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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.
Dec 10, 2023
First Gene-Editing Therapy Coming to Market; Reiterating Our Positive Stance on Vertex Pharma
Credit: Darryl Leja, NHGRI. On December 8, 2023, the U.S. Food and Drug Administration announced that it had approved Vertex Pharma’s and CRISPR Therapeutics’ novel gene-editing therapy (“Casgevy” – exa-cel) for sickle cell disease [SCD] in patients that are 12 years of age or older. This is the first such approval of its kind in U.S. history and will likely open the door for more gene-editing therapies for other rare diseases in the future. Estimates indicate that roughly 16,000 people will be eligible for the treatment at an estimated cost of around $2.2 million each, according to Reuters. The one-time market size of roughly $35.2 billion is a needle-mover, but the pace and timing of adoption of the therapy among the eligible population is difficult to estimate at this time. Note also that the therapy is of one-time application, meaning the therapy is a functional cure and will not be a source of recurring revenue from each patient. Nevertheless, it is an exciting development for medical science.
Dec 10, 2023
ESG Matters: Applied Materials Faces Criminal Investigation
Image: Applied Materials’ shares faced considerable pressure November 17 as news that it had violated export restrictions to China came to light. On November 16, Reuters reported that Applied Materials allegedly evaded export restrictions by shipping hundreds of millions of dollars of equipment to a subsidiary in South Korea before sending it to China’s biggest chipmaker SMIC. This alleged miscue falls under the Governance (G) category of ESG investing, and shares of Applied Materials have yet to recover from the aggressive sell-off it experienced during the trading session November 17. Though the results of the Department of Justice investigation are still pending, this is quite the black eye for Applied Materials, and we view this as a serious infraction given the U.S.’s stated efforts to keep advanced chips and chipmaking equipment out of China for national security reasons. We’re keeping a close eye on this story, as further news regarding the matter comes to light.
Dec 8, 2023
Reinstating Coverage of Lululemon
Image Source: Mike Mozart. On December 7, Lululemon reported strong third-quarter results for its fiscal 2023, with revenue increasing 19% and comparable sales increasing 14% on a constant-dollar basis. Adjusted earnings per share of $2.53 came in roughly 10% higher than the consensus forecast. We are reinstating coverage of Lululemon with a $470 per share fair value estimate and an Attractive Economic Castle rating. We like Lululemon but we won’t be adding it to any newsletter portfolio at this time.
Dec 8, 2023
Dividend Increases/Decreases for the Week of December 8
Let's take a look at firms raising/lowering their dividends this week.
Dec 7, 2023
Latest Report Updates
Check out the latest report refreshes on the website.
Dec 5, 2023
5 Stocks to Consider Buying
The five stocks highlighted in this article generate tremendous amounts of free cash flow, have healthy balance sheets with either a net cash position or net-neutral position, generate high ROICs, and offer upside potential on the basis of the high end of our fair value estimate range. We think Apple and Microsoft are our two favorites, while Dick's Sporting Goods may be the one true "value" play with a low double-digit P/E ratio. Vertex Pharma has tremendous long-term potential, in our view, while shares of Booking Holdings appear cheap to us. We think the risk/reward remains in favor of the long-term investor that considers these five names.
Dec 3, 2023
Latest Report Updates
Check out the latest report refreshes on the website.
Dec 1, 2023
A Note on Valuation -- Low P/E Stocks with High Dividend Yields
Image: Stocks with low valuation multiples have trailed the broader S&P 500 (orange) considerably since the depths of the Great Financial Crisis. Today, with all the readily available information and data out there, it is far more likely the case that a company with a low P/E ratio actually deserves it, and a firm with an outsized dividend yield just holds a lot of net debt on their books. Investing in low P/E stocks or stocks with low valuation multiples without considering their intrinsic values (i.e. fair value estimates) may result in owning a basket of value traps. Investors may be attracted to these types of stocks for their low P/E ratios and hefty dividend yields, but just having a low P/E ratio and a high dividend yield doesn’t a good stock make. If investing were this easy, so-called “value stocks” wouldn’t have underperformed the market significantly for more than a decade and a half now.
Dec 1, 2023
Dividend Increases/Decreases for the Week of December 1
Let's take a look at firms raising/lowering their dividends this week.
Nov 30, 2023
Net-Cash-Rich, Free-Cash-Flow Generating Powerhouse Salesforce Has a Long Growth Runway
Image Source: Salesforce. On November 29, Salesforce reported excellent fiscal third-quarter results and issued an outlook for its fiscal fourth quarter that came in better than expectations. The Dow Jones Industrial Average component’s results were welcome news as the bellwether revealed that spending on cloud-based CRM software remains robust. In the quarter ending October 31, revenue advanced 11% on a year-over-year basis, while non-GAAP diluted earnings per share came in at a solid $2.11. Its outlook was rosier than what the Street was expecting. For the fiscal fourth quarter, the company is targeting non-GAAP earnings per share in the range of $2.25-$2.26 per share, better than the consensus forecast of $2.18. The strong quarter only increases our confidence in Salesforce’s longer-term outlook, and we plan to raise our fair value estimate of the firm upon our next report update.



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