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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.
May 4, 2020
Visa Reports That Global Spending Levels May Have Started to Stabilize in April
Image Source: DeclanTM. One of our favorite companies and a top-weighted holding in our Best Ideas Newsletter portfolio, Visa, reported second-quarter earnings for fiscal 2020 (period ended March 31, 2020) which beat both consensus top- and bottom-line estimates. Going forward, while Visa’s very lucrative travel-related businesses (which includes payment processing and foreign currency transaction solutions) will take a hit from reduced travel worldwide due to the ongoing coronavirus (‘COVID-19’) pandemic, management is focused on controlling expenses to offset exogenous headwinds. Specifically, management noted that Visa would pull back on “discretionary spending especially related to personnel, travel, professional services, and marketing” which we appreciate.
Apr 30, 2020
Alphabet Surges Higher
Image Shown: Shares of Alphabet Inc surged higher on April 29 after reporting a stellar earnings report, and we continue to like Alphabet Class C shares as a top-weighted holding in our Best Ideas Newsletter portfolio. After the market close on April 28, Alphabet reported first-quarter earnings for 2020 that beat top-line consensus estimates and missed bottom-line consensus estimates, with sales supported by the strength of its digital advertising business and its growing Google Cloud business. Alphabet’s advertising revenue (comprised of revenue from its Google Search, YouTube, and Google Network Members' properties operations) was up 10% year-over-year to $33.8 billion while Google Cloud reported 52% revenue growth year-over-year, reaching $2.8 billion last quarter. All-in-all, Alphabet’s GAAP revenues climbed higher by 13% year-over-year in the first quarter, hitting $41.2 billion. Shares of Alphabet moved significantly higher on April 29 as the firm’s outlook was better than expected, aided by management communicating that Alphabet was prepared to utilize its fortress-like balance sheet to repurchase stock at a meaningful discount to their intrinsic value.
Apr 28, 2020
Good News for Facebook Ahead of Earnings Report
Image Shown: Facebook Inc’s top-line has experienced meaningful growth in recent years. Image Source: Facebook Inc – Fourth Quarter and Full-Year 2019 Earnings IR Presentation. One of our favorite Best Ideas Newsletter portfolio holdings is Facebook, and we appreciate its pristine balance sheet (plenty of cash on hand and no debt on the books as of the end of 2019), promising growth trajectory (short-term headwinds aside, digital advertising is a secular growth market and likely to bounce back strongly once the pandemic subsides), and we would like to highlight that shares of FB trade at a meaningful discount to our fair value estimate (which sits at $234 per share) as of this writing. Recently, several things have happened that supports our thesis as to why Facebook is a stellar company which will cover in this note. The ongoing coronavirus (‘COVID-19’) pandemic will depress Facebook’s near-term performance, but the firm’s medium- and long-term outlook remains very promising.
Apr 21, 2020
Macy’s Will Find It Difficult to Unlock the (Fair) Value of Its Real Estate
Image Source: Valuentum. The embattled department store Macy’s suspended its dividend and drew down its revolving credit line on March 20 in order to shore up its financial position in the face of the ongoing coronavirus (‘COVID-19’) pandemic. All of Macy’s physical stores were temporarily closed on March 18, though some might shut down for good given the company’s financial woes. The fair value estimate of Macy’s is heavily dependent on factors well outside the control of management, and considering the US economy and global economy at-large are sliding toward a pandemic/leverage induced recession/depression, we aren’t optimistic on Macy’s ability to unlock the (fair) value of its real estate. Any real estate sales done in the foreseeable future will likely be at a discount to their fair value. As the firm continues to burn through cash--there’s a very high probability Macy’s will continue to generate negative free cash flows until the “cocooning” of households ends--the clock is working against Macy’s. We are staying away from the name.
Apr 17, 2020
JB Hunt Scales Back
Image Source: JB Hunt Transportation Services Inc – First Quarter 2020 Earnings IR Presentation. JB Hunt Transportation offers trucking freight and other logistics services to customers in North America, including intermodal services (which is the firm’s largest business segment by revenue). On April 14, the company reported first-quarter 2020 results, which showed its top-line beat consensus expectations while its bottom-line missed consensus expectations. Part of the reason why JB Hunt missed bottom-line expectations was due to incentive pay increases related to the ongoing coronavirus (‘COVID-19’) pandemic and the need to compensate frontline workers for the risks they are taking (and we appreciate all the work frontline workers are doing during these challenging times). Shares of JBHT yield ~1.1% as of this writing.
