Valuentum Exclusive Analysis for the Discerning Investor

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Dec 8, 2023

Reinstating Coverage of Lululemon
Image Source: Mike Mozart. On December 7, Lululemon reported strong third-quarter results for its fiscal 2023, with revenue increasing 19% and comparable sales increasing 14% on a constant-dollar basis. Adjusted earnings per share of $2.53 came in roughly 10% higher than the consensus forecast. We are reinstating coverage of Lululemon with a $470 per share fair value estimate and an Attractive Economic Castle rating. We like Lululemon but we won’t be adding it to any newsletter portfolio at this time.

Dec 8, 2023

Dividend Increases/Decreases for the Week of December 8
Let's take a look at firms raising/lowering their dividends this week.

Dec 5, 2023

5 Stocks to Consider Buying
The five stocks highlighted in this article generate tremendous amounts of free cash flow, have healthy balance sheets with either a net cash position or net-neutral position, generate high ROICs, and offer upside potential on the basis of the high end of our fair value estimate range. We think Apple and Microsoft are our two favorites, while Dick's Sporting Goods may be the one true "value" play with a low double-digit P/E ratio. Vertex Pharma has tremendous long-term potential, in our view, while shares of Booking Holdings appear cheap to us. We think the risk/reward remains in favor of the long-term investor that considers these five names.

Nov 27, 2023

How Do We Use the Valuentum Buying Index?
Image: We highlighted Exxon Mobil to start 2022, and the stock was one of the best performers in the S&P 500 last year. Exxon Mobil became a “Valuentum” stock last year, with shares being undervalued, exhibiting a strong technical breakout, and sporting an attractive dividend yield to boot. The stock became a huge winner. Note: Exxon is no longer included in the simulated newsletter portfolios. The image is an excerpt from an email sent to members January 5, 2022.We answer one of the most frequently asked questions about the Valuentum Buying Index.

Nov 24, 2023

Dividend Increases/Decreases for the Week of November 24
Let's take a look at firms raising/lowering their dividends this week.

Nov 20, 2023

Dick’s Sporting Goods Still Looks Really Cheap
Image Source: Dick’s Sporting Goods. On November 21, Dick’s Sporting Goods reported solid third-quarter results with sales up 2.8% on a year-over-year basis thanks to comparable store sales growth of 1.7% that lapped an impressive 6.5% increase in the same period a year ago. Non-GAAP earnings per share came in at $2.85 in the quarter, up from $2.60 in last year’s period. The company also raised its 2023 comparable store sales growth guidance range to 0.5%-2% from flat to 2% previously, and it raised its 2023 non-GAAP earnings per share outlook to $12.00-$12.60 from its previous range of $11.50-$12.30. We liked the news and continue to believe that shares are mispriced. Our fair value estimate stands at $160 per share, well above where shares are trading at the moment.

Nov 17, 2023

REITs Will Likely Continue To Underperform
Image: REITs have not performed as well as some may have thought. This article clearly explains that REIT dividends are risky and showcases that REIT investors have missed out on a lot of total return during the past decade or so. One has to go back a long time to see any real return from REITs, and changing working and shopping habits will likely continue to punish the broader REIT sector. We view REITs as a game of financial leverage tied to the vicissitudes of the commercial real estate cycle, all for a dividend yield that approximates that of risk-free assets these days. REITs seem to have a large following these days and many will come to the defense of REITs in their own way, but from a bird's eye view of this market, we remain puzzled by the love affair some have for them. We can only posit that some have a myopic focus on REIT-specific metrics, are not getting the best information when it comes to capital-market dependence risk, and perhaps don't truly understand the structural dynamics of the dividend payment with respect to the free dividends fallacy (i.e. that a REIT's share price is adjusted downward by the amount of the dividend on the ex-dividend date). In our view, the structural dynamics that have hurt REITs for the past decade won't be going away anytime soon, and for investors looking to maximize their returns and the longevity of their retirement savings, there are much better options than REITs.

Nov 17, 2023

Dividend Increases/Decreases for the Week of November 17
Let's take a look at firms raising/lowering their dividends this week.

Nov 14, 2023

The Home Depot Delivers in Third-Quarter Fiscal 2023 Results
Image Source: Mike Mozart. On November 14, Home Depot reported third-quarter results for the period ending October 29, 2023, that were largely in-line with expectations. Though the housing market remains stagnant due to increased mortgage rates and limited supply, Home Depot continues to navigate the market well, in our view. The firm’s comparable store sales faced pressure in its fiscal third quarter, and while big-ticket, discretionary purchases may be experiencing some pressure, management noted that it continues to see strong activity with customers pursuing smaller projects. We like Home Depot as a derivative play on the housing market, and the high end of our fair value estimate stands at $344 per share.

Nov 10, 2023

Use Both the Dividend Cushion Ratio (Probability of a Dividend Cut) and the Qualitative Dividend Ratings in Your Assessment of the Payout
The Dividend Cushion ratio ranks companies on the probability of a dividend cut in the longer run, while the qualitative ratings in part assess the outlook for the health of the payout in the near term in the context of management’s willingness to preserve and raise the payout. Since the systematic application of the Dividend Cushion ratio across our coverage in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90% at identifying the risks of a dividend cut in advance of the event.