Valuentum Exclusive Analysis for the Discerning Investor

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Jan 27, 2023

Dividend Increases/Decreases for the Week of January 27
Let's take a look at firms raising/lowering their dividends this week.

Jan 24, 2023

Manpower Group’s Massive Free Cash Flow Yield Facing Some Pressures; Shares Have Dividend Yield of ~3%
Image: Manpower Group is a tremendous generator of free cash flow, though performance can be lumpy at times. Image Source: Manpower Group. Manpower Group has been acquisitive and is facing increased competition of late, but the company’s financials, particularly its free cash flow generation, remain quite attractive. The firm continues to buy back stock at a nice clip, too, as it pays its attractive semi-annual dividend of $1.36 per share. Though its free cash flow yield will face some pressure using pending 2022 results, Manpower Group could be an idea for investors seeking equities with outsized free cash flow yields in this market, in our view. We expect to fine-tune our assumptions within our discounted cash-flow model once the company’s fourth-quarter results are released in the coming weeks, but very few non-energy firms have such a strong normalized free cash flow yield as that of Manpower Group.

Jan 20, 2023

Why Are the Dividends of REITs So Risky?
REITs, as measured by the Vanguard ETF (VNQ), have generated a total return of 39.5% since the beginning of 2015 through the end of 2022, an eight-year period that has translated into a measly compound annual return of just 4.25%. This compares to a total return of the Vanguard S&P 500 ETF (VOO) of 116.3%, which translates into a compound annual return of 10.1% over the same time period. Not only have REITs underperformed terribly during the past 8 years, but there have been more than 100 dividend cuts by REITs over this time period, too. REITs just aren’t what some make them out to be. Be careful.

Jan 17, 2023

Goldman Sachs Drops, Morgan Stanley Pops in “Bull Market for Advice”
Image: Morgan Stanley’s ‘Wealth Management’ division has provided the company with stability, while Goldman Sachs continues to feel weakness across several of its business segments. Image Source: TradingView. Banking entities have kicked off fourth-quarter 2022 earnings season. The quarterly results across those that have reported have been mixed thus far, among the largest entities, but perhaps the dichotomy among players was no more pronounced than the market’s reaction to Goldman Sachs’ and Morgan Stanley’s respective fourth-quarter 2022 results. Goldman Sachs’ shares fell to the lower end of our fair value estimate range, while Morgan Stanley’s shares surged toward our fair value estimate. We think Morgan Stanley’s shares could run to the high end of our fair value estimate range, or $118 each, in part on the basis of technical momentum, but we’re not making any changes to our banking fair value estimates following the results at this time.

Jan 15, 2023

Our Reports on Stocks in the Telecom Services Industry
Image Source: Mike Mozart.  Our reports on stocks in the Telecom Services industry can be found in this article. Reports include CMCSA, DISH, T, TMUS, VZ, SBAC, AMT, CCI, PARA. The telecom industry is characterized by rapid technological change, intense competition and pricing pressures. The mature wireline segment remains under attack from cable/wireless products. Mobile technology enhancements such as the iPhone continue to attract new wireless subscribers in less saturated markets, but this has not lessened the intensity of competition. Industry constituents continue to pursue acquisitions in order to reduce bloated cost structures and achieve synergies. Average revenue per subscriber and churn rates should be monitored closely. We’re neutral on the structure of the group.

Jan 12, 2023

Taiwan Semiconductor’s Shares May Have Bottomed
Image: We’re liking the technical bottom forming in Taiwan Semiconductor’s shares. Image Source: TradingView. Everyone has their eyes on Taiwan Semiconductor these days. The firm is the center of attention with respect to Sino-American relations, and the risk that China may invade Taiwan has added a degree of uncertainty to shares that is almost impossible to quantify within general valuation frameworks. Headquartered in Hsinchu, Taiwan, the world’s largest pure-play semiconductor foundry is a key bellwether for an area within technology that has faced considerable pressure during the past year. However, from our perspective, shares of Taiwan Semiconductor look to have carved out what we believe to be a technical bottom, and the high end of our fair value estimate range of $90 speaks to more upside potential.

