Valuentum Exclusive Analysis for the Discerning Investor

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Feb 6, 2022

Weekly: Why We Missed Big on T and FB; Overpriced Staples, Our Call To Action; and More!
In this Valuentum Weekly, in video form, President of Investment Research Brian Nelson, CFA, explains why Valuentum missed big on T and FB, how volatility on names with huge market caps is spiking recklessly, and why the call to action in the book Value Trap remains as relevant as ever given current incentives.

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 2, 2022

Alphabet and PayPal Report Fourth-Quarter 2021 Results
Video: Valuentum's President Brian Michael Nelson, CFA, walks through the fourth-quarter 2021 results of Alphabet and PayPal.

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."

Feb 1, 2022

Structural Changes in the Airline and Aerospace Business
Image Source: Valuentum. The future profile for air travel demand will be negatively impacted in the long run (relative to pre-COVID-19 expectations) as increased leisure travel from the wealth effect may not completely offset reduced business travel growth impaired by digital solutions permanently disrupting the way companies conduct business. As with Warren Buffett, who recently wrote down the value of metal casting jet-engine supplier Precision Castparts (one of the best aerospace suppliers in the business), we believe intrinsic values of others in the aerospace supply chain have been permanently reduced as well. We’re staying away from airlines and aerospace with the exception of Honeywell, which offers diversified industrial exposure and a “call option” on a gradual aerospace recovery to a “new normal.” Honeywell is included in the Dividend Growth Newsletter portfolio and showed that it can thrive in a business environment where aerospace demand may not live up to pre-COVID-19 long-term expectations. Honeywell yields ~1.9% at the time of this writing.