Valuentum Exclusive Analysis for the Discerning Investor

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Jan 13, 2023

UnitedHealth Is A Free Cash Flow Powerhouse; Shares Yield ~1.3%
Image Source: UnitedHealth Group. Very few firms have the type of free cash flow conversion as that of UnitedHealth Group, and the company’s free cash flow coverage of its cash dividends remains phenomenal, all the while its balance sheet remains as strong as ever. We expect the firm to continue to raise its 2023 guidance throughout the year as momentum behind its UnitedHealthcare and Optum divisions accelerate. The executive team remains confident that it will achieve its long-term goal of growing earnings per share in the range of 13%-16% per annum, and while that may seem aggressive, it is achievable, in our view. Healthcare spending remains a large part of U.S. GDP, and we expect overall spending on healthcare to continue to expand at a rapid clip in coming years. We continue to like UnitedHealth Group as a dividend growth idea, and its financials speak to tremendous payout support.

Dec 14, 2022

Moderna’s Personalized Cancer Vaccine (PCV) Could Be a Game-Changer When Combined with Merck’s KEYTRUDA
Image: Moderna’s therapeutics pipeline continues to advance, and the company recently received positive news regarding its personalized cancer vaccine (PCV), ID # mRNA-4157, when combined with Merck’s KEYTRUDA. Image Source: Moderna. Moderna and Merck have revealed what could be a big breakthrough with respect to investigational cancer treatment, but we remind investors that the news is a Phase 2b study, and there is still a meaningful probability that the Phase 3 trial for the immunotherapy may be unsuccessful. Still, the Phase 2b results for the PCV-KEYTRUDA combination showed an impressive 44% reduction in the risk of recurrence or death in patients with late-stage melanoma, and the adverse effects from the combined PCV-KEYTRUDA therapy occurred in just 14.4% of patients, which was not terribly different than those receiving KEYTRUDA alone. There are a plethora of players dabbling in mRNA vaccine technology these days, and we remain excited about its future potential to improve patient outcomes, as much as we are about CRISPR gene-editing technology.

Dec 9, 2022

Dividend Increases/Decreases for the Week of December 9
Let's take a look at firms raising/lowering their dividends this week.

Nov 22, 2022

Dick’s Sporting Goods Defies Skeptics, Puts Up Strong Comp Performance in Fiscal Third Quarter
Image: Dick’s Sporting Goods is the premiere sporting goods retailer, and the firm’s performance during its recently reported fiscal third quarter showed a key inflection point in same-store-sales growth. Image Source: Dick’s Sporting Goods. On November 22, Dick’s Sporting Goods reported fiscal third quarter results for the period ending October 29 that beat expectations on both the top and bottom line, but the real story was the sporting good retailer’s same-store sales performance, which far exceeded the consensus expectation for the period. With a forward estimated dividend yield of ~1.8% and a solid Dividend Cushion ratio of 3.3, Dick’s Sporting Goods remains one of our favorite ideas within the Dividend Growth Newsletter portfolio.

Oct 27, 2022

VBI Ratings Not as Impressive As We Would Have Liked in 2022
Image: How the VBI rating system has ranked equities so far this year. At Valuentum, we use the Valuentum Buying Index (VBI) to source ideas into diversified simulated newsletter portfolios, and the VBI may be most applicable to the simulated Best Ideas Newsletter portfolio, where we generally like to include ideas when they register a high VBI rating and remove them when they register a low VBI rating. We always use the VBI in a portfolio setting and never by itself. Let's talk more about the VBI rating system in this work.

Oct 19, 2022

Johnson & Johnson Reports Mixed 3Q Results, Plans to Spin Off Consumer Health Division Mid-to-Late 2023
Image Source: Johnson & Johnson. Johnson & Johnson is one of the top weightings in the simulated Dividend Growth Newsletter portfolio, and it has delivered tremendous stability at a time when the markets are facing considerable pressure. Year-to-date, Johnson & Johnson has fallen about 4% on a price-only basis, while the S&P 500 is down more than 18% so far in 2022. Macroeconomic uncertainty, inflationary pressures and currency headwinds will muddy operational results in the near term, and its planned spin-off of its ‘Consumer Health’ division as Kenvue in mid-to-late 2023 will complicate financials, but we still like Johnson & Johnson. Shares yield ~2.7% at the time of this writing.

