Valuentum Exclusive Analysis for the Discerning Investor

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Jan 17, 2020

Dividend Increases/Decreases for the Week Ending January 17
Let's take a look at companies that raised/lowered their dividend this week.

Jan 16, 2020

Alcoa’s Turnaround Still a Work in Progress
Image Shown: It has been rough for Alcoa Corporation over the past couple of years as the company faces a slowing global industrial economy while trying to optimize its asset base and overall operations in a bid to save on costs. After the market close on January 15, alumina, aluminum, and bauxite product leader Alcoa Corp reported earnings covering the fourth quarter of 2019. The company’s top- and bottom-line results missed consensus expectations. Alcoa is trading at the lower bound of our fair value estimate range and shares appear fairly valued. With global industrial activity slowing down considerably, we aren’t optimistic on Alcoa’s outlook. Material asset base and operational changes will help, but there’s only so much that can be done given the firm’s looming liabilities. Even with the US-China semi-trade truce now in effect, Alcoa still has plenty of work to do to turn this ship in the right direction. We continue to stay away from Alcoa, but appreciate management attempting to bring down the firm’s net debt/liability burden via divestments and free cash flow.

Jan 16, 2020

Wells Fargo Remains an Inefficient Bank Despite Regulatory Overhang
Image Source: Wells Fargo Earnings Supplement. Wells has been forced to do a lot of hiring related to remediating its problems with regulators, but the problem is simply larger than that. This is an inefficient bank, which is very odd considering the massive scale that it benefits from.

Jan 15, 2020

Visa Enhances Its Long-Term Outlook
On January 13, top weighted Best Ideas Newsletter portfolio holding Visa announced it was buying financial tech company Plaid for $5.3 billion. Plaid primarily offers a network that allows consumers to connect financial accounts to apps securely and safely, meaning that when a consumer downloads a mobile financial-oriented app to their phone (for example), Plaid is the company that ensures a smooth connection between app and the relevant financial institution when it comes to transferring information and ultimately money. What’s important about this acquisition is that Visa, once again, is showcasing its ability to spot and capitalize on high quality opportunities within the financial services space.

Jan 15, 2020

Our Reports on Stocks in the Pharmaceuticals (Biotech/Generic) Industry
Image Source: Open Grid. We've optimized our healthcare coverage.

Jan 15, 2020

JPMorgan's Quarter Shows Higher Sustainable Growth Potential
Image Source: JPMorgan Earnings Presentation. We are raising our fair value estimate of JPMorgan to $160 per share to reflect higher sustainable growth than we’d previously been expecting.

Jan 14, 2020

Disney Joins the Best Ideas Newsletter Portfolio
Image Shown: Shares of The Walt Disney Company have performed well over the past year, and we see room for additional upside. Media and entertainment giant The Walt Disney Company was just added to our Best Ideas Newsletter portfolio. Though the firm does not register the typically high Valuentum Buying Index rating that we would prefer with new additions (sometimes we have to relax criteria to achieve newsletter portfolio goals), we like Disney’s business model and its future free cash flows are underpinned by: a top quality intellectual property (‘IP’) portfolio that’s practically impossible to replace, the immense profitability of its theme parks (which benefit from its strong and ever-growing IP portfolio i.e. adding Star Wars-themed rides), its strength in streaming (Disney owns ~67% of Hulu and Disney+ has reportedly been a big hit initially), its position in live sports (one of the few reasons why households keep cable, or choose higher priced streaming packages) is top notch (ESPN, which Disney owns ~80% of, now has ESPN+ to offer incremental upside), and the company should be able to wring out synergies after buying 21st Century Fox (the deal closed in March 2019) through a ~$71 billion cash-and-stock deal.

Jan 13, 2020

ALERTS: Big Changes to the Portfolios; Goodbye Apple!
Image Source: GDS-Productions. We are making a number of changes to the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio as this market continues full steam ahead. We remain near fully invested in both newsletter portfolios, but we are positioning them more defensively as we enter 2020.

Jan 13, 2020

Intel Has Performed Well Since Acquiring Mobileye
Image Shown: Intel Corporation (represented by the blue line in the graph above), a long time holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has substantially outperformed the NASDAQ 100 index (black line) and the S&P 500 index (orange line) since the period just before announcing its ~$15 billion deal to acquire Mobileye in March 2017, before taking dividends into consideration (given that Intel pays out a decent dividend, that wouldn’t change this picture materially). We continue to like Intel in both our newsletter portfolios and its ~2.1% yield as of this writing provides investors with a nice income stream. Intel’s dividend will likely continue to experience strong per share growth over the coming years, in our view, a growth trajectory that’s well supported by Intel’s 2.1x Dividend Cushion ratio.

Jan 12, 2020

Capital Appreciation or Dividend Growth?
Image source: David Mulder. “Xilinx crushed the market over its holding period of a matter of a few weeks during 2019” is not something that we think dividend growth investors are focused on, or even care to hear.