Apr 13, 2020
Dollar General Near All-Time Highs, Decides to Issue Long-Term Debt at Attractive Rates
Image Source: Dollar General Corporation – May 2016 Investor Day Presentation. Dollar General is now trading near its all-time highs after rising ~8.5% year-to-date, at a time when the S&P 500 is down almost 15%, as of the end of normal trading hours on April 9. We include shares of DG in our Best Ideas Newsletter portfolio and recently covered some of Dollar General’s operational updates in our ‘US Beer Sales Reportedly Surge During the Pandemic, Dollar General Well-Positioned to Meet Rising Demand’ article that can be viewed here. We are following up on that piece, and our note covering Dollar General’s most recent financial updates that can be viewed here, to highlight how Dollar General is maintaining its liquidity position during these harrowing times. The ongoing coronavirus (‘COVID-19’) pandemic is wreaking havoc on global economies and staying on top of debt maturities is a key part of maintaining the funds needed to meet surging demand for consumer staples products (keeping inventory management and other considerations in mind). Shares of DG yield ~0.9% as of this writing.
Apr 6, 2020
Wayfair’s Sales Rise as US Households Stay In
Image Shown: Shares of Wayfair Inc shot up on April 6 after publishing a very favorable business update. E-commerce firm Wayfair sells furniture and home décor online and operates several websites including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold. Shares of W surged upwards on April 6 after the e-commerce company put out a very promising business update that stated Wayfair’s sales were skyrocketing upwards. While most of the US economy (and others) is shutting down to contain and ride out the pandemic, Wayfair’s business model appears more resilient than the market was previously giving it credit for. That being said, the company remains very free cash flow negative and carries a net debt position. Its recent convertible debt issuance will provide Wayfair with much needed liquidity, but it remains to be seen if the company’s success of late will translate into positive free cash flows in the medium-term.
Apr 3, 2020
US Beer Sales Reportedly Surge During the Pandemic, Dollar General Well-Positioned to Meet Rising Demand
Image Source: Valuentum. According to some reports, US beer and alcohol sales are surging during the ongoing coronavirus (‘COVID-19’) pandemic. As of early Wednesday April 1, Johns Hopkins University reported there are now over 850,000 confirmed cases of COVID-19 around the world and that includes over 42,000 fatalities. We are still months away from human trials commencing on a potential vaccine, and it likely won’t be until 2021 at the very earliest that a vaccine could enter commercial production. As we wait out this pandemic, we hope everyone and their loved ones stay safe. We continue to like Dollar General in our Best Ideas Newsletter portfolio and view the firm as well-positioned to ride out the storm and emerge on the other side as a stronger enterprise. Back on March 17, we published a piece on our website, ‘Dollar General Holding Up Relatively Well in the Face of COVID-19’, that we encourage our members to take a look if they haven’t done so already (link here).
Mar 26, 2020
US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill
Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust. President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus and emergency spending bill to offset the negative impact of the ongoing novel coronavirus (‘COVID-19’) pandemic. The bill passed 96-0 after several senators forced a vote on an amendment on that bill that would have changed the nature of the “beefed up” unemployment benefits (that amendment failed 48-48, and would have needed 60 votes to pass). As of this writing, there are over 65,000 confirmed cases of COVID-19 in the US according to Johns Hopkins University, and we sincerely hope everyone, their families, and their loved ones stay safe during this pandemic. A vote in the US House of Representatives is expected this upcoming Friday morning on March 27. The House is expected to convene at 9AM EST and the goal of each party’s leadership is to secure passage of the bill via a voice vote (please note that this differs from unanimous consent, which requires every member of the House to agree to such a legislative process in order to pass a bill without having the majority of lawmakers return to Washington DC, but this is easier/faster to achieve than a recorded roll call vote that would force every member of the House to return). Assuming the House swiftly passes the bill that was approved in the Senate, President Trump has clearly communicated he would sign the bill into law right away. Please note this bill is formally known as the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act.
Mar 20, 2020
Op-Ed: Bail Out Boeing, No Other Publicly Traded Companies
Image: Boeing B-17E Fortress 41-2599 "Tugboat Annie"; took part in the Battle of Midway in Jun '42; later ditched at sea on 16 Jan 43. Source.Dear Uncle Sam: Please stop bailing out the competition of small business. We need a changing of the guard. Let capitalism work.



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