Valuentum Exclusive Analysis for the Discerning Investor

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Jun 5, 2023

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio
Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN).With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We're going to "fully invested" in the Best Ideas Newsletter portfolio today and expect to do the same in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio soon.

May 25, 2023

Nvidia Rockets Higher to Propel Large Cap Growth
Image: Nvidia powers higher after releasing better-than-expected second-quarter fiscal 2024 guidance. The company continues to be a driver behind the outperformance of large cap growth as a stylistic area. We haven’t seen a quarterly guidance beat like this since Synaptics put up a monster quarter when Apple started using its innovative click-wheel technology in the first-generation iPod, almost 20 years ago. Nvidia Corp.'s outlook for the second quarter of its fiscal 2024 was phenomenal thanks to tremendous interest in its chips that power artificial intelligence [AI]. We expect a material increase in our fair value estimate of Nvidia, but shares remain quite pricey, in our view. Revenue during Nvidia’s fiscal second quarter is expected to be ~$11 billion versus consensus that had been looking at ~$7 billion, implying a forward outlook more than 50% better than what the Street was looking for. Interestingly, Synaptics’ click-wheel technology started the wave of Apple products, which have been the go-to tech platform for years, and Nvidia may very well be the driving force behind AI proliferation, the next great technology platform.

May 8, 2023

Long Live Apple and Large Cap Growth!
Image: Since the release of the book Value Trap in December 2018, an ETF that tracks large cap growth (SCHG) has outperformed not only the S&P 500 (SPY), but also the areas of dividend growth (SDY) and small cap value (IWN) by sizable margins. In a world where monetary policy is tightening and regional banks are failing, we maintain our long-held view that big cap tech and large cap growth are the places to be. Since the release of the book Value Trap in December 2018, an ETF that tracks the area of large cap growth (SCHG) has not only outperformed the S&P 500 (SPY), but also the areas of dividend growth (SDY) and small cap value (IWN) by sizable margins. We love the net cash rich balance sheets and strong expected future free cash flow generators within the area of large cap growth, and Apple remains one of our very favorites that fits the mold. Apple is included in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.

May 5, 2023

Apple’s Second-Quarter Fiscal 2023 Results Were Good Enough
Image Source: Valuentum. On May 4, Apple reported second-quarter results for its fiscal 2023 for the period ending April 1, 2023, that were slightly better than consensus forecast, but we’re viewing the report as mixed. Revenue dropped 2.5% in the quarter on a year-over-year basis as better-than-expected resilience in iPhone sales could not offset weakness in Mac and iPad performance, and its quarterly EPS of $1.52 was unchanged from last year’s mark. Revenue in the company’s Services business jumped 5.4%, and the iPhone maker announced a $90 billion buyback program as it upped its quarterly dividend by more than 4%, to $0.24 per quarter. We plan to make a few tweaks to our valuation model of Apple, but we don’t anticipate a material change to our fair value estimate.

May 5, 2023

Dividend Increases/Decreases for the Week of May 5
Let's take a look at firms raising/lowering their dividends this week.

Apr 27, 2023

Meta Platforms Surges Back to Fair Value Estimate
Image: Meta Platforms’ shares continue to recover from its massive fallout in 2022. We’re sticking with our $225 fair value estimate following the company’s first-quarter 2023 earnings report. Though Meta Platforms is no longer included in the newsletter portfolios, many readers know that we’ve been bullish on the areas of large cap growth and big cap tech for a long time now and that we include Alphabet, Microsoft, and Apple as core ideas in the newsletter portfolios. Year-to-date and over the past year, an ETF that tracks the area of large cap growth (SCHG) has outperformed an ETF that tracks the area of small cap value (IWN) by roughly 9 percentage points. Over the past five years, the outperformance grows to more than 70 percentage points. Without a doubt, large cap growth has been the place to be, and we’ve had a courtside view of why thanks to our fundamental, cash-flow-driven analysis. We expect large cap growth to continue to lead markets, and while we’ve grown skeptical of Meta Platforms, we like that the market is viewing its first-quarter 2023 report positively.

Apr 19, 2023

1Q 2023 Earnings Coming in Better Than Feared Thus Far
Image: We view valuation as a range of probable fair value outcomes. Our updated fair value estimate for Booking Holding stands north of $3,000, while shares are trading at less than $2,700. First-quarter 2023 earnings season has been coming in better than feared, in our view, and bank earnings have not spooked the market as many may have thought they would. But again, any banking crisis takes far more than just a month or two to work through the system, and in the event another shoe drops – whether in Europe or in U.S. commercial real estate or U.S. housing – things could get ugly for the banking sector. We continue to prefer equities over bonds, and as was shown once again during SVB Financial meltdown, the Fed was there once again to bail out the “market” and prevent contagion at any cost. With roughly 10% of the S&P 500 reporting first-quarter 2023 earnings so far, many companies have been beating consensus estimates.

Apr 11, 2023

Not Worried About Global PC Demand Weakness
Image Source: IDC. On April 9, International Data Corporation (IDC) issued preliminary findings for the first quarter of 2023 for global personal computer (PC) shipments in its Worldwide Quarterly Personal Computing Device Tracker. The results were a bit surprising, with the firm noting that “weak demand, excess inventory, and a worsening macroeconomic climate were all contributing factors for the precipitous drop in shipments of traditional PCs during the first quarter of 2023.” According to the IDC report, global PC shipments fell 29% to 56.9 million compared to the first quarter of 2022. Apple experienced the biggest year-over-year percentage decline, where shipments fell more than 40%. Dell Technologies, Lenovo and ASUS experienced declines greater than 30%, while HP Inc. and a basket of other PC makers witnessed declines in the mid-20% range. Channel inventory remains elevated, and investors should expect more discounting from the PC makers, as the industry continues to optimize the supply chain amid pre-COVID and post-COVID demand dynamics.

Apr 5, 2023

The Difference Between Speculation and Investment
In this edited video transcript, Brian Nelson, President of Investment Research at Valuentum, discusses the difference between speculation and investment.

Mar 28, 2023

The Real Reason Why Moats Matter
Image Source: Ray in Manila.  Let's sit down with President of Investment Research Brian Nelson for his take on economic moats, and why he still likes the areas of large cap growth and big cap tech.