Valuentum Exclusive Analysis for the Discerning Investor

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Apr 12, 2022

Best Idea Domino’s Is Incredibly Shareholder Friendly
Image Shown: Domino’s Pizza Inc is incredibly shareholder friendly. Image Source: Domino’s Pizza Inc – Fourth Quarter of Fiscal 2021 IR Earnings Presentation. Domino’s Pizza Inc is one of our favorite restaurant franchises. We include Domino’s as an idea in the Best Ideas Newsletter portfolio as we are huge fans of its asset-light business model, strong free cash flow generating abilities, bright growth outlook, and shareholder friendly management team. Our fair value estimate for Domino’s sits at $517 per share, substantially above where shares of DPZ are trading at as of this writing. Additionally, shares of DPZ yield a modest ~1.1% as of this writing, and its dividend program offers incremental upside to the potential return from capital appreciation.

Apr 12, 2022

Best Idea Dollar General Roaring Higher
Image Shown: We like the niche Dollar General Corporation has carved out for itself in the competitive discount retail industry. Image Source: Dollar General Corporation – Fiscal 2021 Annual Report. Though the discount store retail industry is incredibly competitive, we like the niche that Dollar General Corp has carved out for itself by targeting towns and cities in the U.S. with populations of 20,000 or less. These are regions where e-commerce economics are not attractive due to hefty fulfillment costs, and often are underserved in terms of shopping options. Dollar General operates over 18,100 stores across 46 U.S. states and is included as an idea in the Best Ideas Newsletter portfolio. We continue to be big fans of Dollar General. Our fair value estimate stands at $234 per share of DG with room for upside as the top end of our fair value estimate range sits at $281 per share.

Apr 6, 2022

Lululemon Firing on All Cylinders; Shares Recovering
Image Shown: Shares of Lululemon Athletica Inc are recovering in the wake of the company’s recent earnings report. On March 29, Lululemon Athletica Inc reported fourth quarter earnings for fiscal 2021 (period ended January 30, 2022) that matched consensus top-line estimates and beat consensus bottom-line estimates. Lululemon also announced it had initiated a new $1.0 billion stock buyback program after completing its previous program in the first quarter of fiscal 2022. The company issued favorable guidance for fiscal 2022 during its latest earnings update, which helped drive shares of LULU sharply higher during normal trading hours on March 30. Shares of LULU are up more than 20% during the past 52 weeks through the time of this writing, more than doubling the return of the S&P 500 during that time. We value shares north of $400 each at the time of this writing, revealing significant potential upside should price-to-fair value estimate convergence materialize.

Mar 29, 2022

Nike Holding Its Own Against Major Exogenous Shocks
Image Shown: Shares of Nike Inc are on an upward climb again after dropping significantly from November 2021 to March 2022. Nike is holding its own in the face of major exogenous headwinds. The firm’s pivot towards D2C and digital sales are having a powerful impact on its business and underlying financial performance. We appreciate that Nike is a stellar generator of shareholder value, though we caution that inflationary headwinds and supply chain hurdles loom large over its near term outlook, as does the Ukraine-Russia crisis due to rising fuel expenses and the risk that portions of the global economy (particularly developing and emerging markets) may enter a recession. We continue to be bullish on U.S. equities and the domestic economy.

Mar 22, 2022

Dividend Growth Idea Home Depot Raises Payout as Its Growth Story Continues
Image Shown: Dividend growth idea Home Depot Inc has put up strong financial performance of late. Image Source: Home Depot Inc – Fourth Quarter of Fiscal 2021 Supplemental Material. Demand for home improvement and construction activities remains strong according to Home Depot Inc, an idea in the Dividend Growth Newsletter portfolio. When Home Depot reported its fourth quarter earnings for fiscal 2021 (period ended January 30, 2022) in February 2022, the company beat both consensus top- and bottom-line estimates. Home Depot also announced a 15% sequential increase in its dividend and issued out favorable guidance for fiscal 2022 in conjunction with its latest earnings report. The company’s new quarterly payout sits at $1.90 per share or $7.60 per share on an annualized basis. Shares of HD yield ~2.3% as of this writing.

