Valuentum Exclusive Analysis for the Discerning Investor

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Jun 26, 2022

Valuentum's Dividend Growth Strategy 'Outperforming'
Image: The Valuentum Dividend Growth strategy has delivered thus far in 2022. With the S&P 500, as measured by the SPY, down 18.1% (negative 18.1%) thus far in 2022 and the S&P Dividend ETF (SDY) down 6.7% (negative 6.7%), the Valuentum dividend growth strategy, as measured by the hypothetical performance of the Dividend Growth Newsletter portfolio (as shown above), is down an estimated 4.6% (negative 4.6%) so far in 2022, all on a price-only basis. Though two percentage points better than the S&P High Yield Dividend Dividend Aristocrats Index doesn't seem like much, the large cap tilt of the simulated Dividend Growth Newsletter portfolio makes such "outperformance" significant and material. The benefits of a dividend growth strategy, in general, have also been on display so far in 2022, with the simulated Dividend Growth Newsletter portfolio "outperforming" the SPY by an estimated ~13.5 percentage points, on a price-only basis. With the half year mark of 2022 nearing, we wanted to continue to provide updates on the "performance" tracking across a variety of our publications. In case you missed them, please find the year-to-date evaluations of the simulated Best Ideas Newsletter portfolio, the Exclusive capital appreciation and short idea considerations, the simulated High Yield Dividend Newsletter portfolio, as well as our additional options commentary for your convenience. The links are provided as follows. In this article, we'll talk about the "performance" of the simulated Dividend Growth Newsletter portfolio relative to traditional benchmarks and in the context of modern portfolio theory, though we stress that our dividend growth focus is on long-term income expansion not short-term relative price performance, per se.

May 24, 2022

Dividend Growth Idea Honeywell Capitalizing on Recovering Aerospace Industry
Image Shown: Dividend growth idea Honeywell International Inc increased its full-year guidance for 2022 during its first quarter earnings update. We continue to be big fans of the name as the aerospace industry steadily rebounds. Image Source: Honeywell International Inc – First Quarter of 2022 IR Earnings Presentation. On April 29, Honeywell International reported first quarter 2022 earnings that beat both consensus top- and bottom-line estimates as its business continues to rebound from the worst of the coronavirus (‘COVID-19’) pandemic. Due to its strong performance, management raised the company’s full-year sales and earnings guidance for 2022 in conjunction with its latest earnings update. We continue to like Honeywell as an idea in the Dividend Growth Newsletter portfolio to gain exposure to the recovering aerospace industry and exposure to the nascent quantum computing industry. Shares of HON yield ~2.1% as of this writing.

May 18, 2022

Newsletter Portfolio Idea Republic Services Holding Up Quite Well in the Face of Major Headwinds
Image Shown: Shares of Republic Services Inc have held up quite well over the past several months while equity markets swooned lower. On May 5, Republic Services reported first quarter 2022 earnings that beat both consensus top- and bottom-line estimates. The waste management firm is benefiting from its immense pricing power and volume growth. We continue to like Republic Services as an idea in both the Dividend Growth Newsletter and ESG Newsletter portfolios. Shares of RSG yield ~1.4% as of this writing.

May 11, 2022

Ameresco Posts Solid First Quarter Earnings Update
Image Source: Ameresco Inc – First Quarter of 2022 Earnings Press Release. The rise of ESG investing and the political shift towards encouraging developments within the realm of green energy--from renewable energy projects to efforts to reduce water consumption and much more--has created numerous opportunities for investors. Ameresco offers energy efficiency solutions, infrastructure upgrades, and renewable energy solutions to its customers. The company also operates some of the renewable energy facilities it helps develop such as solar farms and biogas plants. Ameresco provides its services all over the globe, though the US remains its most important market (and the source of over 90% of its revenues). In the US, Ameresco will often help its clients secure the financing needed to fund relevant projects, particularly for its federal government customers. We include Ameresco as an idea in the ESG Newsletter portfolio and view its capital appreciation upside favorably. Due to Ameresco utilizing energy savings performance contracts (‘ESPC’), its financials can be a messy read. ESPCs enable its governmental customers in the US to finance infrastructure upgrades without needing to tap their capital budgets by taking advantage of the expected future energy cost savings. The company generally experiences large working capital builds on an annual basis due to growth in its federal ESPC receivables asset, a product of Ameresco’s overall business growing, making gauging its free cash flows a more difficult task.

