Valuentum Exclusive Analysis for the Discerning Investor

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Dec 19, 2019

2019: Another Market Beating Year for the Best Ideas Newsletter Portfolio!
We estimate thus far the Best Ideas Newsletter portfolio return has beat the S&P 500 by 2.8 percentage points during 2019 (34.4% versus 31.6% for the S&P 500, as measured by the SPY). Our move to overweight Apple, Facebook, and Visa worked out wonderfully for members during 2019. We continue to overweight big winners, and we credit this to our team's conviction in our very best ideas. We also made quite the savvy move in rolling over a solid gain in Chipotle (60%+) into even more shares of Apple stock during the year. We're putting some of the best ideas right in front of our membership in full transparency. Berkshire Hathaway's overweighting added some stability to the Best Ideas Newsletter portfolio, but it was a large drag on returns during the year. This is okay - we like the diversification benefits. 2019 was a very, very difficult year to beat the market, but by our estimates, the Best Ideas Newsletter did so, and by a fair margin, particularly for a large cap orientation. Note this kind of outperformance is unique as many money managers continue to trail their benchmarks during 2019. We credit the outperformance to our team's work ethic and the Valuentum methodology. We are disappointed with the current state of active management, and we are working to develop solutions for our membership. We expect to roll out an important survey in the coming months. We continue to encourage members to add the Exclusive to their membership, if they haven't considered this fantastic publication just yet. More on the Exclusive >> The Best Ideas Newsletter portfolio is part of a regular premium membership to Valuentum. More here >>

Dec 18, 2019

FedEx’s Earnings Miss
Image Source: FedEx Corporation – 2019 Annual Stockholders Meeting September 2019 IR Presentation. In the days leading up to FedEx Corp latest earnings report where the firm missed by a mile, news broke that Amazon is now blocking third-party sellers that use its marketplace platform from using the FedEx Ground delivery service (which handles North American volumes) to ship to Prime customers. This comes on the heels of FedEx and Amazon ending two significant shipping contracts earlier this year, including the arrangement where FedEx Ground would handle some of Amazon’s packages, a deal that expired at the end of August. Please note that FedEx Ground is a small-package delivery service that caters to America and Canada, and that other FedEx options for certain packages bought through or sold by Amazon are still available. We are still staying away from FedEx as its ability to generate free cash flows remains pressured by its need to invest heavily in the business to keep up with the likes of Amazon and others. FedEx’s dividend payout could be at risk should exogenous shocks (i.e. a breakdown in the partial US-China trade war truce) continue weakening its financial performance.

Dec 17, 2019

Cisco, Intel, Johnson & Johnson, and PayPal in the News
Cisco is trading at the low end of our fair value estimate range, and the company’s healthy dividend yield is well supported. Intel remains one of our favorite ides, and we expect a stellar dividend-growth trajectory at the company, too. Johnson & Johnson’s shares look poised to break out to new highs, and PayPal continues to execute nicely.

Dec 16, 2019

ICYMI: Interview with Valuentum’s Callum Turcan
Callum Turcan helps head up Valuentum’s research product and is co-editor of the company’s newsletters. We sat down with Callum to get his thoughts on new developments in the market and economy. Let’s kick things off with his thoughts on Brexit.

Dec 16, 2019

As Expected, Broadcom’s Organic Revenues Didn’t Grow in Fiscal 2019
Image Source: Broadcom Inc – November 2019 IR Presentation. On December 12, Broadcom reported fourth-quarter earnings for its fiscal 2019 (period ended November 3, 2019). While GAAP revenues for the full fiscal year were up 8% year-over-year, hitting $22.6 billion, please note that includes the uplift from Broadcom acquiring CA Technologies. Shares of AVGO initially traded down 2%-3% on December 13, as investors digested the firm’s guidance for fiscal 2020. As of this writing, shares of AVGO yield 3.4%.

Dec 13, 2019

Oracle’s Dividend Growth Trajectory Remains Solid
Image Source: Oracle Corporation – Financial Analyst Meeting Presentation, September 2019. On December 12, Oracle Corp reported second quarter earnings for its fiscal 2020 (period ended November 30, 2019). Massive share repurchases reduced Oracle’s diluted outstanding weighted-average share count from 3,908 million in the first half of fiscal 2018 to 3,370 million in the first half of fiscal 2019. That played a key role in boosting Oracle’s EPS performance (diluted GAAP EPS was up 12% year-over-year in the first half of fiscal 2020) as its revenues were broadly flat during this period. We continue to like Oracle in our Dividend Growth Newsletter portfolio given the strength of its free cash flow profile and promising outlook. Shares of ORCL yield 1.7% as of this writing, and its strong Dividend Cushion ratio of 2.7x provides for a solid payout growth trajectory. Shares of Oracle sold off initially on its weaker than expected sales performance last quarter, but we remain optimistic on its future potential as we’ll cover in this note.

Dec 13, 2019

Dividend Increases/Decreases for the Week Ending December 13
Let's take a look at companies that raised/lowered their dividend this week.

Dec 12, 2019

Analyzing Chevron and Important Updates in the Global Energy Industry
Image Source: Chevron Corporation – November 2019 IR Presentation. In this note, let’s cover the current state of raw energy resource prices in North America and around the world. We’ll analyze Chevron’s 2020 capital investment and exploration budget, in particular, and the global energy industry at-large. Shares of CVX appear generously valued, as of this writing, given the numerous headwinds facing the energy industry going forward.

Dec 12, 2019

Our Reports on Stocks in the Communications Equipment Space
Image Source: Seth Stoll. We've optimized our technology coverage.

Dec 11, 2019

GameStop’s Problems Continue
Image Source: GameStop Corporation – Fourth Quarter Fiscal 2018 Earnings IR Presentation. On December 10, video game retailer GameStop Corp reported third quarter earnings for its fiscal 2019 (13-week period ended November 2, 2019) that were simply terrible. Shares of GME were down big after-hours on December 10. GAAP net sales were down 26% year-over-year last quarter, hitting $1.4 billion, while the company’s GAAP operating loss came in at ~$0.05 billion, an improvement versus an operating loss of $0.5 billion (due to a large goodwill impairment charge) in the same period last fiscal year. GameStop halted its common dividend program in the middle of 2019, which freed up substantial cash flow for share buybacks and deleveraging efforts. Investors looking to avoid disruptions to their dividend income streams should consider utilizing Valuentum’s Dividend Cushion ratio to avoid value traps (read more about the importance of our Dividend Cushion ratio here).