Valuentum Exclusive Analysis for the Discerning Investor

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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 28, 2023

6%+ Dividend Yielder Cracker Barrel Needs to Raise Menu Prices More Aggressively
Image: Cracker Barrel remains focused on returning cash to shareholders. We think performance at Cracker Barrel is fixable, but it has to be menu price-driven as commodity price and hourly wage inflation continues to eat into operating income, and traffic remains troubled even with increased spend on marketing. Notwithstanding its long-term unit growth opportunities at its Cracker Barrel and Maple Street stores, Cracker Barrel’s unique concepts continue to resonate with consumers, but the firm is being left behind in a world where other restaurants are sacrificing price-conscious consumers for those less concerned about price increases. Its ~6.3% dividend yield at the time of this writing speaks of heightened risk, as does its 0.5 Dividend Cushion ratio, but if Cracker Barrel can turn things around by ratcheting up its pricing initiatives more aggressively in fiscal 2025 and beyond, the stock could end up being one of the most attractive income ideas on the market today. For now, however, we’re watching and waiting for a strategic shift.

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.

Nov 29, 2023

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

Nov 10, 2023

Use Both the Dividend Cushion Ratio (Probability of a Dividend Cut) and the Qualitative Dividend Ratings in Your Assessment of the Payout
The Dividend Cushion ratio ranks companies on the probability of a dividend cut in the longer run, while the qualitative ratings in part assess the outlook for the health of the payout in the near term in the context of management’s willingness to preserve and raise the payout. Since the systematic application of the Dividend Cushion ratio across our coverage in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90% at identifying the risks of a dividend cut in advance of the event.

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!

Oct 9, 2023

Investors Likely Overreacting to Long-Run Impact That Weight-Loss Drugs Will Have on Snack and Food Stocks
Image: Domino’s stock has slumped recently due to weakening same-store sales expansion and concerns that weight-loss drugs will have on snack and food demand. The American eater continues to fight the “battle of the bulge” as many seek improved lifestyles and the health benefits from losing weight and getting in shape. The healthcare industry is delivering on this front, too, with diabetes drugs from Novo Nordisk and Eli Lilly called GLP-1 agonists that also have weight-loss benefits. Though we applaud what looks to be a solution in part for the obesity epidemic that has overtaken the U.S., investors are growing concerned that food that snack and food stocks will see slackening demand.

Sep 20, 2023

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

Jul 27, 2023

McDonald’s, Chipotle, Domino’s Second-Quarter 2023 Results Solid
Image: Shares of McDonald’s, Chipotle and Domino’s have done well since the beginning of 2020, with Chipotle leading the pack. McDonald’s and Chipotle aren’t going away anytime soon, and we’re not at all discouraged by their respective second-quarter 2023 same-store-sales performance; CMG’s performance gave the market pause, but the sell-off in the burrito maker’s shares was mostly profit-taking (after a huge run up so far in 2023). McDonald’s is a perfect stock for the current inflationary environment, in our view, while Chipotle remains one of the best unit growth stories in the restaurant arena. Another one of our favorites, Domino’s has recently broken through its downtrend. We don’t expect to make any major changes to our fair value estimates of MCD, CMG, or DPZ, and we continue to like shares of all three in the Best Ideas Newsletter portfolio.

Jul 20, 2023

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