Valuentum Exclusive Analysis for the Discerning Investor

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Jan 13, 2020

ALERTS: Big Changes to the Portfolios; Goodbye Apple!
Image Source: GDS-Productions. We are making a number of changes to the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio as this market continues full steam ahead. We remain near fully invested in both newsletter portfolios, but we are positioning them more defensively as we enter 2020.

Jan 13, 2020

Intel Has Performed Well Since Acquiring Mobileye
Image Shown: Intel Corporation (represented by the blue line in the graph above), a long time holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has substantially outperformed the NASDAQ 100 index (black line) and the S&P 500 index (orange line) since the period just before announcing its ~$15 billion deal to acquire Mobileye in March 2017, before taking dividends into consideration (given that Intel pays out a decent dividend, that wouldn’t change this picture materially). We continue to like Intel in both our newsletter portfolios and its ~2.1% yield as of this writing provides investors with a nice income stream. Intel’s dividend will likely continue to experience strong per share growth over the coming years, in our view, a growth trajectory that’s well supported by Intel’s 2.1x Dividend Cushion ratio.

Jan 12, 2020

Capital Appreciation or Dividend Growth?
Image source: David Mulder. “Xilinx crushed the market over its holding period of a matter of a few weeks during 2019” is not something that we think dividend growth investors are focused on, or even care to hear.

Jan 12, 2020

Our Reports on Stocks in the Luxury Goods - Established Brands Industry
Image Source: Kevin Wu. Luxury goods firms differentiate themselves based on brand name, perception, and quality in order to generate excess returns on invested capital through the economic cycle. Building a large, successful luxury brand is difficult, leaving those that possess them with intangible competitive advantages that are not easily overcome by new entrants. Growth in emerging middle classes and China will be the key demand drivers going forward, though the strongest brands will also grow successfully via market share gains. Though changes in consumer preferences should be watched closely, we like the structure of the group.

Jan 10, 2020

Newmont’s Outlook is Bright Due to More Than Just Gold Prices Rallying
Image Source: Newmont – Third Quarter 2019 Earnings IR Presentation. Newmont Corp announced a huge boost to its dividend on January 6, with its quarterly payout growing by 79% to $0.25 per share from $0.14 previously. As of this writing, that’s good for a forward-looking yield of ~2.4%. Additionally, the company reiterated its commitment to buying back its stock now that the merger between Newmont and Goldcorp is firmly in the rear view mirror (Newmont Corporation used to be known as Newmont Goldcorp Corporation, a name that was shortened this year). We continue to like the name as one of the top gold mining plays.

Jan 9, 2020

ALERT: Facebook at All-Time Closing Highs
"I'm completely baffled by Facebook's pricing action, and I still think this one will again return to new highs." -- Nelson, December 20, 2018, with shares trading at ~$130 each. Shares of Facebook registered an all-time closing high of $218.30 per share January 9, 2020.

Jan 9, 2020

Yum! Brands Buys Habit Restaurants
Image Shown: An overview of Yum! Brands Inc’s operations. Image Source: Yum! Brands Inc - Investor Fact Sheet. On January 6, quick-service restaurant chain Yum! Brands (which owns the KFC, Pizza Hut, and Taco Bell brands) announced that it was acquiring fast causal burger joint Habit Restaurants for $14 per share in cash for a total cash consideration of $375 million. Habit Burger’s footprint includes ~265 restaurants in total across more than a dozen US states and China under its namesake brand, Habit Burger Grill, and please note roughly 90% of those locations are company-owned. Having the benefit of Yum! Brands global marketing and advertising wing will support future growth endeavors at the Habit Burger Grill brand. We still aren’t interested in shares of YUM here as the top end of our fair value range estimate sits at $106, or just a few dollars ahead of where YUM is trading at as of this writing.

Jan 8, 2020

Update: US and Iran Now De-escalating Tensions
On January 7, Iran retaliated against the US for the killing of Iranian major general Qasem Soleimani (leader of a group that the US has deemed a terror threat under the Trump administration) less than a week earlier by firing missiles from Iranian soil at bases in Iraq that contain US, Iraqi, and coalition troops. The Iranian government aggressively publicized the attack by providing Iranian media outlets with footage of missiles leaving Iran that were targeted towards Iraq. Fortunately, no US, Iraqi, or coalition casualties were reported. We are very thankful that nobody was hurt as a result of the Iranian missile strike.

Jan 7, 2020

Middle East Tensions on the Rise
Early Friday (Arabian Standard Time) on January 3 (the strike was carried out late Thursday evening Eastern Standard Time), under the orders of President Trump, the US took out major general Qasem Soleimani who was the leader of Iran’s Quds military group within the Islamic Revolutionary Guard Corps (‘IRGC’). Please note the US designated the IRGC as a Foreign Terrorist Organization in April 2019, and that the justification for the strike was due to there being an immediate threat to US lives (namely soldiers and contractors stationed in the Middle East), according to the Pentagon. It’s important to note that the strike occurred on Iraqi soil. The Quds force is known to be Iran’s extraterritorial military outfit, an elite group thought to be deeply involved in ongoing wars in Syria (undergoing a civil war), Yemen (undergoing a civil war), and Iraq (ostensibly fighting the remnants of the ISIS terror group). Qasem Soleimani was in Iraq when the US took him out with an airstrike, along with others such as Abu Mahdi al-Muhandis, who was the deputy chief of the Popular Mobilization Units (‘PMF’) which is an umbrella group for various militias active in Iraq that have extensive ties with Iran. Abu Mahdi al-Muhandis was thought to be an adviser of Qasem Soleimani.

Jan 7, 2020

Dividend Cushion Ratio Catches Another Dividend Cut
Image Shown: Tupperware Brands Corporation suspended its dividend in November 2019, a pitfall investors could have avoided by utilizing Valuentum’s proprietary Dividend Cushion ratio. Our Dividend Cushion ratio can be a very useful tool for income seeking investors that wish to avoid payout cuts and the likely capital depreciation that follows. The Dividend Cushion ratio is based on our forecast of the firm’s future free cash flows over the next five full fiscal years, less its net debt or plus its net cash position, divided by its expected dividend obligations during this period. We view this as a powerful gauge of a company’s true dividend coverage, as compared to EPS payout ratios which are backward looking and flawed when evaluating the ability to cover future dividend obligations. This metric has been successfully in warning investors about numerous value traps over the years, including packaging company Tupperware Brands Corp. The company sells anything from plastic kitchen storage containers under its Tupperware brand to beauty products under its NaturCare and other brands. The Dividend Cushion also most recently warned about the cut at Core Labs, too.