Valuentum Exclusive Analysis for the Discerning Investor

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Oct 1, 2020

ICYMI -- News Brief: FDX, CBRL, ADBE, XOM
Image Source: Exxon Mobil. The dichotomy in the global economy remains. Restaurants such as Cracker Barrel continue to struggle mightily while those tied to e-commerce proliferation such as FedEx are thriving. Those with strong recurring revenue business models such as Adobe continue to do well, and we remain bearish on the outlook for the energy sector and point to the increased likelihood of Exxon Mobil cutting its payout.

Sep 29, 2020

Facebook’s Promising Growth Outlook
Image Shown: Top-weighted Best Ideas Newsletter portfolio holding Facebook Inc has seen its stock price surge higher over the past year and we see room for considerably more capital appreciation upside. Facebook’s growth trajectory will depend in large part on how effective the firm is at generating more revenue per active user, especially in markets outside of the US & Canada. The emergence of a large global middle class should assist in these endeavors. We view Facebook’s growth outlook quite favorably and continue to be big fans of the social media giant. Facebook continues to be one of our favorite companies out there. Shares of Facebook are included as a top-weighted holding in our Best Ideas Newsletter portfolio. Our fair value estimate for FB sits at $284 per share, though should the firm outperform our “base case” assumptions, Facebook could carry a fair value estimate as high as $355 per share. We are enormous fans of Facebook’s net cash balance (~$58.2 billion in net cash at the end of June 2020), high quality cash flow profile (relatively modest capital expenditures are required to maintain a certain level of revenue), and incredibly promising long-term outlook that is supported by secular growth tailwinds.

Sep 27, 2020

Costco Closes Out Fiscal 2020
Image Shown: Shares of Costco Wholesale Corporation have been on an upswing over the past five years. The ongoing coronavirus (‘COVID-19’) pandemic has upended daily activities and encouraged households worldwide to stockpile consumer staples products. When Costco Wholesale Corp reported its fourth quarter fiscal 2020 earnings (16-week period ended August 31, 2020) on September 24, management noted that Costco’s worldwide foot traffic was down ~1% year-over-year last fiscal quarter though its average basket size was up ~13% year-over-year during this period. Households are apparently making the most out of every shopping trip in order to socially distance. Costco’s ancillary businesses, like its in-store opticians and food courts operations, were hurt by temporary closures last fiscal quarter, though its core business held up very well. Costco’s gas business took a hit from reduced travel demand, though its membership renewal rates were broadly flat versus the same period a year ago last fiscal quarter.

Sep 26, 2020

Update on Johnson & Johnson
Image Shown: An overview of Johnson & Johnson’s expectations for fiscal 2021 provided during its second quarter of fiscal 2020 earnings report. We continue to like shares of Johnson & Johnson as a top-weighted holding in our Dividend Growth Newsletter portfolio. Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 Earnings IR Presentation. Johnson & Johnson is a top-weighted holding in our Dividend Growth Newsletter portfolio, and we continue to be big fans of the healthcare and consumer staples giant. The company recently published some key updates that we wanted to draw our members’ attention towards. Before we begin, please note that Johnson & Johnson is near the front of the pack when it comes to developing a potential coronavirus (‘COVID-19’) vaccine. Should Johnson & Johnson prove successful, global health authorities would be better able to combat the severity of the COVID-19 pandemic.

Sep 25, 2020

PayPal and Visa Expand Partnership
Image Shown: Shares of Best Ideas Newsletter portfolio holding PayPal Holdings Inc have surged higher this year. We continue to be big fans of the company.The payment processing and payment solution space is incredibly attractive given the secular growth tailwinds supporting companies operating in the financial tech industry. As consumers are increasingly using cards and digitally-oriented payment services during the ongoing coronavirus (‘COVID-19’) pandemic, demand for the various “cash-less” payment options offered by PayPal Holdings and Visa is on the rise. Please note that rising demand for payment processing, cross-border transactions, and similar services is increasing from both consumers and businesses alike. This is more than just a short-term adjustment to cope during the COVID-19 pandemic; the transition towards a “cash-less society” has been underway for some time. We continue to like shares of both PayPal and Visa as top-weighted holdings in our Best Ideas Newsletter portfolio.

