Valuentum Exclusive Analysis for the Discerning Investor

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Feb 8, 2022

Nutrien Benefiting from the Strong Global Farm Economy, Shares Yield ~2.5%
Image Source: Nutrien Limited – 2020 Annual Report. Nutrien Limited is benefiting from the strong global farm economy. The company sells tens of millions of metric tons of potash, nitrogen, and phosphate products every year, which are key ingredients used in the production of fertilizer. With geopolitical tensions building in Eastern Europe, Nutrien is preparing to bring idle potash production capacity in Canada back online while steadily expanding its nitrogen production capabilities. Nutrien is a great free cash flow generator with a promising growth outlook, though its net debt load is rather large. The firm is focusing on deleveraging activities in the near term, which we appreciate. Shares of NTR yield ~2.5% as of this writing, and we think it is one for your radar.

Feb 7, 2022

Sonos Expected to Continue Growing Rapidly; Margin Concerns Remain Key Issue
Image Source: Sonos Inc – Fourth Quarter of Fiscal 2021 IR Earnings Presentation. Sonos' financial performance staged an impressive turnaround in fiscal 2021. The company exited fiscal 2021 with a $640 million net cash position and generated $208 million in free cash flow that fiscal year. Sonos is leveraging its financial strength by buying back its stock. The firm is also considering potential M&A activities that could be used to enhance its growth runway, with an eye towards the potential for Sonos to expand into the premium wireless headphone space. Sonos forecasts that it will grow its revenues by double-digits annually in fiscal 2022, though its margins are expected to face moderate headwinds this fiscal year. Shares of SONO have faced sizable selling pressures of late as concerns mount over its medium-term outlook. We love the company's products, but we're cautious on the stock in the near-term given its cloudy EBITDA outlook. That said, we see potential upside in the stock to the high-$20s from a valuation perspective (modestly above where shares are trading at this time).

Feb 5, 2022

Our Thoughts on Big Pharma’s Calendar Fourth Quarter Earnings Reports
Image Source: Merck & Company Inc – Fourth Quarter of 2021 IR Earnings Presentation. We include the Health Care Select Sector SPDR Fund ETF in the Best Ideas Newsletter and Dividend Growth Newsletter portfolios to gain broad exposure to the health care sector. Instead of betting on one entity's pipeline (which could be hit or miss), we like the exposure to lots and lots of "shots on goal" when it comes to the vast collective pipeline in the XLV ETF. We wrote up the calendar fourth-quarter results of the top two weightings in the XLV ETF, United Health and Johnson & Johnson recently. We continue to like UNH a lot, but JNJ's story has become a lot more complicated for dividend growth investors in recent months. Let's have a look at some of the other key holdings in the XLV ETF, however. We'll cover the calendar fourth-quarter earnings reports from four heavyweights in the pharmaceutical arena (ABBV, GILD, LLY, and MRK). Additionally, we'll cover the performance of some of their top-selling treatments that have already received regulatory approval from the U.S. Food and Drug Administration (‘FDA’) and key clinical trials that could produce new commercial growth opportunities. The coronavirus (‘COVID-19’) pandemic has become more manageable during the past year or so after several vaccines and therapeutics for the virus were discovered in record time. While headwinds from the pandemic remain, the health care sector is steadily recovering and this space is home to plenty of attractive opportunities for capital appreciation and income seeking investors. XLV, UNH, JNJ, and VRTX are a few that we like a lot.

Feb 4, 2022

Undervalued PINS, SNAP Rallying; FB Incredibly Mispriced, and Refreshed Consumer Discretionary Reports
Image: Valuentum's Periodic Screener, February 4. Two of the most undervalued stocks in our coverage Pinterest, Inc. and Snap Inc. are indicated to rally hard February 4 after issuing positive earnings reports, providing further evidence of the importance of the discounted cash flow process and the magnet that intrinsic value estimates are to stock prices.