Feb 10, 2022

Chipotle Sees Bigger Unit Growth Opportunity in North America, Continued Pricing Power
Image: Chipotle’s shares look like they are poised to breakout of a downtrend on news that its long-term unit restaurant opportunity is bigger than expected and that its pricing power remains intact. Chipotle's fast-casual focus and premium food offerings coupled with its Chipotlane rollouts and its breakfast “call option” are a few things that give the company a runway for continued strength that may be unprecedented by an established brand, particularly as it sees an even greater opportunity for unit development in North America than it did before. Because it serves a higher-end fast-casual customer, we think product pricing ahead of inflation won’t be an issue (helping to augment margins), and we’re reiterating our fair value estimate of ~$1,640 per share, above where shares are currently trading at the time of this writing (~$1,580 per share). A more optimistic take on Chipotle could see shares reach the higher end of our fair value estimate range of ~$1,970 per share.

Jan 27, 2022

Net Cash Rich Tesla Reports Solid Free Cash Flow, Closes Out 2021 on a High Note
Image Shown: A look at Tesla Inc’s new ‘Gigafactory’ manufacturing facility in Austin, Texas, that is currently under development. Image Source: Tesla Inc – Fourth Quarter of 2021 IR Shareholder Deck. On January 26, Tesla reported that it had produced ~306,000 vehicles and delivered ~309,000 vehicles during the final quarter of 2021. The electric vehicle (‘EV’) and battery maker beat both consensus top- and bottom-line estimates in the fourth quarter as it continued to successfully ramp its production capabilities. We plan to fine-tune our cash flow valuation model covering Tesla to take its latest earnings report into account, but we still expect the point fair value estimate to be below where shares are trading at the time of this writing (~$937 per share).

Jan 23, 2022

RH’s Financials, Long-Term Potential Great But Housing Market and Deteriorating Wealth Effect Pose Risks
Image Shown: Shares of RH have exploded higher since the news broke that Berkshire Hathaway Inc had taken a stake in the firm’s equity back in 2019, though shares of RH have shifted lower in recent months. RH is an innovative home furnishing company that pairs its products with interior/exterior design services to offer a comprehensive package. The company primarily targets affluent households in the U.S., Canada, and the U.K. RH has tremendous pricing power and its margins have increased significantly in recent fiscal years, even during the COVID-19 pandemic, and its net revenues are trending higher as well. The firm is expanding into the high-end hospitality industry and has several projects that are set to come online in 2022 and beyond. RH is a stellar free cash flow generator with a manageable net debt load. Though the company has been executing nicely of late, as witnessed by its stellar financial performance and recent guidance increases, shares of RH have sold off in recent months. In our view, the recent selloff is a function of broad based market weakness, but it also may be due to investors growing more concerned about the impact higher interest rates and a deteriorating wealth effect may have on housing and home furnishing demand and on its push into the hospitality space, respectively. We continue to view RH’s long-term capital appreciation upside potential favorably, however.

Jan 6, 2022

Best Idea Domino’s Has a Massive Growth Runway
Image Source: Domino’s Pizza Inc – Third Quarter of Fiscal 2021 IR Earnings Presentation. Domino’s Pizza runs a great business. Most of its store locations are franchised (~98% as of September 2021), meaning inflation cost headwinds fall more squarely on its franchisees. The company has put up great same store sales performance on both a domestic and international basis in recent fiscal years, and it continues to have an immense growth runway. Domino’s is a stellar generator of free cash flow, too, thanks to its asset light revenue model. We include shares of Domino’s as an idea in the Best Ideas Newsletter portfolio.

Dec 27, 2021

Nike Beats Estimates in the Face of Supply Chain Constraints
Image Shown: Shares of Nike Inc shifted higher in the wake of its latest earnings report. On December 20, Nike reported second quarter earnings for fiscal 2022 (period ended November 30, 2021) that beat both consensus top- and bottom-line estimates. The company did its best to navigate supply chain hurdles as efforts by public health officials and governments to contain the spread of the coronavirus (‘COVID-19’) pandemic in Southeast Asia (a major production hub for apparel and footwear) weighed quite negatively on its ability to meet demand.