Valuentum Exclusive Analysis for the Discerning Investor

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Sep 20, 2023

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

Sep 20, 2023

Fed Rate Decision, UAW Strike Continues, Microsoft Ups Payout
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.

Aug 28, 2023

Stock Report Updates
Check out the latest report updates on the website.

Aug 3, 2023

Albemarle Is One of the Best Growth Stories on the Market Today
Image: Albemarle is a low-cost producer of lithium derivatives, an end market that is expected to experience tremendous demand in the coming years. On August 2, Albemarle Corp. reported excellent second-quarter 2023 results that showed net sales advancing 60% and adjusted diluted earnings per share more than doubling in the quarter. For the full-year 2023, net sales are now expected to be between $10.4-$11.5 billion (was $9.8-$11.5 billion) thanks in part to continued strength in electric vehicle (EV) demand. Our fair value estimate for Albemarle stands at $257 per share, well above where shares are currently trading. We think the market is underestimating not only its growth potential but also mid-cycle levels of profitability.

Jul 24, 2023

Tesla Is A Net-Cash-Rich, Free-Cash-Flow Generating, Secular-Growth Powerhouse
Image: Tesla’s Cybertruck showcasing its versatility. The truck is on track to begin production at Gigafactory in Texas in the coming months. Image Source: Tesla's second-quarter press release. The cash-based sources of intrinsic value (and the trajectory of growth in them) are the most important considerations when it comes to assessing the attractiveness of an equity. Two of the most important cash-based sources of intrinsic value are net cash on the balance sheet and future expected free cash flows, and in these two areas, Tesla excels. Though we won’t be adding Tesla to any of the newsletter portfolios anytime soon, we like it within a diversified basket of large-cap growth equities, of which the Best Ideas Newsletter in some ways approximates.

Jul 4, 2023

Tesla Registers Record Total Deliveries in Second Quarter 2023
Source: Tesla. We’ve liked Tesla’s share-price strength so far this year, and record total deliveries during the second quarter of 2023 help to continue to support its impressive share-price move. The high end of our fair value estimate range of Tesla stands at $335 per share, meaning shares of Tesla still have more room to run. The company remains one of the most speculative ways to play U.S. equities.

May 30, 2023

Paper: Value and Momentum Within Stocks, Too
Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks.

Mar 30, 2023

Dividends, Dividends, Dividends
Valuentum's President of Investment Research Brian Nelson shares three unique insights on dividends not commonly discussed among investors. The transcript of the video can be found in this article.

Mar 13, 2023

ICYMI: How Big Is Your "Too Hard" Bucket?
Image Source: Christian Schnettelker. In investing, it's okay to admit that there are some things that investors can't know. It's not a poor reflection of one's analytical ability or a possible shortcoming of one's experience, but rather quite the contrary: Understanding and accepting that some things are "unknowable" is a sign of the quality of one's judgment. Quite simply, certain critical components of the equity evaluation process are more "unknowable" than others. The intelligent investor recognizes the variance (fair value estimate ranges) and the magnitude of the "unknowable" between companies and generally tries to identify entities that have the least "unknowable" characteristics as possible or situations where the "unknowable" might actually be weighted in their favor (an asymmetric fair value distribution).

Feb 12, 2023

Albemarle Outlines Strong Lithium Demand Outlook
Image Source: Albemarle. Albemarle released a very promising outlook in late January, one that implies a tremendous pace of top-line expansion, profitability growth, and free cash flow generation. We’re huge fans of the outlook and believe lithium demand will continue to be robust, even as new supply comes to market. The company has called its next five years a period of “transformational growth,” where expected net sales are targeted at 2.5x 2022 levels and adjusted EBITDA is targeted to more than double. Electric vehicle demand remains robust, and Albemarle has opportunities across the end markets of mobility, energy, connectivity, and health, too. We think Albemarle remains one of the best growth stories on the market today, and we like shares.