Valuentum Exclusive Analysis for the Discerning Investor

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Brain Teaser - Reflexive versus Reflective
Image: Amy Leonard. Valuation multiples tend to trigger the reflexive side of our brain, and we process the multiples through anchoring. On the other hand, enterprise valuation, or the process required to answer the questions (in this article) correctly, shows that our reflexive process can be quite incorrect at times. In fact, cognitive biases such as anchoring can completely trip us up into missing out on truly undervalued companies that may have high P/E ratios while baiting us into value traps with low P/E ratios.

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.

PepsiCo Adjusts Organic Revenue Growth Guidance
Image: PepsiCo’s shares have been choppy since the beginning of 2022. We’re not reading too much into PepsiCo's modest downward organic revenue growth guidance revision for 2024 (approximated 4% versus at least 4%), as the firm's underlying profitability remains strong, with expectations for at least 8% core constant currency expansion in 2024. Total cash returns to shareholders is targeted at $8.2 billion for 2024, consisting of dividends of $7.2 billion and share repurchases of $1 billion. For the 24 weeks ended June 15, PepsiCo had negative free cash flow, while it retained a hefty net debt position on the balance sheet. Though PepsiCo is not a net-cash-rich, free cash flow generating powerhouse, we like the diversification benefits it provides in the Best Ideas Newsletter portfolio.

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. We address a number of questions from both subscribers and visitors to our site.

Latest Report Updates
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Dividend Increases/Decreases for the Week of May 3
Let's take a look at firms raising/lowering their dividends this week.

PepsiCo Has Raised Dividends in Each of the Past 50+ Years
Image: Pepsi’s shares continue to be choppy, but we like its consecutive annual dividend growth streak. On April 23, PepsiCo reported solid first-quarter 2024 results that showed a beat on both the top and bottom lines. The beverage and snacks giant plans to return $8.2 billion in cash to shareholders during 2024, with dividends accounting for $7.2 billion and share buybacks the balance. We love PepsiCo’s consecutive annual dividend growth streak, and the firm continues to deliver where it counts.

You Already Own Whatever Your Investment Will Pay You in Dividends
Image Source: Images Money. Stocks are generally valued on the present value of all their future free cash flows, which already include future dividend payments. A company’s dividend policy may impact an investor’s eagerness to pay a higher price for shares on the basis of a higher yield, but the dividend is a symptom of future free cash flows (and therefore intrinsic value), not the driver behind it.

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

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.