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Fundamental data is updated weekly, as of the prior weekend. Please download the Full Report and Dividend Report for any changes.
Oct 30, 2020
Our $140 Fair Value Estimate of Apple Remains Unchanged
Image Shown: Apple Inc maintained its enormous net cash position at the end of fiscal 2020. In the graphic up above, Apple’s cash-like items are underlined in red and its debt-like items are underlined in blue. Image Source: Apple Inc – 8-K SEC filing covering the fourth quarter of fiscal 2020 with additions from the author. On October 29, Apple reported fourth quarter and full-year earnings for fiscal 2020 (period ended September 26, 2020). Its fiscal 2020 GAAP revenues and GAAP operating income were up 6% and 4% year-over-year, respectively. Growth was driven by its Mac, iPad, ‘Wearables, Home and Accessories,’ and ‘Services’ offerings while its iPhone revenues dropped somewhat. Longer term, we are optimistic that Apple’s high-margin Services businesses will eventually become a significantly larger part of its overall financial performance (its Services segment represented ~20% of Apple’s sales and ~34% of its gross profit in fiscal 2020). We continue to be huge fans of Apple and include shares of AAPL as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios.
Oct 29, 2020
Disney Is One Of Our Favorite Streaming Companies
Image Shown: Shares of The Walt Disney Company continue to recover from the pandemic-induced crash in March 2020. One of our favorite companies with significant exposure to the video streaming arena is the entertainment behemoth The Walt Disney Company. The company’s various streaming services include ESPN+, Disney+, Hulu, among others. On October 12, Disney announced a major restructuring which effectively reorganized several of its business operating segments around supporting its video streaming ambitions, with an eye towards ensuring sizable investments in original content would be put towards good use.
Oct 23, 2020
Our Thoughts on Intel’s Latest Earnings Report
Image Shown: An overview of Intel Corporation’s performance during the first nine months of fiscal 2020. Image Source: Intel Corporation – Third Quarter of Fiscal 2020 IR Earnings Presentation. On October 22, Intel Corp reported third quarter fiscal 2020 earnings (period ended September 26, 2020) that largely matched consensus expectations. Intel boosted its full-year outlook for fiscal 2020 on a net basis (which included an increase in its expected free cash flows this fiscal year) during its latest earnings update, though management reduced its forecast for Intel’s expected operating margins versus previous expectations. We continue to like Intel’s ability to generate sizable free cash flows, though we are concerned with its rising net debt load of late.
Oct 21, 2020
Our Thoughts on Intel’s Big Divestiture Ahead of Its Earnings Report
Image Source: Intel Corporation – Second Quarter of Fiscal 2020 IR Earnings Presentation. On October 20, Intel Corp and South Korean-based SK Hynix announced a major transaction that will reshape the global NAND flash memory market. For reference, NAND flash memory is used in smartphones, personal computers, and other digital devices. Intel will receive $9.0 billion in cash that will be paid out in two phases, assuming everything goes as planned. In return, SK Hynix is receiving “Intel NAND memory and storage business, which includes the NAND SSD business, the NAND component and wafer business, and the Dalian NAND memory manufacturing facility in China” though Intel will retain its Intel Optane business, which caters to both the data center and personal computer markets.
Oct 14, 2020
Our Thoughts on Apple Launching Its First-Ever 5G-Capable iPhone
Image Shown: Shares of Apple Inc have surged higher year-to-date. On October 13, Apple announced its first-ever lineup of 5G-capable iPhones along with a new smart home speaker offering HomePod Mini. While the 5G-capable iPhone announcement was largely expected, we appreciate the good news all the same. We include shares of Apple as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios and are big fans of the name. The HomePod Mini offering represents Apple’s way of staying competitive with similar offerings from Amazonand Alphabet.
Oct 12, 2020
Dollar General’s Promising Growth Outlook
Image Source: Dollar General Corporation – Fiscal 2019 Annual Report. We are big fans of Dollar General Corp and continue to like shares of DG as a holding in our Best Ideas Newsletter portfolio. After updating our discounted cash flow model, we increased the fair value estimate and the top end of our fair value estimate range for Dollar General. Under our “bull” case scenario, Dollar General now has a fair value estimate of $223 per share. Even if Dollar General surpasses the top end of our fair value estimate range, we prefer to let our winners run until their technicals turn against them. The latest 16-Page Stock Report covering Dollar General can be accessed here.
