Valuentum Exclusive Analysis for the Discerning Investor

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Feb 3, 2023

Trio of Earnings Reports from Apple, Alphabet, and Amazon Give Pause to Markets
Image Source: Valuentum. Apple’s, Alphabet’s and Amazon’s calendar fourth-quarter results, released February 2, weren’t great, but we’re keeping things in context. Apple had to deal with disruptions in China during the period, while Alphabet is contending with a slowdown in advertising. Both Apple and Alphabet continue to generate tremendous amounts of free cash flow, while boasting considerable net cash positions. Alphabet’s financial profile is second to none. Amazon, on the other hand, continues to burn through free cash flow while it holds a net-neutral balance sheet. We continue to be comfortable including Apple and Alphabet in the newsletter portfolios, but we won’t be considering Amazon anytime soon. Though we expect to make a few tweaks to our valuation models of each, our fair value estimates remain unchanged at this time.

Jan 26, 2023

Market-Cap Weighted S&P 500 Breaks Out; Have We Already Seen the Bottom?
Image: The market-cap weighted S&P 500 (SPY) has broken through its downtrend. The markets could be headed meaningfully higher. Image Source: TradingView. The market-cap weighted S&P 500 has broken out of the technical downtrend that defined 2022 following the equal-weight breakout that preceded it. The pace of inflation looks like it peaked in June 2022, and while myriad risks to both the economy and stock market remain, fourth-quarter 2022 earnings season is shaping up better than feared. We maintain our view that the markets remain at critical technical levels, and we continue to monitor earnings season and technical developments closely.

Jan 25, 2023

Microsoft Is Betting Big on Artificial Intelligence (AI); Fiscal Q2 Shows Meager Revenue Growth, Weaker Cash Flow Generation
Image: Microsoft believes artificial intelligence (AI) will be the next platform wave, and the company is going full steam ahead to incorporate AI across its business systems. Image Source: Microsoft. “The age of AI is upon us and Microsoft is powering it. We are witnessing non-linear improvements in capability of foundation models, which we are making available as platforms. And as customers select their cloud providers and invest in new workloads, we are well positioned to capture that opportunity as a leader in AI. We have the most powerful AI supercomputing infrastructure in the cloud. It’s being used by customers and partners like OpenAI to train state-of-the-art models and services, including ChatGPT.” – Microsoft CEO Satya Nadella (January 24, 2023)

Jan 19, 2023

Consumers Feeling the Pinch; S&P 500 Bounces Off Technical Resistance; Elasticities Breaking Down for Staples Stocks
Image: The S&P 500 has bounced right off its technical resistance and will likely test 3,400, in our view. Image Source: TradingView. Things continue to deteriorate across the broader U.S. economy, but it's worth reiterating that the economy is not the stock market. The labor markets remain strong, but we continue to hear of layoffs across Silicon Valley, consumers are working through their excess savings built up during the pandemic, while net charge offs are expected to double in 2023 as credit quality deteriorates. Consumer staples names may be struggling to make elasticities work of late in light of the weakness in operating income in P&G’s calendar fourth-quarter 2022 results. Consumers are finding ways to trade down to private-label products. The S&P 500 has bounced right off its technical resistance, and we could test 3,400 during the year on the index. We remain bullish on stocks in the long run, however.

Jan 11, 2023

Don't Let "Them" Spin the Narrative
Here’s the bottom line: The 60/40 stock/bond portfolio has failed both during the COVID-19 crisis as well as during 2022, when diversification was needed most. The strongest performers during 2022 were among the weakest performers in the years prior, and their 5-year returns still pale in comparison to those of big cap tech and large cap growth during the past five years. Small cap value, of which factor investing has been built on top of, continues to trail most other stylistic areas during the past five years. We’re staying the course. Though we expect continued tough sledding during the first quarter of 2023, we think the year will offer an incredible opportunity for investors to dollar cost average into what could be yet another strong decade of returns for stocks!

Jan 11, 2023

We’re Glad Microsoft Sees Promise in ChatGPT
Image Source: Mike Mozart. We’re going to be hearing a lot more about artificial intelligence chatbot technologies in the coming years, and our initial interaction with ChatGPT a month ago indicates to us that it will be a gamechanger for a lot of industries. Microsoft’s continued backing in OpenAI, the owner of ChatGPT, will likely accelerate the technology’s development, and we expect it to eventually augment Microsoft’s own search technology and ad-driven revenue opportunities. Alphabet may have a few AI tricks up its own sleeve in its ‘Other Bets’ segment, so we’re not ruling out a highly competitive environment in this area in the coming years. We like that we include both Microsoft and Alphabet in the simulated newsletter portfolios and that we’re not forced to make a decision on whether a new upstart is worthy of inclusion. Our fair value estimate for both Microsoft and Alphabet remain unchanged at this time.

Jan 4, 2023

Adobe Acrobat Pro Prices Up 33%; Price Tag of Figma Deal Remains Overhang on Shares
Image: Adobe's long-term market opportunity is huge. Image Source: Adobe. Adobe recently announced a rather large acquisition of rival Figma, and while the price tag is rather steep, we think the deal makes sense strategically. Price increases across Adobe’s suite of products have been impressive, and we estimate the latest price increase at Acrobat Pro to be ~33%, which is a huge year-over-year delta. Given the high switching costs, we think many consumers will have to eat the price increase. Adobe’s shares trade at a lofty earnings multiple, but it remains one of the best-positioned software stocks in this tumultuous economic environment. A growing recurring (subscription) book of business, considerable operating cash flow growth, and a strong capital structure with investment-grade credit ratings are a few things we like most about Adobe. The high end of our fair value estimate range of Adobe stands at $394 per share.

Jan 3, 2023

Our Reports on Stocks in the Technology Giants Industry
Our reports on stocks in the Technology Giants industry can be found in this article. Reports include META, AAPL, GOOG, AMZN, MSFT, CSCO, V, MA, PYPL, INTC, ORCL, QCOM, ADI, IBM, ADBE, NVDA, CRM, AMD, AVGO, BABA, BKNG, BIDU, TSM, TXN, EBAY, ADP, MU, KFY, MAN, KLAC, LRCX, AMAT.

Dec 30, 2022

5 Top Stock Ideas for 2023!
With 2022 almost in the rear-view mirror, investors are expecting continued weakness into 2023. Millionaires are as bearish as they have been since the beginning of 2008, and we all know what happened during that year. Inflationary pressures coupled with substantially weakened consumer spending as a result of the collapse in the price of cryptocurrencies, traditional asset allocation models such as the 60/40 stock/bond portfolio, and ultra-high yielding stocks with payouts north of 9%-10% have most investors worried about what might be ahead in 2023. Still, investors have reason to be hopeful, in our view. The labor markets continue to hold up well, and the rate hikes that have pummeled equity, bond and real estate prices also act as future dry powder for the Fed to stimulate markets. At any time, the Fed can reverse its contractionary course. In 2023, we should start to see year-over-year increases in inflation slow, too. In this article, let’s talk our top 5 stock ideas for 2023!

Dec 25, 2022

Salesforce Doesn’t Make the Cut for the Newsletter Portfolios
Image: How we rank our favorite ideas. We're huge fans of ideas in the simulated newsletter portfolios and Exclusive publication. We like these ideas better than others on our website. We’re not interested in adding Salesforce to any of the simulated newsletter portfolios at this time, and we’re reiterating our wide fair value estimate range for shares amid executive departures and a weakened software spending environment. Microsoft remains our favorite play on the software space at this time, a company that we include in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.