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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.
Jan 26, 2021
Procter & Gamble Remains a Great Free Cash Flow Generator
Image Shown: Shares of Procter & Gamble Co have started to shift back down towards the top end of our fair value estimate which sits at $120 per share of PG. In our view, investors have begun to factor in expectations that the firm’s growth rate of late will be incredibly hard to sustain over the coming years. Procter & Gamble is a solid company with great free cash flow generating abilities, but the run up in its share price during the second half of the 2020 calendar year was a tad overdone, in our view. On January 20, Procter & Gamble reported solid earnings for the second quarter of fiscal 2021 (period ended December 31, 2020) as its GAAP revenues grew by 8% year-over-year while its GAAP operating income climbed higher by 20%, aided by economies of scale and GAAP gross margin expansion. The company reported strong organic sales growth across all of its core product categories, with its ‘Fabric & Home Care’ and ‘Health Care’ products leading the way. Pricing strength combined with organic volume growth and a favorable product mix played a big role in boosting Procter & Gamble’s margins. It appears consumers are willing to pay up for its products, which tend to be the more expensive items in supermarkets, grocery stores, convenience stores, and similar venues. Looking ahead, Procter & Gamble increased its guidance for fiscal 2021. P&G forecasts it will post annual sales growth (on both a net and organic basis) of 5%-6% and annual diluted EPS growth of 8%-10% this fiscal year, underpinned by its strong performance during the first half of fiscal 2021.
Jan 26, 2021
Recent Fair Value Estimate Changes
Let's cover a few recent fair value estimate changes in this note: APD, F, GM, EOG, LMT, CVS.
Jan 25, 2021
ALERT: Bull Raids, Short Squeezes and Highly Unusual Market Activity
Image: Shares of GameStop have been on an irrationally wild ride recently driven by what looks to have been an orchestrated and highly unethical (and perhaps illegal) short squeeze on the stock. According to some reports, during the pre-market session January 25, GameStop’s shares were up ~80%, and turned red during the trading session, with no fundamental news.In late 2018, Valuentum published Value Trap, a book that warned to all that would heed its warning that a collapse in the traditional quant value factor was coming and that excessive volatility in the markets caused by price-agnostic trading--or those that aren’t paying attention to fair value estimate calculations--would only build and build to eventually reach extreme and irrational levels. The book, while hugely successful winning award after award, was largely ignored by the media, despite our best efforts to get the word out. Now, the chickens are coming home to roost.
Jan 24, 2021
Following Up on Leading Semiconductor Equipment Supplier ASML Holding N.V.
Image Source: ASML Holding NV – Fourth Quarter and Full-Year 2020 Earnings IR Presentation. Shares of Netherlands-based ASML Holding N.V., which supplies lithography systems and services to the semiconductor industry, have done incredibly well since we published our note, "ASML Holding Is an Impressive Enterprise with a Pristine Balance Sheet and Rock-Solid Growth Trajectory" article back on April 8, 2020. From April 8 to January 22, shares of ASML more than doubled. We strongly encourage members that have not done so to check out that article, as we laid out how ASML Holding’s lithography systems are an essential part of the semiconductor industry along with our reasoning behind why we view the company’s long-term outlook favorably. We continue to be fans of ASML Holding’s business model. As a leader in an industry supported by numerous secular growth tailwinds (secular trends, such as the rise of AI and cloud-computing, support the outlook for semiconductor demand which in turn supports the outlook for the cutting edge lithography systems used to make these semiconductors), ASML Holding is poised to continue to generate strong revenue growth while maintaining its pricing power.
Jan 24, 2021
Best Idea Vertex Pharma Is an Intriguing Biotech Play
Image Shown: A snapshot of Vertex Pharmaceuticals Inc’s approved therapeutic offerings and its drug pipeline. Image Source: Vertex Pharmaceuticals Inc – January 2021 IR Presentation. Vertex’s market leading position in the cystic fibrosis ('CF') therapeutics space underpins our expectations that its free cash flow will grow at a brisk pace going forward (supported by the potential for the company to expand into new markets and the potential to grow the application of its CF portfolio). We also like Vertex’s exposure to gene therapies via its partnership with CRISPR Therapeutics. Vertex’s existing drug pipeline is decent, and the biotech has the ability to use its net cash position to bulk up its drug pipeline even further if needed (through a strategic partnership, acquisition, purchase of drug development rights, etc.). Though we generally don't get too excited about biotech plays given their speculative nature, the difficulty in predicting the success of drugs in their pipeline, and the potential for shareholder dilution via new equity issuance, Vertex’s financial position is rock-solid, its outlook is bright, and we like having exposure to the company in the Best Ideas Newsletter portfolio.
Jan 22, 2021
IBM Is Still A Disappointment
We’ve never liked IBM. The company has all the attributes of a stock that we'd prefer to stay as far away from as possible.
Jan 22, 2021
We Expect Netflix to Turn Into a Free Cash Flow Generating Machine
Image Shown: Netflix Inc’s global paid subscriber base is expected to keep growing at a decent clip going forward, though at a slower pace than in the recent past. Image Source: Netflix Inc – Shareholder Letter covering its fourth quarter and full-year earnings in 2020. The video streaming services industry will continue to experience strong subscriber growth in 2021, and we see room for a number of winners in the space. Original content and scale are essential to remaining relevant, and competitive headwinds are growing as companies seek to replicate the success of Netflix. We think Netflix will eventually turn into a free-cash-flow generating machine, but at the moment, we're big fans of "new" streaming rival Disney and include the latter in the Best Ideas Newsletter portfolio. Disney is the top competitive threat to Netflix, in our view.
Jan 22, 2021
Dividend Increases/Decreases for the Week January 22
Let's take a look at companies that raised/lowered their dividend this week.
Jan 21, 2021
UnitedHealth Group Is a Rock-Solid Dividend Growth Opportunity
Image Shown: Shares of UnitedHealth Group Inc, which we added to our Dividend Growth Newsletter portfolio back on November 27, continue to climb higher. The top end of our fair value estimate for UnitedHealth Group sits at $401 per share. On January 20, UnitedHealth Group issued fourth quarter and full-year results for 2020 that beat both consensus top- and bottom-line estimates. The healthcare giant reported a 6% annual increase in its GAAP revenues in 2020, with its ‘Premiums,’ ‘Products’ and ‘Services’ sales all reporting meaningful increases. Its GAAP earnings from operations grew by 14% annually in 2020, though we caution there is some noise due to the deferral of certain medical procedures, a result of the ongoing coronavirus (‘COVID-19’) pandemic. UnitedHealth Group is an exciting healthcare play with substantial dividend growth upside. As global health authorities continue to work toward getting the pandemic under control, a process aided by the ongoing distribution of COVID-19 vaccines, the outlook for the healthcare sector and global economy at-large should continue to improve going forward. We like having exposure to UnitedHealth Group in the Dividend Growth Newsletter portfolio.
Jan 21, 2021
ICYMI: Valuentum's Brian Nelson on the Latest Howard Marks' Memo: "Something of Value"
Valuentum's President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks' latest memo, "Something of Value," January 11, 2021.



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.