Oct 9, 2020
The Resilience of the US Digital Advertising Market and Alphabet
Image Shown: Shares of Alphabet Inc Class C shares, a top-weighted holding in our Best Ideas Newsletter portfolio, have performed very well over the past year. Going forward, we see room for significant capital appreciation upside as the digital advertising market has proven to be very resilient of late. To ride out the ongoing coronavirus (‘COVID-19’) pandemic, we continue to prefer large-cap tech companies with pristine balance sheets, strong cash flow profiles, and promising long-term growth outlooks. Ideally, we are searching for companies with outlooks that are supported by secular growth tailwinds, allowing for several winners in their respective end markets. Digital advertising is a prime example of a resilient high-quality market that is supported by secular growth tailwinds. Alphabet perfectly bits the bill given its ~$117.1 billion net cash position at the end of June 2020 (not including ~$13.0 billion in non-current non-marketable securities, and with no short-term debt on the books), and considering it generated over $14.0 billion in free cash flow during the first half of 2020 alone. We include Alphabet Class C shares as a top-weighted holding in our Best Ideas Newsletter portfolio, and the top end of our fair value estimate range sits at $1,795 per share of GOOG.
Sep 29, 2020
Facebook’s Promising Growth Outlook
Image Shown: Top-weighted Best Ideas Newsletter portfolio holding Facebook Inc has seen its stock price surge higher over the past year and we see room for considerably more capital appreciation upside. Facebook’s growth trajectory will depend in large part on how effective the firm is at generating more revenue per active user, especially in markets outside of the US & Canada. The emergence of a large global middle class should assist in these endeavors. We view Facebook’s growth outlook quite favorably and continue to be big fans of the social media giant. Facebook continues to be one of our favorite companies out there. Shares of Facebook are included as a top-weighted holding in our Best Ideas Newsletter portfolio. Our fair value estimate for FB sits at $284 per share, though should the firm outperform our “base case” assumptions, Facebook could carry a fair value estimate as high as $355 per share. We are enormous fans of Facebook’s net cash balance (~$58.2 billion in net cash at the end of June 2020), high quality cash flow profile (relatively modest capital expenditures are required to maintain a certain level of revenue), and incredibly promising long-term outlook that is supported by secular growth tailwinds.
Sep 27, 2020
Costco Closes Out Fiscal 2020
Image Shown: Shares of Costco Wholesale Corporation have been on an upswing over the past five years. The ongoing coronavirus (‘COVID-19’) pandemic has upended daily activities and encouraged households worldwide to stockpile consumer staples products. When Costco Wholesale Corp reported its fourth quarter fiscal 2020 earnings (16-week period ended August 31, 2020) on September 24, management noted that Costco’s worldwide foot traffic was down ~1% year-over-year last fiscal quarter though its average basket size was up ~13% year-over-year during this period. Households are apparently making the most out of every shopping trip in order to socially distance. Costco’s ancillary businesses, like its in-store opticians and food courts operations, were hurt by temporary closures last fiscal quarter, though its core business held up very well. Costco’s gas business took a hit from reduced travel demand, though its membership renewal rates were broadly flat versus the same period a year ago last fiscal quarter.
Sep 22, 2020
Update on TikTok Saga
Image Shown: Shares of Oracle Corporation, a holding in our Dividend Growth Newsletter portfolio, have performed well recently as excitement grows over the company’s improving long-term growth outlook. Oracle may soon become a strategic shareholder in the rising social media star TikTok, alongside Walmart Inc and various US-based venture capital firms. Some big news emerged this past weekend involving TikTok that we wanted to bring to our members attention. We covered this story in detail in late-August and mid-September, and encourage our members to check out those articles for additional background information. In brief, TikTok is currently owned by Beijing-based ByteDance, a company that has been accused of being an extension of China’s central government (meaning a security threat to Western interests) which in turn prompted the White House to push for a sale of TikTok’s US operations or an outright shutdown/ban of the app in the US. This past weekend, President Trump stated he approved of a proposed deal that would involve Oracle Corp and Walmart taking a strategic equity stakes in a newly created firm called TikTok Global, which will likely be based in the US.



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