Valuentum Exclusive Analysis for the Discerning Investor

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Feb 25, 2024

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?
Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key long-term earnings growth, cash flow dynamics, and balance sheet health considerations. We remain bullish on equities for the long haul, and we think the next couple years will be incredibly strong. Our best ideas can be found in the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, High Yield Dividend Newsletter portfolio, ESG Newsletter portfolio, and via the Exclusive publication as well as options idea generation.

Feb 11, 2024

Eli Lilly’s Shares Have More Than Doubled During the Past 52 Weeks
Image: Eli Lilly’s shares have been on a tear these past few years. On February 6, Eli Lilly reported excellent fourth-quarter results that showed revenue and non-GAAP earnings per share coming in better than expectations. The company’s fourth-quarter results were bolstered by sales of diabetes and weight-loss drug Mounjaro, which saw sales in the quarter leap to ~$2.2 billion from ~$279 million in the year ago period. We continue to be in awe of the sales momentum behind GLP-1 receptor agonists, and the opportunity continues to be robust, despite already rapid sales acceleration. Though Eli Lilly trades at a premium to the high end of our fair value estimate range, we may be low in our expectations of the company’s ability to tap this lucrative market in the longer run, and shares may still be attractive to the risk-seeking aggressive growth investor.

Jan 8, 2024

Thinking Slow: 3 Research Blind Spots That Changed the Investment World
Image Source: EpicTop10.com. We have to be on high alert about how our minds work. PBS recently delivered a four-part series examining how easily our minds are being hacked, and why it is so important to "think slow." When it comes to the active versus passive debate, does the analysis suffer from parameter risk? With respect to empirical, evidence-based analysis, does the analysis have the entire construct wrong? When it comes to short-cut multiples, are we falling into the behavioral trap of thinking on autopilot?

Dec 29, 2023

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

Dec 23, 2023

12 Reasons to Stay Aggressive in 2024
From outperforming simulated newsletter portfolios to fantastic success rates in the Exclusive publication to option ideas and great income-oriented ideas and beyond, we continue to deliver across our simulated newsletter suite as our latest video outlines. It’s hard to know exactly what 2024 will bring in terms of a market return, but the internals of the stock market and the U.S. economy look great to us. The new bull market we’re in could last for years, and as a result, we are staying aggressive with many of our new ideas as we look to benefit from these favorable trends.

Oct 22, 2023

There Will Be Volatility
Image: An ETF tracking Russell 1000 "growth" stocks has outperformed an ETF tracking Russell 2000 "value" stocks since the beginning of 2021. To us, the market remains hypersensitive to almost every economic data point that hits the wires, and we’re just not going to play that game. The macro headlines and never-ending news flow are what many quant and algorithmic traders are trading on, and to a very large extent, for investors with a long-term horizon, these macro data points just don’t factor into the equation. When valuing equities, we’re always after mid-cycle expectations, not peak or trough performance, so our valuations implicitly embed a "normal" recession. Warren Buffett didn’t become a billionaire buying and selling on macro data points, and volatility is simply to be expected given the proliferation of price-agnostic trading these days. Instead of panicking over higher interest rates, we think investors should view the Fed’s work thus far as future potential dry powder to stimulate both the economy and the markets. Whenever you feel like stocks are no good, have a read of Warren Buffett’s classic piece written during the Great Financial Crisis, “Buy American. I Am.” To us, we still like stocks for the long run. Happy investing!

Sep 24, 2023

Report Updates: Amazon Registers the Lowest Rating on Our Scale
Check out the latest report updates on the website. The biggest takeaway of this refresh is that Amazon is poised to generate significantly negative free cash flow in 2023, and while we think the firm will turn this measure around materially in the long haul, shares are coming out as overvalued on our discounted cash-flow process, while technically its stock price is breaking down. An overvalued stock on both an absolute and relative value basis with negative technical/momentum indicators registers the worst rating on our methodology, the Valuentum Buying Index (1=worst, 10-best).

Sep 20, 2023

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

Jun 26, 2023

Latest Report Updates Concentrated in Mining & Chemicals and Healthcare Industries
In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company's rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis with an evaluation of a firm's technicals and momentum indicators to derive a score between 1 and 10 for each company (10=best). We believe the VBI methodology helps identify the most attractive stocks at the best time to consider buying, helping to avoid value traps and lagging performance due to the opportunity cost of holding a stock with great potential but at an inopportune time. The Best Ideas Newsletter portfolio puts the VBI into practice. Read more about the Valuentum Buying Index rating system, "Value and Momentum Within Stocks, Too." Members can access our 16-page company research reports by using our 'Symbol' search box in our website header.

May 23, 2023

Call Me Unconcerned
Image: Large cap growth has dominated returns the past five years. The Best Ideas Newsletter portfolio continues to have significant exposure to this area. We’re taking it slow this time of year. With the area of large cap growth nearly doubling since the beginning of 2018, trouncing the return of the broader market, dividend growth strategies, the area of small cap value and general REIT indices, it’s just hard to find much wrong with staying pat. The proliferation of artificial intelligence will likely propel big cap tech and large cap growth to new highs, while small cap value may continue to be weighed down by the banks--and dividend-oriented strategies may face continued pressure from rising interest rates and tired real estate markets. Things were a bit murky during 2022, but thanks for keeping the faith.