Brands reported second quarter fiscal 2020 earnings (period ended August 1, 2020) on August 19 that smashed past both consensus top- and bottom-line estimates. However, those estimates were a low bar to beat as analysts had already factored in the significant headwinds the coronavirus (‘COVID-19’) pandemic created for its business. Last fiscal quarter, L Brands reopened most of its stores and leaned on e-commerce sales channels to meet customer demand as best it could. For reference, Victoria’s Secret and PINK (collectively referred to as Victoria’s Secret by L Brands) sell lingerie and similar apparel/accessories while Bath & Body Works sells fragrances, soaps, hygiene products, and similar offerings.

Aug 20, 2020

BHP Group Shakes Up Long-Term Strategy
Image Source: BHP Group Ltd – Full Fiscal Year 2020 IR Earnings Presentation. Though burdened by its net debt load, BHP Group has done a solid job navigating the storm created by COVID-19 so far. While production at several of its mines was negatively impacted during the first half of calendar year 2020 (second half of BHP Group’s fiscal 2020), BHP Group has implemented new procedures to ensure its employees can stay safe while mining operations resume in earnest. We appreciate management’s pivot away from some of BHP Group’s legacy assets. To read more about BHP Group, please check out our June 2020 article highlighting our thoughts on how the firm is capitalizing on the ongoing economic recovery in China.

Aug 19, 2020

Update: COVID-19 Vaccine Race
Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has devasted the global economy (though things are starting to improve) and has fundamentally altered daily human life. According to a draft report from the World Health Organization (‘WHO’), there were 29 COVID-19 vaccine candidates undergoing clinical trials as of August 13 along with 138 other candidates undergoing preclinical evaluation. It is a race against the clock. Unfortunately, as of this writing on August 18, there have been ~170,000 COVID-19-related deaths in the US alone according to data from the US Centers for Disease Control and Prevention (‘CDC’). We are optimistic that one of the many “shots on goal” will end up proving successful. The US launched Operation Warp Speed to accelerate the development of a COVID-19 vaccine, which involves providing funding to companies with promising vaccine candidates. Furthermore, please note that major economies around the world have adjusted their rules and procedures to allow for multiple phases of clinical trials to be conducted concurrently. Before getting into some of the most promising COVID-19 vaccine candidates, we hope everyone, their loved ones, and their family members are staying safe out there as we ride out the pandemic.

Aug 14, 2020

Two Exciting Names for Your Radar: PENN, SPCE
Image Source: Penn National Gaming. “Davey the Day Trader” meets space flight in this article that sums up the goings-on at two exciting companies, Penn National and Virgin Galactic. We think shares of PENN are fairly valued at the moment, and we won’t be taking a “flier” on Virgin Galactic, but we still think it is one worth watching.