Sep 22, 2020

Update on TikTok Saga
Image Shown: Shares of Oracle Corporation, a holding in our Dividend Growth Newsletter portfolio, have performed well recently as excitement grows over the company’s improving long-term growth outlook. Oracle may soon become a strategic shareholder in the rising social media star TikTok, alongside Walmart Inc and various US-based venture capital firms. Some big news emerged this past weekend involving TikTok that we wanted to bring to our members attention. We covered this story in detail in late-August and mid-September, and encourage our members to check out those articles for additional background information. In brief, TikTok is currently owned by Beijing-based ByteDance, a company that has been accused of being an extension of China’s central government (meaning a security threat to Western interests) which in turn prompted the White House to push for a sale of TikTok’s US operations or an outright shutdown/ban of the app in the US. This past weekend, President Trump stated he approved of a proposed deal that would involve Oracle Corp and Walmart taking a strategic equity stakes in a newly created firm called TikTok Global, which will likely be based in the US.

Sep 21, 2020

CubeSmart Remains Rock-Solid
Image Shown: An overview of CubeSmart’s core geographical focus. We continue to like CubeSmart as a holding in our High Yield Dividend Newsletter portfolio. Image Source: CubeSmart – September 2020 IR Presentation. One of our favorite industries as it relates to locating high-quality high-yielding companies with promising dividend growth runways is the self-storage real estate investment trust (‘REIT’) space, particularly companies with operations primarily (if not entirely) in the US. Within this industry, CubeSmart is one of our favorites and remains a holding in our High Yield Dividend Newsletter portfolio. Shares of CUBE yield ~4.0% as of this writing. The self-storage REIT continued to make good on its dividend obligations during the coronavirus (‘COVID-19’) pandemic, a task made easier through CubeSmart’s ability to generate meaningful free cash flows. Unlike most other REITs, REITs operating in the self-storage space tend to be able to generate substantial free cash flows, and CubeSmart is no exception as we cover in this note.

Sep 18, 2020

Outperformance of Valuentum's COVID-19 Ideas
Image: Valuentum's COVID-19 ideas. Hypothetical returns are calculated on a price basis. To my amazement, the equal-weighted hypothetical returns of our top 10 COVID-19 ideas not only exceeded the market return over the simulated measurement period by a huge margin, but because of the impeccable timing of their release, they also did better than the returns of a backfilled index from the start of the year that--get this--was filled with stocks that in April were already "outperforming the S&P 500 since the start of 2020." I sincerely hope this provides some perspective of just how awesome our research and idea generation has been this year. If I had a mic, I would drop it!

Sep 16, 2020

Our Thoughts on Nvidia Acquiring Arm
Image Source: Nvidia Corporation – Nvidia to Acquire Arm IR Presentation. On September 13, Nvidia Corp announced it would acquire Arm Limited (a semiconductor company with a heavy focus on smartphones and gaming devices) from SoftBank Group Bank Corp. and SoftBank’s Vision Fund through a transaction valued at approximately $40 billion. That deal will see Nvidia pay SoftBank and the Vision Fund $12.0 billion in cash (including $2.0 billion payable at signing), $21.5 billion in Nvidia stock (equal to 44.3 million shares at the time of the announcement, though that figure could change as it depends on NVDA’s average closing price over the last 30 trading days), and the deal has an earn-out component that could see Nvidia pay an additional $5.0 billion in cash or stock if certain financial hurdles are met. Furthermore, Nvidia will issue $1.5 billion in equity to Arm’s employees if the deal closes.

Sep 11, 2020

Oracle’s Transformation Continues
Image Shown: Shares of Dividend Growth Newsletter portfolio holding Oracle Corporation are on an upward trajectory after the tech giant reported that its strategic transition towards cloud-based offerings was going well during its latest earnings report. On September 10, Oracle Corporation reported first quarter fiscal 2021 earnings (period ended August 31, 2020) and we liked what we saw. In constant currency terms, the company’s ‘cloud services and license support’ and ‘cloud license and on-premise license’ segments reported year-over-year sales growth of 2% and 8%, respectively. We appreciate that Oracle’s cloud-oriented businesses are finally starting to gain some real traction in this lucrative and hypercompetitive market. Additionally, Oracle’s strong performance occurred in the face of the ongoing coronavirus (‘COVID-19’) pandemic, highlighting the resilience of its business model and the company’s ability to rise to the occasion.