Valuentum Exclusive Analysis for the Discerning Investor

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Jun 23, 2020

Kroger Fighting for Market Share in the Online US Grocery Business
Image Source: The Kroger Company – Fiscal 2019 Annual Report. On June 18, The Kroger released its first quarter fiscal 2020 earnings (period ended May 23, 2020) that beat both top- and bottom-line estimates. Comparable store sales (excluding fuel) grew by 19% year-over-year as consumers flocked to its various grocery stores and supermarkets (under brands such as Fred Meyer, Fry’s Marketplace, Pick ‘n Save, and others) to stock up on consumer staples products as the coronavirus (‘COVID-19’) spread across North America. Kroger’s digital sales surged 92% year-over-year last fiscal quarter as curbside and home delivery options have become increasingly popular during the pandemic. Shares of KR yield ~2.0% and are trading in the upper bound of our fair value estimate range as of this writing.

Jun 21, 2020

Why We Like Apple and Microsoft in the Newsletter Portfolios
Image Shown: Shares of Apple Inc (blue line) and Microsoft Corporation (red line) are up significantly year-to-date as of the market close on June 19, and we see room for both shares of AAPL and MSFT to continue marching higher after recently revising our fair value estimates for both companies. On June 12, we added back shares of Apple and Microsoft Corp to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. We added Apple and Microsoft back to the newsletter portfolios using the cash position generated by removing the Vanguard Real Estate ETF and the SPDR S&P Aerospace and Defense ETF from the Best Ideas Newsletter portfolio and Cracker Barrel and Bank of America Corp from the Dividend Growth Newsletter portfolio on June 11. The Best Ideas Newsletter portfolio (link here) and Dividend Growth Newsletter portfolio (link here), as of June 15, 2020, can be viewed on our website. There are a lot of reasons to like Apple and Microsoft, especially during these turbulent times. Both firms have massive net cash positions, better positioning the tech giants to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic. Both companies are free cash flow cows and their growth trajectories are underpinned by secular growth tailwinds (particularly on the cloud computing and digitally-provided services side of things), further bolstering their cash flow profiles.

Jun 21, 2020

Gap Buys Itself Some Time
Image Shown: An overview of Gap Inc’s net sales by brand. Image Source: Gap Inc – First Quarter Fiscal 2020 IR Earnings Presentation. On June 4, Gap reported first quarter fiscal 2020 earnings (period ended May 2, 2020) that missed both consensus top- and bottom-line estimates. Shares of GPS have gotten crushed due to the ongoing coronavirus (‘COVID-19’) pandemic as consumers (particularly those in the US) have spent far less on discretionary goods (like apparel) over the past several months. Combined with the negative impact of physical store closures and the lack of a meaningful online presence, Gap shares sank as its outlook turned dire. Though Gap operates stores in over 40 countries, please note about ~80-82% of its GAAP net sales came from the US from fiscal 2017 to fiscal 2019, highlighting its dependence on the US consumer.

Jun 21, 2020

Warren: Four Ways to Play the Market at This Juncture
Image Source: Daniel Lobo. In this piece, we examine where the economy and stock markets have been recently, where we are now, and where we are going next. We also highlight four key ways to play this volatile market. We think this is a helpful way to think about overall portfolio construction, especially so that one does not overly expose themselves to a particular set of risks that could come to fruition—like an extended downturn in the economy or a rapid discovery of a vaccine for Covid-19 on the other hand.

Jun 19, 2020

Dividend Increases/Decreases for the Week Ending June 19
Let's take a look at companies that raised/lowered their dividend this week.

Jun 18, 2020

Recent Events Concerning Johnson & Johnson
Image Source: Johnson & Johnson – First Quarter of 2020 IR Earnings Presentation. We include Johnson & Johnson as a top-weighted holding in the Dividend Growth Newsletter portfolio and as a medium-weighted holding in the Best Ideas Newsletter portfolio. The firm’s Dividend Cushion ratio sits at a solid 2.1 and please note that this forward-looking dividend coverage ratio factors in our expectations that Johnson & Johnson will grow its per share dividend by mid-single-digits annually over the coming years. Johnson & Johnson earns a “GOOD” Dividend Safety rating and an “EXCELLENT” Dividend Growth rating, with shares of JNJ yielding ~2.8% as of this writing. In our view, Johnson & Johnson’s strong balance sheet and high quality cash flow profile provide it with the financial strength to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic with its current dividend policy and financials intact.

Jun 18, 2020

Best Idea PayPal Hits Record High!
The Valuentum strategy continues to deliver! My goodness! One of our favorite ideas in the payment processing space PayPal is hitting a record high today. Simply incredible. For those that missed the latest edition of the Best Ideas Newsletter, it can be downloaded here (pdf). For those that missed the latest edition of the Dividend Growth Newsletter, it can be downloaded here (pdf). Thanks so much for your interest, and we're available for any questions. Cheers!

Jun 18, 2020

Nelson: Trust Is What Matters
---Video: President of Valuentum Brian Nelson remains optimistic about the markets and the outlook for Valuentum investing. Don't forget to fill out the survey!

Jun 17, 2020

Turbulent Fiscal Fourth Quarter Aside, Oracle Paints a Promising Outlook for Fiscal 2021
Image Source: Oracle Corporation – Oracle Database Update September 2019 Presentation. On June 16, Oracle Corp reported fourth quarter fiscal 2020 earnings (period ended May 31, 2020) that beat consensus bottom-line estimates and missed consensus top-line estimates, though there is some noise given the turbulence created by the ongoing coronavirus (‘COVID-19’) pandemic. Additionally, Oracle declared a $0.24 per share quarterly dividend that is slated to get paid out in July, which was flat on a sequential basis. Shares of ORCL yield ~1.8% as of this writing, and we continue to like the idea as a holding in the Dividend Growth Newsletter portfolio. While shares of ORCL sold off on June 17, management painted a more optimistic outlook for the firm’s fiscal 2021 performance than initial trading action suggests.

Jun 16, 2020

Reiterating Our Bullish Long-Term View on Stocks
Image: The NASDAQ 100 Index remains resilient, bouncing off support, after breaking out to new highs recently. Some of our best ideas are included in the NASDAQ 100, and our favorite concentrations include exposure to big cap tech and large cap growth. We continue to be bullish on equities for the long run. In addition to unlimited quantitative easing and "whatever it takes, squared" Fed policy, today, June 16, the Trump administration announced that it is weighing a $1 trillion stimulus bill to help support the economy. While uncertainties remain regarding specifics of the bill (it might include state assistance, extension of unemployment benefits, etc.), the move is consistent with the outsize spending we expect to further bolster the bull case, "ICYMI -- Stay Optimistic. Stay Bullish. I Am." We continue to emphasize that, in light of unlimited QE and runaway fiscal stimulus, the longer-duration components of intrinsic values are expanding considerably, and as a result, fair values, themselves, are actually rising during this recession and pandemic [a good estimate of the value of the S&P 500 today may be between 3,530-3,920, as outlined in the following: "Scribbles and More Newsletter Portfolio Changes.]."