Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

May 28, 2021

Nvidia Growing at a Brisk Pace Amid Chip Shortage
Image Source: Nvidia Corporation – GTC Spring 2021 Investor Day Presentation. On May 26, Nvidia Corp reported first quarter earnings for fiscal 2022 (period ended May 2, 2021) that beat both consensus top- and bottom-line estimates. Demand for Nvidia’s chips used in data center and gaming offerings remains robust. Looking ahead, Nvidia provided guidance for the fiscal second quarter during its latest earnings update that indicated its strong performance was expected to continue.

Apr 26, 2021

Competition Is Heating Up for Intel
Image Shown: Intel's shares have outpaced the S&P 500 SPDR (SPY) since we removed them October 2020.Intel has had a terrific run, but we think bad news may be on the horizon. The chip giant is juggling too many balls at the moment, and competition from the likes of AMD and Nvidia could result in some tough sledding in coming years. We don’t see much risk to the dividend payout, but the lower end of our fair value range may be a reasonable target for shares. We feel that a big miss is coming that may take the market by surprise later this year or in 2022. Execution will be key, and Intel has its work cut out for it. We expect to make some tweaks to our valuation model given the report, but we don’t expect a material fair value estimate change at this time. The company’s Dividend Cushion ratio stands at 1.4.

Apr 8, 2021

The Best Years Are Ahead
The wind is at our backs. The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets to remain overpriced for some time). Bond yields are paltry and will likely stay that way for some time, requiring advisors to rethink their asset mixes. The stock market looks to be the place to be long term, as it has always been. With all the tools at the disposal of government officials, economic collapse (as in the Great Depression) may no longer be even a minor probability in the decades to come--unlike in the past with the capitalistic mindset that governed the Federal Reserve before the “Lehman collapse."

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Jan 27, 2021

ALERT: Raising Cash in the Newsletter Portfolios
Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we're raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. For more conservative investors, the high end of this range may even be larger, especially considering the vast "gains" from the March 2020 bottom and the increased systemic risks arising from price-agnostic trading (read Value Trap). The individual holdings will be reduced in proportion to arrive at the new targeted cash weighting in the respective simulated newsletter portfolios. The High Yield Dividend Newsletter and Dividend Growth Newsletter are scheduled for release February 1. We'll have more to say soon.

Jan 27, 2021

Fourth Quarter Earnings Reports Coming In: INTC, GGG, KMB, STLD
Image Source: Kimberly Clark Corporation – Second Quarter of Fiscal 2021 Earnings IR Presentation. Fourth quarter 2020 earnings season is upon us. In this note, we walk through the reports of four companies issuing results: Intel, Graco, Kimberly Clark, and Steel Dynamics. Intel is making the right call by seeking to outsource some of its production needs given its inability to produce certain current- and next-generation chips. For companies operating in the industrial sector, it appears that after a challenging first half of 2020, things are now recovering in earnest. The industrial economy appears to have entered 2021 with momentum, keeping short-term headwinds in mind. Consumer staples entities experienced strong demand growth in 2020, though it appears that many companies operating in the space now expect their organic sales growth to moderate in 2021 as the uplift from “pantry stockpiling” fades.

Jan 24, 2021

Following Up on Leading Semiconductor Equipment Supplier ASML Holding N.V.
Image Source: ASML Holding NV – Fourth Quarter and Full-Year 2020 Earnings IR Presentation. Shares of Netherlands-based ASML Holding N.V., which supplies lithography systems and services to the semiconductor industry, have done incredibly well since we published our note, "ASML Holding Is an Impressive Enterprise with a Pristine Balance Sheet and Rock-Solid Growth Trajectory" article back on April 8, 2020. From April 8 to January 22, shares of ASML more than doubled. We strongly encourage members that have not done so to check out that article, as we laid out how ASML Holding’s lithography systems are an essential part of the semiconductor industry along with our reasoning behind why we view the company’s long-term outlook favorably. We continue to be fans of ASML Holding’s business model. As a leader in an industry supported by numerous secular growth tailwinds (secular trends, such as the rise of AI and cloud-computing, support the outlook for semiconductor demand which in turn supports the outlook for the cutting edge lithography systems used to make these semiconductors), ASML Holding is poised to continue to generate strong revenue growth while maintaining its pricing power.

Dec 28, 2020

Qualcomm’s Growth Trajectory Is Impressive and Supported by Numerous Secular Trends
Image Source: Qualcomm Inc – 2019 Analyst Day Presentation. Qualcomm offers dividend growth investors a way to play the rollout of 5G technologies and other nascent technologies worldwide, along with technologies that do not exist yet but could be made viable by the ongoing rollout of 5G wireless networks. We like Qualcomm’s business model, and we view the company as well-positioned to capitalize on numerous secular growth tailwinds. Beyond the recent launch of several 5G-capable smartphones by various companies, its automotive business offers Qualcomm ample upside potential. Additionally, we are intrigued by the opportunities created by the IoT trend and the firm’s AI-related investments. Concerns over competitive threats to Qualcomm’s modem business are not to be viewed lightly, though the company has many technical competitive advantages (know-how) derived from years of development and remains a leader in its field. As long as Qualcomm continues to innovate, made possible through its meaningful R&D investments, its product offerings and expansive IP portfolio should continue to remain in high demand. The company’s dividend growth trajectory is supported by its stellar cash flow profile and relatively strong balance sheet. Shares of QCOM yield ~1.8% as of this writing.

Nov 20, 2020

Nvidia Is a Great Company but Its Shares Appear to be Generously Valued
Image Source: Nvidia Corporation – October 2020 IR Presentation. On November 18, Nvidia Corp reported third quarter earnings for fiscal 2021 (period ended October 25, 2020) that beat both consensus top- and bottom-line estimates. The company’s GAAP revenues jumped higher by 57% year-over-year last fiscal quarter, aided by growth at its ‘Data Center’ (sales were up 190% year-over-year) and ‘Gaming’ (sales were up 37% year-over-year) business operating segments, which combined represented ~88% of its revenues last fiscal quarter. Nvidia’s ‘Professional Visualization’ and ‘Automotive’ business operating segments both posted year-over-year declines in sales. The ongoing coronavirus (‘COVID-19’) pandemic has accelerated recent trends in the digital world, such as the pivot towards offsite cloud-computing solutions to meet IT needs. In turn, this dynamic has sharply increased demand for data centers that make the transition towards cloud-computing possible, which has proven to be a boon for Nvidia. The work-from-home (‘WFH’) trend has driven up demand for PCs and laptops over the past few quarters. Additionally, rising demand for video games entertainment options is likely supporting demand for higher end PCs and laptops as well. Nvidia has so far been able to rise to the occasion and meet surging demand for data centers, laptops, and PCs during these turbulent times.