Valuentum Exclusive Analysis for the Discerning Investor

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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 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 8, 2020

Nelson: I'm Not Worried About This Market
Image Source: The White House. President Donald J. Trump listens as U.S. Surgeon General Jerome Adams delivers remarks and urges citizens to wear masks in public at a coronavirus (COVID-19) update briefing. All things considered, not much has changed since our last update. I think the newsletter portfolios--Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, High Yield Dividend Newsletter portfolio--are well-positioned for this market environment, our new options idea generation has been great, the Exclusive ideas have had tremendous success rates (we just closed another two winners recently), and we continue to add tremendous value in providing our work in full transparency for readers. Thanks for tuning in.

Sep 16, 2020

Our Thoughts on Nvidia Acquiring Arm
Image Source: Nvidia Corporation – Nvidia to Acquire Arm IR Presentation. On September 13, Nvidia Corp announced it would acquire Arm Limited (a semiconductor company with a heavy focus on smartphones and gaming devices) from SoftBank Group Bank Corp. and SoftBank’s Vision Fund through a transaction valued at approximately $40 billion. That deal will see Nvidia pay SoftBank and the Vision Fund $12.0 billion in cash (including $2.0 billion payable at signing), $21.5 billion in Nvidia stock (equal to 44.3 million shares at the time of the announcement, though that figure could change as it depends on NVDA’s average closing price over the last 30 trading days), and the deal has an earn-out component that could see Nvidia pay an additional $5.0 billion in cash or stock if certain financial hurdles are met. Furthermore, Nvidia will issue $1.5 billion in equity to Arm’s employees if the deal closes.

Sep 9, 2020

Our Thoughts on the Widespread Launch of 5G Services
Image Shown: The evolution of wireless networks and telecommunications technology over the years. Image Source: Intel Corporation – November 2019 State of 5G Presentation. The rollout of 5G telecommunication networks is upon us and we want to draw our members' attention to some of the key companies with meaningful exposure to this space. Many are excited about what opportunities 5G technology could enable. To ride out the ongoing coronavirus (‘COVID-19’) pandemic we prefer large-cap tech companies with pristine balance sheets, quality cash flow profiles, and firms whose growth outlooks are underpinned by secular growth tailwinds. Between Broadcom and Qualcomm, we are keeping a closer eye on Qualcomm given its more manageable net debt load and the company’s aforementioned near-term catalysts.

Sep 8, 2020

Dividend Growth Selection in a Low Yield Environment
Image Source: EpicTop10.com. Management's willingness to pay is critical, so an understanding of how dividend growth has been the past few years is very important, but when we look for fantastic dividend growth ideas for the future, we also want to make sure that the management team has the capacity to keep raising the dividend--meaning there's so much more to dividend growth assessments than backward-looking analysis. For starters, we want our long-term dividend growth ideas to have strong competitively-advantaged business models, solid secular growth trends or recession-resistant characteristics, impressive balance sheets (sometimes and preferably with hefty net cash positions) and growing future expected free cash flows (strong Dividend Cushion ratios).

Sep 2, 2020

Our Thoughts on Rackspace and Zoom Video Communications
Image Source: Rackspace Technology Inc – Second Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has fundamentally disrupted daily activities for households all over the globe, which has changed the way individuals work and communicate with each other. Now many are working from home, doing schoolwork and attending virtual classes from home, and seeking to stay connected with friends and family while at home. Software-as-a-Service (‘SaaS’) companies that provide solutions to the problems created by COVID-19 are well-positioned to ride out the storm, aided by their asset-light and highly scalable business models.

Aug 25, 2020

Intel Plans to Repurchase a Lot of Its Stock
Image Shown: Intel Corporation is having trouble producing the next generation of chips (7-nm and smaller) as its current manufacturing process is having yield issues, which we covered previously. Image Source: Intel Corporation – Architecture Day 2020 Presentation. On July 23, Intel Corp reported second quarter fiscal 2020 earnings (period ended June 27, 2020) that we covered in detail here. For members that have not yet read that note, we strongly encourage them to do so. Please note that delays in Intel’s 7-nm chip production schedule weighed negatively on its medium-term outlook, which sent shares of INTC meaningfully lower after its latest earnings report. Management recently responded by announcing a plan to aggressively buy back Intel’s stock, after previously suspending the company’s share buyback program in March 2020 due to uncertainties created by the ongoing coronavirus (‘COVID-19’) pandemic.