Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Dec 18, 2019

FedEx’s Earnings Miss
Image Source: FedEx Corporation – 2019 Annual Stockholders Meeting September 2019 IR Presentation. In the days leading up to FedEx Corp latest earnings report where the firm missed by a mile, news broke that Amazon is now blocking third-party sellers that use its marketplace platform from using the FedEx Ground delivery service (which handles North American volumes) to ship to Prime customers. This comes on the heels of FedEx and Amazon ending two significant shipping contracts earlier this year, including the arrangement where FedEx Ground would handle some of Amazon’s packages, a deal that expired at the end of August. Please note that FedEx Ground is a small-package delivery service that caters to America and Canada, and that other FedEx options for certain packages bought through or sold by Amazon are still available. We are still staying away from FedEx as its ability to generate free cash flows remains pressured by its need to invest heavily in the business to keep up with the likes of Amazon and others. FedEx’s dividend payout could be at risk should exogenous shocks (i.e. a breakdown in the partial US-China trade war truce) continue weakening its financial performance.

Dec 17, 2019

Cisco, Intel, Johnson & Johnson, and PayPal in the News
Cisco is trading at the low end of our fair value estimate range, and the company’s healthy dividend yield is well supported. Intel remains one of our favorite ides, and we expect a stellar dividend-growth trajectory at the company, too. Johnson & Johnson’s shares look poised to break out to new highs, and PayPal continues to execute nicely.

Dec 16, 2019

As Expected, Broadcom’s Organic Revenues Didn’t Grow in Fiscal 2019
Image Source: Broadcom Inc – November 2019 IR Presentation. On December 12, Broadcom reported fourth-quarter earnings for its fiscal 2019 (period ended November 3, 2019). While GAAP revenues for the full fiscal year were up 8% year-over-year, hitting $22.6 billion, please note that includes the uplift from Broadcom acquiring CA Technologies. Shares of AVGO initially traded down 2%-3% on December 13, as investors digested the firm’s guidance for fiscal 2020. As of this writing, shares of AVGO yield 3.4%.

Dec 13, 2019

Oracle’s Dividend Growth Trajectory Remains Solid
Image Source: Oracle Corporation – Financial Analyst Meeting Presentation, September 2019. On December 12, Oracle Corp reported second quarter earnings for its fiscal 2020 (period ended November 30, 2019). Massive share repurchases reduced Oracle’s diluted outstanding weighted-average share count from 3,908 million in the first half of fiscal 2018 to 3,370 million in the first half of fiscal 2019. That played a key role in boosting Oracle’s EPS performance (diluted GAAP EPS was up 12% year-over-year in the first half of fiscal 2020) as its revenues were broadly flat during this period. We continue to like Oracle in our Dividend Growth Newsletter portfolio given the strength of its free cash flow profile and promising outlook. Shares of ORCL yield 1.7% as of this writing, and its strong Dividend Cushion ratio of 2.7x provides for a solid payout growth trajectory. Shares of Oracle sold off initially on its weaker than expected sales performance last quarter, but we remain optimistic on its future potential as we’ll cover in this note.

Dec 12, 2019

Analyzing Chevron and Important Updates in the Global Energy Industry
Image Source: Chevron Corporation – November 2019 IR Presentation. In this note, let’s cover the current state of raw energy resource prices in North America and around the world. We’ll analyze Chevron’s 2020 capital investment and exploration budget, in particular, and the global energy industry at-large. Shares of CVX appear generously valued, as of this writing, given the numerous headwinds facing the energy industry going forward.

Dec 11, 2019

GameStop’s Problems Continue
Image Source: GameStop Corporation – Fourth Quarter Fiscal 2018 Earnings IR Presentation. On December 10, video game retailer GameStop Corp reported third quarter earnings for its fiscal 2019 (13-week period ended November 2, 2019) that were simply terrible. Shares of GME were down big after-hours on December 10. GAAP net sales were down 26% year-over-year last quarter, hitting $1.4 billion, while the company’s GAAP operating loss came in at ~$0.05 billion, an improvement versus an operating loss of $0.5 billion (due to a large goodwill impairment charge) in the same period last fiscal year. GameStop halted its common dividend program in the middle of 2019, which freed up substantial cash flow for share buybacks and deleveraging efforts. Investors looking to avoid disruptions to their dividend income streams should consider utilizing Valuentum’s Dividend Cushion ratio to avoid value traps (read more about the importance of our Dividend Cushion ratio here).

Dec 11, 2019

Visa Operates a Great Business
Image Shown: Shares of Visa have shot upwards over the past year and we continue to like the name as a top holding in our Best Ideas Newsletter portfolio. One of our favorite companies out there is Visa. The company generates robust free cash flows, its outlook is supported by powerful secular growth tailwinds, the firm doesn’t take on credit risk as it doesn’t issue out credit cards (making Visa a “pure play” on the shift from cash to card around the world), and generally speaking, the company has been very shareholder friendly. We continue to like Visa as a top holding in our Best Ideas Newsletter portfolio, a position it has been for some time now.

Dec 11, 2019

Apple Charging Higher
Image Shown: Shares of Apple Inc continue to climb higher and we like the name in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. This is a long-term holding with substantial potential capital appreciation and dividend growth upside. We like Apple’s pristine balance sheet, top quality free cash flow profile, and decent growth outlook. The company retains an enormous amount of firepower for additional share buybacks and material dividend increases going forward. Depending on whether the US decides to impose additional tariffs on Chinese imports soon will be very material to Apple’s near-term performance, but the long-term trajectory remains the same. Beyond Apple Pay, the company has its new streaming offering (Apple TV+) which launched on November 1 to drive services-related revenue growth.

Dec 9, 2019

Health Care Sector Remains Hot
Image Shown: The Health Care Select Sector SPDR ETF, a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has been on an upward tear over the past several years. Strong macro tailwinds combined with the ability for industries within the health care sector to generate meaningful shareholder value have been key to supporting strong capital appreciation of equities operating in the area of late. The Health Care Select Sector SPDR ETF is a top holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. We like the exposure and diversification to health care equities that XLV provides. XLV yields ~1.5% as of this writing. State Street Corp acts as advisor to the fund through State Street Global Advisors, and annual fund operating expenses come out to just 13 basis points (we like the XLV ETF’s low gross expense ratio).

Dec 9, 2019

Intel’s Resilient Free Cash Flows and Improving Outlook
Image Shown: Shares of Intel Corporation have resumed their upward climb after stumbling during the middle of 2019. We continue to like the name in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Intel Corp is another one of our favorite companies and is included in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. After coming under fire during the middle of 2019, INTC is back on a nice upward trajectory. The top end of our fair value range estimate sits at $61 per share of INTC, indicating there’s plenty of room for Intel to run higher. Shares of INTC yield 2.2% as of this writing, and we view the company’s dividend growth trajectory as stellar (we give Intel an EXCELLENT Dividend Growth rating which is supported by its GOOD Dividend Safety rating, a product of its 2.1x Dividend Cushion ratio).