Feb 4, 2022

Dividend Increases/Decreases for the Week February 4
Let's take a look at companies that raised/lowered their dividend this week.

Feb 3, 2022

The Facebook (Meta Platforms) Thesis Just Got Even More Complicated
Image: Facebook’s free cash flow generation remains robust. Image Source: Meta Earnings Presentation Q4 2021. The company formerly known as Facebook, Meta Platforms is facing a long list of headwinds from moderating revenue growth, tightening margins, slowing free cash flow expansion due to rising capital spending, and tail risks of the regulatory and antitrust variety. We expect a downward revision to our fair value estimate of Meta upon the next update to factor in these dynamics, but we still believe shares are undervalued.

Feb 3, 2022

Dividend Growth Idea Qualcomm Growing Robustly
Image Shown: Dividend growth idea Qualcomm Inc posted a solid earnings update and provided promising near term guidance on February 2. Image Source: Qualcomm Inc – First Quarter of Fiscal 2022 IR Earnings Presentation. On February 2, dividend growth idea Qualcomm reported first quarter earnings for fiscal 2022 (period ended December 26, 2021) that beat both consensus top- and bottom-line estimates. The semiconductor company issued guidance for the current fiscal quarter that calls for double-digit revenue and earnings growth versus fiscal year-ago levels, though shares of QCOM still dipped modestly in after-hours trading that day. We continue to like Qualcomm as an idea in the Dividend Growth Newsletter portfolio as the firm remains a free cash flow cow with a promising growth outlook.

Feb 3, 2022

PayPal’s Margin Pressure, Flattish Earnings Outlook Shocks Market; Fair Value Estimate Reduced
Image Shown: PayPal Holdings Inc grew at a robust pace in 2021 though its margin outlook is not as promising as once believed. Image Source: PayPal Holdings Inc – Fourth Quarter of 2021 earnings press release. PayPal is a solid enterprise supported by its pristine balance sheet, strong free cash flows, and promising revenue growth outlook. The proliferation of e-commerce provides PayPal will a powerful secular tailwind to capitalize on. However, PayPal’s operating leverage is not what it once appeared to be, and that weighs negatively on its margin expansion potential. As noted previously, we have fine-tuned our cash flow valuation model on the company, and now value shares at $160 on a point fair value estimate basis. We continue to include PayPal as an idea in the Best Ideas Newsletter portfolio for the time being (as we evaluate the next few quarters). PayPal's refreshed stock page and report will be available shortly.

Feb 1, 2022

Exxon Breaks Out! Oil Prices Might Rip Higher Still!
Image: A pretty technical breakout at Exxon Mobil. Valuentum's Callum Turcan: "The tight supply-demand dynamics for oil & natural gas combined with rising geopolitical tensions (West-Russia over a potential Russian invasion of Ukraine, reports of potential terror attacks on Northern Iraqi/Kurdish oil infrastructure, West-Iran over Iran's nuclear program and nuclear deal talks reportedly breaking down, civil tensions in Kazakhstan, perennial problems facing Libya and Nigeria's security situation) indicate there is likely room for oil prices to rip higher still."

Jan 30, 2022

Our Favorite Biotech Vertex Pharma Powers Ahead, Leaps 6%+
Image: Vertex Pharma continues to soar toward our fair value estimate. The biotech arena is difficult to navigate, which is why we tend to play it a bit more conservative than most. Vertex Pharma has an established, cash-flow generating portfolio of cystic fibrosis therapies, which has helped to establish a net cash rich balance sheet and a steady stream of robust free cash flow, unlike many biotechs that need external capital and are at risk of never reaching commercialization. We’re excited about Vertex’s clinical pipeline of potentially transformative genetic therapies, and we like its exposure to CRISPR gene-editing technology, which could be a huge business in the years ahead. Vertex Pharma remains our favorite biotech play and an idea in the simulated Best Ideas Newsletter portfolio.