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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.
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 26, 2023
Chipotle Hits All-Time High, Microsoft Doesn’t Disappoint in Calendar First-Quarter 2023
Image: Ideas in the Best Ideas Newsletter portfolio are doing great! Shares of Chipotle are up ~45% so far in 2023, while shares of large cap growth giant Microsoft (orange) are up more than 20% year-to-date. Microsoft’s shares soared during the trading session April 26 thanks to strong third-quarter fiscal 2023 performance for the period ending March 31 led by its Azure cloud business segment, while Chipotle’s first-quarter 2023 report only provides more support for a higher intrinsic value estimate for shares.
Apr 25, 2023
Brief Take: Best Idea PepsiCo Hits All-Time High! Beautiful Breakout!
Image: PepsiCo, an idea in the Best Ideas Newsletter portfolio, has broken out to all-time highs. We continue to like the name. PepsiCo now expects core earnings per share to advance to $7.27 in fiscal 2023, a 7% increase (up from 6% previously). As in the case of General Mills and several consumer staples entities, PepsiCo’s price elasticities remain in its favor, and we expect a modest fair value increase upon our next report update. PepsiCo remains a key idea in the Best Ideas Newsletter portfolio.
Apr 25, 2023
Small Cell Deployments a Growth Avenue for Tower Operator Crown Castle
Image: Crown Castle has grown its dividend payout at a compound annual growth rate of ~9% during the past several years. Image Source: Crown Castle. Crown Castle remains one of our favorite income ideas thanks in part to its free-cash-flow rich, asset-light, contractual recurring revenue business model that is tied to long-term secular growth trends in mobile device data usage. The REIT’s forward estimated dividend yield stands at ~5%.
Apr 21, 2023
Extra Space Storage Pursues the Winner’s Curse; LSI Shareholders Should Take the Money and Run
Image Source: Extra Space Storage. It would seem that Life Storage wants nothing to do with Public Storage, first refusing to negotiate with Public Storage regarding its proposal to merge, then rolling out a revised severance package for its CEO, CFO and COO on March 17, and now most recently announcing that it would tie the knot with Extra Space Storage on April 3.
Apr 21, 2023
Dividend Increases/Decreases for the Week of April 21
Let's take a look at firms raising/lowering their dividends this week.
Apr 20, 2023
Philip Morris’ First-Quarter 2023 Results Just Okay
Image: Philip Morris’ smoke-free product portfolio. Image Source: Philip Morris 2022 Form 10-K. We like that Philip Morris has raised its quarterly dividend by more than 170% since it became a public company in 2008, reflecting a compound annual growth rate of ~7.5%, and further growth in the dividend payout should ensue. The company’s Dividend Cushion ratio stands at 1.0, but the mediocre ratio is more of a function of the company’s large net debt position than anything else, as free cash flow generation remains robust. Shares of Philip Morris yield ~5% at the time of this writing.
Apr 20, 2023
AT&T Disappoints Again
Image: AT&T is back in the doghouse, as free cash flow generation came in worse than expected during its first-quarter 2023 results. Image Source: AT&T. AT&T’s forward estimated dividend yield of 5.6% is attractive at face value, but the economics of its business continue to leave a lot to be desired, in our view. Not only is the company saddled with a tremendous amount of net debt to the tune of a whopping $134.7 billion, resulting in an annualized net debt to adjusted EBITDA ratio of 3.22x, but the company operates a capital-intensive model that eats into its operating cash flow.
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 18, 2023
Brief Take: Chart of Best Ideas Newsletter Portfolio Idea Chipotle Looks Beautiful!
Image: Chipotle’s shares have surged to a 52-week high. We continue to like the company’s long-term market opportunity. Chipotle’s shares have surged past the high end of our fair value estimate range, but we expect to take another look at our valuation model to reflect greater confidence in an established restaurant concept that has plans to more than double its current store count in the longer run. Younger millennials and Generation Z (born 1997-2012) generally did not grow up when Yum Brands’ Taco Bell dominated Mexican cuisine, and many prefer Chipotle hands down. It’s probable, in our view, that Chipotle’s long-term target of 7,000 restaurants may also be conservative. Readers should expect us to increase our fair value estimate of Chipotle upon the next report update.



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