Valuentum Exclusive Analysis for the Discerning Investor

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Nov 18, 2021

High-Yielding Idea CyrusOne Gets Bought!
Image Shown: CyrusOne, an idea in the High Yield Dividend Newsletter portfolio, announced it was getting bought out on November 15. CyrusOne, a data center real estate investment trust (‘REIT’) included as an idea in the High Yield Dividend Newsletter portfolio, announced on November 15 that the private equity firm KKR & Co Inc and the infrastructure investment fund Global Infrastructure Partners (‘GIP’) is buying the REIT for $90.50 per share in cash.

Nov 15, 2021

Hut 8 Mining Is an Interesting Play on Cryptocurrencies
Image Source: Hut 8 Mining Corporation – November 2021 IR Presentation. Executive Summary: We are intrigued by Hut 8 Mining’s business model. By growing its bitcoin balance over time and covering its operating expenses by lending out its bitcoin hoard, generating so-called fiat yield, Hut 8 Mining is effectively a bet that a combination of growth in the price of bitcoin and growth in its bitcoin hoard will provide a major boost to its net asset value (‘NAV’) over time. Should the price of bitcoin tank, however, that would weigh negatively on its business, though things would likely not be as bad as it first appears given that Hut 8 Mining is set up to make money in almost every bitcoin pricing environment. As long as there is investor demand out there to borrow its bitcoins, and that broad interest in cryptocurrencies holds up well going forward, Hut 8 Mining should be able to continue growing its revenue as it grows the amount of bitcoin it can lend out on average per quarter. Obviously, of course, the firm would do better if the price of bitcoin stays the same (currently at roughly USD$64,700 for one bitcoin as of this writing) or increases. From our perspective, Hut 8 Mining is better positioned to capitalize on the cryptocurrency craze, in our view, than many of the other firms out there that are mining and continuously selling off their bitcoin holdings or actively buying bitcoin on the open market seeking to flip those alternative digital assets for a profit down the road (the “greater fool theory” in action). We are keeping an eye on Hut 8 Mining, though in this particular case, we must caution that the intrinsic value of alternative digital currencies like bitcoin is zero. The value is entirely in the eyes of the beholder.

Nov 8, 2021

ALERT: High Yield Dividend Newsletter Portfolio Changes
Image: Mike Cohen. Calendar third-quarter results were solid for constituents in the High Yield Dividend Newsletter portfolio, and we look forward to a bright 2022!

Nov 5, 2021

Qualcomm Explodes Higher Towards Our Fair Value Estimate; Semiconductor Supply Chain Update
Image Source: Qualcomm's shares have surged toward our fair value estimate. We continue to like shares of this dividend growth giant. Qualcomm remains a free-cash-flow generating juggernaut that has a very healthy dividend. Management surprised the market to the upside with its fiscal fourth-quarter report and guidance and indicated that supply chain issues are “playing out exactly as (they) planned,” as the firm expects supply and demand to be aligned by the second half of 2022. We were pleased by the news and are reiterating our $170 per share fair value estimate and the company as an idea for long-term dividend growth investors.

Nov 4, 2021

Our Favorite Energy Giants Chevron and ExxonMobil are Focused on Returning Cash to Shareholders
Image Shown: Shares of Chevron Corporation (blue line) and ExxonMobil Corporation (orange line) are both up sharply year-to-date as of this writing. We liked what we saw in the latest earnings reports from Chevron and ExxonMobil. Both are focused on fiscal discipline and returning cash to shareholders in the form of dividend payments and share repurchases. Looking ahead, the outlook for the global energy complex is quite bright, and we continue to be huge fans of both Chevron and ExxonMobil. Please note we also include Energy Select Sector SPDR Fund ETF as an idea in the Best Ideas Newsletter portfolio to gain diversified exposure to the recovering global energy complex.

Nov 1, 2021

FinTech Stocks Still Attractive, Market Overreacting to Visa’s Cross-Border Travel Outlook
Image: Visa continues to rake in the free cash flow. Though its outlook is clouded somewhat by recovering cross-border travel transaction volumes, we still like its asset-light, free-cash-flow rich business model. Cryptocurrency trading is all the rage these days, but when it comes down to it, the average consumer isn’t using crypto to pay for everyday goods and services. We believe fintech is a great way to play the firm foundations of asset-light, free-cash-flow generating entities that are exposed to crypto adoption but not pure plays to crypto’s success, which is far from guaranteed. Cloudy outlooks from Visa and Mastercard regarding cross-border travel activity have many fintech investors somewhat cautious heading into 2022, but we couldn’t be bigger fans of the group. Visa and PayPal remain two of our favorite fintech ideas.

Oct 29, 2021

Apple Remains a Free Cash Flow Generating Powerhouse
Image Shown: Apple Inc remained a free cash flow generating powerhouse in fiscal 2021. Key line-items are underlined in red and blue. Image Source: Apple Inc – Fourth Quarter of Fiscal 2021 Financial Supplement with additions from the author. Apple is not immune to the headwinds facing global supply chains, though its fortress-like balance sheet and stellar free cash flow generating abilities should enable the firm to ride out near-term hurdles with its bright growth trajectory intact. We are huge fans of the tech behemoth and continue to like shares of AAPL as an idea in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.

Oct 29, 2021

Dividend Increases/Decreases for the Week October 29
Let's take a look at companies that raised/lowered their dividend this week.

Oct 27, 2021

Lockheed Martin Shocks the Market
Image: After years of backlog growth at Lockheed Martin, the third quarter of 2021 revealed a sharp year-over-year decline to the tune of ~8.3%. The company’s outlook also left a lot to be desired. Lockheed Martin reported a terrible third-quarter 2021 report and offered a gloomy outlook, but there are still reasons to be optimistic. The company retains strong coverage of the dividend with traditional free cash flow and has a burgeoning backlog of $134.8 billion (2.04x expected 2022 revenue). Its acquisition of Aerojet Rocketdyne may breathe new life into an executive team that may need to sharpen its focus on delivering for investors, and it's hard to argue with the strength of its competitive position. We’ll be lowering our fair value estimate upon the next update, but investors are getting paid a ~3.4% dividend yield to wait for management to right the ship. The company retains its position in the simulated Dividend Growth Newsletter portfolio.

Oct 27, 2021

Digital Realty Boosts Guidance and Further Extends Growth Runway
Image Source: Digital Realty Trust Inc – Third Quarter of 2021 IR Earnings Presentation. On October 26, Digital Realty Trust posted third quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The data center real estate investment trust (‘REIT’) saw its GAAP operating revenues come in at $1.1 billion (up 11% year-over-year) and its non-GAAP core funds from operations (‘FFO’) per share come in at $1.65 per share (up 7% year-over-year) last quarter. Digital Realty also increased its guidance in conjunction with its latest earnings report, which we appreciate, as that signals the REIT is growing confident that it will exit 2021 on a high note. When taking into consideration Digital Realty’s ability to tap capital markets at attractive rates (something we cover in this article), we give the REIT a “GOOD” Dividend Safety rating as its adjusted Dividend Cushion ratio is near parity at 0.7, which factors in expected dividend growth over the coming years. Additionally, we give Digital Realty a “GOOD” Dividend Safety rating, underpinned by its bright cash flow growth outlook. The top end of our fair value estimate range sits at $186 per share of DLR, well above where Digital Realty is trading at as of this writing.