Valuentum Exclusive Analysis for the Discerning Investor

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May 11, 2020

Republic Services: “The Worst Is Behind Us…”
The waste industry has a number of cost levers to pull to overcome profit pressures in its residential pick-up operations and reduced volume in its commercial and industrial operations, the latter a higher margin proposition. However, economic activity seems to be picking up, and some are saying the worst may be behind us. Our favorite waste hauler is Republic Services.

May 11, 2020

Facebook Is Roaring Higher!
Image Shown: Shares of Facebook (blue line) have roared higher since reaching their March 2020 lows, far outpacing the rebound in the S&P 500 (orange line). We continue to like shares of FB as a top-weighted holding in our Best Ideas Newsletter portfolio. Top-weighted Best Ideas Newsletter portfolio holding Facebook posted first quarter 2020 earnings on April 29 that saw its GAAP revenues jump 18% year-over-year to $17.3 billion while its GAAP diluted EPS grew by 101% year-over-year, hitting $1.71. Please note that Facebook’s bottom-line comparison was made easier due to the firm recording a $3.0 billion legal settlement with the US Federal Trade Commission (‘FTC’) during the first quarter of 2019. While digital advertising spending levels are expected to get crushed in 2020 due to the ongoing coronavirus (‘COVID-19’) pandemic, Facebook communicated to investors that its long-term growth trajectory remained very promising during the firm’s latest quarterly conference call. In our view, digital advertising spending levels will quickly bounce back once economies around the world start to reopen in earnest, though we caution that efforts to reopen the economy and resume “normal” daily activities need to keep in mind the risk another wave of infections imposes.

May 10, 2020

Valuentum Experiences Unprecedented Demand for Services
Unprecedented Demand for Valuentum’s Services; Unique Visitors Up 207%, Number of Visits Up 164% During 1Q Versus Same Period Last Year Woodstock, May 10, 2020 – Valuentum, a trusted source for independent investment opinion for individuals, advisors and institutions, has provided a business update amid the COVID-19 pandemic.

May 8, 2020

ICYMI: Never Been More Bullish Even as Buffett Dumps Airlines
Image Source: IATA. Data Source: McKinsey & Company (IATA). Airlines haven’t been able to earn their estimated cost of capital for as long as we can remember. There have been hundreds of airline bankruptcies since deregulation in 1978. The news may be scary in coming months, and market volatility may elevate again, but we’ve never been more bullish on the longer run. The biggest advantage of an individual investor is something called time horizon arbitrage. As many professionals continue to fear a break below the March 23 lows, we’re focused on how this market absorbs the tremendous and unprecedented stimulus in the coming months and what that means for nominal equity prices in the longer run. It may not happen this month or this year, but we expect lift off as investors race to preserve purchasing power! Our favorite ideas for a portfolio setting remain in the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, and High Yield Dividend Newsletter portfolio. Our favorite brand new ideas, released each month, are included in the Exclusive publication.

May 8, 2020

Disney’s Financials Will Eventually Rebound
Image Source: Marc Levin. On May 5, The Walt Disney Company reported second quarter earnings for fiscal 2020 (period ended March 28, 2020) that beat consensus top-line estimates but missed consensus bottom-line estimates. The firm’s financial and operational performance has taken a hit from the ongoing coronavirus (‘COVID-19’) pandemic; however, in our view the firm will bounce back once considerably a COVID-19 vaccine becomes available (which isn’t a certainty, but a lot of companies are actively pushing forward with human clinical trials as we speak including this firm). We continue to like Disney with a modest weighting in the Best Ideas Newsletter portfolio.

May 8, 2020

Dividend Increases/Decreases for the Week Ending May 8
Let's take a look at companies that raised/lowered their dividend this week.

May 7, 2020

Best Idea PayPal Soars on Very Promising Outlook
Image Shown: Best Ideas Newsletter portfolio idea PayPal is surging after a strong outlook that speaks to underlying strength of the “new” consumer in a post COVID-19 world. On May 6, one of our favorite companies PayPal reported first quarter 2020 earnings. While PayPal missed consensus estimates on both the top- and bottom-line, investors looked towards the future and shares of PYPL rose sharply after the report on May 7. We continue to like PayPal as a near top-weighted holding in our Best Ideas Newsletter portfolio. Please note we increased the weighting of PYPL shares in that newsletter portfolio back on January 13, 2020 (link here) and further increased PayPal’s weighting in our Best Ideas Newsletter portfolio after going “fully invested” in April 29, 2020 (link here). The top end of our fair value estimate range sits at $150 per share, and in our view, shares of PYPL have room to run further from current levels as of this writing (even after their strong performance of late). PayPal is very well-positioned to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic as the world continues to transition towards an era heavily reliant on digital payments.

May 7, 2020

Gold Miner Newmont Continues to Shine
Image Source: Newmont Corporation – First Quarter of 2020 Earnings IR Presentation. On May 5, the gold miner Newmont Corp reported first quarter 2020 earnings that missed both consensus top- and bottom-line estimates which prompted shares to sell off modestly during the normal trading session that day, though shares of NEM have been on an epic bull run since the start of 2020. We continue to like Newmont as an idea in our Dividend Growth Newsletter portfolio with shares of NEM up ~48% as of this writing since joining the portfolio on January 13, 2020, before taking dividend considerations into account, while the S&P 500 is down ~13% during this period before taking dividend considerations into account. At Newmont’s new annualized dividend payout of $1.00 per share, shares of NEM yield ~1.6% as of this writing.

May 7, 2020

BNP Paribas’ Shares Could Have Upside Potential
Image Source: BNP Paribas 1Q2010 Earnings Presentation. BNP Paribas’ shares are trading at a fraction of tangible book. If the bank can contain its cost of risk through this cycle and produce double-digit returns on tangible equity on the other side of this crisis, shareholders would do quite well in such a scenario. That said, we point out that Europe is overtraded when it comes to banking, which pressures earnings power at even the stronger banks like BNP Paribas. We’re paying close attention to the key banking players in Europe to assess the likelihood of a global financial contagion that may accompany the global pandemic that has become COVID-19.

May 6, 2020

Berkshire Hathaway Prepares Itself for COVID-19
Image Source: Berkshire Hathaway Inc – 2019 Annual Report. Berkshire Hathaway reported first-quarter 2020 earnings on May 2, which due to significant unrealized losses in its investment portfolio (a product of the market swoon in the early months of 2020) the firm swung to a large loss on a GAAP basis. As Berkshire Hathaway’s leadership team has often noted, the 2018 accounting rule change that forces companies to recognize unrealized gains and losses in the income statement can make GAAP net income and GAAP diluted EPS figures near meaningless without digging deeper into the firm’s financials.