Jan 10, 2023

Dow Laggard Walgreens Boots Alliance Yields North of 5%; Has Raised Dividend for 47 Consecutive Years
Image: Walgreens Boots Alliance’s shares have been pummeled during 2022. Image Source: TradingView. Key metrics, including free cash flow and adjusted earnings per share, aren’t presently moving in the right direction at Walgreens Boots Alliance, but free cash flow generation remains in excess of cash dividends paid. The company, and its predecessor firm, Walgreen Co., have paid 360 straight quarters of dividends over the past 90 years, too, raising the payout in each of the past 47 years. It’s absolutely amazing for a company to have such a storied history and reliable dividend track record, but it’s also worth emphasizing Walgreens Alliance Boots is far from a simple story these days. Still, with a 5%+ forward estimated dividend yield, this component of the Dow Jones Industrial Average is worth a close look.

Jan 5, 2023

The Fed ‘Can’t Stop, Won’t Stop’ Until Labor Market Feels More Pain
Image: Prices for private label brands at Aldi are considerably lower than those of branded products. The consumer staples sector, however, remains fully-priced with a 21+ forward earnings multiple, and many constituents hold large net debt positions. We believe the sticking point for the Fed is not groceries or gasoline prices, but rather the labor markets, which remain very strong, despite layoffs. Image Source: Valuentum. We maintain our view that markets will remain challenged for at least the first quarter of 2023, and we expect the S&P 500 to bottom around 3,400 based purely on a technical evaluation of the ongoing downtrend. The labor market remains too strong for the Fed to stop rate hikes, as the primary concern for the Fed is not what inflation will do this year, but rather whether it will spike again in 2024. To truly stomp out inflation, the Fed needs to witness further weakening in the labor markets, as consumers have found ways to trade down to offset grocery inflation and as gas prices at the pump ease. We’re never happy to hear of layoffs, but an unemployment rate of 4.5%-5% may be the range required for the Fed to stop hiking, in our view. The last thing the Fed wants is to stop hiking too early, only for inflation to come roaring back in the quarters that follow the pause. The Fed is not thinking about year-over-year inflation numbers for 2023, in our view, but rather policies that will ensure that inflation rates of the past 12-18 months do not return in 2024-2025. They are playing the long-term game.

Dec 30, 2022

5 Top Stock Ideas for 2023!
With 2022 almost in the rear-view mirror, investors are expecting continued weakness into 2023. Millionaires are as bearish as they have been since the beginning of 2008, and we all know what happened during that year. Inflationary pressures coupled with substantially weakened consumer spending as a result of the collapse in the price of cryptocurrencies, traditional asset allocation models such as the 60/40 stock/bond portfolio, and ultra-high yielding stocks with payouts north of 9%-10% have most investors worried about what might be ahead in 2023. Still, investors have reason to be hopeful, in our view. The labor markets continue to hold up well, and the rate hikes that have pummeled equity, bond and real estate prices also act as future dry powder for the Fed to stimulate markets. At any time, the Fed can reverse its contractionary course. In 2023, we should start to see year-over-year increases in inflation slow, too. In this article, let’s talk our top 5 stock ideas for 2023!

Dec 29, 2022

Dividend Growth Giant Lockheed Martin’s Share Price Surges 35%+ in 2022
Image: Lockheed Martin’s shares have been bolstered by a robust share buyback program during the fourth quarter of 2022. Though we still expect shares to be resilient, some technical consolidation may be necessary. Image Source: TradingView. Lockheed Martin’s aggressive buybacks during the fourth quarter of 2022 may have driven its price up to lofty levels, but we continue to like shares in the Dividend Growth Newsletter portfolio heading into 2023. The company’s free cash flow generation remains robust, its backlog has firmed up, and geopolitical tensions around the globe continue to intensify. The company’s equity yields ~2.5% at the time of this writing.