Valuentum Exclusive Analysis for the Discerning Investor

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Mar 19, 2021

In the News: Facebook Optimistic, Visa Resilient, Dollar General’s Outlook Not Bad and More
The equity markets, as measured by the S&P 500, are trading above/near the high end of our fair value estimate range, but we remain focused on the long run, and there are many individual ideas that present tremendous long-term capital appreciation potential. By far, Facebook is the most undervalued stock on the market, in our view, and recent news has painted its relationship with Apple in a more positive light. The Justice Department is investigating Visa for anti-competitive behavior, but we don’t think its dominant position and lucrative business model will be challenged. Successful vaccines for coronavirus (“COVID-19”) have breathed life into shares of airline equities, but we still don’t view them as long-term investments. Dollar General will see its yearly streak of consecutive same-store sales growth come to an end in fiscal 2021 (ends January 28, 2022), but we’re still positive on the name. Some of our best ideas continue to be in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. For investors seeking higher-yielding ideas, please consider the High Yield Dividend Newsletter publication.

Mar 16, 2021

Honeywell Reaffirms Outlook, Dividend Looks Great
Image Source: Honeywell – J.P. Morgan Industrials Conference Presentation. 2021 will be a solid year for Honeywell, but we expect 2022 and 2023 to be even brighter, as some of the company’s revenue initiatives bear fruit in a much healthier industrial marketplace buoyed by greater infrastructure spending. The cost cuts put in place during COVID-19 should help with margin improvement as economic conditions pick up, putting the firm in a position to surprise to the upside. We expect continued dividend growth. Honeywell yields 1.7% at the time of this writing.

Mar 10, 2021

Dividend Growth Portfolio Idea Dick’s Sporting Goods Raises Dividend 16%!
Image Source: Mike Mozart. Dick's Sporting Goods put up its best same-store-sales growth rate in history during 2020. We continue to like shares of the sporting goods retailer in the Dividend Growth Newsletter portfolio. Dick’s Sporting Goods showcased the strength of its business model during 2020, and while it may not be able to duplicate the results in 2021, we think the future is bright. Free cash flow generation trends are solid, its balance sheet is healthy, and dividend coverage is sound. As more and more consumers choose healthier lifestyles, Dick’s Sporting Goods remains in a sweet spot to capture continued demand. With a solid 2% dividend yield, the company remains a holding in the simulated Dividend Growth Newsletter portfolio. We expect continued strong dividend growth for years to come.

Mar 4, 2021

Market Update: Still Fully-Priced

Feb 26, 2021

The Invisible Hand Will Sink These Markets
Image: Nan Fry. Markets have bounced right off the high end of our fair value estimate range on the S&P 500, and we’ve raised cash. The violins are playing on the Titanic. The “unsinkable” ship we call the price discovery mechanism of the markets can sink. Let us not be fools to think otherwise. There will be an epilogue to Value Trap, and you and I both know that I don't want to write it. Let's keep playing the violin for now.

Feb 25, 2021

Public Storage’s Traditional Free Cash Flow Coverage of the Dividend Is Unique for a REIT
Image Source: Mike Mozart. In light of Public Storage’s core FFO coverage of the payout and its traditional free cash flow coverage of the payout, we think its dividend is about as healthy as any REIT’s gets. Public Storage is also one of the highest-rated REITs by the credit rating agencies, with Standard & Poor’s and Moody’s assigning an A credit rating and A2 credit rating on its senior debt, respectively. Shares yield ~3.3%, and we continue to like exposure to this rock-solid dividend-paying REIT in the High Yield Dividend Newsletter portfolio.

Feb 25, 2021

Realty Income’s Dividend Track Record Unfazed by Its Weakened Theater Exposure
Image Source: Realty Income. We include Realty Income, “The Monthly Dividend Company,” in the Dividend Growth Newsletter portfolio, and the company’s long-term dividend growth track record has been fantastic, posting 90+ consecutive quarterly dividend increases. Though the REIT is capital-market dependent, its investment-grade corporate debt ratings (A3/A-) support its ability to tap the debt and equity markets when needed, as it has been doing during this COVID-19 crisis. Shares of Realty Income yield ~4.5% at the time of this writing.

Feb 24, 2021

Garbage Hauler Republic Services Expects Record Year in 2021
Image Source: Republic Services. There are few things as certain as death and taxes, but garbage may be one of them. One of our favorite ideas within the municipal solid waste coverage is Republic Services, a holding in the Dividend Growth Newsletter portfolio. We love its free cash flow generating ability, visibility into future revenue, enviable position with respect to disposal capacity, CPI-based book of business, and exposure to fast-growing economic areas in the US.

Feb 24, 2021

Home Depot Shows the Home Has Never Been More Important
Image Source: Home Depot. On Tuesday, February 23, Home Depot reported fiscal fourth-quarter 2021 results (period ending January 31, 2021) that came in better than consensus estimates across the board. Not only did the top- and bottom- lines beat, but comparable store sales growth of 24.5% exceeded even some of the most optimistic forecasts for the home improvement retailer during the period. The average ticket price and the number of transactions advanced, while both professional (“Pro”) and Do-It-Yourself (“DIY”) customer revenue increased at a double-digit pace in the quarter. Home Depot also raised its dividend 10% and now yields ~2.5% on a forward-looking basis ($6.60 per-share dividend on an annualized basis). We continue to like the home improvement retailer as a holding in the Dividend Growth Newsletter portfolio.

Feb 23, 2021

Korn Ferry Leaps Higher Toward Our Fair Value Estimate
Image Shown: Korn Ferry's stock has surged since it registered a 9 on the Valuentum Buying Index. The company is also included as a holding in the Best Ideas Newsletter portfolio. On December 11, 2020, we raised our fair value estimate of Korn Ferry to $66 per share and assigned it a 9 on the Valuentum Buying Index, one of the highest ratings on our system. Shares at the time were trading at ~$41 each. The company’s equity has surged in the past few weeks, with shares now changing hands at $60+ each. We still believe Korn Ferry’s stock has room to run higher, and the company will remain a holding in the Best Ideas Newsletter portfolio.