May 9, 2022

Interview with SDM Investments' Kevin Truitt -- ESG in a Few Words: "Good Ethics, Honesty, Respect, and Dignity"
Image: SDM Investments' Kevin Truitt (left) and Valuentum's Brian Nelson (right) pause for a picture at the Chicago Chapter of the American Association of Individual Investors (December 2016).We talked with SDM Investments' Kevin Truitt recently, and we’d like to share our conversation with you! Learn about the critical nature of value investing and thinking about stocks as businesses, how investors should approach macro indicators, the importance of using a margin of safety, how to think about ESG investing, and why cash-based investing helps to safeguard against downside risk. Kevin also shares five of his favorite ideas!

Feb 10, 2022

Dividend Growth and ESG Favorite Republic Services Is Buying U.S. Ecology
Image Shown: Republic Services Inc is one of our favorite waste management companies. On February 9, the company announced it was acquiring US Ecology Inc through an all-cash deal. US Ecology provides specialized waste management services and has an asset base that is nearly irreplaceable. We like the deal as it could generate meaningful cost saving and revenue synergies. Image Source: Republic Services Inc – February 2022 Infographic. On February 9, one of our favorite waste management companies, Republic Services announced a deal to acquire U.S. Ecology through an all-cash deal worth about $2.2 billion when including net debt considerations. Republic Services is paying $48 per share in cash to take over U.S. Ecology, which provides specialized waste management services. We like this deal as it will add nearly irreplaceable assets to Republic Services’ asset base and is expected to be immediately accretive to its adjusted earnings and free cash flow performance once the transaction closes.

Jan 22, 2022

Don’t Throw the Baby Out with the Bathwater
Image: Erica Nicol. Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor may be doing much worse. Our timing to exit some very speculative ideas in the Exclusive publication has been impeccable. Beware of “best-fitted” backtest data regarding sequence of return risks. Research is to help you navigate the future, not the past. We remain bullish on stocks for the long haul and grow more and more excited as our simulated newsletter portfolios continue to hold up very well. Don’t throw the baby out with the bath water. Stick with the largest, strongest growth names. We still like large cap growth and big cap tech, though we are tactical overweight in the largest energy stocks (e.g. XOM, CVX, XLE). The latest short idea in the Exclusive publication has collapsed aggressively since highlight January 9, and we remain encouraged by the resilience of ideas in the High Yield Dividend Newsletter portfolio and ESG Newsletter portfolio. Our options idea generation remains ongoing.

Dec 26, 2021

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum's President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds.

Dec 7, 2021

Dividend Growth Stocks Soar!
Image: Every stock in the Dividend Growth Newsletter portfolio is in the green today, with a little less than an hour left in the trading session! Image Source: Seeking Alpha. What a day for dividend growth stocks!

Nov 24, 2021

Ameresco Has Soared, Boosts Guidance (Again)
Image Shown: Shares of Ameresco Inc have boomed higher since we first wrote about the company on V.com back in August 2020. We include Ameresco as an idea in our ESG Newsletter portfolio and see ample room for further capital appreciation upside. On November 1, Ameresco reported mixed third-quarter 2021 earnings that missed top-line consensus estimates but beat bottom-line numbers. The company also raised its full-year guidance (again) for 2021 which saw the firm increase the midpoint of its revenue, gross margin, non-GAAP adjusted EBITDA, and non-GAAP EPS forecast. Ameresco also raised its full-year guidance for 2021 when it published its first quarter 2021 earnings report. We include Ameresco as an idea in our new ESG Newsletter portfolio and shares of AMRC have surged higher in recent months. On the website, we first wrote about Ameresco back in August 2020 and shares of AMRC have roughly tripled since then as of this writing.