Valuentum Exclusive Analysis for the Discerning Investor

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Mar 1, 2020

COVID-19 Crisis Intensifies
Image Source: CDC. Coronavirus Disease 2019 (COVID-19). The world is being challenged today by what some including Bill Gates believe might be a "once-in-a-century pathogen." We do not know the eventual outcome, whether the impact of this illness ends up being as profound as the Spanish Influenza of 1918-1919 (which inflicted a death toll in the tens of millions), but we maintain our view the markets have yet to come to grips with the impact of COVID-19 on economic activity and potential ramifications on the global economy and the banking system. What is currently a "biological" crisis may turn into an all-out global financial crisis, one that could end up worse than the 2008/2009 mortgage meltdown. Instead of toxic mortgages putting a halt to lending activity across the globe as they did over a decade ago, today's crisis stems from an illness that very few of the top health officials in the world know much about--not only in the duration of COVID-19's incubation period, but also in how easily it seems to be spreading, and how deadly it may eventually become, particularly if health systems around the world become overwhelmed.

Mar 1, 2020

Our Reports on Stocks in the Software (Graphics) Industry
The software (graphics) industry is composed of a variety of firms from online gaming entities to technology-based-language learning companies. Industry constituents compete for the leisure time, attention and discretionary spending of consumers. The social gaming space, in particular, is evolving rapidly, and new entrants will inevitably drive down outsize returns over time. Performance of many participants is “hit” driven. If companies don’t deliver “hit” products to the market, operating results will suffer. Rapid technological change makes obsolescence a possibility. We don’t like the group’s structure.

Feb 28, 2020

Dow Down 3000+ Points This Week -- Interested in Options? This Might Be for You
Image: We "added" out of the money put options on the S&P 500 ETF (SPY) Monday morning, February 24. The markets have crashed since. Beginning April 2020, we'll be starting to release via email options-related ideas (two per month) and commentary, as well as educational information, to those that subscribe. Depending on market opportunities, ongoing ideas could include commentary associated with writing covered calls for income, identifying mispriced securities over distinct time horizons and identifying mispriced volatility, as well as other considerations. If you would like to add more options-related ideas and commentary, please add this as part of your membership here ($500/year). You will receive a registration and confirmation email this evening after we receive payment. Given the vast success of the Exclusive publication, we will be limiting these ideas and commentary to 500 members. No refunds. Cancel anytime. As an important note, please stay safe out there as COVID-19 continues to spread around the world. Your support across our service and products is greatly appreciated. Thank you for your interest. Please let us know if you have any questions.

Feb 28, 2020

Home Depot Reports Fourth Quarter Amid Rising Exogenous Headwinds
Image Shown: Home Depot Inc has had plenty of success building off of and expanding its ‘Pro’ ecosystem as it relates to generating nice comparable sales growth. Image Source: Home Depot – 2019 Investor and Analyst Day IR Presentation. On February 25, Home Depot Inc reported fourth quarter and full-year earnings for fiscal 2019 (period ended February 2, 2020) which matched top-line consensus estimates and beat bottom-line consensus estimates. What really caught the market’s attention was Home Depot’s strong comparable sales performance, which was up 5.2% overall and 5.3% in the US during the fourth quarter on a year-over-year basis (for the whole fiscal year, Home Depot’s overall and US comparable sales rose by 3.5% and 3.8%, respectively, keeping in mind the firm has locations in the US, Canada, Mexico, Puerto Rico, Guam, and the US Virgin Islands). This strength is at least partially why management pushed through a 10% sequential increase in Home Depot’s quarterly dividend, bringing it up to $1.50 per share or $6.00 on an annual basis. Shares of HD yield ~2.6% on a forward-looking basis as of this writing.

Feb 28, 2020

Dividend Increases/Decreases for the Week Ending February 28
Let's take a look at companies that raised/lowered their dividend this week.

Feb 27, 2020

Has the Stock Market Crash Begun?
Image: CDC. Transmission electron microscopic image of an isolate from the first U.S. case of COVID-19, formerly known as 2019-nCoV. The spherical viral particles, colorized blue, contain cross-section through the viral genome, seen as black dots.According to the latest Situation Report from the CDC, dated February 25, there are now more new cases reported from countries outside of China than from China. Globally, there are currently 80,000+ confirmed cases in nearly 40 countries, with China, South Korea, Italy and Iran the major hotspots. Up until now, investors have been anxiously waiting for the other shoe to drop (i.e. community spread in the United States), with the CDC even saying, “It's not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen and how many people in this country (United States) will have severe illness.” Well, that “when” is now. The CDC just confirmed February 26, 2020, a possible instance of community spread of COVID-19 in the US.

Feb 26, 2020

Republic Services Further Showcases Why It’s a Top Quality Defensive Firm
Image Shown: We added Republic Services Inc to our Dividend Growth Newsletter portfolio on January 13, 2020, with shares of RSG included at a modest weighting. Republic Services is a high quality defensive company that comes with a nice dividend growth trajectory. Our fair value estimate stands at $94 per share with room for upside as the top end of our fair value range estimate sits at $113 per share as of this writing. On February 24, we added additional protection to our newsletter portfolios that we strongly encourage our members to read about here. Additionally, members looking to read more about Republic Services and why we added shares of RSG to our Dividend Growth Newsletter portfolio should check out this article here.

Feb 25, 2020

Berkshire Reports 2019 Earnings
Berkshire Hathaway reported fourth quarter and full-year results on Saturday February 22, and we appreciate the firm’s performance across most of its business lines, keeping in mind that losses at its insurance-underwriting business during the fourth quarter weakened its company-wide performance. That being said, the insurance business can be volatile at times, which is why we appreciate Berkshire’s large railroad, utility, consumer goods, and other business segments. On the topic of Berkshire’s insurance-related exposure to the ongoing COVID-19 epidemic (which has since spread from China to the rest of the world, shutting down economies in South Korea, Italy, and elsewhere), insurance firms fundamentally altered the structure of their policies after the 2002-2003 severe acute respiratory syndrome (‘SARS’) outbreak to exclude epidemic coverage from most policies (save for insurance policies that explicitly cover those situations) according to the WSJ. Shares of Berkshire Class B stock are included in our Best Ideas Newsletter portfolio with a top-weighting, and over the past few months shares of BRK.B has begun converging towards our fair value estimate of $229 per share. Berkshire Class B shares could move towards the top end of our fair value range estimate of $275 per share, particularly if the company figures out where to invest its enormous cash pile.

Feb 25, 2020

Our Reports on Stocks in the Electrical Equipment Industry
Image Source: Emerson. We've optimized our industrials coverage.

Feb 25, 2020

Our Reports on Stocks in the Communication Equipment Industry
Image Source: Kārlis Dambrāns. We've optimized our technology coverage.