Oct 18, 2022

Dividend Growth Idea UnitedHealth Group Outperforming
Image Shown: Shares of dividend growth idea UnitedHealth Group Inc have put up stellar performance so far in 2022. We are huge fans of UnitedHealth Group, and its dividend growth potential remains immense. The top end of our fair value estimate range sits at $599 per share of UnitedHealth Group, indicating that the health care giant also possesses substantial capital appreciation upside as well. UnitedHealth Group’s acquisition of Change Healthcare is intriguing and should generate material synergies going forward. Looking ahead, we expect that UnitedHealth Group will grow its dividend at a robust pace, aided by its strong free cash flow generating abilities and pristine balance sheet.

Oct 10, 2022

Best Idea Vertex Pharma Outperforming in 2022
Image Shown: Shares of Vertex Pharmaceuticals Inc, an idea included in our Best Ideas Newsletter portfolio, have performed incredibly well year-to-date through October 2022. Vertex Pharma’s performance this year has been stellar, and its financial position is rock-solid. The company has ample financial firepower to invest heavily towards commercializing its existing drug development pipeline and is well-positioned to ride out the numerous exogenous shocks seen of late (inflationary pressures, geopolitical tensions, and the increasing likelihood of a global recession in the near term). We continue to like shares of VRTX in the simulated Best Ideas Newsletter portfolio.

Jul 26, 2022

Johnson & Johnson’s Underlying Performance Remains Strong
Image Source: Johnson & Johnson – Second Quarter of 2022 IR Earnings Presentation. Johnson & Johnson reported second quarter 2022 earnings that beat both top- and bottom-line estimate consensus estimates. Johnson & Johnson maintained the midpoints of its full-year non-GAAP adjusted operational sales and earnings per share guidance during its latest earnings update but reduced its reported sales and earnings guidance due to headwinds stemming from a strengthening US dollar. We continue to like Johnson & Johnson as an idea in both the Best Idea Newsletter and Dividend Growth Newsletter portfolios. Shares of JNJ yield ~2.6% as of this writing. Please note that Johnson & Johnson is in the process of spinning off its ‘Consumer Health’ segment as a separate publicly traded entity by 2023 through a tax-free transaction. The firm is still working out the details and intends to finalize the organizational design of the new enterprise by the end of this year.

Jul 20, 2022

UnitedHealth Group Beats Estimates and Once Again Raises Guidance
Image Shown: Shares of dividend growth idea UnitedHealth Group Inc moved higher by ~5% during normal trading hours on July 15 after reporting a stellar earnings update. The health care giant once again raised its full-year earnings guidance for 2022 in conjunction with its latest earnings update. Shares of UNH have held up quite well year-to-date in the face of volatile capital markets. On July 15, UnitedHealth Group reported second quarter 2022 earnings that beat both consensus top- and bottom-line estimates. The health care giant also boosted its non-GAAP adjusted EPS guidance to $21.40-$21.90 for 2022, up from $21.20-$21.70 previously, in conjunction with it second quarter earnings update. Please note that this is the second time UnitedHealth Group has increased its earnings guidance for 2022 (it also boosted its full-year forecasts back in April 2022), and we appreciate management’s confidence in UnitedHealth Group’s near term outlook. We include UnitedHealth Group as an idea in the Dividend Growth Newsletter portfolio, and shares of UNH yield ~1.3% as of this writing. At the high end of our fair value estimate range, we assign UnitedHealth Group a fair value estimate of $599 per share, well above where UNH is trading at as of this writing. UnitedHealth Group has a fortress-like balance sheet, “moaty” business characteristics, a bright growth outlook, and is a stellar free cash flow generator.