Valuentum Exclusive Analysis for the Discerning Investor

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Apr 30, 2021

High Yielding Philip Morris Boosts Guidance
Image Shown: Philip Morris International Inc has been steadily growing its alternative tobacco product sales during the past several years and its growth outlook on this front is quite bright. RRP stands for reduced-risk products according to Philip Morris. Image Source: Philip Morris International Inc – First Quarter of 2021 IR Earnings Presentation. Philip Morris is a high-yielding income generator with a promising growth outlook. Historically, the firm hasn't allocated a significant amount of capital (or any) towards share repurchases, highlighting management’s commitment to income seeking shareholders. Though we understand that some investors may shy away from the company due to ESG-related considerations, for those that do not have such investment restrictions, we continue to like Philip Morris as an idea in the High Yield Dividend Newsletter portfolio. We view its forward-looking dividend coverage quite favorably, though we would like for management to pare down the firm’s net debt load over the long haul. Recently, shares of PM have been on a nice upward climb indicating investors continue to warm up to Philip Morris’ promising free cash flow growth outlook, supported in part by its alternate tobacco products (and what they imply regarding long-term resiliency versus traditional cigarettes).

Apr 30, 2021

Dividend Increases/Decreases for the Week April 30
Let's take a look at companies that raised/lowered their dividend this week.

Apr 29, 2021

Best Idea Facebook Posts Blowout Earnings Report
Image Shown: Facebook Inc’s digital advertising business is a behemoth and enabled the firm to put up banner first quarter 2021 performance. We continue to be enormous fans of Facebook and include shares of FB as a top-weighted idea in our Best Ideas Newsletter portfolio. Image Source: Facebook Inc – First Quarter of 2021 IR Earnings Presentation. We continue to view Facebook as one of the most attractive capital appreciation opportunities out there as shares of FB, as of this writing, are trading at a steep discount to their intrinsic value on the basis of enterprise cash flow analysis. Our fair value estimate for Facebook sits at $413 per share with room for upside as the top end of our fair value estimate range sits at $516 per share. Facebook is included as a top-weighted idea in the Best Ideas Newsletter portfolio and more recently, shares of FB have begun to converge towards our fair value estimate. Momentum continues to shift in the right direction after Facebook published its first quarter 2021 earnings report on April 28, which saw shares of FB jump higher after the report went public as the firm easily surpassed consensus top- and bottom-line estimates.

Apr 29, 2021

Visa’s Business Is on the Rebound
Image Shown: Visa Inc remains a tremendous free cash flow generator, aided by its asset-light business model. We continue to be big fans of Visa and include the company as a top-weighted idea in our Best Ideas Newsletter portfolio. Image Source: Visa Inc – Second Quarter of Fiscal 2021 IR Earnings Presentation. On April 27, Visa reported second quarter fiscal 2021 earnings (period ended March 31, 2021) that beat both consensus top- and bottom-line estimates. Visa’s GAAP revenues and GAAP operating income were down 2% and 9% year-over-year, respectively, last fiscal quarter as its cross-border business remains subdued. On the flip side, Visa’s total payment volumes and processed transaction were up 8% and 11% year-over-year, respectively, in constant currency terms. Coronavirus (‘COVID-19’) vaccine distribution efforts should help global health authorities eventually bring the pandemic to an end, though the return of international travel and related activities to pre-pandemic levels is likely a way off. During its latest earnings report, Visa’s business showcased serious signs that a recovery was already well underway, and we continue to be huge fans of the name. We include Visa as a top-weighted idea in the simulated Best Ideas Newsletter portfolio.

Apr 28, 2021

Best Idea Alphabet Flying Higher
Image Shown: Shares of Alphabet Inc Class C stock are on a nice upward climb of late as investors continue to warm up to the company’s fortress-like balance sheet, stellar free cash flow generating abilities, and promising growth outlook. We continue to like Alphabet Inc Class C shares (ticker GOOG) as a top-weighted idea in the Best Ideas Newsletter portfolio. We are huge fans of Alphabet, and the digital advertising giant delivered again April 27 when it reported a stellar first quarter 2021 earnings report that saw the firm fly by both consensus top- and bottom-line estimates. Shares of Alphabet Class C are included as a top-weighted idea in the Best Ideas Newsletter portfolio. As of this writing, even after the post-earnings bounce, shares of GOOG are trading well below our fair value estimate of $2,792 (the top end of our fair value estimate range sits at $3,490) indicating there is room for substantial capital appreciation upside going forward.

