Valuentum Exclusive Analysis for the Discerning Investor

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Feb 11, 2022

Dividend Increases/Decreases for the Week February 11
Let's take a look at companies that raised/lowered their dividend this week.

Feb 10, 2022

Best Idea Disney Rebounding Nicely; Shares Look Cheap
Image Shown: Shares of The Walt Disney Company strengthened February 9 in the wake of the media and entertainment giant's latest earnings report. We include shares of DIS as an idea in the Best Ideas Newsletter portfolio. On February 9, The Walt Disney Company reported first-quarter fiscal 2022 earnings (period ended January 1, 2022) that smashed past both consensus top- and bottom-line estimates. A sharp rebound at its ‘Disney Parks, Experiences and Products’ unit impressed investors and shares of DIS are strengthening nicely in the wake of its latest earnings report. We are big fans of Disney and include shares of DIS as an idea in the Best Ideas Newsletter portfolio. Our fair value estimate stands at $179 per share of Disney with room for upside as the high end of our fair value estimate range sits at $219 per share. Shares are currently trading at ~$155 each at the time of this writing.

Feb 10, 2022

Top ESG Idea South32 Getting Closer to Launching Major Mining Project in Arizona
Image Shown: South32 is targeting ample zinc, lead, and silver resources at the Hermosa project in Arizona that could be quite economical to extract should the Australian-based miner move forward with the endeavor. Image Source: South32 – January 2022 IR Presentation. Shares of South32, one of our favorite miners, are up over 50% during the past year as of this writing and that is before taking dividend considerations into account. The Australian miner has a bright outlook after shedding virtually all its thermal coal assets last calendar year (completed in June 2021) and announcing in October 2021 that it would acquire a sizable economic interest in a Chilean copper mine. We include shares of SOUHY as an idea in the ESG Newsletter portfolio and continue to be huge fans of the company. The miner has ample exposure to the “green energy” revolution and continues to pivot towards minerals that are expected to be in high demand in the future, which in turn supports the firm’s cash flow growth runway. South32 has exposure to attractive potential mining opportunities down in Arizona and recently provided a big update on these efforts that are worth going over. Let's dig in.

Feb 8, 2022

Nutrien Benefiting from the Strong Global Farm Economy, Shares Yield ~2.5%
Image Source: Nutrien Limited – 2020 Annual Report. Nutrien Limited is benefiting from the strong global farm economy. The company sells tens of millions of metric tons of potash, nitrogen, and phosphate products every year, which are key ingredients used in the production of fertilizer. With geopolitical tensions building in Eastern Europe, Nutrien is preparing to bring idle potash production capacity in Canada back online while steadily expanding its nitrogen production capabilities. Nutrien is a great free cash flow generator with a promising growth outlook, though its net debt load is rather large. The firm is focusing on deleveraging activities in the near term, which we appreciate. Shares of NTR yield ~2.5% as of this writing, and we think it is one for your radar.

Feb 7, 2022

Sonos Expected to Continue Growing Rapidly; Margin Concerns Remain Key Issue
Image Source: Sonos Inc – Fourth Quarter of Fiscal 2021 IR Earnings Presentation. Sonos' financial performance staged an impressive turnaround in fiscal 2021. The company exited fiscal 2021 with a $640 million net cash position and generated $208 million in free cash flow that fiscal year. Sonos is leveraging its financial strength by buying back its stock. The firm is also considering potential M&A activities that could be used to enhance its growth runway, with an eye towards the potential for Sonos to expand into the premium wireless headphone space. Sonos forecasts that it will grow its revenues by double-digits annually in fiscal 2022, though its margins are expected to face moderate headwinds this fiscal year. Shares of SONO have faced sizable selling pressures of late as concerns mount over its medium-term outlook. We love the company's products, but we're cautious on the stock in the near-term given its cloudy EBITDA outlook. That said, we see potential upside in the stock to the high-$20s from a valuation perspective (modestly above where shares are trading at this time).

Feb 3, 2022

PayPal’s Margin Pressure, Flattish Earnings Outlook Shocks Market; Fair Value Estimate Reduced
Image Shown: PayPal Holdings Inc grew at a robust pace in 2021 though its margin outlook is not as promising as once believed. Image Source: PayPal Holdings Inc – Fourth Quarter of 2021 earnings press release. PayPal is a solid enterprise supported by its pristine balance sheet, strong free cash flows, and promising revenue growth outlook. The proliferation of e-commerce provides PayPal will a powerful secular tailwind to capitalize on. However, PayPal’s operating leverage is not what it once appeared to be, and that weighs negatively on its margin expansion potential. As noted previously, we have fine-tuned our cash flow valuation model on the company, and now value shares at $160 on a point fair value estimate basis. We continue to include PayPal as an idea in the Best Ideas Newsletter portfolio for the time being (as we evaluate the next few quarters). PayPal's refreshed stock page and report will be available shortly.

Feb 1, 2022

Exxon Breaks Out! Oil Prices Might Rip Higher Still!
Image: A pretty technical breakout at Exxon Mobil. Valuentum's Callum Turcan: "The tight supply-demand dynamics for oil & natural gas combined with rising geopolitical tensions (West-Russia over a potential Russian invasion of Ukraine, reports of potential terror attacks on Northern Iraqi/Kurdish oil infrastructure, West-Iran over Iran's nuclear program and nuclear deal talks reportedly breaking down, civil tensions in Kazakhstan, perennial problems facing Libya and Nigeria's security situation) indicate there is likely room for oil prices to rip higher still."

Feb 1, 2022

Structural Changes in the Airline and Aerospace Business
Image Source: Valuentum. The future profile for air travel demand will be negatively impacted in the long run (relative to pre-COVID-19 expectations) as increased leisure travel from the wealth effect may not completely offset reduced business travel growth impaired by digital solutions permanently disrupting the way companies conduct business. As with Warren Buffett, who recently wrote down the value of metal casting jet-engine supplier Precision Castparts (one of the best aerospace suppliers in the business), we believe intrinsic values of others in the aerospace supply chain have been permanently reduced as well. We’re staying away from airlines and aerospace with the exception of Honeywell, which offers diversified industrial exposure and a “call option” on a gradual aerospace recovery to a “new normal.” Honeywell is included in the Dividend Growth Newsletter portfolio and showed that it can thrive in a business environment where aerospace demand may not live up to pre-COVID-19 long-term expectations. Honeywell yields ~1.9% at the time of this writing.

Jan 28, 2022

Visa Remains One of Our Favorite Ideas
Image Shown: Visa Inc, one of our favorite companies, has been growing robustly of late. Image Source: Visa Inc – First Quarter of Fiscal 2022 IR Earnings Presentation. On January 27, Visa reported first quarter earnings for fiscal 2022 (period ended December 31, 2021) that beat both consensus top- and bottom-line estimates. Shares of V shot higher after its results were made public. We include Visa as a “top-weighted” idea in the Best Ideas Newsletter portfolio and remain huge fans of the company. Our fair value estimate sits at $255 per share of V, well above where Visa is trading at as of this writing, indicating the payment processing giant has ample room to run higher from current levels. Shares of V yield a modest ~0.7% as of this writing.

Jan 28, 2022

Dividend Increases/Decreases for the Week January 28
Let's take a look at companies that raised/lowered their dividend this week.