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Fundamental data is updated weekly, as of the prior weekend. Please download the Full Report and Dividend Report for any changes.
May 13, 2021
Markets Back on Track – Seeking Net-Cash-Rich, Free Cash Flow Generators with Pricing Power!
Image Shown: The pricing action of ideas in the Dividend Growth Newsletter portfolio May 13. Image Source: Seeking Alpha.  We remain intensely focused on the cash-based sources of intrinsic value—net cash on the balance sheet and future expected free cash flow—when it comes to identifying price-to-fair-value-estimate mis-pricings as well as in assessing long-term dividend health. We think it may be tempting to rotate into some names where fair value estimate revisions have occurred, but the margin of safety around many energy/commodity producers and banking entities may be too large even for conservative investors. We expect most energy/commodity producers to continue to endure boom-and-bust cycles, and banking entities to do the same, as the latter act more like utilities this day and age. Once implicitly nationalized during the Great Financial Crisis, and used as an extension of government programs such as the Paycheck Protection Program during the COVID-19 crisis, outsize economic profit spreads may remain limited for banks/financials given the punitive regulatory environment. Facebook, of course, remains our top idea for long-term capital appreciation potential. Newmont Mining remains our favorite dividend growth-oriented “inflation hedge” followed by garbage hauler Republic Services and its CPI-indexed contracts. AT&T remains our favorite high yield dividend idea, boasting a free-cash-flow covered ~6.5% dividend yield, and we prefer only diversified exposure to the energy and banking sectors through the Energy Select Sector SPDR (XLE) and Financials Select Sector SPDR (XLF). We’ll be looking to deploy the ~10%-20% cash “positions” in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in the coming months. The High Yield Dividend Newsletter remains “fully invested,” and Exclusive idea generation remains robust. If you haven’t already, please be sure to have a look at the video in this article to see how we assess the cash flow statement and balance sheet to uncover stocks with strong net cash positions and solid future free cash flows that handily cover expected cash dividend payments. We apply this laser-focus on financial statement analysis across our idea-generation suite of publishing products.
May 10, 2021
Inflation! How to Think About Value Duration
Image Shown: Longer-duration free cash flow stocks are more impacted by changes in inflationary expectations and interest rates (up or down) than stable and/or stable and growing free cash flow generators. This example shows the impact of falling interest rates (10%-->5%) on stable versus longer-duration hypothetical future free cash flow streams, all else equal (the opposite would directionally be applicable in a rising interest rate environment). There's nothing 'all else equal' in the real world though. In the event of rising inflationary expectations, we would still expect speculative technology stocks to take the biggest hit. On the other hand, we would expect strong and growing free cash flow powerhouses that can price ahead of inflation such as big cap tech to handle the environment well. Though banks, energy, and the metals and mining sectors may lead the market for some time, we still like large cap growth and big cap tech for the long run. What many may be overlooking is that, for those with pricing power, higher inflationary expectations translate into higher product and service prices, too. Big cap tech (and their pricing power) is well-positioned to handle such an environment. We’re not overreacting in any respect, and we’re not going to chase commodity prices or commodity producers higher. Commodity prices are simply too difficult to predict in almost all cases, and banking entities are far too susceptible to boom-and-bust shocks for us to get comfortable with their long-term investment profiles. All in, we’re sticking with companies with strong net cash positions and future expected free cash flows (and solid dividend health, where applicable). Some of the strongest companies that have these characteristics can be found in large cap growth and big cap tech. Facebook remains our top idea for long-term capital appreciation potential. In the meantime, we’re comfortable watching the market chase a rotation into more speculative areas.
May 7, 2021
Dividend Increases/Decreases for the Week May 7
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 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 12, 2021
How Many Stocks to Achieve Diversification?
Image: GameStop’s shares are falling like a rock after hitting euphoric levels in the mid-$400s earlier this year. Our fair value estimate stands below $10 per share.  Day trading GameStop is gambling. Resist the urge. The 60/40 stock bond portfolio may have cost investors a bundle during the past 30 years relative to active stock managers charging 2% per annum, but that doesn’t mean you shouldn’t diversify appropriately within the equity component of your asset mix. Use common sense, and don’t get too aggressive on your favorite ideas either. We generally like to limit new ideas to 8%-10% of the newsletter portfolios at “cost” and generally don’t like them to run higher than 15% of the newsletter portfolio after appreciation. From my perspective, only ultra-sophisticated investors should ever consider shorting, and please don’t gamble too aggressively on options. Know the unlimited loss potential of selling options contracts. Options is not a fun game to lose. Investing is a long game--and know the difference between diversification across your favorite ideas and “diworsification” by buying overpriced assets. Adding pipeline MLPs to your portfolio in mid-2015 may have smoothed your returns the past five years, but only by hurting them. Leave gambling to the quants. See through the illusion of “factor” investing. Be smart, and don’t get stuck thinking “inside the box.” Markets are inefficient, unless you think GameStop was appropriately priced at both $180 and $350 on the same day (March 10) on no news. Finally, unless you have a few friends that can lend you a few billion in a pinch, don’t ever forget the cardinal rule--and even if you have a few billionaires next store: Always leave yourself outs. Stocks for the long run.
Mar 26, 2021
Dividend Increases/Decreases for the Week March 26
Let's take a look at companies that raised/lowered their dividend this week.



The High Yield Dividend Newsletter, Best Ideas Newsletter, Dividend Growth Newsletter, Nelson Exclusive publication, and any reports, articles and content found on this website are for information purposes only and should not be considered a solicitation to buy or sell any security. The sources of the data used on this website are believed by Valuentum to be reliable, but the data’s accuracy, completeness or interpretation cannot be guaranteed. Valuentum is not responsible for any errors or omissions or for results obtained from the use of its newsletters, reports, commentary, or publications and accepts no liability for how readers may choose to utilize the content. Valuentum is not a money manager, is not a registered investment advisor and does not offer brokerage or investment banking services. Valuentum, its employees, and affiliates may have long, short or derivative positions in the stock or stocks mentioned on this site.