Apr 28, 2021

Microsoft Churns Out Gobs of Free Cash Flow
Image Shown: An overview of Microsoft Corporation’s performance last fiscal quarter. Image Source: Microsoft Corporation – Third Quarter of Fiscal 2021 IR PowerPoint Presentation. On April 27, Microsoft Corp reported third quarter fiscal 2021 earnings (period ended March 31, 2021) that smashed past both consensus top- and bottom-line estimates. Revenue growth came in strong across the board. Its cloud computing Azure segment posted 50% revenue growth, its business-facing Dynamics 365 segment posted 45% revenue growth, and its consumer-facing Xbox content and services segment posted 34% revenue growth on a year-over-year basis last fiscal quarter. Though not a large part of its business, Microsoft’s digital advertising revenues also grew nicely in the fiscal third quarter. Foreign currency tailwinds supported the sales performance at most of Microsoft’s reporting segments last fiscal quarter, and recent acquisition activity helped grow its video game business.

Apr 27, 2021

Trash Is Cash
Image Source: Clyde Robinson. Increasingly valuable disposal capacity that is only becoming scarcer and pricing power across collection and disposal operations that keep inflationary pressures at bay are just two of the reasons why we like the municipal solid waste space. Waste Management’s first-quarter performance showed that the U.S. municipal solid waste industry remains very healthy while free cash flow generation across the group will remain robust and perhaps grow stronger as the U.S. economy continues its recovery. We include Waste Management's peer Republic Services as one of our favorite ideas in the Dividend Growth Newsletter portfolio.

Apr 27, 2021

Tesla Scaling Up Nicely
Image Shown: Tesla is steadily working towards bringing another manufacturing facility online in the US, this time near Austin, Texas. Image Source: Tesla Inc – Shareholder Letter Covering the First Quarter of 2021. Electric vehicle (‘EV’) giant Tesla continues to impress as it smashed past consensus top- and bottom-line estimates when it reported first quarter 2021 earnings on April 26. The company delivered 184,800 vehicles (182,780 Model 3/Y variants and 2,020 Model S/X variants) and produced 180,338 vehicles in the first quarter of this year, though we note that Tesla only produced Model 3/Y variants last quarter and Model S/X vehicle deliveries were met via its inventory. In the first quarter of 2021, Tesla’s ‘automotive revenues’ of $9.0 billion were up 75% year-over-year, its GAAP revenues of $10.4 billion were up 74% year-over-year, and its GAAP net income came in north of $0.4 billion (up sharply from year-ago levels).

Apr 26, 2021

Competition Is Heating Up for Intel
Image Shown: Intel's shares have outpaced the S&P 500 SPDR (SPY) since we removed them October 2020.Intel has had a terrific run, but we think bad news may be on the horizon. The chip giant is juggling too many balls at the moment, and competition from the likes of AMD and Nvidia could result in some tough sledding in coming years. We don’t see much risk to the dividend payout, but the lower end of our fair value range may be a reasonable target for shares. We feel that a big miss is coming that may take the market by surprise later this year or in 2022. Execution will be key, and Intel has its work cut out for it. We expect to make some tweaks to our valuation model given the report, but we don’t expect a material fair value estimate change at this time. The company’s Dividend Cushion ratio stands at 1.4.

Apr 26, 2021

Chipotle Could Double the Number of Restaurants in the Long Run
Image Source: Valuentum. Chipotle’s first-quarter results were solid, and we’re sticking with the idea in the simulated Best Ideas Newsletter portfolio. The company’s long-term total restaurant opportunity is tremendous, and we view its digital initiatives as top-notch as it continues to grow comparable store sales nicely. With one of the most innovative CEOs at the helm, Chipotle’s shares continue to be enticing, in our view.